Correlation Between Unethical Behavior and Success
Every business and finance course I have taken always spends a lot of time preaching ethical behavior, but from what I've been exposed to in life, it appears that every person I meet with a net worth north of $10 million and didn't inherit it, is a shark. I'm not saying they've done anything illegal to get where they are (although some have) but none of them seem to care about ethical behavior as much as profit maximization.
Did I meet the wrong people in life, or is this a common occurrence?
Let's face it, no one is giving away millions of dollars to money-hungry businessmen out of the kindness of their hearts.
so those worth 9.9 million are good to go i guess.
Saints.
I think that may depend on the industry. I know a man with a business that was grossing 100 million a year and profiting 5 million and he was know for being ethical and fair. Part of why his business did better then his competitors, I also know many of people like the ones you mentioned. I also should mention, all of the wealthy people I know are blue collar entrepreneurs not wall street types.
"Worldcom, Tyco, Enron and other giant companies had leaders who failed to play fair. Because they cheated, they lost. Accumulation of wealth became a driving force to these executives. They forgot the golden rule of integrity. Trust is a greater compliment than affection. With integrity comes respect." -Jon Huntsman Sr. self made billionaire.
On the other hand some people have a weird version of fair in their minds, you can't be an idoit with your money or business deals. There is a balance.
I know plenty of people with a net worth below 10 million and unethical
I just want to be rich enough to vote democrat
Draw a line in your head between focused effort and criminal behavior. I've watched people mercilessly cut down their competition and/or aggressively pursue theIr goals while remaining ethical. Surviving is priority #1: details may get fudged, strings are pulled, and often we see the darker side of humanity, but this is a very bad time in the history of this industry to attempt flagrantly criminal behavior. We're the whipping boy for another few years, and even if all was well with the world I would choose to be a less wealthy Jamie Dimon as opposed to a more wealthy Raj. Once your bills are paid and there are legitimate ways to get ahead, you have to realize that prison is a scary place. Risking prison to go from $5Mm to 10 is a bad move in the larger sense.
Goddammit that might be the best thing I read on the internet this year.
I think we should be clear what we mean by unethical. I see it as encompassing fraud, slandering the competition, etc...basically stuff that would be illegal, but it difficult to prosecute. I don't think these people are very common at high levels of income, at least in my experience.
Things like outsourcing, cutting benefits, reducing quality/cost-cutting, and aggressively pursuing contracts are not unethical in my mind, but necessary. The market punishes non-competitive firm. If your competitor puts out a product for less $, he will drive you out of business.
Competition is good. As Mr. Rainmaker of the Left Coast just said, you've gotta be competitive and calculating. BUT, that certainly doesn't extend to violating the law. We should be willing to do what's necessary, but never, ever violate the law, whether it's unjust or not, in business practice.
There is no correlation otherwise Wall Street wouldn't be a successful business scheme if you define success by the amount of money that people on Wall Street make
Hmm, sounds like you work at an inter-dealer broker.
I think there's a slightly positive correlation. Most people can have 50% more by taking a 5% chance they go to jail. Most people choose not to take that risk- ~50-60% of them because they're genuinely honest, 40% because they are dishonest but hate risk, but a small percentage do.
Also, calling Wall Street a successful business scheme is like calling US automakers successful during the Chrysler bailout.
Some of this starts to get philosophical, religious, and down to worldviews. My view is that the world is terribly screwed up. Our political, economic, and diplomatic systems all work in opposition to values like honesty, integrity, and compassion. So at some level, a very good person is going to make a poor CEO or political leader.
I stated if we define success by the amount of money that people make, then it is applicable to Wall Street.
Whether that money was earned or stolen from tax payers, we can at least say that Wall Street successfully stole that money without a scratch on its shoulder.
As far as ethic goes, we all know that unfortunately ethic does not stand strong were money is at stake.
^^^ So why do you claim there is no correlation when you also claim that the money is stolen?
"Stolen" is open to interpretation.
Some people think they earn that money, others think that it's thief.
Stolen is not my personal qualification of what went down on Wall Street with the bail out because you cannot use one set of event to characterize the lifetime of an industry. Has WS always lived on bail out money?
I'll go Tocqueville and say the world is getting better and worse at the same time, so I agree w/ IP and UFO that we're inherently flawed. I am glad to see this conversation is still taking place and people actually care enough to ask.
I think there are a lot of talented assholes who want to be wealthy, and if they're willing to bend some rules here and there to increase the odds in their favor, it's that much tougher for the ethical person. But that's true of any competition.
It for sure happens in the investing world. I'm not going to name names, but I know for a fact that some well known investors have crossed the line before in terms of representing their own interests above their LPs. In general, most of the people I've met in this business are pretty snakey, either overtly or covertly. I think you have to be pretty aggresive, play it close to the line, and watch yourback. You don't have to cheat to win, but it's probably a good idea to think like a cheater so you can protect yourself from getting cheated.
The thing that most surprised me when I got into the industry is how often and to what degree company executives sometimes lie. Supposedly, they're bound by a duty of fairness to their investors, yada, yada. But there have been several times when I've sat face-to-face with CEOs and had them straight up lie to me -- and not small lies, I'm talking whoppers. If you're quick with numbers you can sometimes catch them, other times not. But yeah, it's shadiness all the way through in this game.
Personally, I think you want to avoid crossing the line. It might serve you well 9 out of 10 times, but if you go to zero (or your reputation goes to zero) on the 10th time, what good is that?
