Costa kicks Rudd

In an article titled “Greenspan not Gekko cooked up this stew” in this mornings Australian Michael Costa writes:-

Rudd’s comments remind me of the ideological nonsense I used to hear at ACTU meetings from left-wing trade union officials in the ’90s. Bob Hawke and Paul Keating were repeatedly attacked by the political Left for their neo-liberal policies of global integration and deregulation. Doug Cameron, now a Labor senator, gave a speech to the Tasmanian Fabian Society in 2005 in which he attacked, among others, the Labor Right for being neo-liberal. It’s an example of the ideological typecasting the political Left habitually uses. Anything that doesn’t conform to their world view of greater government intervention is described as neo-liberal. This epithet is a favourite of the anti-globalisation crowd. Indeed, there is nothing more old Labor than protectionism and industry subsidies.

Much of Rudd’s analysis is wrong. Historians of finance have concluded that the 1987 stockmarket collapse was complex and the result of a combination of factors, including computer trading, the failure of stock and index option markets to co-ordinate, overvaluation of stocks and short-term liquidity problems. The collapse was short-lived and the market recovered quickly. The savings and loans crisis was a uniquely US experience. The causes were complex and included the unstable monetary conditions of the ’70s and early ’80s and a failure of government regulation.

I suspect that Michael Costa is not the only ALP insider that wishes Kevin Rudd would pull his head in.

Gordon Gekko is not even a real person. However if Kevin Rudd wants to deal with fictional characters then lets take a look.

The bit that so upsets the moral sensibilities of the likes of Kevin Rudd is no doubt this part of Gordon Gekkos famous speech:-

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.

However read the full Gekko speech and it is pretty clear that it is essentially a criticism of executive salaries that are not linked to performance. It’s a speech about management accountability.

You own the company. That’s right — you, the stockholder.

And you are all being royally screwed over by these, these bureaucrats, with their steak lunches, their hunting and fishing trips, their corporate jets and golden parachutes.

Check out the full speech from the movie:-

http://www.americanrhetoric.com/MovieSpeeches/moviespeechwallstreet.html

28 thoughts on “Costa kicks Rudd

  1. It was one of Hollywood’s finest ever speeches..up there with Jack Nicholson’s ‘You Cant Handle the Truth’ speech to a bed-wetting Tom Cruise.

    Kevin Rudd is coming across more and more as a total economic ignorant. I dont think he has the first clue how business operates.

  2. Like John Howard our current PM is good at a technique called pace and lead. However there is a difference between being good at getting people to follow you and being a good leader. The former is necessary but not sufficient for the latter.

  3. Wall St was a great movie but I always saw Gekko as the persecuted hero which is not what Stone intended.

  4. Yes, I think I mentioned in another thread that I first watched that movie in high-school (in Commerce class, I believe). You got the impression you were supposed to disagree with what he said, but I was inspired even at that age. It was a new idea for me, at the time, that greed was could be a positive force.

    Another good Hollywood speech was that of Larry the Liquidator (Danny DeVito, Other People’s Money). Look for it on youtube if you haven’t seen it.

  5. When I saw ‘Wall St.’ I thought that the greed is good speech was probably inspired by a liberal lefties perception of ‘The Virtue of Selfishness’ which I once waded through. While I was inclined to agree with Rand I don’t tend to read her, I would sooner hand bog spillage at the bottom of a shaft.

    I agree with you, Gordon wasn’t meant to be likable, but I couldn’t really work out why he was supposed to be a villain.

    I note that Rudd is now going to ‘keep an eye’ on the financial sector, so look out for financial watch, to go with fuel watch and all the others.

  6. I think I like Costa. He’s a born again economic liberal as well as a global warming sceptic. I hope he rises again in public life.

    Gekko’s speech was always on the money. Greed is a subjective emotion, not a rational description. One man’s greed is another man’s ambition. But the bit about stockholders getting screwed was quite accurate. It’s been a concern to me for quite a while. I’ve sold out of a few companies where I discovered the execs were being paid heaps despite the share price or dividends struggled. I’d like others to do the same.

  7. Rudd is starting to worry me. Mandatory Internet censorship, anti-capitalist rhetoric worthy of Chavez, and now sticking his hands in our super.

    Fiscal conservative my ass.

  8. fleeced

    i also found it inspiring. it wasnt really a speech about how how great greed is, but more about standing up for shareholder rights and making the point that MegaCorp managers are not the same as MegaCorp owners. It’s what Michael Milken had been banging on about for years.

  9. Personally I think Rudd isn’t just wrong. I suspect he’s being deliberately dishonest.
    I suppose he’s seen people take this line before and therefore thinks he can simply resort to strawman arguments while evading reality.
    As prime minister, you should clearly take your responsibilities and job seriously and not just play political games.

    The greed argument is total BS of course.
    It’s selflessness – the opposite of self interest or greed – that got the world into this predicament.
    The CRA regulations were obviously based on a desire to be selfless and encourage lenders to “help out” the needy. Was it selfishness which led lenders to give mortgages to people who didn’t qualify for them under normal standards? (Unfortunately I suspect bankers believe the crap the media and politicians preach to them).
    Last Monday when Paulson ordered the leaders of the 9 largest banks in the country to allow themselves to be taken over by the government, not one of them
    had the selfishness or greed to stand up and say “NO”.

