Greg Smith’s New York Times op-ed seems to have struck a chord. But with all due respect, there’s nothing really very new—or particularly unique to Goldman—in the bill of particulars. Yes, banks sell toxic products, including problematic loan terms, to their customers, but so, too, did McDonald’s with the “pink slime” (ammonium hydroxide) in its beef, car companies pushing products with known defects (remember Ford Pinto’s exploding gas tank?), and medical device and drug companies that push products with known problems and health risks—witness the recent uproar over defective hip replacements.
As the late London Business School professor Sumantra Ghoshal, among many others, argued, the basic problem is the “shareholder first” (and for that matter, second, third, and fourth also) doctrine that is enshrined in our business school curricula, in our language and discourse, and indeed in how we see the purpose of the corporation. It’s all about winning. Politicians shamelessly lie to win votes or political points—and aren’t even embarrassed about it. Witness Senator Jon Kyl’s response to being told that abortions are not well more than 90 percent of what Planned Parenthood does: It was “not intended to be a factual statement.” On a daily basis I recall a line attributed to the late New York parks commissioner, Robert Moses, “if the ends don’t justify means, what does?”
We live in a world of instrumentalism—it’s all about achieving the goal. An instrumental orientation drives corrupt behavior. Business school students, more interested in the credential than in learning, cheat more than other students, research shows. Companies seeking profits first and foremost cut corners in hundreds of ways. They do this every day, in many industries, all over the world.
Unless and until we collectively stop worshiping winning above the process required to prevail, nothing is going to change. There will be some clucking over the Smith piece, and then things will go back to normal—at Goldman Sachs and all the places that could have been the subject of a similar piece, but weren’t.