Is America an economic hothouse for growing psychopaths?
The past year has witnessed the rise of a kind of cottage industry of speculative blogging and associated online chatter about the idea that America’s ruling economic and political institutions — which have now, let us note, collapsed together to become one and the same — are ideologically and bureaucratically structured to attract and promote psychopaths. The general idea is that if you examine the lists of personality and psychological traits that are formally used for diagnosing someone as psychopathic, you’ll find that they line up astonishingly well with the very same characteristics that are required for, and amenable to, success and upward mobility in corporate America.
I’ve listened to the unfolding conversation with a kind of detached interest, and have found the basic argument to be quite compelling even as I’ve observed that it is often offered by people with entrenched partisan ideological leanings. But now, in a development that’s right in line with the 21st century’s society-wide trend of fringe ideas converging on the mainstream, no less a bastion of mainstream journalistic respectability than Time magazine has taken up the cause.
The incitement was the rather astonishing take-down of Goldman Sachs that was penned by one of the company’s outgoing executive directors, Greg Smith, and published in The New York Times on March 14. Like so many other people, I read it on the day it was published and found myself jolted by passages like this:
Today is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.
…It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail…These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen.
– Greg Smith, “Why I Am Leaving Goldman Sachs,” The New York Times, March 14, 2012
By that evening, the Times‘ Dealbook reported on the piece’s rather earthshaking impact: “The Op-Ed landed ‘like a bomb,’ inside Goldman, said one executive who spoke on the condition of anonymity. The article reignited a debate on the Internet and on cable television over whether Wall Street was corrupted by greed and excess. By noon, television crews crowded outside Goldman’s headquarters in Lower Manhattan…[T]he ripple effects were felt beyond Wall Street. Shares of Goldman fell 3.4 percent. And media coverage was worldwide. ‘Goldman Boss: We Call Our Clients Muppets,’ screamed the front page of The London Evening Standard” (“Public Rebuke of Culture Opens Goldman Debate“).
The next day, Time magazine published the piece that drew all of these strands together: “Greg Smith’s Resignation: Are Wall Street Traders Psychopathic?” Here’s the condensed version, which leaves out considerable nuance and extra information that I urge you to click through and read:
To the average 99-percenter, [Smith's accusation] hardly seems like a revelation. Unethical behavior and Wall Street go hand in hand — especially at the top, right? Goldman supporters might say this perspective reflects sheer jealousy and resentment; however, a growing body of research suggests that there’s more to it than that. One 2010 study looked directly at the prevalence of psychopathic traits in a sample of 203 executives at seven companies who had been chosen for their leadership potential to participate in additional management training…Just over 5% of the trainees in the study met the full criteria for psychopathy — a rate five times higher than that seen in general public. Many of those who qualified were already in high-level senior management positions. So, the snakes are indeed overrepresented at the top.
Psychopathic traits include being highly manipulative and callous, lacking empathy and remorse, having little concern about consequences, being willing to use deceit or threats to get what you want and caring little for others except in terms of what you can get from them. Although the stereotype of a psychopath is a serial killer, they are actually more likely to be con artists or shady businesspeople. While no available research includes only financial firms, it’s not implausible to think that those whose primary values are materialistic and power-driven would be especially attracted to the business that currently fuels many of America’s biggest fortunes. Indeed, a psychologist whose practice is focused on Wall Street recently told CFA magazine that he thinks that, at minimum, 10% of workers in financial services are outright psychopaths
…Like other personality traits and disorders, however, psychopathy lies on a spectrum. As with autism and schizophrenia, there are far more people who have related traits that do not cause disability than there are those with the full conditions themselves. In fact, in the 2010 study of managers, 4% of executives were found to score abnormally high on psychopathic traits, but not over the cutoff point that defines psychopathy…[According to Dr. Ronald Schouten,] “A great deal of damage can be done by individuals who fall in between folks who are ‘normal’ and true psychopaths. These are individuals who would never be diagnosed as a psychopath, but whose behavior to varying degrees can be just as deceptive, dangerous, and remorseless as that of a full-blown psychopath.”
…All of this suggests that Wall Street offers a perfect storm of an environment that is not only likely to attract psychopaths and to promote them to the top, but also to encourage them to behave in antisocial ways.
The piece concludes with a point that sends the echoes of this trend rippling out into American society at large: “The thing about psychopathic values is that they’re contagious. We pick up the values of our leaders and often mirror their behavior.”
