As most of the smart set have pointed out, a fair amount of the berating of Goldman Sachs execs on the Hill earlier today didn’t really make sense. An investment bank can’t have a strict fiduciary responsibility to everyone it interacts with, so hectoring about whose obligations to act in whose best interests gets a little bit pointless. Besides which, we’re all grownups, we all understand that the point of a business is to make money and that in any business the point of treating customers well is to develop a good reputation and drum up more business.
Which just returns to the point that, though we’re reluctant to admit it in respectable circles in the United States, it’s the money as such that’s the real scandal here. If Lloyd Blankfein were living humbling on $800,000 a year (i.e., 15-20 times the median household income) and donating the rest to charity then I think you’d have to say that what’s good for Goldman Sachs is good for the world. But obviously that’s not what’s taking place. Consequently, I think it’s not quite right to say that nobody is doing anything wrong unless they’re committing actionable fraud. Becoming obscenely wealthy in the business world and then hoarding your money is, itself, morally wrong. It’s just not a critique people are very comfortable offering because obviously even those of us who aren’t making Blankfein bucks are still living higher on the hog than we in principle could.
But it’s a mistake to let fear of hypocrisy drive us to a world in which there are no standards of ethical conduct. If you feel a bit bad about condemning the behavior of the super-rich, then the answer is to try to improve your own conduct not to avoid criticism of those who are objectively open to even more severe criticism.