In 2007, John C. Bogle, founder of the Vanguard Group, gave a commencement speech entitled “Enough” to the MBA Graduates of Georgetown University’s McDonough School of Business. In it, he related an anecdote from Kurt Vonnegut. Vonnegut and Catch-22 author Joseph Heller were at a party hosted by a billionaire hedge fund manager. Vonnegut asked Heller how he felt knowing that their host probably made more money in one day than Heller had made off of the entire history of Catch-22. Heller replied that he had something the billionaire would never have: enough.
This speech became the foundation of a book Bogle published a year later, on the eve of the global financial crisis. The message of the book, and of the commencement speech, is simple: we have gone from an agricultural economy to a manufacturing one to a service one to a financial one, and in so doing, we have pinned so much of our collective fortune on extracting value from trading paper that we are losing our grip on what it means to actually build anything of value, let alone how to serve others. Getting rich is fine. Getting crazy about it isn’t.
It took courage to write this at a time when most people on the planet didn’t want to hear that the global economy was on the verge of bursting its bubble. Bogle warned that when things turned south, the folks on Wall Street and everybody connected to them who would be hanging from the lamp posts. Given how little Occupy Wall Street has accomplished, I think it’s safe to say that there will be no revolution over this.
But it has driven home a deep and well-deserved skepticism about how the extreme parts of the financial sector operate. They say money has no conscience, but that doesn’t mean the people making it should be that way, also. I was reminded of this when reading the scathing resignation letter Goldman Sachs executive Greg Smith published as an op-ed in the New York Times last month, in which Smith verified every bad suspicion everybody has ever had about Goldman, which is to say that even among investment banks, the place practices the kind of financially driven sociopathy that would make Gordon Gekko blush.
But Goldman is hardly the only problem here. At some point, what drives our financial system is not mere wealth, for there is only so much time in the year to spend it. At some point, money–which ought to be a means to an end–becomes an end unto itself, driven by a pathological need to acquire. How else can we explain the need for John Paulson, a guy who made billions short-selling subprime mortgages, to strip mine a company like the Hartford purely to produce a better stock price? It’s not like he’s concerned about the policyholders.
It all makes me arch an eyebrow at the stock model in general. Indeed, there are plenty of strong, responsible stock insurers, but they inevitably remind me of that old joke about how, in college, you can have two out of three: sleep, good grades and a social life. In insurance, there is tight underwriting, broad market share and fast-growing stock price. You can have two, and the third one is probably not the best one to start with.