A few months ago, there was quite a bit of talk about a BBC story on Alessio Rastani, a self-described “independent trader,” who indicated he couldn’t care less what the European financial crisis did to people’s lives. For him it was all about making money and another recession would enable him to make plenty. Andrew Leonard of Salon tied the story together with and article in Der Spiegel on a Swiss study of traders. The results showed that these people
behaved more egotistically and were more willing to take risks than a group of psychopaths who took the same test.”
Particularly shocking for [Thomas] Noll [researcher] was the fact that the bankers weren’t aiming for higher winnings than their comparison group. Instead they were more interested in achieving a competitive advantage. Instead of taking a sober and businesslike approach to reaching the highest profit, “it was most important to the traders to get more than their opponents,” Noll explained. “And they spent a lot of energy trying to damage their opponents.”
Using a metaphor to describe the behavior, Noll said the stockbrokers behaved as though their neighbor had the same car, “and they took after it with a baseball bat so they could look better themselves.”
The researchers were unable to explain this penchant for destruction, they said.
Yesterday, Dakinikat sent me a Bloomberg article by William D. Cohan about a British academic’s “theory” on the causes of the financial crisis: Did Psychopaths Take Over Wall Street Asylum?
It took a relatively obscure former British academic to propagate a theory of the financial crisis that would confirm what many people suspected all along: The “corporate psychopaths” at the helm of our financial institutions are to blame.
Clive R. Boddy, most recently a professor at the Nottingham Business School at Nottingham Trent University, says psychopaths are the 1 percent of “people who, perhaps due to physical factors to do with abnormal brain connectivity and chemistry” lack a “conscience, have few emotions and display an inability to have any feelings, sympathy or empathy for other people.”
As a result, Boddy argues in a recent issue of the Journal of Business Ethics, such people are “extraordinarily cold, much more calculating and ruthless towards others than most people are and therefore a menace to the companies they work for and to society.”
Of course this isn’t a scientific study, but it certainly makes intuitive sense. Boddy blames changes in corporate culture for the problem.
Until the last third of the 20th century, he writes, companies were mostly stable and slow to change. Lifetime employment was a reasonable expectation and people rose through the ranks.
This stable environment meant corporate psychopaths “would be noticeable and identifiable as undesirable managers because of their selfish egotistical personalities and other ethical defects.”
For Wall Street — a rapidly changing and highly dynamic corporate environment if there ever was one, especially when the firms transformed themselves from private partnerships into public companies with quarterly reporting requirements — the trouble started when these charmers made their way to corner offices of important financial institutions.
There they supposedly changed many of the moral and ethical values that previously had guided businesspeople. This theory seems somewhat flawed, since it doesn’t explain how these men differed from the 19th century robber barons. But I haven’t read Roddy’s original articles. Perhaps he explains this inconsistency in his argument. I would argue that these kinds of people have always been involved in business and probably in politics too.
Case in point: Mitt Romney. I urge you to read the new article about Romney in Vanity Fair: The Meaning of Mitt: The Dark Side of Mitt Romney. The article is based on a new book about Romney by Michael Kranish and Scott Helman, The Real Romney. There’s no way I can briefly summarize the piece or excerpt all the important parts. The article focuses on Romney’s attitudes toward family, his deep involvement with his Mormon religion, and his business career. If you read it, you’ll recognize characteristic signs of the psychopath–coldness, calculation, lack of empathy for others, self-involvement. The only thing missing is the charisma that these people often have.
There are multiple examples of Romney’s insensitivity toward women and women’s autonomy in the article, and his career as a corporate raider and junk bond pusher are described in detail. I’ll give you just one shocking example of Romney’s attitude toward women’s rights in his role as “spiritual leader.”
Peggie Hayes had joined the church as a teenager along with her mother and siblings. They’d had a difficult life. Mormonism offered the serenity and stability her mother craved. “It was,” Hayes said, “the answer to everything.” Her family, though poorer than many of the well-off members, felt accepted within the faith. Everyone was so nice. The church provided emotional and, at times, financial support. As a teenager, Hayes babysat for Mitt and Ann Romney and other couples in the ward. Then Hayes’s mother abruptly moved the family to Salt Lake City for Hayes’s senior year of high school. Restless and unhappy, Hayes moved to Los Angeles once she turned 18. She got married, had a daughter, and then got divorced shortly after. But she remained part of the church.
