Greed is Still Good

Print Friendly, PDF & Email

“Wall Street” (1987) was one of the first films focused on the inner workings of the financial markets, and is loosely based on the scandals involving junk bonds and insider trading in the 1980s. Michael Douglas won an Oscar for his performance as Gordon Gekko, the ruthless insider who takes down several companies before he is finally caught. His character’s name has become so tied to Wall Street shenanigans that business schools reference him in their courses. Hedge fund manager Anthony Scaramucci called his investment memoir “Goodbye Gordon Gekko” (2010), knowing that no one would have any trouble understanding the title. Libertarian reporter John Stossel borrowed Gekko’s most famous line, “Greed . . . is good” for the title of one of his best known TV specials (1998). As the sequel to this landmark film opens, it is worth taking another look at the original.

“Wall Street” (1987) begins with a sweeping panorama of downtown Manhattan and the Twin Towers of the World Trade Center. Seeing it today is eerie, since the Towers are now synonymous with terrorism. But it is a reminder that the Towers were once the greatest symbol of capitalism and finance. Symbols don’t matter much, however, to Bud Fox (Charlie Sheen). He is a young, ambitious stockbroker making cold calls to potential clients

Gekko is right on both counts. Greed motivates people to work harder and produce more. Greed is good.

 

and begging them to give him “just five minutes” of their time. He eventually gets sucked into the glamorous world of massive profits from insider trading. It starts innocently enough, when, in a casual conversation over a beer, his father (Martin Sheen) mentions that a lawsuit against the aviation company he works for, Bluestar, is about to be decided in the airline’s favor. Desperate to impress Gordon Gekko with a good investment deal when he finally has that “five minutes” of his time, Bud blurts out that Bluestar is going to be getting some good news. “I just know,” he says intensely, when Gekko asks for details. Gekko knows that look.

As Bud is pulled deeper and deeper into the web of deceit, we see how easily stocks can be manipulated through a whisper here, a nod there, a phone call to the Wall Street “Chronicle” to get a stock puffed in the news, even some old-fashioned detective work to figure out what a competitor is getting ready to do.

Gekko stands as the giant of confidence, swagger, and bravado, his name already synonymous with financial villainy. And maybe for good reason — he does use insider information that is technically off limits because it isn’t available to the general public, and he often uses illegal means to obtain that information. He brags, “If you’re not an insider, you’re an outsider,” and tells Bud, “The most valuable commodity I know of is information” (as he sends him out to ferret out some insider info).

Bud doesn’t resist very hard being pulled into Gekko’s world. When his father chides him because he is so focused on earning money instead of contributing to charity, he responds, “You gotta get to the big time first. Then you can be a pillar and do good works.”

But the most famous speech in the movie (inspired by a commencement speech that Ivan Boesky gave in 1986) is delivered by Gekko, and it has actually suffered unfairly from bad press all these years. In fact, it’s pretty sound. Having bought up a large percentage of a paper company, he addresses the shareholders to convince them that they should fire the 33 deadweight vice presidents, streamline the company, and make it profitable again. As he tells them, “I am not a destroyer of companies, I am a liberator of them!” It’s an important point. Investing in stocks is not just a gamble in paper money. It is the way businesses raise capital and maintain their ability to produce, invest, and employ.

Gekko continues, “Greed, for the lack of a better word, is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the evolutionary spirit. . . . What’s worth doing is worth doing for money. It’s a bad bargain if nobody gains. And if we do this deal, everybody gains.”

Gekko is right on both counts. Greed is good, and he does lack a better word. If greed motivates people to work harder and produce more, it’s good. If it motivates real estate developers to buy decrepit buildings, fix them up, and sell them for a profit, the community gains. If it motivates a health food aficionado to build grocery stores that sell organic fruits and vegetables and expand the business around the world so that others can enjoy healthier food, that’s good too. But “self-interest” might be the “better word” Gekko seems unable to find. Greed is good, but self-interest is a better brand.

Unfortunately, the word “greed” carries with it a sense of unfairness, of taking more than you should get, at the expense of others. Gekko contradicts himself when he later says, “It’s a zero sum game. Somebody wins, somebody loses. Money isn’t lost or made. It’s simply transferred.” That’s a crowd-pleasing line, and it reveals Oliver Stone’s own philosophical bias. It is also a falsehood. The idea that there is a finite amount of wealth in the world, and that the only way to gain wealth is by taking it from others, harks back to mercantilism, and was the basis for the colonialist drive to plunder other nations. Adam Smith blew that theory out of the water when he showed in “The Wealth of Nations” (1776) that wealth can indeed be created and expanded, simply by adding time, innovation, and labor to raw materials. A pound of iron may be worth 10 cents, but turn it into horseshoes and it’s worth $10. Add coal, heat, and manufacturing to turn it into pins or knives or a toaster oven, and it’s worth $100 or more. Capitalism is not a zero sum game. It is the vibrant process by which the Western economy has expanded to an almost incredible extent during the past two centuries.

