Tuesday, May 15, 2012

They Aren't Wizards

Posted by on Tue, May 15, 2012 at 11:39 AM

I hate to blockquote his entire post, but I know he won't mind, so, you know, what Atrios said:

I know all the Very Serious People accepted the narrative the Jamie Dimon was a good one, that JP Morgan was fine no really fine yes just fine of course all fine. But, you know, they weren't. They took TARP money. They went to the Fed discount window and put their mouths to the free money funnel. More than that, numerous counterparties were bailed out.

The top executives at every big bank should have been sacked at a minimum. They aren't wizards, even the "good ones" like Dimon. They're gamblers who almost destroyed the world and will likely do it again soon.

At which point they will be bailed out. Again.

It's not his main point, but it's worth repeating: "They aren't wizards." There's this myth that America is largely a meritocracy, that executives like Dimon earn hundreds of millions of dollars because they're uniquely worth it, but it's just not true. There are hundreds... thousands... perhaps millions of people who could run Chase at least as well as Dimon, if not better. But through whatever combination of timing, good fortune, chutzpah, and yes, talent, it is Dimon who managed to work his way to the top.

And Wall Street isn't the only place filled with incredibly wealthy people who have convinced themselves that they earned every penny through their own genius and hard work. The Seattle area has its fair share of self-important multi-millionaires, many of whom are no doubt very smart and have at times worked long hours, but who somewhat owe their immense fortunes to the accident of being born ten years before the following generation of Microsoft employees, or whatever stock option lottery they managed to win.

Even someone as iconic as Bill Gates: no doubt as smart and driven as he is he likely would have ended up a success no matter what career he had pursued, but would he ever have been the world's richest man had he been born five years sooner or later, or to a working class family? Probably not.

But I digress. Again, the point is that people like Dimon aren't wizards. And we'll never fix what's wrong with our economy by deferring to them as if they are.

 

Comments (18) RSS

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1
By your logic, there are millions of people who could write for Slog as well. Actually, I agree with you 100 percent on that. But, no, millions of people could not run Chase. That's just stupid. Goldy, you need to meet and talk with people like this. They are fucking smart, and they have a certain way about them that makes them successful in that environment. Most CEOs are aware that they got lucky and that many, many people could be in their shoes instead of them. Not millions, but hundreds perhaps, who have similar backgrounds and experiences that would prepare them for a big CEO job. Some CEOs are blowhard assholes that really think they are unique. Those folks are few and far between and tend to start and run their own companies.
Posted by David from Chicago on May 15, 2012 at 12:02 PM · Report this
Max Solomon 2
things will have to get much much worse for us to "fix what's wrong with our economy". finite energy resources, misallocation of trillions wealth to the MIC, spiraling health care and education costs, legislative paralysis, and the paper productivity of the FIRE (finance, insurance, & real estate) economy will plague us for decades to come.
Posted by Max Solomon on May 15, 2012 at 12:11 PM · Report this
3
@1
"They are fucking smart, and they have a certain way about them that makes them successful in that environment."

That's an interesting usage of "successful".
Weren't they bankrupting their company?
Wasn't their company only saved when the feds bailed them out?
And now they're losing billions of dollars again?
That is "successful"?
Posted by fairly.unbalanced on May 15, 2012 at 12:12 PM · Report this
Supreme Ruler Of The Universe 4

What about the people who won MegaMillions?

Given that a MegaMillionaire can exist, it pretty much makes the case that intelligence in and of itself, is not a requirement for wealth.

Posted by Supreme Ruler Of The Universe http://www.you-read-it-here-first.com on May 15, 2012 at 12:31 PM · Report this
thatsnotright 5
Financial workers love the myth that they are "the smartest guys in the room". That trope originated in the Enron debacle and really means that these people are crooked and so obsessed with money that they will do anything to make piles of it.That is not necessarily intelligence, it is greed however you parse it.
Posted by thatsnotright on May 15, 2012 at 12:31 PM · Report this
rob! 6
@2, although their value is more concrete, the medical and post-secondary-education juggernauts deserve to be mentioned in the same breath for their rapidly increasing ability to extract a lifetime's worth of earnings in a very brief time.
Posted by rob! http://www.youtube.com/watch?v=QZBdUceCL5U on May 15, 2012 at 12:36 PM · Report this
7
Amen.
Posted by tshicks on May 15, 2012 at 12:44 PM · Report this
Urgutha Forka 8
My experience with high-paid execs is that they're not any smarter or have any better business sense, they just work nonstop. Evenings. Weekends. They're ALWAYS at work. They're the kind of people who, on their deathbeds, will say "I wish I'd spent more time at the office."

To be a big time exec, you have to give up a family and a personal life. You have to WANT to be working all. the. time.

