Dave Krasne in the New York Timesand Andrew Leonard in Salon both write about Wall Street executives who continued to reward themselves lavishly while their firms were crumbling. Both writers focus on Merrill Lynch as Exhibit A of bad examples. Krasne writes,
Merrill Lynch lost $27 billion last year, and yet still managed to rush through $4 billion worth of year-end bonuses in the days before it was taken over by Bank of America.
And for that extra dash of class-warfare-induced homicidal rage, there is also the tidbit, first revealed by MSNBC's Charles Gasparino, that [Merrill Lynch CEO John] Thain spent $1.2 million remodeling his office in Sistine Chapel-like extravagance last January.
We've read news stories about luxury junkets and extravagant spending that continued even after firms received billions of dollars from government to keep them from folding. Dave Krasne, who is a partner in a private equity firm, writes "This speaks to how completely foolhardy behavior has overtaken our industry."
It's not just the financial industry, of course. In December, the heads of the three big Detroit automakers, in fear of bankruptcy, flew to Washington to ask for federal money. And they flew in three separate corporate jets, at a cost of hundreds of thousands of dollars each.
John Helyar, Katherine Burton and Vernon Silver write for Bloomberg News about associates of Bernard Madoff, who is currently under indictment for defrauding investors of as much as $50 billion. The associates say that, in retrospect, there were many signs that there was something wrong with Madoff's operation, but they chose to ignore the signs. "Fiduciary duty stood no chance against the profit motive," said the Bloomberg reporters.
I assume the chief executive officers of Wall Street and Detroit are not stupid people. I assume also that most of them would not think of stealing cash out of someone else's pocket. What Bernard Madoff thinks of himself I do not know, but I suspect most of his associates and others in the financial industry do not see themselves as thieves, crooks, or profligates. Somewhere along the line, however, their judgments became seriously warped.
The Four Noble Truths tell us that our thirst, greed and grasping are the principal causes of dukkha -- the unsatisfactory nature of life. Our passions cause and are caused by our delusions. And it appears the global financial industry became a thicket of delusions for all who entered it.
At the Guardian, Ed Halliwell (a Buddhist) suggests that religious leaders who speak of the moral implications of the financial crisis would do well to adopt the language of psychology.
In these terms, economic boom and bust is a collective manifestation of bipolar disorder – just like a manic depressive, we are trapped in repeating cycles of increasing activity and acquisition, leading to overconfidence and poor decision-making, which then creates the conditions for a painful crash and reactive depression.
The recorded history of human civilization is at least 6,000 years old. Yet every generation has to re-learn the fact that greed makes us crazy.
This habitual pattern will only stop when we understand how and why it works, and take steps, individually and collectively, to break free of our pointless craving for riches. This, incidentally, is the basis of the Buddha's second noble truth – the cause of our suffering is attachment.
Buddhist or not, society would do well to recognize that living in a bubble of boundless opulence utterly corrupts objective judgment. For their own protection, shareholders should insist on putting sane limits on executive compensation. This is not just to keep them honest, but to keep them rational.Update:Arianna Huffington has more on corporate insanity.