“Wall Street” appears regularly on such cable stations as AMC and TNT, and is available on Netflix. It has held up well in the nearly quarter century since it was made. The story is compelling and the acting is superb, with the exception of Daryl Hannah as Bud’s

The idea that there is a finite amount of wealth in the world harks back to mercantilism. It’s a falsehood.

 

love interest. (Hannah won the Razzie for Worst Supporting Actress of 1987, and says she has never watched the film.) I like it better than the sequel.

In some ways “Wall Street: Money Never Sleeps” (2010) feels more like a remake than a sequel. It begins with Gekko (Michael Douglas) being released from prison, so we know the time frame is 15 years later. But it all seems so familiar, as though we had been here before, as indeed we have. It opens with the same sweeping panorama of the New York skyline, though this time with the Twin Towers conspicuously absent. Once again the story focuses on a young, ambitious investment broker, Jake Moore (Shia LaBeouf), trying to break into the big time and keep up with the pros. Once again we watch the ticker tape of the young broker’s first big trade falling steadily until the thud of the closing bell at the end of the day. Once again the wise fatherly stockbroker is named Lou (perhaps because Oliver Stone’ own father, Louis, was a stockbroker). Once again the young broker is trying to get funding for a company he believes in. We even see the same real estate broker (Sylvia Miles) that Bud Fox used in the original “Wall Street.” And yes, Charlie Sheen does make a cameo appearance, with a babe on each arm, channeling his alter ego from the TV show “Two and a Half Men” more than the sadder but wiser Bud from the 1987 movie.

The story line is similar, too. Gekko wants revenge against a rival investor, and he uses the cocky young broker to help him get it. The details are different, but the story is essentially the same. While “Wall Street” focused on the junk bond-insider trading scandals of the mid-1980s, “Money Never Sleeps” focuses on the economic meltdown of 2008. Scaramucci acted as a technical adviser on the film, and the result is technically accurate, though sometimes to a fault. As the film moves from boardroom to boardroom and talking head to talking head, it is often difficult to understand and process their words before the next dialogue-heavy scene appears. At 2 hours and 13 minutes, the film is long, and the editing is a little too tight. We keep stumbling into conversations that have already started, between people who already know what is going on.

Often those conversations and talking heads are presented in splitscreen projections, along with a graph or two, so while we’re still listening to one speaker, the next one has already started. It’s almost as though the editors knew they couldn’t make the movie any longer, but they couldn’t bear to throw anything out, so they presented it all at the same time. Some of the computer graphics are pretty cool, such as the one that outlines London’s Tower Bridge in the background as it demonstrates a company’s rise and fall. Yet I suspect that ten years from now, on cable TV, those graphics will look dated and hokey.

I happened to attend a private screening in Manhattan with a theater full of investment brokers and financial experts. They all loved the film, even those who said they seldom go to movies. I’m sure that for them, it was as simple as a primer. But at one point I just decided to stop trying to understand all the technojargon and focus instead on the storyline: something bad is happening, and those two attractive young lovers are caught up in it. That worked for me.

The two young lovers are Jake and Gekko’s daughter, Winnie (Carey Mulligan), who hasn’t seen or spoken to her father in several years. Jake wants to bring the two of them together again, ostensibly “to help her heal,” but really to get closer to his idol, Gekko, who, despite being a jailbird, is still packing in the crowds on the lecture circuit, promoting his new book, “Is Greed Good?”

Once again, the film shines when Michael Douglas is on the screen. Yes, he is older, but he still has that great selfconfident smile, that swagger. He’s still talking about greed, and he’s still just as flippant. He quips, “Once greed was good. Now it’s legal . . . ,” and everyone laughs cynically, as though greed was ever illegal. I wanted to counter, “Theft is illegal. Fraud is illegal. Greed is human nature.”

Gekko continues, “Greed makes the bartender take out three mortgages he can’t afford. . . . Greed makes parents buy a $200,000 house and borrow $250,000 against it to go shopping at the mall. . . . Greed got greedier with a little envy mixed in. . . . They took a buck and shot it full of steroids and called it leverage.” He’s right about those things happening. Many people who are underwater on their mortgages got there today by borrowing the equity out of their homes and using it to pay off credit cards, invest in businesses, or pay their children’s college tuition. Or, yes, go to the mall. Others got there because they bought at the top of the market, expecting the bubble to continue rising. But they couldn’t have done it without banks giving them outrageously unsubstantiated loans — or the government’s encouraging such loans to be given. So why are we bailing them out? Greed was always legal. It just wasn’t healthy for certain people.

And maybe the economy needed to get sick for us to learn that. Today people are using debit cards more and credit cards less. They’ve figured out that airline miles and rewards points aren’t really free if they come with 18.6% interest rates. Learning some economic truths has required some belt tightening, but that’s a good thing in times like these. We’ve learned, as Gekko says, that “money is a jealous lover. If you don’t watch her carefully, in the morning she’ll be gone,” and that “speculation is a bankrupt business model.” As private citizens we are becoming more frugal and setting our own houses in order. Many businesses are building up their cash reserves instead of borrowing money, so they will have more to spend on future investments. In this economic climate, it’s in their best interest to do so. That’s called capitalism. And it works. “Greed” is good, but self interest is better.

Leave a Reply

Your email address will not be published.