Anomie at the Top

Goldman Sachs short-sold clients, Morgan Stanley covered up ginormous losses, Barclays toyed with the LIBOR rate, HSBC aided money-laundering, and Wegelin helped evade tax. Peter Doyle of the IMF has since pulled a Greg Smith; the Fund now has its own whistle-blowing exit. There is a lot to infer here about global finance. Hopefully, experts and leaders alike will put their heads together to react to the big picture. There is, though, a bigger picture.

Door Detail at the Bank of England / Photo: Paul (HOWZEY), via Flickr under a Creative Commons License

Ever since the unprecedented oil spill in the Gulf of Mexico directly hurt British pensioners, we have known that as with finance, the management of our environment, the other global common, is subject to the same kind and degree of failures. That climate change is not the only pathway of global environmental harm and the harm may not necessarily be in the supra long term or even necessarily environmental. News and information is another global common. The top leadership there is not doing much better either.

Why are we failing to check or even detect critical failures in vast networked organisations? How can they happen when they need an organisation-wide support to be hushed-up?

The answer may lie in advice that Neil Barofsky received, before commencing his job of policing the TARP bailout. It may seem a paradoxical connect to a contemporary discourse on work-life balance. David Brooks, Umair Haque, Anand Giridharadas and more recently, Anne-Marie Slaughter, have been singing of this in various tunes: the idea has gained ground that we face a choice between living for our careers or defining what else we live for and balancing that with our work. But the career-driven societies of the day present other more direct trade-offs at work itself. Mr Barofsky was told, the New York Times reports, not to be “too aggressive” and risk damaging his future career. In that subtle menace lurks the devil.

The recent spate of revelations about mischief of the highest order across global financial institutions on both sides of the Atlantic, at a multinational oil company and global news outlets makes one wonder. As societies evolve, get rich and tidy up, as institutions of governance improve, how could managers through the ranks be apparently devoid of morals? A few rotten eggs rising to the top is easily explained. But how can an entire organisation conspire to cover something up?

It would appear that the advice that Mr Barofsky received has widespread adherence anyway. Simple, honest people go along with it, lest they jeopardised their carefully built careers. Every little honest achievement of their past, earned with decades of consistent hard work and countless daily sacrifices big and small, leads them to that university and onwards to that coveted job, even if still far from the top, at that big bank. Or at that intergovernmental organisation. The way success is pegged, these good hard-working people fear for a single bad word in the progress report, one less-than-stellar recommendation from the top.

No surprises then that Greg Smith so famously spoke out only when leaving Goldman Sachs, and Peter Doyle, when leaving the IMF. We never seem to hear from current incumbents in-charge who discovered in the course of duty how bad things were, before they are in the dock. Mr Barofsky also wrote an Op-Ed on his last day.

The consequence of a university-branded career-driven society is not just that a vast majority of people lose sight of what used to make people happy until the previous century. Most people are also readier, once they deem themselves successful, to compromise on the values that for the most part earned them their early successes. That is faulty design logic at the least.

It is now common enough to signal shortcomings greater than of the individual. Universities like to take credit for spectacular successes. Let us start by shaming them for colossal failures. For every list of illustrious CEOs to have graduated from a school, let us also publish lists of alumni summoned to a parliament or a court to explain dubious oversight or criminal misconduct. Let us publish the costs of damage to contrast against figures that signal success for the benefit of prospective students and future managers.