FOR THE LOVE OF MONEYBY SAM POLK

JANUARY 18, 2014

New York Times

SUMMARY

Sam Polk the person

• Columbia University• Athlete• Addictive compulsive behavior• Father (Willy Loman) defined

relationship to money• $ could solve all problems

• Sought counseling • Ended alcohol & drug addiction• but not addictive behavior

“In my last year on Wall Street my bonus was $3.6 million – and I was angry because it wasn’t big enough.”

WALL STREET

• Internship Credit Suisse First Boston• Bonds and credit default swap trade Bank of

America• Joined Hedge fund on Wall Street• Offered “$1.75 by 2” by Citibank• Late twenties

• $6000 a month flat in Manhattan• Beautiful girlfriend• Access to any restaurant or event at any

time

• During 2008 crash shorted derivatives of risky companies

“The satisfaction wasn’t just about the money. It was about the power. … it was someone else’s job to make me happy”

WHY IS DESIRE FOR $1 BILLION BAD?

Utilitarian

• Desire is not behavior. Without behavior there are no consequences. Without consequences there are no stakeholders

• Hedonism: Pleasure and Pain of being rich

Deontological: WD Ross 7 virtues

1. fidelity 2. reparation 3. gratitude4. justice 5. beneficence 6. self-improvement 7. non-injury of others

Virtue-Based

• Does the desire to be rich conflict with the goal to be a “moral actor”• When does desire become excessive?

ETHICAL STANDARD OF COMMUNITY:

WEALTH ADDICTION“I don’t have the brain capacity to think about the system as a whole.

All I’m concerned with is how this affects our company.”- Polk’s boss

Polk recognizes addictive behavior is ethical standard of his industry

• Trading floor feels like neighborhood in “The Wire”• Traders despise anything or anyone that threatens bonuses.• Lobby for tax loop holes. • Terrified of forgoing future bonuses

How doesn’t the drug addict analogy hold up?

• When Polk spends his money it isn’t to support an industry that perpetuates addiction, violence and lawlessness.

How does the drug addict analogy hold up?

• Fellow trader tells of feeling of being trapped

Taking Action Not Taking ActionStakeholders Harm Benefit Harm BenefitProfessional Stakeholders

Financial institutions: Pension funds, 401K investors, Commercial banks, Investment banks

Desire to make $ may lead to unethical behavior and/or assumption of risks that damages value of investments.

Greater assumption of risks pays off and increases wealth of pension fund.

Lack of incentive to perform may damage returns.

Avoidance of job burn out, resulting in greater career longevity and experience which benefits the fund mgmt and performance.

Stakeholders in beneficiaries of wealth

Politicians

Concentration of wealth narrows scope of fund raising efforts. Increasing political influence of small group of people only interested in personal interests.

Can raise more money faster by appealing to small group. More efficient fund raising activities provides more time for governance activities.

Forces politician to raise money from more donations of smaller amounts. Less efficient.

Increases political voice of less wealthy / total available market and accountability to greater number of constituents / customers.

Providers of luxury goods and services

High concerntration increases risk to revenue in volatile markets

Efficient demand generation from small high income market.

Business forced to revise business model to reach new markets resulting in new, potentially more efficient, competitors.

Forces businesses to revise business model to reach larger total available market, reducing market availability.

Personal Stakeholders:

Polk's girl friendLose respect for his ethics. Never see boyfriend because he works all the time.

Can purchase luxury items on his gold card. Its about quality not quantity of time.

Cannot provide for desired standard of living. I had more time to spend with him, it turned out I didn't like him anyway.

Respect for boyfriend's ethics serves as foundation of future relationship. Spend more time with him and it turns out I do really like him and who he want's to be.

Societal Stakeholders

Government tax receipts

Undue political influence results in loop holes, capital gains tax rates, increasing tax burden on middle class and reduced investment on education and infrastructure resulting in degradation of national competitiveness in global economy.

Modestly higher taxes reciepts result in investments and reduce deficit.

Potentially reduces tax receipts and increasing pressures on deficits and reducing investments in edu and infrastructure.

To maintain tax receipts and fight deficits, government must remove corporate loop holes increasing wealth equity.

Commercial Bank Depositors

Increases risk of investment strategy and amount of leverage resulting in financial volatility / crisis that reduces value of commercial bank savings either directly or through monetary devaluation.

Successful investments support a healthy debt to equity ratio protecting depositor investments and availability of credit.

Drop in performance may make bank vulnerable to more motivated competitors, willing to assume greater risk.

Less motivation for risk results in more secure investments, reliable returns and safer deposits.

IS CONSCIENCE A GOOD MEASURE OF

ETHICAL BEHAVIOR?

YES

Virtuous Life is the happy fulfilled life.

If you conscience is troubling you, it may indicate a failure of virtuous behavior.

NO

Conscience is fallible basis of perception.

Individual could be replacing addiction to power with addiction to self loathing or serving need for acceptance.

“I DON’T LIKE WHO I’VE BECOME.”

Polk’s conscience: Guilt-city

• No social good from trading• “Wealth addicts are responsible for the

widening rift that is tearing apart our once great country.”

• McDonald’s CEO makes $14M and publishes brochures on how to survive low wages.

• Polk sees himself as a bad moral actor.

Is being rich inherently unethical?

Is guilt a good measure of ethical behavior?

INCOME

INEQUALITY

DOES OUR SOCIETY SUPPORT

WEALTH ADDICTION?“I'm supposed to feel pleased at the author's epiphany.

But I don't. I feel angry.”

“Drugs are not the norm, and wealth addiction is not the norm either.” - trader

I think it would be a mistake for people to get the impression that only the very rich or the Wall Street types are wealth

addicts. These days it seems almost EVERYONE is obsessed with money.

“This explains our government policy, far more than any of the twisted reasoning offered in excuses.”

“Another exercise in self-excuse with a philanthropic coda.”