12 Apr Teldar Paper as a microcosm of Corpo America
Teldar Paper was a fictional company in Wall Street that Gordon Gekko wanted to take over. At the annual stockholders meeting, we hear the iconic line about how good greed is.
As you listen to the entire speech, however, it becomes clearer – to me, at least – that Teldar Paper sounds like a microcosm of Corpo America. It’s also a pretty interesting indictment of the American economic system itself. Let’s take a look. (You can find the speech in its entirety at https://www.americanrhetoric.com/MovieSpeeches/moviespeechwallstreet.html)
“Well, ladies and gentlemen, we’re not here to indulge in fantasy, but in political and economic reality. America has become a second-rate power. Its trade deficit and its fiscal deficit are at nightmare proportions.”
Things have only gotten worse since the film’s release in ’87.
As of this writing, the US national debt was more than $31 trillion. (Though Truth in Accounting reports the true deficit is more than $150 trillion.)
“Now, in the days of the free market, when our country was a top industrial power, there was accountability to the stockholder. The Carnegies, the Mellons, the men that built this great industrial empire, made sure of it because it was their money at stake. Today, management has no stake in the company! All together, these men sitting up here own less than 3 percent of the company. And where does Mr. Cromwell put his million-dollar salary? Not in Teldar stock; he owns less than 1 percent. You own the company. That’s right — you, the stockholder. And you are all being royally screwed over by these, these bureaucrats, with their steak lunches, their hunting and fishing trips, their corporate jets and golden parachutes.”
Did the old robber baron days actually represent “the days of the free market” as Gekko says? I don’t think so! What he’s referring to as a free market really just meant: the robber barons were free to do whatever they pleased in the name of money.
“Robber baron is a derogatory term of social criticism originally applied to certain wealthy and powerful 19th-century American businessmen. The term appeared as early as the August 1870 issue of The Atlantic Monthly magazine. By the late 19th century, the term was typically applied to businessmen who purportedly used exploitative practices to amass their wealth. These practices included exerting control over natural resources, influencing high levels of government, paying subsistence wages, squashing competition by acquiring their competitors to create monopolies and raise prices, and schemes to sell stock at inflated prices to unsuspecting investors. The term combines the sense of criminal (“robber”) and illegitimate aristocracy (a baron is an illegitimate role in a republic).” –https://en.wikipedia.org/wiki/Robber_baron_(industrialist)
The more things change, the more they stay the same. Let’s look at that penultimate line again:
“These practices included exerting control over natural resources, influencing high levels of government, paying subsistence wages, squashing competition by acquiring their competitors to create monopolies and raise prices, and schemes to sell stock at inflated prices to unsuspecting investors.” -Wikipedia, Ibid. emphasis mine
Hmm . . . that sounds really familiar. Sounds like Crony Capitalism, not a free market system.
“And where does Mr. Cromwell put his million-dollar salary?”
The Presidents and CEOs rake in huge salaries while laying off employees and griping about the economy.
“CEO pay has skyrocketed 1,460% since 1978. CEOs were paid 399 times as much as a typical worker in 2021.” –https://www.epi.org/publication/ceo-pay-in-2021/
By the way, Mr. Cromwell’s $1 mil salary in 1985 when the film is set would be $2,818,585 in 2023. (https://www.dollartimes.com/inflation/inflation.php?amount=1000000&year=1985)
“And you are all being royally screwed over by these, these bureaucrats, with their steak lunches, their hunting and fishing trips, their corporate jets and golden parachutes.”
This is where Gekko gets it right, IMO. It’s easy for CEOs to whine about employees needing to c’mon back to the office for ____ (insert bogus reason here). Meanwhile, they have a private executive suite so they don’t even have to use the same toilet as you and they can leave early, take long lunches, have golf course Fridays, etc. But you, little peon, you had better be buns-in-seat at the cube farm! And if the whole thing goes pear-shaped, they get a golden parachute and you get nothing.
“Teldar Paper, Mr. Cromwell, Teldar Paper has 33 different vice presidents, each earning over 200 thousand dollars a year. Now, I have spent the last two months analyzing what all these guys do, and I still can’t figure it out. One thing I do know is that our paper company lost 110 million dollars last year, and I’ll bet that half of that was spent in all the paperwork going back and forth between all these vice presidents.”
He’s also right on this. Corpo America can waste endless amounts of time and money on:
- Needless, bloated hierarchies
- Too many folks at the C-Suite level
- Insane amounts of meetings
- Technology around having insane amounts of meetings
- So-called gurus
- “Perks” that no one really wants
- Expensive entertainment / entertainers
- Real estate / furniture / “resimercial” designs
and then talk about how they need to cut the budget and lay folks off because times are tight.
I worked at a company once that had no small number of VPs and EVPs and I found myself asking the same question: what do all of these people actually do?
“The new law of evolution in corporate America seems to be survival of the unfittest. Well, in my book, you either do it right or you get eliminated.”
Agreed. I would add that survival of the unfittest includes going along to get along, fitting in, comporting with “one of us” expectations, presenting as extroverted at all times, etc. And if you can’t actually do it right: lie, cheat, and steal to ensure you get ahead.
“In the last seven deals that I’ve been involved with, there were 2.5 million stockholders who have made a pretax profit of 12 billion dollars. Thank you. I am not a destroyer of companies. I am a liberator of them! The point is, ladies and gentleman, that greed — for lack of a better word — is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms — greed for life, for money, for love, knowledge — has marked the upward surge of mankind. And greed — you mark my words — will not only save Teldar Paper, but that other malfunctioning corporation called the USA.”
Clearly, Gekko is appealing to the greed of the stockholders in the room by touting his own track record of generating billions in profits. $12 billion in 1985 dollars would be more than $33 billion today (https://www.dollartimes.com/inflation/inflation.php?amount=12000000&year=1985) One imagines that getting a slice of a pie that size would be pretty appealing.
A liberator of companies LOL. Politicians and their corpo cronies and their controlled mass media like to paint themselves with the same brush, n’est-ce pas?
Will greed save the US? Wall Street was released in 1987 and set in 1985. Did greed save the US then? Has it now?
Remember: it was October 19, 1987 when “Black Monday” occurred.
“In the 1980s, many of the deals were hostile takeovers, so there was quite a bit of risk involved. These deals were usually financed by high-yield debt, so there was also a high amount of leverage involved. Furthermore, many investors were betting heavily on rumors and chatter around the Street about potential deals both hostile and friendly. Some of this chatter was around specific deals that might be in danger of getting called off due to rising interest rates…” –https://www.cnbc.com/2017/10/16/cause-of-black-monday-in-1987-as-told-by-a-trader-who-lived-through-it.html
It’s also worth noting that Gekko’s speech occurs in the midst of one such hostile takeover.
So what has changed? If greed was going to save everyone, wouldn’t it have already prevailed?
I recalled the aliens who appeared to be servants of man but were really intending to serve man as their dinner.
Teldar Paper is a microcosm of Corpo America. Overpaid executives, a bloated executive team and no one knows precisely what they do, the company is in trouble, a corporate raider is presenting himself as a savior, the shareholders are told it will all be fine and they’ll get a fat pay day.
And the system just goes on and on.