Jordan Belfort and the Obscene Destruction of Wealth.
It seems to have been completely forgotten by now but when Gordon Gekko
made his ‘Greed is Good’ speech in Oliver Stone’s landmark 1987 film ‘Wall
Street’ he was not waxing philosophically in a theoretical sense. He was
speaking as a major stockholder of a company at a shareholders meeting.
Specifically the company was Tarbell Paper and Gekko had bought up a large
share of stock in order to streamline the company (sell off assets and fire
unnecessary personel) and use the proceeds towards a large dividend payment. As
a major stockholder he would certainly profit from such an action, but that was
not the only reason Gekko put forth to justify his actions. Here is the
complete speech:
[at the Teldar Paper stockholder's
meeting] Well, I appreciate the opportunity you're giving me Mr. Cromwell as
the single largest shareholder in Teldar Paper, to speak. 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. Teldar
Paper, Mr. Cromwell, Teldar Paper has 33 different vice presidents each earning
over 200 thousand dollars a year. Now, I have spent the last two months
analyzing what all these guys do, and I still can't figure it out. One thing I
do know is that our paper company lost 110 million dollars last year, and I'll
bet that half of that was spent in all the paperwork going back and forth
between all these vice presidents. The new law of evolution in corporate
America seems to be survival of the unfittest. Well, in my book you either do
it right or you get eliminated. In the last seven deals that I've been involved
with, there were 2.5 million stockholders who have made a pretax profit of 12
billion dollars. Thank you. I am not a destroyer of companies. I am a liberator
of them! The point is, ladies and gentleman, that greed, for lack of a better
word, is good. Greed is right, greed works. Greed clarifies, cuts through, and
captures the essence of the evolutionary spirit. Greed, in all of its forms;
greed for life, for money, for love, knowledge has marked the upward surge of
mankind. And greed, you mark my words, will not only save Teldar Paper, but
that other malfunctioning corporation called the USA. Thank you very much.
That’s right, the company was badly run. It had thirty-three vice
presidents all being paid exhorbitant amounts of money for no particular
reasona at all. In other words,
the company was ripping off its investors and should have been broken up,
streamlined, and made more efficient. Does anybody remember this detail? I
bring it up because this speech and this movie, to the horror I bet of its fire
breathing liberal writer/director, has been credited as a main inspiration for
the Wall Street we have today. There is an incredible speech in the Wolf of
Wall Street that I’m going to put down in its entirety. It is given by Jordan
Belfort, played by Leonardo Dicaprio, the founder of a brokerage firm named
Stratton Oakmont. He is inspiring his traders to misrepresent to their clients
that a bad shoe company, for which Stratton Oakmont owns 80% of the shares, is
a must buy. The idea is to use their clients to drive up the price and then to
sell their own shares at the peak. This will of course devalue the stock that
Stratton Oakmont does not own but their clients do. This is dishonest and
illegal and here is the speech:
Besides the “Greed is Good” mantra I would submit that there is very
little similar in these two speeches. Our culture nonetheless does not make
that distinction. Either you are against Greed and against both actions or you
are for it and endorse both.
The confusion can be directly traced to Adam Smith’s landmark treatise
on capitalism “The Wealth of Nations” published in 1776. It is an extraordinary
book in many ways but it also contains several errors. (Errors in groudbreaking
masterpieces are not such an extraordinary thing. Read any tome of Aristotle
and Plato and you will notice antiquated and mistaken arguments sandwiched
between the words of wisdom on a regular basis.) One of the biggest errors
concerns Adam Smith’s theory on the division of labor. He compares the winter
coat of a poor worker in London with the loincloth of an African King. Why, he
asks, can this poor man afford better clothes than a king? The answer is that
London has a developed economy that uses division of labor. The African king
made his own loincloth all by himself and did not have the time or capacity to
make it any better. The poor man’s coat however had been touched by thousands
of men. The herders of the sheep, the shearers of the wool, the transporters of
the wool, the weavers, the salespeople, et cetera et cetera. The insight is that a man can
do one simple task for one job far faster than he can do all the tasks for one job. If you build a network of all these different people doing their own
respective simple tasks you will be able to produce far more than you could if
one person did everything by himself or herself. The vast supply of goods that this
network creates drives down prices for the goods themselves, which is why the
poor man in a developed economy can afford better clothes than the African king
in an undeveloped economy. Adam Smith than states that rational self-interest
is what made the network possible. Each participant in the network was acting
in his or her own self-interest not a sense of altruism.
And here is where Smith after pages of brilliant insights makes his
error. Altruism is not the foil Adam Smith should have drawn for capitalism.
