Q: Goldman Sachs, the country's most successful investment bank, is under fire for helping a hedge-fund tycoon dump bad investments on unsuspecting customers and then betting against them. CEO Lloyd Blankfein says the firm did everything it was legally required to. Are ethical issues relevant as a business seeks to earn money for its investors? Does the little guy stand a chance in such an environment?
Ethical issues in business are always relevant, whatever the business, because even crooks don't want to do business with crooks. All businesses recognize this truth and invariably try to portray themselves as having the highest ethical standards in serving the interests of their customers, just as "Goldmine" Sachs did.
Just as obviously, however, very few businesses are true to their proclaimed ethical standards whenever there is a conflict of interest between the business and its customers. "Goldmine" was doing what many used-car dealers do on a much smaller scale: With greater knowledge of the product being sold, it could palm off junk on its customers and then make even more money betting that the junk "car" would soon fail.
"There's a sucker born every minute" and another born a minute later to take advantage of him, as the saying goes. 'Goldmine' was in business to make money -- as much and as fast as possible -- and it did a great job separating fools from their money.
The bottom line is clear: Doing business with anyone whose interests are not aligned with yours is inherently high risk, so make sure you understand exactly what those risks are.
The "little guy" stands little chance in this casino because he has no way of understanding the risks that even the "big boys" don't understand. The law and the government are usually late to the party too, so counting on them is yet another risk.
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