Some people can do it. Great for them. I'm not one of them.
Posted by Urgutha Forka on May 15, 2012 at 12:53 PM · Report this
Pip Hellion 9
Pursue money all your life, and you may or may not acquire it. Either way, you spent your entire life in pursuit of money. Good on 'ya.
Posted by Pip Hellion on May 15, 2012 at 1:08 PM · Report this
pfffter 10
This is very true. There was an article this morning about how/why tech CEO's are practically Luddite blowhards who usually know nothing about the product, use the product, or know what people want from a product. I don't see any reason why the same can't be true of bank CEO's. As you say, they aren't wizards.

Oh, here's that article:

http://www.buzzfeed.com/jwherrman/why-te…

"executive tunnel vision can happen in any industry"
Posted by pfffter on May 15, 2012 at 1:09 PM · Report this
11
@8 Agreed. Many are that way. Those who rise to CEO are a special breed, and they usually need more than just a good work ethic to get there. One CEO I heard give a talk said his greatest regret was focussing too much on his job and letting his marriage fail. You are right that those folks often sacrifice family, which is sad, and they often realize it too late. I am not one of them either. I'd rather ride my bike than wrestle with office politics. It's not easy what they do, however, and it's not something that many people could do well.
Posted by David from Chicago on May 15, 2012 at 1:09 PM · Report this
Will in Seattle 12
Dimon isn't even that smart, actually.

Just think of MBA Quants as being overpaid String Theorists.

Neither does anything useful.
Posted by Will in Seattle http://www.facebook.com/WillSeattle on May 15, 2012 at 1:18 PM · Report this
13
Goldy - agreed, mostly... whether it's acting, "running" (or is that "ruining") a business, or politics (or blog writing) a lot of success is some combination of luck, people manipulation, etc., but usually (though not always) it is NOT superior skills.

@1 - what you describe sounds more like people manipulation than skill/business smarts - and I define business smarts as actual business skills and not "people" skills (which is mostly getting someone else to do the work for you and you get the credit). They may also put in long hours (so do a lot of very poorly paid people, so, ho-hum on that point... We do however agree on the most important point - I'd rather be riding my bike :) - both actually as well as metaphorically - and I'm very glad I've lived my life that way
Posted by myr on May 15, 2012 at 1:41 PM · Report this
Steven Bradford 14
I'm sure I remember reading a quote by Bill Gates Jr., years ago, that goes along with the thrust of your argument. IIRC, he wrote something along the lines of, that if he'd been born 5 or 10 years earlier, he'd likely have ended up a mathematics professor. Perhaps a very successful one, or maybe in some other business, and successful enough, but not the richest guy in the world. Does anyone else remember this?
Posted by Steven Bradford http://www.seanet.com/~bradford/ on May 15, 2012 at 2:05 PM · Report this
15
@11
"Those who rise to CEO are a special breed, and they usually need more than just a good work ethic to get there."

You've slipped into "confirmation bias" there.

The first question that pops up is: Are there any of those "special breed" that do NOT make it to CEO (or equivalent)?

Or is the "special breed" just another term for "CEO"?
If you make CEO then you're a special breed.
The sole characteristic of that special breed being that they are CEO's.

Or, to misquote Scott Adams, there's a reason why statisticians do not write management books.
Posted by fairly.unbalanced on May 15, 2012 at 2:22 PM · Report this
Sir Vic 16
@1 You're right, there are hundreds of people who could do Dimon's job with more or less the same results. That could be said about a lot of high profile jobs. Financial markets are a tough game to play in and be continually successful. The "smart" part about being a big bank CEO is knowing how to rig the game. Anyone can look like a savant with a set of marked cards. Dimon's done pretty well on that score.
Posted by Sir Vic on May 15, 2012 at 2:54 PM · Report this
17
B-b-but you're implying (inconceivable that you'd out and say such a thing!) that the Most Holy Market doesn't always make the best decisions in this the most Pareto-optimised worlds.

That would imply that Something Else should come into play...it couldn't be Big Evil Gummint 'cos that never does anything right...you must mean the Church.

(I've long thought that one reason why actors tend to skew Left is because all but the stupidest _know_ that there are tens to hundreds of others who could have acted all their rĂ´les as well as or better than they---meritocracy is a joke to them.)
Posted by Gerald Fnord on May 15, 2012 at 4:49 PM · Report this
Will in Seattle 18
@16 exactly. Rig it so he makes money when he makes it, and makes money when he loses it.

Regulation: it's your Friend, not your Enemy, unless you have vast amounts of stolen or inherited wealth. And we mean Billions, not Millions.
Posted by Will in Seattle http://www.facebook.com/WillSeattle on May 15, 2012 at 6:17 PM · Report this

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