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Gordon Gekko made a lot of fictional sense.

March 9th, 2009 · Greg Atkinson · 4 Comments

First let’s be clear, Gordon Gekko is a fictional character from the 1987 movie Wall Street. I state this upfront because you would swear that he really existed by the way some journalists seem to write about him these days and use him as a example of what they feel is wrong with the free market economy. But the Gordon Gekko character also put the spotlight on poor corporate management and ineffective boards and judging by recent events, it seems little has changed in 20 years.

Contrary to what most if often conveyed in the media, Gordon Gekko (played by the very real Michael Douglas) came unstuck at the end of the film because of “insider trading”. He did not fall from grace because he was a ruthless investor or believed greed was good, he came unstuck because be broke the law in the pursuit of wealth. You can still be greedy and not go to prison, so greed it itself is not a one way ticket to jail.

I make this distinction because not all the fictional Gordon Gekko does in the movie is unethical and often he simply makes a lot sense. For example in a famous scene from the movie a rather dapper looking Mr. Gekko makes the following observation: (while addressing the Teldar AGM)

” Well, ladies and gentlemen we’re not here to indulge in fantasy but in political and economic reality. America, America has become a second-rate power. Its trade deficit and its fiscal deficit are at nightmare proportions. Now, in the days of the free market when our country was a top industrial power, there was accountability to the stockholder. The Carnegies, the Mellons, the men that built this great industrial empire, made sure of it because it was their money at stake. Today, management has no stake in the company! All together, these men sitting up here own less than three percent of the company. And where does Mr. Cromwell put his million-dollar salary? Not in Teldar stock; he owns less than one percent. You own the company. That’s right, you, the stockholder. And you are all being royally screwed over by these, these bureaucrats, with their luncheons, their hunting and fishing trips, their corporate jets and golden parachutes. ”

Even after more than 20 years I find those words are still relevant today. Think of the U.S. auto industry for example and the ludicrous situation where the executives flew in private company jets to Washington D.C to ask for government assistance last year. Even while their companies bled, these executives continued to waste money….amazing really.

Our economic problems are not because of free markets or capitalism.  The current economic problems have been caused by the errors, blunders and at times the unethical behaviour of the people who manage corporations or are responsible for regulation of the financial system. (including politicians) The character of Gordon Gekko in Oliver Stone’s classic movie was certainly no saint, but he was no moron either and I think you have to give him points for hitting the nail right on the head with his comments about how some corporations are managed.

But some journalists and writers just take the whole Gordon Gekko thing a little too far and today I read for example that apparently greed is finished according to a forgettable article in Sydney Morning Herald. In this article the reporter Julian Lee, makes this moronic observation:

“If there were any lingering doubts that Gordon Gekko and all that he stood for was dead, the latest consumer research confirms it.”

He then rattles on about some survey that indicates people are more cautious about their spending now (tends to happen in a recession) and in some mystical way connects this Gordon Gekko. (here is a link to the full article if you don’t believe me) Next they will be blaming poor old Gordo for global warming.

Finally I suggest you watch the clip below from Wall Street. In addition to being a classic scene from the movie, it is also interesting to think how little has changed in 20 years. Maybe we need a Gordon Gekko type at a few AGM’s in Australia?

4 responses so far ↓

  • 1 8020 Financial // Mar 10, 2009 at 4:13 pm

    Thanks for the clip. The comments before the famouse’Greed is Good’ statement about vice-presidents, etc. are genuinely prescient. Gordon Gekko was right!

  • 2 Greg Atkinson // Mar 10, 2009 at 8:58 pm

    Hi 8020. Gordo was on the money a lot of the times. He might have been dodgy but he was no idiot. Like your blog by the way…hope the bear market is not causing you too much grief.

  • 3 8020 Financial // Mar 11, 2009 at 10:01 pm

    Hey Greg,

    Thanks for the positive feedback on my blog.
    I’m stuck in a very nasty trade at the moment, but I’m short some Google futures, so its actually the big bull rally yesterday thats causing me grief!
    Keep these essays coming. We really need a few Aussies with a contrarian view.

  • 4 Greg Atkinson // May 28, 2009 at 11:13 am

    8020 I guess the rally from the March lows is not helping things on your side?

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