As Tuld says in Margin Call:
You can be first You can be smarter Or you can cheat
That pretty much says it all.
True UFO, on closer reading I did put words into your mouth, my bad
Heres a real question for ethical people. Can we punish a person with no ethics for being unethical?
damn, that's deep philosophical stuff bro.
To me the ease of access is the most important thing. If you are in a position of authority you are more likely to abuse it. Having said that, some people have very strong integrity and couldn't care less about money.
A wise man once told me, "money isn't everything". And I learn something from that everyday.
smart crooks always win.
The real question is how do we balance society's right to not shut down with nihilists' rights to not be punished for something they don't believe exists. As a modernist/traditionalist, I say that's their problem. Nihilists don't even understand utilitarianism vs. deontological ethics, so there's no problem with being a utilitarian and taking away their ability to do things that society deems unethical.
Deontological ethics, in order for them to have any chance of working, have to assume some sort of fixed perspective that most of society can agree on. A nihilist would ESPECIALLY agree with this.
A few comments:
Using your edge is not unethical: Finance is often an adversarial business even at the junior/mid levels. People on either side of a trade, the agency problem and such. Being able to look after your own interest & the interest of your firm is key for longevity & success. This is very different form being unethical. If you are being a fool with your or your employers money, someone is going to take advantage of you, because you usually have a counter-party with opposing interests. All of this is both ethical and legal (no, they aren't the same thing). If you don't have the competitive streak or you are lax about protecting yourself you won't last no matter how ethical you are.
Principal Vs. Agent success: I think there is a difference between what is necessary for success as a principal (e.g. entrepreneur, equity partner in a financial advisory or investing firm) or success as an career Executive / CEO. I've never met a career CEO who hasn't lied to me. However, it was just the normal business BS that people can cut through if they are prudent and shrewd about looking after their own/their firm's interest. In cases where I've seen unethical behaviour in terms of misleading people in a material way, it only worked because the counter-party was not doing their job. They were negligent. When unethical people get caught out and receive some kind of censure or legal action, they will revise their assessment of the cost/benefits.
- Risks: I think on a long enough timeline and in industries & businesses where reputation is important, unethical behaviour is not an advisable strategy. You basically bet your whole career every time for a small amount of profit... on a long enough time horizon the risk you blow your reputation up is very high. However if you're a hit & run CEO, the incentives are there for you to go for it.
Lessons: - If you're on the buy side, don't tolerate lies and people BSing you. If you can't tell when this happens, learn or find a new career. - Make sure your advisor is aligned with you. If you keep screwing them, they'll do the same to you. - Work with people with integrity.
What Raj did was NOT unethical. Illegal perhaps but immoral NO. Insider trading makes markets more efficient. As Edmundo Braverman said here it is a victimless crime. It is also more common than you'd want to know. Many people are trading tips and getting away with it. I could tell you some stories but I'm not going to post them here.
To the OP, there is truth in what you say but people who do things like that usually have no choice. It is not about greed but survival. People have worked very hard to get where they are and they are not going to lose their job to follow some sort of code forced upon society by government.
Most of you will be in a situation where you have NO CHOICE but to cheat in order to survive. It will not be your fault, do not blame yourself if you ever need to do something like that. Just realize you need to be cautious. The world is a very harsh place with few winners. Most of those winners had to fight their way to the top and it was either that or be homeless.
Running a ponzi scheme or boiler room however is EVIL and that I can't condone in any way.
If you don't like that, that's fine, but then you're going to jail.
I don't think Raj needed to cheat to survive. He had plenty of money and could have retired. Instead he chose to cheat. It's not like someone stuck a gun to his head or even like he was trying to pay for baby formula let alone his mortgage. I guess the fact that he would have lost investors and his position- resigning to be merely upper middle class- makes me just a little sympathetic, but we can't rationalize bad behavior.If you knowingly sell someone a house infested with termites or a car that falls apart three miles later, you lose your licenses and often go to jail. Same deal with insider trading.
Yes, they always find a way to rationalize their behavior
Insider trading is not a victimless crime, who ever thinks so is wrong. Insider trading can trigger sell offs that hurt non insiders.
[intentional Jon Stuart line]
a victimless crime is when you punch someone in the dark.
That is the stupidest thing I have ever read. Do you understand what the word victim means?
where's the victim?
derrière chaque grande fortune se cache un crime
Donc tous ceux qui sont riches sont des criminels?
Mitt Romney est-il un crimnel ou crois-tu que sa fortune n'est pas assez grande pour etre qualifie comme une grande fortune ? (compare aux Rotshilds, Rockefeller, Kochs).
j'en suis certain qu'il a blanchi de l'argent :) en sois un crime eh
What a joke post.
Hahaha @ victimless crime being punching someone in the face. Gotta be kidding me.
melvvvar you voted for obama didnt you?
just because i referred to a dark room. your racist!
More proof that you voted for that idiot.
Murdoch is pretty successful..... and his wife Wendy Deng is even more successful for being one of the biggest gold diggers in modern times.
I am feeling like a positive correlation.
Where does Warren Buffett stand, here? Marital ethics aside.
She is also a tiger-wife. She earned every cent at the Parliamentary hearings.
Viz.
http://www.nytimes.com/2011/07/20/world/europe/20wendi.html
Definitely not a stupid woman, she knows when to settle and stop fucks around, literally.
look up jake cherry. what is it with powerful men and slut-goddesses like this? she must be able to suck the chrome off a hitch.
Only powerful in the eyes of a goldigger poor slut.
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