After all not all rational self-interest is capitalism. An arms length
transaction between two parties is in the rational self-interest of both
parties. But if a man beats another man up and steals his lunch money that too
is in the rational self-interest of the first man. Both men are being greedy.
But one of them is trading. The other is stealing. That is a huge difference.
In essence, it is the difference between capitalism and
piracy/communism/fascism/etc and the fact that we as a society cannot tell the
difference is a huge problem. The traders in ‘The Wolf of Wall Street’ take
this corrupted thinking to its most logical and extreme end. They think they
are capitalists and point to all the money they have gained as proof that they
are. But they are not capitalists and this story is not a story of capitalism.
It’s about thugs and thieves and the obscene destruction of wealth implicitly
approved by a society that does not yet understand certain fundamental basics
of economics.
“The Wolf of Wall Street,” is the fifth collaboration between director
Martin Scorsese and actor Leonardo Dicaprio. It is arguably their best. It is
certainly the most outrageous, funniest, crassest, excessive, and balls to the
wall crazy movie they have ever made. It might have broken the f-word record,
but I know for certain that I haven’t seen so much nudity in a movie outside of
pornography. And the drug use, well I don’t think there is a scene in this
3-hour movie where somebody isn’t on something. The story comes from the
autobiography of Jordan Belfort, a consummate salesman in that he could sell
almost anything to anyone. After a brief stint on the real Wall Street, where
his boss played by Matthew McCounaghey openly snorts cocaine in an upscale
restaurant and counsels him to steal from his clients and masturbate at least
twice a day, Jordan opens up his own penny stock brokerage firm in Long Island.
The companies he shills are almost completely worthless but Jordan has an
unbeatable sales pitch. In essence what he is selling is something way too good
to be true. Get rich quick with penny stocks. He tells his clients that they
can make money hand over fist by sitting on the couch at home doing nothing.
Give me your money and you will win the lottery essentially. Jordan drives home
this point by advertising his own lifestyle as proof that he knows how to make
you rich. Look at Jordan’s big house, his beautiful wife, his cars, his hookers
and drugs. Don’t you want to be just like him?
This is almost as important as the sales pitch because in order to
become as rich as Jordan gets, he can’t do it all by himself, he needs hundreds
of sales associates with the same unscrupulous tactics he has. He says to them:
scam the people on the bottom and you will become as rich and decadent as me on
the top. And boy does Jordan ever lavish on the temptations on his employees and
clients. Every month, they have huge parties in the office with nude marching
bands and strippers. Hookers roam the office corriders on a regular basis.
Cocaine and Quallude use is rampant. For Jordan’s bachelor party he flew 50 of
his coworkers to Vegas, hired 100 prostitutes, and trashed an entire floor of
an upscale hotel. They have an orgy on the 747 to Vegas. The entire thing cost
two million dollars. A drop in the bucket for a man who brags about being upset
because he only made 52 million dollars last year. You see he was three million
shy of a million dollars a week. He’s that kind of rich.
Do we care that people are doing this with other people’s money? For
anyone wondering why the movie is three hours long, the answers are
intertwined. The movie goes on so long because nobody stops Jordan. People
don’t care apparently, probably because we have this ‘Joe the Plumber’
mentality about this type of excess. In other words, we aren’t against it
because one day we hope to be on top doing the same thing. It’s the American
Dream we’ve seen so many times in movies this year whether it was Spring Breakers, Pain and Gain, The Great
Gatsby, or American Hustle. It is
amazing how much bad behavior Jordan Belfort gets away with because he is rich.
Sexual Assault, Public Intoxication, and Reckless Driving Under the Influence
are just a few of his crimes. At one point he idiotically pilots his 170-foot
yacht into a major storm and it sinks. A plane that comes in to rescue them
crashes and the three people inside die. Jordan happened to be violating a
court order at the time that instructed him to stay in the country. There are
no consequeces.
The performance by Leonardo Dicaprio and also by his sidekick here
Donnie Azoff, played by Jonah Hill, is arguably the best of his career. It is
notable in its sheer lack of vanity. One particular scene stands out. Jordan
and Donnie take these very old Qualuddes that unbeknownst to them take a very
long time to kick in. When they finally do Jordan is far away from home. He is
paralyzed by the force of the drugs and has to crawl out of the country club,
into his car, and get home. It is a tour de force comic scene and the Leonardo
and Jonah’s respective Oscar nominations are duly deserved.
The directing by Martin Scorsese and editing by Thelma Schoomaker is as
always especially brilliant. He uses all the tricks in his bag in this movie
and then some. In plenty of ways this is the biggest movie he has ever made.
Imagine that, at 77 years of age he is still making his best movies. Killer impressive.
Go see this movie and bring along a dark sense of humor.
