You Go, Gordon Gekko!
[Cross-posted at Organizations and Markets]
Several folks in my part of the blogosphere have noted John Hasnas’s terrific op-ed in yesterday’s WSJ, “The ‘Unseen’ Deserve Empathy, Too.” Hasnas invokes the great Bastiat to counter President Obama’s call for judges who have compassion, empathy, and understanding of “people’s hopes and struggles.” As Hasnas points out, judges should consider the effects of legal rulings not only on the parties before the bar, but also on the “unseen” whose lives will be affected:
One can have compassion for workers who lose their jobs when a plant closes. They can be seen. One cannot have compassion for unknown persons in other industries who do not receive job offers when a compassionate government subsidizes an unprofitable plant. The potential employees not hired are unseen. . . .
The law consists of abstract rules because we know that, as human beings, judges are unable to foresee all of the long-term consequences of their decisions and may be unduly influenced by the immediate, visible effects of these decisions. The rules of law are designed in part to strike the proper balance between the interests of those who are seen and those who are not seen. The purpose of the rules is to enable judges to resist the emotionally engaging temptation to relieve the plight of those they can see and empathize with, even when doing so would be unfair to those they cannot see.
This was on my mind when, channel surfing last night, I came across Oliver Stone’s 1987 classic “Wall Street,” which I haven’t seen in its entirety in years. To my surprise (perhaps not yours), I found myself rooting for Michael Douglas’s Gordon Gekko, the corporate raider who serves as the movie’s arch-villain. The main sub-plot revolves around Gekko’s attempted buyout of Blue Star Airlines. Bud thinks the buyout can save the struggling airline, where his father still works, and helps convince the pilots’ and flight attendants’ unions to Gekko’s move. Later, Bud discovers Gekko is really planning to break up the company and sell off the pieces and Bud feels betrayed, leading to a climactic confrontation. (The film feels remarkably fresh, despite the glowing green CRT screens and brick-sized cellular phones, and Douglas’s performance is dazzling.)
Stone wants us to empathize with the airline employees (particularly Bud’s dad, who heads the mechanics’ union and distrusts Gekko from the start), the little guys who pay the price for Gekko’s cold, heartless machinations. But I found myself thinking about Bastiat’s unseen, the workers and consumers who are worse off because the inefficient Blue Star is consuming resources that could be used elsewhere in the economy. Keeping unprofitable firms in business may be good for the immediate stakeholders of those firms but it’s lousy for everyone else (attention George Bush, Henry Paulson, Ben Bernanke, Barack Obama, Timothy Geithner. . . .). At one point it’s mentioned that Gekko plans to sell land under Blue Star’s hangars to condominium developers. Shouldn’t we have compassion for the people who might have lived in those condos, had resources been allowed to flow to their highest-valued uses? Where’s our empathy for the small or medium-sized employers who would love to hire away Blue Star’s overpaid employees, who could make better use of its assets, and so on? I say Go, Gordon, Go!