During the last week Greg Smith wrote an editorial about why he was resigning from Goldman Sachs, where he said “the environment now is as toxic and destructive as I have ever seen it.” Until his resignation, he was executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa.
My first thought in reading his letter was that he’s probably in a heap of legal trouble. Whether the situation warrants it or not, I bet he’s at risk of getting slapped with a slander/defamation suit. He makes a number of pretty harsh claims and I’d expect Goldman Sachs to want him to substantiate them all—as if somehow failing to do so meant things were really fine and he should have kept quiet.
After all, I expect them to argue, Goldman Sachs lost 3.4% of their market value Wednesday after the resignation letter went public, a bit over two billion dollars. Amazingly, shares were back up by 2.2% the next day, bringing the loss to a matter of mere hundreds of millions. I’m guessing the market’s conclusion is that no one cares—that people probably already knew this is how such businesses work. Losses were probably taken by idealists who had thought otherwise, and the cynics probably just saw it as a buying opportunity. Still, it must have left some ruffled feathers and I expect someone to give Smith a hard time about it.
In addition to being hard to substantiate, I’m guessing that at least some of Smith’s remarks violate some confidentiality agreement he had to sign in order to get his job. I’m not privy to any such specific agreement, and yet I’m confident it’s standard practice for such a business to require that employees at his level formally agree not air the company’s dirty laundry with the general public.
I personally have no idea what his involvement was in any of the allegedly inappropriate goings on and can only speculate on that as well. But one has to at least commend him for trying to break the cycle. The only thing is that his manner of coming clean may have made a personal mess for himself. And if it does, it won’t exactly be a shining example others will want to follow. That would be sad, I think.
If we want people to do more of this, we need to make better protections for them. What protections? That’s harder to say. But it doesn’t mean we shouldn’t collectively give it some thought.
Oh, sure, there are probably whistleblower laws that may protect some people who can prove outright crimes. But I suspect it’s often difficult to make those cases, and it’s not difficult for businesses to menace the people who do. And for people who can’t prove a crime, but merely suspect one, there’s probably little legal room for grumbling.
Whistleblowing is about clear breaches of law, but we don’t even have a name for the rightful questioning of a gray area that falls short of crime. Or maybe we do. We call it disloyalty. We say the employee is wrong to question something without proof. We allow companies to fire people for stuff like that.
As the old saying goes, “Almost only counts in horseshoes and hand grenades.” We may almost protect an employee who speaks out about something they think is happening, or know is happening but can’t document, but almost protecting them means not protecting them at all. If an employee has no smoking gun to show some degree of certainty of an outright crime, they’re obliged to stay silent. Nothing to report. No way to talk about “almost” or “mostly” without violating confidentiality contracts.
It might be possible, as a society, to decide to weaken the right of companies to require or enforce such agreements, but I’m guessing that is an uphill battle. Still, our collective failure to address such issues leaves employees who can only almost prove a problem with little to do but cringe. Of course, it’s great that Smith felt he could resign and speak out, but I’m guessing he had a few dollars in the bank when he did. By contrast, most of us aren’t executive directors of economic institutions and that means most of us couldn’t afford to resign from a paying job just on a matter of principle.
It’s a pretty hard for a regular person to take such a stand. Jobs are scarce, and many employees have not only their own well-being to think of, but their families’. So I’m betting they stick it out. I’ve got no evidence to point to, I’m just speculating aloud, but it seems clear to me that this is a fertile breeding ground for things we as a society don’t want to have happen. There’s probably a lot more that should be said all over, but no incentive for anyone to say it.
I guess it’s kind of like the way some don’t want government to fund preventive health care but they’re willing to have it fund emergency room care, when it would be better and cheaper in many cases to prevent a problem before it got to being an emergency. We don’t want to intrude on companies that only might be in trouble; we’d rather just wait until we’re sure they are.
Strange, though, that the GOP lately seems to want government to intrude on the most personal details of ordinary people’s morality, but wants us to keep our hands off of the morality of corporations—even as they insist that corporations are people. You’d almost think there was some sort of double standard, like maybe they didn’t believe all people were created equal.
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