I was particularly struck by this because I myself have personally witnessed the workings of what we can now safely term “the Goldman Sachs effect”: the utter selling out of financial firms to what can be described as psychopathic behavior motivated by pure greed. It was just over a decade ago, right at the end of Clinton Age and spilling into the early years of the Bush Age, and I was working at a mortgage brokerage in Springfield, Missouri — a circumstance that stands at sharp variance with everything else in my personal orientation and professional history. The internal culture of the company was exactly like the current culture of Goldman Sachs as described by Smith. (I’ll insert here that I’m inclined to believe the culture of GS back then was much the same as it is today. I find it difficult to believe Smith’s claim that the company’s current culture of corruption represents a dramatic departure from a former culture of virtue, especially in light of the brilliant investigative journalism conducted over the past few years by the likes of, for example, Matt Taibbi, who has laid out Goldman Sachs’ century-plus history of epic greed and political-cultural manipulation in great detail.) Although the company I worked for was small and independent, as contrasted with the galactic vampire squid nature of GS, it still inhabited the same moral universe. When Smith describes the personae and motivations of today’s GS executives and employees, he may as well be describing most of the people I worked with at that little company. The majority had come to the mortgage business by way of the car business. They saw mortgages as just one more product to sell, and abandoned their respective auto dealerships when they saw they could make more money selling mortgages thanks to newly lowered interest rates.
The whole point was to convince people to borrow as much money as possible on their homes, since this earned a bigger commission for the loan officer. Smith said he was sickened by hearing junior analysts at Goldman Sachs talk about “ripping eyeballs out.” At my company the equivalent term was “ripping lips off.” Whenever somebody managed to rake in a ton of dough from some hapless customer who had been convinced to accept a far higher interest rate and/or pay far more in fees than he or she needed to pay, the loan officer would gleefully announce to his coworkers, “I ripped their lips off!” It was doubly wonderful if this could be followed by the announcement, “And they love me.” In other words, the customer had been so thoroughly duped that he or she thought of the loan officer as a friend, as someone likable and trustworthy, and the loan officer was reveling in the fact that he had pulled off this feat of public relations while managing to milk unnecessarily huge amounts of money from the person. I saw this for three years, and struggled to reconcile the oft-repeated claim that “This is just how things are” with my gut-level recognition that the whole thing was deeply wrong, even though it was totally legal.
In the middle of my tenure there, in the year 2000, the dot-com bubble burst, and the American financial community was sent scrambling to find a new point of balance. Soon the word came down the pipeline, filtering all the way down from the highest levels of the system — that is, from Fannie Mae and Freddie Mac (or at least that’s what I was told) — that a whole new way of doing mortgages was in the offing, and that the little-used “no-doc” loans, which we were rarely able to convince lenders to take, would become the standard product. They were called “no-doc” because they required little or no documentation from borrowers regarding their income, employment status, and assets. These were, of course, the same mortgages that we all now remember as the infamous NINJA loans (no income, no job, no assets), which fueled the mortgage-backed security bubble that exploded in 2008 (pricked by rising oil prices) and took down the entire economy with it. I’m still amazed to remember that I was right there for the start of the whole thing.
So, was I working alongside psychopaths? Was I myself acting as one? More broadly, have we become in some ways an entire nation of psychopaths? Is this a possible interpretation, partly stretched but still built on a nugget-sized cornerstone of truth, of what the collective American psyche and the representative American citizen have become in an age of hyper-financialization, hyper-consumerism, hyper-greed, hyper-materialism, and hyper-marketing? In his latest book, Why America Failed, Morris Berman argues persuasively, backed by much documentation and subtle analysis, that the triumph of the culture of hype and hustling in America is actually a fulfillment of the basic values of the people who originally migrated to the New World seeking a free arena for the pursuit of material gain and ended up founding a nation to accomplish it. Have we now reached a kind of end-game by constructing a massive system, half-intentional and half-ad hoc, spanning the continuum from Wall Street to Main Street, that is inherently and explicitly built to reward psychopathic tendencies and behavior?
“The thing about psychopathic values,” says Time, “is that they’re contagious. We pick up the values of our leaders and often mirror their behavior.” But I don’t think a change in leadership can change things now. We’re far too gone en masse for that, and so I think we’re each thrown back upon our own selves and forced to confront the monster that may be staring at us in the mirror.