Comments on: Goldman Sachs and the Need for Hangings in the Village Square

By: Ron Robinson

Ron Robinson — Sun, 09 Jan 2011 03:13:01 +0000

I appreciate your comments and have written letters to the editor regarding how Ayn Rand, educated as a novelist and playwright in Russia, has influenced the Fed Chair and many others and in the process brought our country to near disaster. Now we have the Tea Party. We need rules and referees in business just like NCAA basketball does. Can you imagine Duke v. Carolina without referees and expecting players to call fouls? How could we leave the financial industry, or other enterprises for that matter,to their own devices with a leadership moral compass focused solely on stockholder value and personal wealth?

By: dorothy marcic

dorothy marcic — Wed, 16 Jun 2010 04:09:28 +0000

Scaffold, perhaps. But at least some punishment.

Have you heard of Schelling and Ross Hammond? They’ve used computers to create simulated societies and found that all societies turned honest as long as wrong-doers are caught. And not even all of them, just enough to make others scared, and for the “catching” to be random and not have any group in society “above the law.” See an article about this:
http://www.theatlantic.com/past/issues/2002/04/rauch.htm

Then see figure 3, related to Hammond’s model of social corruption.
http://www.theatlantic.com/past/docs/issues/2002/04/rauch-movies.htm

Cheers,
Dorothy

By: Justin Noll

Justin Noll — Tue, 15 Jun 2010 21:08:42 +0000

Jack Welch is also a big believer in ‘public hangings’, in the context of reinforcing corporate norms and expectations. It works on several levels, the most obvious is that it’s a deterrant to others contemplating the same types of action. But on another level, it works to show the majority of employees (or citizens) that inappropriate behavior is punished, thus creating a sense of fairness and justice. In this case, we perceive that the big bonuses are still paid and no one is held accountable, even those who created the financial mess that impacted all of us. Thus there is no sense of fairness and justice.

Ultimately, power corrupts, and even with a justice system in place, there will always be people who bend and break rules to their own advantage. Without a justice system or a set of checks and balances in place, it would be even worse.

By: Larry Miller

Larry Miller — Mon, 14 Jun 2010 15:24:23 +0000

Don, thanks for the comment. I am certainly a believer in capitalism in the sense of private ownership of capital, private decision making, and yes… pursuing self interest. But, every “interest” requires a degree of moderation and balance. My main point, a question really, is whether mankind is going to become more mature, mature to the point of self-regulation… not requiring the hanging in the village square. The current evidence points to the opposite, doesn’t it.

By: Larry Miller

Larry Miller — Mon, 14 Jun 2010 13:26:23 +0000

Thank you George. I might do that at some point.

By: Donald A. Dinero

Donald A. Dinero — Mon, 14 Jun 2010 08:54:44 +0000

Our view of capitalism is based on Adam Smith’s thoughts mainly as written in his “Wealth of Nations” book. The concept people follow is that “self-interest promotes the general welfare.” As I read a more current book, David Cay Johnston’s “Free Lunch,” Mr Johnston states that Smith also wrote that “unchecked self-interest [greed], especially when aided by the government will spoil the benefits of capitalism…The law cannot prevent people from meeting (for self-interest), but it should not facilitate those meetings.” I see two main underlying causes for the financial crises. The first is that the government has allowed the stock market to operate as a gambling operation, which it regulates or prohibits in every other area of our lives. A stock proce should represent how well a company is performing. The only transactions that should be allowed are the buying (for possession) and selling (for release) of stock. Selling short then should not be allowed because it is overt gambling and the person never really owns the stock. The second cause is the misguided objective of most companies. I assume that most companys’ objective is to maximize profits for their stockholders. The objective should be to maximize the welfare of the employees and sockholders. Both must be affected since the employees are supplying the activities and the stockholders are supplying the funding. A client of mine in Utah is privately held and its mission is to optimize the way of life of its employees. That measn to satisfy as many of the employees’ needs as possible. The company must make a profit in order to do this, but by having welfare as an objective gives the company’s operation a completely different feeling. The employees know why they do what they do and can see a benefit from it. The owner could possibly be making more money, but he realizes that he can only use so much and a satisfactory life is more important than maximizing profit. This concept has inherent checks and balances since we must still make a profit. Since that is not the ultimate goal, we do not becmome obsessed with it.

By: George Starcher

George Starcher — Mon, 14 Jun 2010 05:35:18 +0000

Dear Larry, As I have said before, I really like your writing. Why don’t you, at some point in time, bundle the best of these Meditations and publish them? I would be your first customer… EBBF might even publish them or at least share them with our members.

Again, many thanks for these gems of wisdom.

Best, George

By: gordon

gordon — Mon, 14 Jun 2010 05:28:01 +0000

Great stuff Larry, go get ‘em.