Enough!

John C. Bogle, the legendary founder and former CEO of the Vanguard Mutual Fund, a company with more than $1.1 trillion for over 22 million people, began his latest book, Enough: The Measure of Money, Business, and Life, with this relevant tale:

At a party given by a billionaire of Shelton Island, Kurt Vonnegut informs his pal, Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch 22 over its whole history. Heller responds, "Yes, but I have something he will never have... enough."

Considering the beginning of the New Year and the new administration, there could not be a greater cry, that of simply, "Enough!" But what exactly have we had enough of? We have had enough of selfishness. We have had enough of the lack of accountability and responsibility. We have had enough of failed political policies. We have had enough of greed. We have had enough of money as God.

In the New Testament, the Apostle Timothy writes, "The love of money is the root of all evil." It is not money itself that is evil, but the elevation of it to a God-like status. The love of money reduces people to things. The love of money blinds. The love of money inhibits true innovation and gives way to financial engineering that enables cooked books. The love of money stifles creativity and replaces it with Ponzi schemes.

John Bogle's years of experience come through clearly in his writing. He is as at home in matters of money, business and life. Perhaps that is what a few years teach. But as we know years do not always teach wisdom. We have plenty of old fools to go around. In Enough complicated problems such as the financial crisis are broken down in ways that the average American can understand.

Bogle breaks down the mortgage crisis and its many players in this way:

Innovation in finance is designated largely to benefit those who create the complex new products, rather than those who own them. Consider, for example, the revenue production (and cost bloating) that occurs along the food chain of the creation of collateralized debt obligations (CDOs) backed by mortgages:

1) The mortgage broker brings in the borrower and takes a commission from the bank.

2) The bank takes a commission when it secures the mortgage.

3) The rating agency takes a fee (estimated at $400,000 a throw) for each security it rates (usually, of course, in return for the coveted AAA rating, without which it can't be sold.)

4) The stockbroker takes a commission when he sells the security to customers. These costs, however deeply hidden -- end up being paid by some combination of

a) The person who borrows the money to buy the home and

b) The end-user investor who purchases the CDO for a portfolio.

7) The multiple croupiers -- all those middlemen -- reap the rewards.

8) Of all of croupiers involved in this crisis, the homeowner reaps the least.

Besides the lucid understanding of money and business, the book speaks eloquently on ethics and how we must individually and collectively take responsibility for ourselves and surrounding people and declare what is enough. (He writes rather candidly about his own finances and sense of enough. When have we seen this?) There are a great many things that we have had enough of, but there are some things that we need more of. He writes:

Yes, our world already has quite enough hate, guns, political platitudes, arrogance, disingenuousness, self-interest, snobbishness,, superficiality, war, and certainty that God is on our side. But it never has enough love, conscience, tolerance, idealism, justice, and compassion, nor enough of wisdom, humility, self-sacrifice for the greater good, integrity, courtesy, poetry, laughter and generosity of substance and spirit...The great game of life is not about money; it is about doing your best to join the battle to build anew ourselves, our communities, our nation and our world.

This year will undoubtedly be a year of transformation in politics and business. But can we honestly say that we have had enough? If so, what will we each do to hold ourselves and our leaders more accountable? We cannot do one without the other. What should investor do as the beneficiaries of business to demand accountability?

What should citizens do -- besides electing a new administration -- to ensure change? What should banks do to prevent this sense of dual agency? What should mortgage brokers do that would not only benefit themselves but homeowners? What should homeowners do to avoid foreclosures in the first place?

My initial thought is that we need an ethics that replaces self-serving behavior with one that benefits the whole. What do you think? What should be done with those who may not break the law but whose ethics are such that CEOs can drive a company into the ground and still walk away with multiple millions and billions of dollars?

Comments

[Stirner]

How about modifying the college entrance exams to put less stress on mathematics? First off, for most normal people, there is no algebra after high school. Second, the emphasis upon mathematical activity as if it were some sort of an important intellectual discipline has been quite over-rated. Most mathematicians are not very bright nor need be (e.g., "Idiot Savants"). Of course, they can be, but need not be. Mathematical skill is but the display of a manipulative juggling of numbers (check out Russell and Whitehead's descriptions -- or what Einstein said of Minkowski). That which can be done by a computer should not be imposed upon a human. But why is this formal skill (akin to chess playing) held in such high repute? Simple: the mathematical skills of accountants and engineers are needed by a money-orientated society (needed for keeping the numerical records of the the "useful items" that will be sold -- all for money, of course). Historians, poets, philosophers, artists of all sorts, who make our world worth living in, rather than seeking merely to "own" it are hardly appreciated -- as the college entrance exams bear witness (along with the bloated "Commerce and Finance" Departments of our Universities) .

[Computer Geek]

I agree with you to a point. Life is indeed more than numbers, but it can do things that other pursuits cannot. Philosophy, history and other pursuits are honorable to be sure, mathematics and engineering are the ultimate method of organizing and prediction. Pi is not an exact number, but with the approximation, many wonderful and useful devices can be created. Bridges, buildings, computers, space exploration, and a vast expanse of other creations have mathmatics and engineering as the means to make them possible. It is not the mathmaticians who call the shots in most businesses. If it were, I doubt (my opinion) that we would be in the mess we are in. Math is what I do, but ethical and fair is how I live.

[Jude1930]

"Math is what I do, but ethical and fair is how I live."

Absolutley beautiful comment. Thank you.

[drymartini1]

People who say money is the root of all evil, doesnt effin has it !! LOL

dialogue from boiler room.

[Judith Ellis - Huffpost Blogger]

drymartini1 - Love your name! The scripture reads: "the love of money is the root of all evil." Money itself is not. Another relevant scripture is "Money answers all things."

[tomas0808]

Money brings power and power corrupts. Our founders understood this, hence the system of checks and balances (which has been compromised) That ideal should be applied to these huge corporations, they should be broken up, the power spread out. The consolidation of corporations and media threatens our democracy.

What can we do? Don't buy anything. Pay down your credit cards, move your money to a credit union, don't buy garbage, live within your means. They made the system dependent on people buying a new car every two years, ten new electronic gadgets every year, trade up trade up, upgrade, upgrade, upgrade.....Just say no. They will get the message. They are waiting for us to start buying junk again, but no one has the money and we have finally woken up and realize we can't just charge it anymore

[Judith Ellis - Huffpost Blogger]

"What can we do? Don't buy anything. Pay down your credit cards, move your money to a credit union, don't buy garbage, live within your means. "

tomas0808 - I love your solution!

[deedubya9173]

"The great game of life is not about money; it is about doing your best to join the battle to build anew ourselves, our communities, our nation and our world."

To build anew requires new approaches to problem solving in our neighborhoods, workplaces, and local communities. Who is going to lead this change? The politicians and organizations who rely on the perpetuating the conflict, gridlock, and status quo to maintain power and profitability? Or is it best lead by the folks whose lives are most affected by the poor policies and abysmal leadership? I will definitely be a vocal and visible "People Advocate" and "Change Catalyst" in my local community working to level the playing field for working single parents!

Thanks for the reminder of the obligation I have to leave my community and it's citizens in a better place than I found them!

[Judith Ellis - Huffpost Blogger]

"Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has."

-- Margaret Mead

Change always begin with the people and often not a very large group of them.