In my favorite episode of “South Park,” two sleazy salesmen sell shoddy condos in the glitzy ski town of “Asspen” to the lower middle-class residents of South Park. Their pitch is intoxicatingly simple: “Try saying it. ‘I’ve got a nice little place in Asspen.’ Rolls off the tongue nicely doesn’t it?” Eventually, the residents open up their checkbooks and buy the scam.
This is exactly what happened when recruiters from Goldman Sachs showed up at Harvard in 2006. As a 20-year-old, I fell for the trick: I joined Goldman that summer as an intern. By July, I had learned many of the firm’s unspoken traditions, like how, instead of wearing Rolexes, the managing directors sported cheap digital watches with black rubber wrist straps, prominently juxtaposed against their expensive tailor-made dress shirts.
The hallmark event at Goldman that summer wasn’t a poker tournament on a lavish boat cruise followed by a debauched night of clubbing, as it had been at Amaranth, the more edgy firm where I’d worked the prior year. Rather, it was “service day” — a day that involved dressing up in a T-shirt and shorts, and then serving the community. Back in 2006, that involved planting trees in a garden in Harlem. The co-head of my group was supposed to lead the way.
When we showed up at the park in Harlem, very few of my colleagues seemed interested in . . . well, planting trees. The full-time analysts shared office gossip with the interns. The vice presidents one-upped each other with war stories about investment deals. And the head of the group was nowhere to be found.
After an hour I noticed that very little service had actually been performed. As if on cue, the co-head of the group showed up an hour late —wearing a slim-fit suit and a pair of Gucci boots . . . and, of course, a cheap digital watch. The chatter amongst the rest of the team died down, as we awaited what he had to say.
“All right, guys,” he said somberly, as though he were going to discipline the team. A moment of tension hung in the air. And then he broke the ice: “Let’s take some pictures and get out of here!” The entire group burst into laughter. Within minutes we had vacated the premises. No trees had been planted. Soon the entire group was seated comfortably at a nearby bar — pitchers of beer ready on the tables and all.
I turned to one of the younger associates sitting next to me. I quipped that if we wanted to have a “social day,” then we should’ve just called it that instead of “service day.”
He laughed and demurred: “Look, just do what the boss says.” Then he quipped back: “You ever heard of the Golden Rule?”
“Treat others like you want to be treated?” I asked.
“Wrong,” he said. “He who has the gold makes the rules.”
I called it “the Goldman Rule.” I learned something valuable that summer after all.
Over a decade later, the Goldman Rule had only grown in importance. At the World Economic Forum in Davos last year, Goldman CEO David Solomon declared that it would refuse to take companies public unless they had at least one “diverse” member on their board.
Put the “diversity” debate to one side: The bigger problem is that Goldman’s edict wasn’t about diversity at all. It was about corporate opportunism: seizing an already popular social value and prominently emblazoning it with the Goldman Sachs logo. It was like planting trees in Harlem all over again.
The timing of Goldman’s announcement was revealing. In the prior year, approximately half the open board seats at S&P 500 companies went to women. In July 2019, the last remaining all-male board in the S&P 500 appointed a woman. In other words, every single company in the S&P 500 was already abiding by Goldman’s diversity standard long before Goldman issued its own proclamation. Goldman’s announcement was an ideal way to attract praise without taking any real risk: another great risk-adjusted return for Goldman Sachs.
Goldman’s timing was also impeccable in another way. Its diversity quota proclamation stole the headlines from a much less flattering event: Goldman had just agreed to pay $5 billion in fines to governments around the world for its role in a scheme stealing billions from the Malaysian people. Goldman reportedly turned a willfully blind eye as corrupt Malaysian officials immediately turned the fund into their own private piggy bank. Ironically, some of that money literally ended up funding Martin Scorsese’s 2013 movie “The Wolf of Wall Street.”
As one Redditor on the now-infamous forum WallStreetBets observed, “They want to make sure that any IPO they bring to market has a brown or black person on the board of the company they are IPOing, but are perfectly okay with ripping off millions of Malaysians by engineering a slush fund for an oil tycoon’s jewelry collection and private jet.” Well, yes. Welcome to the woke-industrial complex.
Woke capitalism is really just crony capitalism 2.0. Here’s how it works: Big business uses progressive-friendly values to deflect attention from their own monolithic pursuit of profit and power.
Crony capitalism 1.0 was simple by comparison: Banks simply had to make campaign contributions and hire lobbyists. In return, they get favorable regulations that codify their status as gatekeepers who enjoy oligopoly status in taking companies public. Championship-level players of this game like Goldman Sachs often top it off with a flourish, by lending their executives to serve as US treasury secretaries — Steve Mnuchin under President Donald Trump, Hank Paulson under President George W. Bush, and so on. And it pays off in the end: Winners like Goldman Sachs get bailouts in tough times like 2008, while less adroit competitors like Lehman Brothers get hung out to dry by the likes of Hank Paulson. That much is straightforward.
But crony capitalism 2.0 is far trickier. Goldman’s diversity edict at Davos last year came at a time when Sens. Bernie Sanders and Elizabeth Warren, two of the biggest critics of the US government’s 2008 bailout of Goldman Sachs, were presidential front-runners. Having supplicated to business-friendly Republicans and centrist Democrats for decades, the moment had arrived for Goldman Sachs to begin placating the identity-politics-obsessed Far Left, just as that wing of the Democratic Party had begun to accrue greater political power. Their new CEO is woker than woke, and he’s a DJ on the side too. That’s how the 2020 edition of crony capitalism looks: Hank Paulson is outmoded by comparison.
Once the American public becomes “woke” to this new trend of self-interest masquerading as morality, our citizenry can see through the charade of corporate virtue-signaling. When Amazon issues a public challenge to Walmart to pay workers $15 per hour, we can simply chuckle to ourselves that Jeff Bezos is just doing what he does best: undermining his competitors when they’re most vulnerable.
Most importantly, we can return the power to implement our social values back to American democracy where it belongs, rather than to corporate chieftains who use it to make an extra buck. As a society we should allow and even embrace the corporate pursuit of financial self-interest above all. The only thing we should ask in return is this: Keep it naked, instead of dressing it up as altruism. America might just be better off in the end if Goldman Sachs executives wear their Rolexes to work, instead of preaching about diversity and pretending to plant trees.
Vivek Ramaswamy is the founder and Executive Chairman of Roivant Sciences. This essay is adapted from his book “WOKE, INC.: Inside Corporate America’s Social Justice Scam,” to be published by Hachette Book Group on Tuesday.
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