The new frugality: Gordon Gekko was wrong

“The point, ladies and gentleman, is that greed is good. Greed is right. Greed works. Greed clarifies, cuts through and captivates the essence of the evolutionary spirit. Greed in all its forms—greed for life, money, knowledge—has marked the upward surge of mankind”.

What a great scene from a great movie in 1987, Wall Street. Michael Douglas played Gordon Gekko, a brilliant and evil financial genius who ultimately went to jail.  Fast forward 20+ years– what’s changed? Well the sequel Wall Street : Money Never Sleeps is in production (I can’t wait to see it—its release date is September 2010). The film is set in 2008. Gekko gets out of prison and unsuccessfully attempts to warn business leaders of the imminent economic downturn.

What have we leaned from Gordo? Certainly as a society we have learned by the awful experience of the past two years that in fact greed is not good, it isn’t right, and it doesn’t work (at least not for the greater good). We are almost two years into a cratered economy set into motion by the greed and financial manipulations of the Gordon Gekko’s of Merrill Lynch, Bank of America, Bear Sterns, et al.

But the painful reality is that the American public also shares blame for our economic demise. Many of us spent recklessly. We assumed only upside and growth. We often bought more than we could afford, had higher mortgages than our incomes justified, bought vacation homes, cars, toys, jewelry, etc. that were beyond our means and beyond our needs. We believed the financial models that said money doubles every few years. How’s that working for you?

Though the economy has stabilized (e.g. not gotten worse) we are still on the precipice of economic disaster and still have deep societal issues staring us in the face—a healthcare system whose costs are out of control, aging baby boomers many of whom will outlive their savings, an underfunded  social security system designed for people who died in their 60s not their 80s and 90s, and an environment which we’ve trashed and need to clean up. And we face the real prospect that our children’s lives will be harder and less prosperous than ours. Happy thoughts.  

My hope is that we have entered an era of “new frugality” where outrageous conspicuous consumption is viewed as ugly, and economic humility is respected. Saving money, using coupons, and questioning expenditures is good. Overspending using oversupplied credit on unneeded items is bad. I realize that lesser spending on goods and services may stymie an economic rebound. So be it. However, more frugal and well balanced personal lifestyles by the American public, along with real controls that won’t allow the Gordon Gekkos to pillage our economy will help provide a platform for future stability. Most consumers have altered their lifestyles–some painlessly, while others have had tremendous personal sacrifice. Also beyond the economic woes of many, there’s an underlying shift of more control on one’s spending along with technology to provide smarter shopping and price comparison.

I pray we’ve learned our lesson and there are sunnier economic days ahead. Only the future will tell. Then again I thought 3-hour lines at the fuel pumps in the 70s were our wake-up call about our overdependence on oil. I guess we learn slowly and painfully. In any event I look forward to seeing Gordon Gekko on the big screen in the fall.

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  1. Michael Elkisch says:

    Hi Lonny,

    I agree with your point at this time, however in years from now when the job picture brightens and people are more optimistic, I foresee a greater return to spending. As Americans were are a consuming (spending) society and that is in our DNA. The best we can hope for is that people with the help of lenders and government oversights will be forced to live more within their means. Frugality gets tiresome and our culture fueled by the marketing industry, of which we are a part (advertising), encourages people to buy/spend. The other issue is real estate. Once home values begin to rise consumers will feel more wealthy and likely tap into their equity, where possible. Of course as Baby-Boomers age the needs will be less material and more health related, but spending nonetheless.

    Americans have very short memories.

    • Lonny Strum says:


      Thanks for comments. But I hope the current recession brings some better thinking to reckless spending habits. But alas we forget too easily. How quickly we’ve forgotten 4 hour lines at the gas pumps in the 70s. Hope life is treating you well. Stay in touch.

  2. Lonny –

    You are right on with this point of view. The new normal will be created out of the lessons we’ve learned (I hope!). If not, the past is destined to repeat itself.

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