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Home » Opinion » Book review
America just doesn't get the idea of 'enough'
By Wang Yong |
February 14, 2009, Saturday
|
Print Edition
Print Edition
AMERICAN author and investment guru John C. Bogle sounds like a lone ranger as he pricks the conscience of his own economic elite in his new book, "Enough: True Measures of Money, Business, and Life."
"Today, if fund managers can claim to be wizards at anything, it is in extracting money from investors," he writes.
After denouncing the American financial system -- not just the mutual fund sector in which he is an element -- as a value destroyer instead of a value creator, he calls for a return to America's 18th century values, reflected in such personalities as Benjamin Franklin.
As an insider, Bogle writes convincingly with facts and figures about the happy conspiracy on Wall Street to rob investors and line the pockets of a handful of greedy managers.
As he observes in the book, the scandalous compensation given to Citigroup CEO Charles Prince (US$138 million), Merrill Lynch CEO Stanley O'Neal (US$320 million) and Bear Stearns CEO James E. Cayne (US$232 million) rewarded their failures.
To Bogle, the American financial system encourages self-dealing and self-serving practices.
The book is a pleasure to read, as is his previous book, "The Battle for the Soul of Capitalism" (2005). His rhetorical phrases backed by hard facts in both books lay bare the greed of Wall Street in its extreme.
In "The Battle of the Soul of Capitalism," Bogle laments America's slide from "owners' capitalism" - executives manage corporations for the benefit of shareholders, to "managers' capitalism" - executives manage corporations for their own benefit.
In a way, his 2005 book provides more details than "Enough" about the systemic failure - how the rich rob the poor in a perverted corporate system.
For example, Bogle points out in the 2005 book that the late 20th century saw the rise of "managers' capitalism." Now the richest 1 percent of Americans own 40 percent of the country's wealth - the greatest share since the "Robber Baron" era of the late 1800s.
As for the mutual fund industry between 1950 and 2004, he says: "...equity fund assets grew 1,600-fold ... from US$2.5 billion to US$4 trillion, (but) expenses rose at an even faster 2,400-fold rate, from US$15 million to US$37.1 billion."
Where did those "expenses" go? Largely into managers' own pockets.
"We have come perilously close to accepting a system of dictatorship in corporate America, a system in which the power of the CEO seems virtually unfettered," Bogle observes.
If the 2005 book ponders more on the systemic failure of corporate America, "Enough" focuses more on morality, although two books cover both.
"On balance, the financial system subtracts value from our society," he says in "Enough." "For a critical element of our society, including many of the wealthiest and most powerful among us, there seems to be no limits today on what enough entails."
He also says: "We focus too much on things and not enough on the intangibles that make things worthwhile; too much on success (a word I've never liked) and not enough on character, without which success is meaningless."
This is where Benjamin Franklin comes into the picture. Franklin listed 13 virtues when he was 20 that he vowed to cultivate throughout his life.
Those virtues include "temperance" (eat not to dullness), "frugality" (make no expense but to do good to others or yourself), "sincerity" (use no hurtful deceit), and "humility" (imitate Jesus and Socrates). Whether Bogle is truly like Franklin remains to be seen, but at least he has been trying to do well while doing good.
His own company, Vanguard Mutual Fund Group, is one of the biggest fund companies in the world. But the Vanguard management company earns a zero net income, as it delivers income to its shareholders, not its managers.
"Success ... can be measured not in what we attain for ourselves, but in what we contribute to our society," he says.
It's unlikely that Wall Street, still drunk on the misery of the vast poor, will heed Bogle's call to character and virtue any time soon.
But the beauty of Bogle's latest book, as with his earlier ones, is something reflected in his own life narrative: Virtue can make a difference.
"Today, if fund managers can claim to be wizards at anything, it is in extracting money from investors," he writes.
After denouncing the American financial system -- not just the mutual fund sector in which he is an element -- as a value destroyer instead of a value creator, he calls for a return to America's 18th century values, reflected in such personalities as Benjamin Franklin.
As an insider, Bogle writes convincingly with facts and figures about the happy conspiracy on Wall Street to rob investors and line the pockets of a handful of greedy managers.
As he observes in the book, the scandalous compensation given to Citigroup CEO Charles Prince (US$138 million), Merrill Lynch CEO Stanley O'Neal (US$320 million) and Bear Stearns CEO James E. Cayne (US$232 million) rewarded their failures.
To Bogle, the American financial system encourages self-dealing and self-serving practices.
The book is a pleasure to read, as is his previous book, "The Battle for the Soul of Capitalism" (2005). His rhetorical phrases backed by hard facts in both books lay bare the greed of Wall Street in its extreme.
In "The Battle of the Soul of Capitalism," Bogle laments America's slide from "owners' capitalism" - executives manage corporations for the benefit of shareholders, to "managers' capitalism" - executives manage corporations for their own benefit.
In a way, his 2005 book provides more details than "Enough" about the systemic failure - how the rich rob the poor in a perverted corporate system.
For example, Bogle points out in the 2005 book that the late 20th century saw the rise of "managers' capitalism." Now the richest 1 percent of Americans own 40 percent of the country's wealth - the greatest share since the "Robber Baron" era of the late 1800s.
As for the mutual fund industry between 1950 and 2004, he says: "...equity fund assets grew 1,600-fold ... from US$2.5 billion to US$4 trillion, (but) expenses rose at an even faster 2,400-fold rate, from US$15 million to US$37.1 billion."
Where did those "expenses" go? Largely into managers' own pockets.
"We have come perilously close to accepting a system of dictatorship in corporate America, a system in which the power of the CEO seems virtually unfettered," Bogle observes.
If the 2005 book ponders more on the systemic failure of corporate America, "Enough" focuses more on morality, although two books cover both.
"On balance, the financial system subtracts value from our society," he says in "Enough." "For a critical element of our society, including many of the wealthiest and most powerful among us, there seems to be no limits today on what enough entails."
He also says: "We focus too much on things and not enough on the intangibles that make things worthwhile; too much on success (a word I've never liked) and not enough on character, without which success is meaningless."
This is where Benjamin Franklin comes into the picture. Franklin listed 13 virtues when he was 20 that he vowed to cultivate throughout his life.
Those virtues include "temperance" (eat not to dullness), "frugality" (make no expense but to do good to others or yourself), "sincerity" (use no hurtful deceit), and "humility" (imitate Jesus and Socrates). Whether Bogle is truly like Franklin remains to be seen, but at least he has been trying to do well while doing good.
His own company, Vanguard Mutual Fund Group, is one of the biggest fund companies in the world. But the Vanguard management company earns a zero net income, as it delivers income to its shareholders, not its managers.
"Success ... can be measured not in what we attain for ourselves, but in what we contribute to our society," he says.
It's unlikely that Wall Street, still drunk on the misery of the vast poor, will heed Bogle's call to character and virtue any time soon.
But the beauty of Bogle's latest book, as with his earlier ones, is something reflected in his own life narrative: Virtue can make a difference.
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