Den of Thieves

"There were several books written about Wall Street amid the insider trading scandals of the late 1980s, which started to break into the public view in late 1986. There were many different scandals erupting in different precincts of the conservative movement right around the same time: the savings and loan meltdown; the scandals involving evangelical preachers; the Iran-Contra scandal as well as the HIV-AIDS crisis, which was becoming a political crisis as well as a public health crisis. All of these things were happening simultaneously, from 1986 to 1988. But the Wall Street scandals were the bombs going off, figuratively speaking, at the true heart of Reaganism. Wall Street was the citadel of the economic vision and ideals promulgated by movement conservatism in the 1980s. Wall Street titans and traders were celebrated and became cultural heroes in a way that hadn’t occurred since the 1920s. And suddenly some of them were taking a big, big fall. “The Wall Street scandals were the bombs going off, figuratively speaking, at the true heart of Reaganism.” Den of Thieves is a very vivid portrait of people who broke what rules there were in the process of transforming American finance and the American economy and making a lot of money by doing so. The book is somewhat marred by his tendency to moralize and to have white hats and black hats. It is easy to tell this story as a simple morality tale of greed and people getting their comeuppance. But some people did take a fall and the story is a fascinating one. Also, just to be reminded of who Michael Milken and Ivan Boesky were, and who Rudolph Giuliani was, when he first became a prominent public figure — very different from the Giuliani that people know today — really takes you back. It’s a good first draft of this history. They’re probably too young. Students who are a bit older may have seen the movie Wall Street by Oliver Stone and remember the ‘greed is good’ speech the Michael Douglas character, Gordon Gekko, makes. Stone’s movie came out in the late 1980s amidst these scandals. It was produced very quickly. The speech was clearly taken from Ivan Boesky’s commencement speech at Berkeley in 1985. It is not very far removed from things that were said very seriously: it’s only satire by a few small degrees. I made very brief comparisons in my book between Thatcherism and Reaganism. I had to leave out a far more extended comparison that I could have made, which would be a very interesting study in itself. In Britain, there was a sense of an enervated spirit in British capitalism, that the labour unions had a crippling hold on economic vitality and dynamism so it was important for Thatcher to break them as she did in the miners’ strike and other instances. The economic situation in the United States was somewhat different. I don’t think there was as strong a sense of economic crisis, although there was a crisis in economic policymaking in the 1970s caused by the phenomenon of stagflation . There are a couple of levels on which you could analyze this. One is a question of where economic growth is going to come from. Another is whether the structure of corporate organization was a dynamic one or not. “The importance of self-interest as a force that would rejuvenate America was the object of true, gleeful celebration.” In terms of macroeconomics, Reagan’s economic policies didn’t work the way they were advertised in some respects, while in some ways they did. The recession of the early 1980s was brought on intentionally to wring inflation out of the economy. That worked very well, and the US economy has been a low inflation economy ever since. I think there are other global forces that have helped to ensure that, but the high interest rates worked. They also did a lot of damage and cost a lot of jobs — and helped usher in the transformation of the American economy into one that is based more on finance and services and less on manufacturing employment. The economic recovery that occurred after that was marketed and sold by conservatives in the United States as a supply side recovery spurred by Reagan’s tax cuts and renewed investor confidence. That’s really not true. The data indicate very clearly that it was actually a demand-side recovery, produced by huge deficit spending. So the irony of the Reagan recovery, as some people would call it, from late 1982 onwards, is that it was the last real Keynesian, demand-side economic recovery. Reagan was a crypto-Keynesian. As for the structure of corporate America, economic and business historians do think that the disarticulation of large multi-divisional conglomerates in the 1980s was a healthy thing for corporate America. The multi-divisional conglomerates that had been formed in the 1960s and 1970s weren’t functioning very well as firms. While the mergers and leveraged buyouts of the 1980s became a kind of lightning rod for criticism they weren’t necessarily the companies where there were the biggest number of job losses. The biggest losses of good paying manufacturing jobs often occurred in companies that were not objects of leveraged buyouts. So, I think that there is actually an interesting and unusually scholarly debate among business historians about how good or how bad the whole leveraged buyout phenomenon of the 1980s was, the merger-mania that then led to the break up of a lot of multi-divisional corporations. I think Reagan believed that by helping the rich all of society would benefit. It wasn’t just a simple or narrowly conceived partisanship for the wealthy. He didn’t think he was helping the rich loot the government Treasury, but that all of society would ultimately benefit through what his critics called “trickle-down economics.” He clearly thought that the way toward a good and prosperous society was to let the wealthy keep more of their wealth, to give them the incentive to create wealth. I also think he believed, at a moral level, that it was wrong, as he might have put it, to confiscate wealth through progressive taxation."