Americans usually get shocked and offended when presented with the worst stereotypes about people. But, when it comes to Wall Street, why is it OK to view financial professionals under the worst possible lens?
The Wolf of Wall Street isn't exactly tearing up the box office, but it is starting a conversation (again) about how capitalism leads to excess. The story itself, based on the life of Jordan Belfort, co-founder of infamous Long Island, N.Y.-based brokerage house Stratton Oakmont, lends itself to some of that talk. Stratton Oakmont was the quintessential chop shop, and, along the way, broke the law. Often. And, as the book and subsequent movie showed, in fairly entertaining ways.
But Stratton Oakmont was not Wall Street. It was an anomaly, an outlier. In the 1990s, when you mentioned Stratton Oakmont to people at white-shoe firms, they rolled their eyes, or tsk-tsked about how over-the-counter firms like that would give finance a bad name. Indeed, that was prescient.
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It's easy to stereotype against Wall Street, particularly after the financial collapse and the bailouts. Wall Street gets in its own way sometimes. But it is not an engine for excess, all hookers and cocaine, all fancy suits and dinners at Bobby Vans. It is actually an engine for good, and it is vital for capitalism and in helping your own business succeed.
People derided Goldman Sachs chief executive Lloyd Blankfein when he likened the business of his firm to "doing God's work" in a 2009 interview. Perhaps that hand was a bit overplayed, but there was more truth than fiction in it. Before he mentioned God, Blankfein actually said something more profound in the same interview. In shooting down suggestions he pay his employees less, he said, "As the guardian of the interests of the shareholders and, by the way, for the purposes of society, I'd like them to continue to do what they are doing."
The "purposes of society" phrase is important here. Wall Street is necessary in capitalist, free-market society in that it allows for the allocation of capital to help drive business. Wall Street firms collect money from their clients and, for a fee, facilitate the placement of that money into global business. Some of those businesses are large, multinational enterprises with common stock to sell. Others are emerging companies who need the funding through initial public offerings to take their businesses to the next level. Still others are private companies that need private placements of investor capital to get off the ground.
Wall Street firms facilitate all that. They drive capital to businesses, thereby fueling the desires and dreams of entrepreneurs and executives who believe in the potentials and outcomes of their own labor. If you are starting a business, or working like hell to help the company you work for grow, you look to Wall Street as the place where you can access the markets and all the capital they have to offer.
Do some bankers make a lot of money and spend it on excessive toys? Absolutely. Do they not deserve to? That's where the argument gets misguided. True, investment bankers aren't digging for coal, but their work is labor nonetheless. This is not 9-to-5 work. Entrepreneurs and investment bankers share similar traits: They work long hours, they are committed to their craft, they believe in their abilities and they innovate their way out of problems and challenges. Also, much of their compensation is driven by bonuses. That means they take out in profits based on how much work they put in to drive business to their companies. How they spend their income is their own affair.
That some bankers blew their money on blow is a red herring. Those personal choices are between them and their maker (and whatever law enforcement agency happens to have jurisdiction). There are bad actors in every environment. But we have to resist the urge to stereotype a whole industry because a few did unseemly things.
This is particularly true of Wall Street, since it is de rigeur to attack capitalism nowadays, in this era where we are bombarded with commentary about wealth inequality and income redistribution. It seems capitalists are the only group for which bigotry is still acceptable.
By all means see The Wolf of Wall Street, but resist the urge to howl at the capitalist moon. You'll profit from a more enlightened perspective.