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Greed Used To Be Good

By Jerry Kalish

The headline is from the memorable speech made by Gordon Gekko (right), as played by Michael Douglas in Oliver Stone's 1987 classic, Wall Street, a role for which he won the Academy Award for Best Actor in 1988.

"In the last seven deals that I’ve been involved with, there were 2.5 million stockholders who have made a pretax profit of 12 billion dollars. Thank you. I am not a destroyer of companies. I am a liberator of them! The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms: greed for life, for money, for love, knowledge, has marked the upward surge of mankind."

Well, Gordon Gekko isn’t around now, and neither is Wall Street, as Marc Tracy pointed out in his recent post on this blog, The Great Rearranging of Wall Street.

But we can ask: what did we do to get where we are now, and how do we--how do small businesses--get out of it? Most of the discussion and commentary has been by the economists and financial experts, but there is a large psychological component to all of this which is beginning to get attention.

At recent conference at the University of Pennsylvania called, "Crisis of Confidence: The Recession and the Economy of Fear", an interdisciplinary panel explored the psychological elements behind today's economy. While all agreed that psychological factors are at work behind the current financial crisis, each focused on a different element:

* Mania and over-optimism behind the housing bubble.
* A lack of self-control by consumers hooked on debt.
* Many Americans' shock and feelings of betrayal because they thought they were making safe investments, but now find themselves facing a frightening and uncertain future.

According to David M. Sachs, a training and supervision analyst at the Psychoanalytic Center of Philadelphia, the crisis today is not one of confidence, but one of trust. Sachs argued that the public will have to see proof that government and business leaders can behave responsibly before they will trust them again.

Maybe it’s as simple as saying “Trust is an economic stimulus package.”

Meanwhile, here's another question: how can you and your business take advantage of the current situation? How can you restore trust where your business is concerned?

Here is a summary of the the conference in the article Hope, Greed and Fear: The Psychology behind the Financial Crisis the on-line publication of the Wharton School at the University of Pennsylvania, Knowledge@Wharton. And if you one of those auditory rather than visual people, here is the mp3.

Jerry Kalish is founder and President of National Benefit Services, Inc., a Chicago-based employee benefit consulting and administrative firm that serves private-held companies, publicly traded companies, and public sector employers. He blogs at The Retirement Plan Blog and can be reached at jerry@nationalbenefit.com.

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