    There’s no greed at work anywhere from anyone, and subsidies, regulations and implicit guarantees made sure of that – it’s greed and self interest that is lacking.

    It’s also obvious that most people don’t know what “capitalism” actually means. Therefore it’s an easy target for politicians to talk of “extreme capitalism” even though such a thing has never existed in the entire 20th century.

    Some of you may be interested in this objectivist friendly website: http://www.repealthebailout.net/
    It’s a US based website but there are some good links to articles.

    Incidentally, if we’re talking great hollywood speeches, my favourite is probably general Patton in the movie Patton.

  10. Tim, there was greed involved in the CRA driven loans, the greed of politicians to get votes by forcing A to do something against A’s interest for the benefit of B. Everyone is self-interested.

  11. Here is also a great speech, from the movie “Home Town Story” (1951) (4:06m)

    Re: fiscal conservative.

    Isn’t a conservative someone who follows the status quo? Since Keynesianism is the economic status quo (pump-priming, automatic stabilisers, protectionism, etc.) then Rudd is telling the truth, he IS a fiscal conservative. If he applied free-market economics then he would be an economic/fiscal radical.

  12. Rudd also uses the words “fiscal conservative” to mean “big surpluses, just in case something goes wrong”. To him conservatism is about risk aversion.

  13. Pedant? Yeah, that’s me alright.

    BTW, what do people think of the ‘economic security’ package? Much is being made of the fact it represents 1% of GDP.

    Now, the US Govt did something similar earlier this year with a package also worth around 1% of GDP. It didn’t work, so why should this one?

    The only substantive difference is that the US stimulus package increased their deficit whereas the Aust package will come out of the surplus. Does that matter?

  14. Fleeced,
    It’s not just the speech from ‘Other People’s Money’, it’s the whole film that should be seen. Vignettes thoughout the film highlighting Garfield’s “greed” which in effect highlight the furtherance of an efficient ecomomy.

    ED, Thanks for that clip from the old black and white. Donald Crisp played the part well. I’ll now lookout for the movie to see in full.

  15. You have to be kidding if you think greed didn’t play a part in creating this crisis. To say it was selflessness and bankers believing politicians that got the world into this predicament is the most naive take on it I’ve heard.

    It was the originate and distribute model that made the whole thing possible. The incredible fees that the brokers, rating agencies and bankers were making drove the excesses, and investors’ desire for a couple of hundred basis points additional return over treasuries.

  16. DavidLeyonhjelm – it would actually be better if shareholders, instead of selling out, became more active in their companies to try to make the executives more accountable – refer to Benjamin Graham, Warren Buffett and Charlie Munger, I’m thinking in particular of The Intelligent Investor, there’s a section on this.

  17. Me – the problem with blaming greed is that greed has been with us since the dawn of time. Why was greed a problem on this occasion and less so on other occasions? Did the devil suddenly go on a temptation drive or did somebody simply leave the gate open.

    To use an analogy your assertion that greed was the cause is about as useful as saying that the World Trade Centre in New York fell down on 11th of September 2001 due to gravity. Sure gravity played a major part but most buildings endure gravity that day without falling down so perhaps there were other more decisive factors. Maybe the airplane did it.

    A lot of commentators that can’t bring themselves to blame greed instead blame irrationality. Which in analysis terms is just about as useless.

  18. Greed cuts both ways, if lenders were greedy, weren’t borrowers and speculators also greedy?

    Also, few people ask the obvious question…where did all that money come from?

  19. I didn’t realise that the economist Anna Schwartz is still alive, she is 92 years old.

    Who is she? She, along with Milton Friedman, is the co-author of the book “A Monetary History of the United States” (1963). This is the book that lifted the lid on how the Federal Reserve contributed to the Great Depression.

    “Federal Reserve Chairman Ben Bernanke has called the 888-page “Monetary History” “the leading and most persuasive explanation of the worst economic disaster in American history.” Ms. Schwartz thinks that our central bankers and our Treasury Department are getting it wrong again.

    Read the rest here:
    http://online.wsj.com/article/SB122428279231046053.html

  20. It was a good piece. She sure is a testament to the breain preserving benefits of staying at work. and think of the pension savings that could be spent on a bailout.

  21. Terje – I don’t agree with Rudd, he’s an imbicile, and I didn’t say greed was the cause, I just said it played a part. But comments 11 and 12 are a couple of the most naive things I’ve read and betray a lack of understanding of what actually happened. I’ve worked on a few of these deals after they’ve turned bad. I have seen bankers’ emotions in the board room when they’ve lost billions of dollars. I can tell you, they’re not too concerned about the borrowers’ situation. If capitalism’s supporters are going to rely on the kinds of arguments made in comments 11 and 12, God help us in the coming tide of support for pervasive regulation.

    Mark – Wall Street is one of my favorite movies and I agree with the greed is good speech. I was simply reiterating the point made by Bejamin Graham that, to an extent, simply selling out undermines our capitalist society.

  22. Pingback: Greed, for want of a better word … « Thoughts on Freedom

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