Rajat Gupta has hogged headlines over the past 20-odd years — he has championed that art. While his educational background without doubt has been exemplary, his consulting advisory was not necessarily so. McKinsey’s consultants, of course, have championed strategies and theories such as ‘core competence’ which are arguably of no great significance or research. I’m reminded of the book In Search of Excellence by Tom Peters and Robert Waterman written on the basis of research that Tom Peters himself later admitted was concocted. Rajat’s stint post McKinsey has been clearly far more controversial due to the more obvious frauds. And now, that he has been found guilty of insider trading, the Indian media, in particular, is hell-bent on portraying it as an example of a perfect ‘American Dream’ gone sour. The question is, is that so?
The key reasons behind the Rajat Gupta saga are endless greed and an endless chase for more — causes championed by the father of capitalism Adam Smith and the likes; of course, causes made famous much later by the character of Gordon Gekko in the movie Wall Street with his powerful line “Greed is good”. In the 1630s, there was the first recorded case of greed related capitalist madness in the form of Tulipomania. Then was the ‘California Gold Rush’ which did develop California but killed more than 1,000 native Indians inhumanly. Then there was the great Florida real estate boom in the 1920s and the subsequent asset crash. This was followed by the Great Depression of 1929. And yes, our generation saw the dot com bust and the massive recession of 2008.
Americans lead by miles in corporate and white collar crimes. From the infamous Maddof Ponzi scheme to doctors jabbing needles repeatedly in patients in collusion with insurance companies to make more money, to tobacco companies manipulating and hiding research that proves tobacco’s carcinogenicity and addictiveness and making billions, to religious frauds swindling millions off people, to cyberspace frauds polishing off money from people’s credit cards, to the case of Richard Scrushy — once one of the highest paid CEOs in America till his Wall Street scam did him in — to fake financial gurus to Enron to of course one of the biggest insider trading scams, that of Rajaratnam of Galleon Group where Rajat Gupta also got involved, unable to manage his greed for more despite having everything that one could possibly dream of.
Greed has been so overpowering a factor in the American Dream saga that the ratio of average CEO compensation to average worker compensation today stands at more than 300:1. In the last couple of years, while companies have been making profits again, there is still no sign of taking back into employment the millions fired during recession. In fact, greed has a history of trickling down from the top — from Ronald Reagan, whose era saw the Iran-Contra affair as well as the Keating Five corruption case to the Bush oil-era and other war related business dealing scams. For the sake of oil, the American government has helped companies enter African nations in collision with bloody dictators of those countries; the US government has also on multiple occasions fought unnecessary wars where the main aim was capturing oil lines.
Though Goldman Sachs is feeling the pinch of having to bear the burden of Rajat Gupta’s 30 million dollars legal fees bill, it has no less scams to its credit. From helping the Greek government fraudulently hide its national debt through its credit default swaps, to underwriting California bonds (thus earning $25 million) in 2008, Goldman has been a part of as much dirt. With one out of four American jobs today paying less than poverty line incomes and about 13% people living below the poverty line (a major proportion of them blacks), inequality, exploitation and greed have never really ceased to be the backbone of the American Dream. Digressing a little, the fact is that it’s not greed that makes an economy or a form of society better than the other. While Americans have played a leading role in science and innovation, there are other nations which have also been able to take lead in innovation without greed being the centre of focus, Japan being the best example with the erstwhile USSR and China not really lagging far behind. It is an environment that supports human creativity and innovation that makes a system grow and this surely can be without greed at its centre.
Coming back to my contention, I should like to conclude by saying that one can arguably claim that this end of Rajat Gupta is as much a symbol of the Great American Dream as the story of several successes are, for the American Dream is about making more, and chasing more. Such a dream is always intertwined with cases of crimes — be they white collar, blue collar or the war related green collar ones.
The writer is a management guru and Honorary Director of IIPM Think Tank