Rajat Gupta has hogged headlines over the past twenty odd years – he has championed that art. While his educational background without doubt has been exemplary, his consulting advisory was not necessarily so. McKinsey & Co.’s way of focus on core competency – and divesting from diversification strategies – necessarily has been one of the most debatable strategies that he represented during his tenure at the firm. Actually, it is one of those strategies that have given consultants the reputation of being people who take your watch and tell you the time; there is no strategy in this strategy. McKinsey’s consultants, of course, have championed such strategies and theories which are arguably of no great significance or research. I’m reminded of the book In Search of Excellence by Tom Peters and Robert Waterman – two McKinsey consultants – written on the basis of research that Tom Peters himself later admitted was concocted. Rajat’s stint post McKinsey has been clearly far more controversial due to the more obvious frauds. And now that he has been found guilty of insider trading, the Indian media in particular is hell-bent on portraying it as an example of a perfect ‘American Dream’ gone sour. The question is, is that so?
The key reasons behind the Rajat Gupta saga are endless greed and an endless chase for more – causes championed by the father of capitalism Adam Smith and post-Smith wannabe champions of capitalism’s cause like Ayn Rand and the likes; of courses, causes made famous much later by the character of Gordon Gekko in the movie Wall Street with his powerful line “Greed is good”. As long back as one looks, the causes of all American, as well as capitalism-related ills have been this endless greed and craving for more. In the 1630s, there was the first recorded case of greed related capitalist madness in the form of Tulipomania, when the Dutch thought that the whole world would be so impressed by their tulips that there would be an endless demand for tulips. At one point of time, a tulip bulb of no apparent worth could be exchanged for a “new carriage, two grey horses and a complete harness”, that is, $100,000 in terms of the contemporary value of money. Then was the 1849 ‘California Gold Rush’ which did develop California but killed more than a hundred thousand native Indians inhumanly. Obviously, people ended up losing money in the mad rush. Then there was the great Florida real estate boom in the 1920s when thousands were left homeless due to the mad rush for buying real estate in places which were simply not habitable and the subsequent asset crash. This was followed by the Great Depression of 1929. And yes, our generation saw the dot com bust and the massive recession of 2008. Capitalism has been full of such desperate situations because the ‘great dream’ of becoming rich overnight is always hanging like a carrot in front of us. But the reality is that only some people might make it while the majority will suffer and the bust is always round the corner.
If, as a state, greed has represented American capitalism and the basis of the Great American Dream, then individual and corporate cases are in no less abundance. Americans lead by miles in corporate and white collar crimes. From the infamous Maddof Ponzy scheme to doctors jabbing needles repeatedly in patients in collusion with insurance companies to make more money, to tobacco companies hiding and manipulating research that proves tobacco’s carcinogenicity and addictiveness and making billions, to religious frauds swindling millions off people, to cyberspace frauds polishing off money from people’s credit cards, to the case of Richard Scrushy – once one of the highest paid CEOs in America till his Wall Street scam did him in – to fake financial gurus to Enron to of course one of the biggest insider trading scams, that of Rajaratnam of Galleon Group where Rajat Gupta also got involved, unable to manage his greed for more despite having everything that one could possibly dream of.
Greed has been so overpowering a factor in the American Dream saga that the ratio of average CEO compensation to average worker compensation today stands at more than 300:1. In the last couple of years, while companies have been making huge profits again, there is still no sign of taking back into employment the millions fired during recession. In fact, greed has a history of trickling down from the top – from Ronald Reagan, whose era saw the Iran-Contra affair as well as the Keating Five corruption case (where more than 700 financial institutions filed for bankruptcy leading to one of the biggest scandals in US history) to the Bush oil-era and other war related business dealing scams. For the sake of oil, the American government has helped companies enter African nations in collision with bloody dictators of those countries; and the US government has also on multiple occasions fought unnecessary wars where the main aim was capturing oil lines. The saga of greed, American growth and imperialism has been as dirty as it can get.
Though Goldman Sachs is feeling the pinch of having to bear the burden of Rajat Gupta’s 30 million dollars legal fees bill, it has no less scams to its credit. From helping the Greek government fraudulently hide its national debt through its credit default swaps, to underwriting California bonds (thus earning $25 million) in 2008, Goldman has been a part of as much dirt. With one out of four American jobs today paying less than poverty line incomes and about 13% people living below the poverty line (a major proportion of them blacks), inequality, exploitation and greed have never really ceased to be the backbone of the American Dream. Digressing a little, the fact is that it’s not greed that makes an economy or a form of society better than the other. While Americans have played a leading role in science and innovation, there are other nations which have also been able to take lead in innovation without greed being the centre of focus, Japan being the best example with the erstwhile USSR and China not really lagging far behind. It is an environment that supports human creativity and innovation that makes a system grow and this surely can be without greed at its centre.
Coming back to my contention, I should like to conclude by saying that one can arguably claim that this end of Rajat Gupta is as much a symbol of the Great American Dream as the story of several successes are, for the American Dream is about making more, and chasing more. Such a dream is always intertwined with cases of crimes – be they white collar, blue collar or the war related green collar ones.
- 21 June 2012 |
- Dr. Arindam On America