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Little Scottie #101 / Joe-Wall Street (4/28/10)

Goldman Sachs makes the best of a public relations nightmare.
Goldman Sachs makes the best of a public relations nightmare.
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Wed, Apr 28, 2010 - UDK, Page 4A
I don't get too bogged down in politics. If anything, I do the exact opposite. But yesterday's Senate hearing with former and current Goldman Sachs employees and executives was one of the most embarrassing scenes I've ever witnessed as an American.

Sure, there are some relatively nuanced points that I might disagree with, but it was the big picture that troubled me. Congress and the President are on a crusade to regulate Wall Street. Fine, I can accept that. No one's saying regulation isn't necessary. But as a country we need to decide whether to deny or accept the system we have in place.

Go to any corner of this country, and you'd essentially get this confirmation: Socialism is bad, Capitalism is good. If everyone can seemingly agree on that point, how do you justify going after a firm like Goldman Sachs that represents what Capitalism is really all about?

Simply put, in Capitalism there are winners and losers. Unfortunately, we live in a country that was founded, at least in part, on a contradictory principle. People are to be equal within a Capitalist system. That's really only true in an abstract sense. Everyone is equal in the sense that everyone participates but not in the sense that they hold the same roles. It's a binary system, and there's no escaping that.

Has anyone ever noticed how in order for any business to succeed someone must get the short end of the stick? Prices are based on what consumers are willing to pay, not what a product really costs. Is that ethical? Look at General Motors. The company is now back on more solid ground. But how did they do it? They reduced their workforce. Is that fair? No. But good luck convincing anyone who's now unemployed that their sacrifice was for the sake of the greater good.

It is indeed a sad day when a man must apologize for lawfully making money. It's not always going to feel fair because, in reality, it isn't. It's called a free market not a fair market.

Like a meandering river, that freedom means letting it do what it does naturally. People investing their life savings is like building a bridge over that river. Suddenly, if you allow the river to meander, your bridge is at risk. So you put in reinforcements to help restrict its movement, which will cause disruptions up and downstream because you have interfered with its natural behavior. The next time you cross over a bridge look at what's around it, and then glance at the banks of the river. They're probably lined with rocks or cement to impede movement.

It's all because people want to reduce their risk, which happens to be exactly what Goldman did all along. Except Goldman wasn't looking to change the whole system in order to do it. It looked to work within it and made money as a result. The irony now is that Congress wants to change the entire system in order to give people a better chance of "winning." Is that really a better solution?
Scott A. Winer / Writer, Little Scottie

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