By 1983, Hayes was 23 and back in the Boston area, raising a 3-year-old daughter on her own and working as a nurse’s aide. Then she got pregnant again. Single motherhood was no picnic, but Hayes said she had wanted a second child and wasn’t upset at the news. “I kind of felt like I could do it,” she said. “And I wanted to.” By that point Mitt Romney, the man whose kids Hayes used to watch, was, as bishop of her ward, her church leader. But it didn’t feel so formal at first. She earned some money while she was pregnant organizing the Romneys’ basement. The Romneys also arranged for her to do odd jobs for other church members, who knew she needed the cash. “Mitt was really good to us. He did a lot for us,” Hayes said. Then Romney called Hayes one winter day and said he wanted to come over and talk. He arrived at her apartment in Somerville, a dense, largely working-class city just north of Boston. They chitchatted for a few minutes. Then Romney said something about the church’s adoption agency. Hayes initially thought she must have misunderstood. But Romney’s intent became apparent: he was urging her to give up her soon-to-be-born son for adoption, saying that was what the church wanted. Indeed, the church encourages adoption in cases where “a successful marriage is unlikely.”
Hayes was deeply insulted. She told him she would never surrender her child. Sure, her life wasn’t exactly the picture of Rockwellian harmony, but she felt she was on a path to stability. In that moment, she also felt intimidated. Here was Romney, who held great power as her church leader and was the head of a wealthy, prominent Belmont family, sitting in her gritty apartment making grave demands. “And then he says, ‘Well, this is what the church wants you to do, and if you don’t, then you could be excommunicated for failing to follow the leadership of the church,’ ” Hayes recalled. It was a serious threat. At that point Hayes still valued her place within the Mormon Church. “This is not playing around,” she said. “This is not like ‘You don’t get to take Communion.’ This is like ‘You will not be saved. You will never see the face of God.’ ” Romney would later deny that he had threatened Hayes with excommunication, but Hayes said his message was crystal clear: “Give up your son or give up your God.”
Not long after, Hayes gave birth to a son. She named him Dane. At nine months old, Dane needed serious, and risky, surgery. The bones in his head were fused together, restricting the growth of his brain, and would need to be separated. Hayes was scared. She sought emotional and spiritual support from the church once again. Looking past their uncomfortable conversation before Dane’s birth, she called Romney and asked him to come to the hospital to confer a blessing on her baby. Hayes was expecting him. Instead, two people she didn’t know showed up. She was crushed. “I needed him,” she said. “It was very significant that he didn’t come.” Sitting there in the hospital, Hayes decided she was finished with the Mormon Church. The decision was easy, yet she made it with a heavy heart. To this day, she remains grateful to Romney and others in the church for all they did for her family. But she shudders at what they were asking her to do in return, especially when she pulls out pictures of Dane, now a 27-year-old electrician in Salt Lake City. “There’s my baby,” she said.
The information the authors provide about Romney’s career at Bain Capital is just as revealing of Mitt’s insensitivity and lack of empathy. Here’s just a brief quote about Romney’s attitudes toward capitalism.
Romney described himself as driven by a core economic credo, that capitalism is a form of “creative destruction.” This theory, espoused in the 1940s by the economist Joseph Schumpeter and later touted by former Federal Reserve Board chairman Alan Greenspan, holds that business must exist in a state of ceaseless revolution. A thriving economy changes from within, Schumpeter wrote in his landmark book, Capitalism, Socialism and Democracy, “incessantly destroying the old one, incessantly creating a new one.” But as even the theory’s proponents acknowledged, such destruction could bankrupt companies, upending lives and communities, and raise questions about society’s role in softening some of the harsher consequences.
Romney, for his part, contrasted the capitalistic benefits of creative destruction with what happened in controlled economies, in which jobs might be protected but productivity and competitiveness falters. Far better, Romney wrote in his book No Apology, “for governments to stand aside and allow the creative destruction inherent in a free economy.” He acknowledged that it is “unquestionably stressful—on workers, managers, owners, bankers, suppliers, customers, and the communities that surround the affected businesses.” But it was necessary to rebuild a moribund company and economy. It was a point of view he would stick with in years ahead. Indeed, he wrote a 2008 op-ed piece for The New York Times opposing a federal bailout for automakers that the newspaper headlined, let detroit go bankrupt. His advice went unheeded, and his prediction that “you can kiss the American automotive industry goodbye” if it got a bailout has not come true.
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Anyone who still sees Romney as the “reasonable” Republican candidate needs to read this article. I knew that Romney had been involved in Mormon Church leadership, but I had no idea how deeply he was involved and how committed to his religion he is. And yet, he’s probably going to be the Republican nominee, facing a weak, unpopular Obama. We’ve heard about a meeting of Conservatives to discuss possible alternatives, but Politico reports that GOP elites are saying Romney probably can’t be stopped.
We’ll see. There’s nothing more dangerous than a Newt scorned, and South Carolina looks to be unfriendly to Mitt. But the next challenge for Romney is New Hampshire, where he leads by double digits. Can Santorum and Gingrich knock him down a peg? Only time will tell.
So….. What are you reading and blogging about today? Please share.