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By Robert F. Hurley

Greg Smith’s March 14, 2012 op-ed piece in the New York Times, “Why I am Leaving Goldman Sachs” is a familiar story for those who follow the betrayal and repair of trust. Smith tells a story of his frustration and disillusionment at Goldman changing from a culture that valued service to clients to one that rewarded those who made the most money for the firm even if it betrayed client interests. To be clear, from a trust violation standpoint, Smith suggests that Goldman lacks integrity because it holds itself out to clients as being their servants when in reality the firm is focused on manipulating clients to buy or sell securities that benefit Goldman’s interests more than the clients’. If this is true, Goldman is saying one thing but doing another, which is duplicitous and lacks integrity.

What is interesting about Smith’s resignation letter is that it tells the all-too-common, inside story of how firms lose their way and violate trust. The message here, and one that is consistent with the BP, News Corporation, Toyota, and Lehman violations, is that these betrayals of stakeholder trust have root causes that are embedded in the organizational system. At BP there was rhetoric about safety after the 2005 Texas oil refinery explosion, but real currency of the realm continued to be profit; so they chose to save 7 million dollars to drill a Deep Water Horizon well that they knew was not the safest option. At News Corp, they said that rogue employees were responsible for the first hacking scandals (that it was not inherent in the system), but it was later revealed that hacking was a strategy used in the News Corp system to gain advantage among news outlets. Toyota had a strong quality culture, but a flawed and Tokyo centric recall system that failed to notify US drivers about cars that had been recalled in other countries. Lehman systematically overrode its own risk management practices because growth and profit is what really mattered.

Betrayals of trust by tyrants and government agencies show similar patterns. Time and time again incongruence in the organizational system cause major trust violations, which lead to demonstrations of trustworthiness by some aspect of the system, only for some other aspect of the organization to undermine it. A failure to align all elements of the organization’s architecture toward achieving its stated mission and values is what causes these betrayals of stakeholder trust.

High trust firms like Zappos, Google, Proctor and Gamble, and QuikTrip don’t fall into these traps. They do the hard work of clarifying mission and values, and they align leadership, culture, reward systems, and all of their core processes (product development, supply chain, etc.) toward serving stakeholders’ interests. These stakeholders — customers, suppliers, communities, and employees — know that these firms can be counted on reliably. The data is clear that these high trust firms derive many competitive advantages in lower employee turnover, more customer loyalty, more organizational resilience, and even higher stock price from this service. Doing the right thing and doing it consistently is a virtuous and effective way of doing business.

The good news for Goldman Sachs is that trust failures can be repaired and reputations restored. Mattel recovered brilliantly from its lead paint problem in toys made in China; Bill Clinton went from the disgrace of the Monica Lewinsky scandal to being a leader in global causes and presented as the world’s CEO in the media . But the path is not easy. Real trust repair requires

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Elvin Lim is Assistant Professor of Government at Wesleyan University and author of The Anti-intellectual Presidency, which draws on interviews with more than 40 presidential speechwriters to investigate this relentless qualitative decline, over the course of 200 years, in our presidents’ ability to communicate with the public. He also blogs at www.elvinlim.com. In the article below he looks at the implications of the charges against Goldman Sachs. See Lim’s previous OUPblogs here.

The Securities Exchange Commission has filed charges against Goldman Sachs as the Obama administration has taken up regulatory reform of the financial markets. The two events are not unrelated. They reveal the perception that the economy has turned the corner, and that the Obama administration is now ready to mean business, literally.

For a year now we have heard about the potential for a “double dip” in the economy. Fortunately, the conventional wisdom hasn’t materialized. Wall Street has a way of swinging between extremes, between the ridiculous hubris that created the housing bubble (or the dot com bubble) and the abject despondency whenever a bubble is burst. If only businesses and investors could find the Aristotelian mean between irrational exuberance and paranoid pessimism.

By most indices, the economy is on its way to recovery. The chances of a double dip on the economy are now so near zero that the Obama administration has switched mottos from “too big to fail” to “big enough to punish.” For the fact is there is a cosy relationship between government and business, and a correlation between the Dow Jones and Gallup. Obama could not afford to regulate the big banks while the economy was spiraling out of control, but he and Geithner appear to think that the coast is now clear to do so.

It would appear that the SEC parts company with unregulated capitalism at the 11,000 mark. Last Friday, federal regulators filed fraud charges against Goldman Sachs over its dealings in subprime mortgages, precipitating a 125-point drop in the Down Jones.  Consider the confidence of the SEC when these charges against Goldman Sachs occurred in the middle of the day on Friday (and not at the start or end), and also at a time when options were expiring for the month (so investors who took out earlier plays on Goldman were left unable to hedge).

Meanwhile, a war is brewing between the two political parties about financial regulation and a bill coming out from the Senate Banking Committee which would, among other things, give federal regulators the authority and a $50 billion fund to control and wind down too-big-to-fail banks at imminent risk of destabilizing the wider economy. Republicans are pushing back hard against what they call “bailout authority” but their real beef is not with bailouts, which Democrats say that the fund would prevent, but the bill’s provision to regulate financial derivatives: the instruments of mischief that led to last year’s recession. This is at the heart of the bill, so important that President Obama has issued a (rare) veto threat against any bill that does not regulate what Warren Buffet calls “financial weapons of mass destruction.”

Now that the market is stable enough to weather regulatory intrusion, Obama means business. With the health-care issue out of the way, regulating Wall Street has become Obama’s next top priority.

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Marhsall Goldman is a Professor of Economics Emeritus at Wellesley College and Senior Scholar at the Davis Center for Russian Studies at Harvard University. In his forthcoming book, Petrostate: Putin, Power, and the New Russia , Goldman chronicles Russia’s dramatic reemergence on the world stage, illuminating the key reason for its rebirth: the use of its ever-expanding energy wealth to reassert its traditional great power ambitions. In the article below Goldman reflects on Medvedev’s recent victory in the Russian elections and on what it means for Russia.

Dmitri Medvedev’s election (or more accurately, selection) as president of Russia was not much of a cliffhanger. By eliminating any viable contender, his patron, Vladimir Putin did all he could to ensure his protégé’s election. For many Russians, there was little point in even bothering to show up at the polling station–everything had been decided in advance. Except for Medvedev, no other candidate (or even a potential candidate) was allowed meaningful access to TV, much less campaign funding. Large public rallies were restricted, if not banned outright. (more…)

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From TillyBloom’s Etsy shop: typewriter earrings! Cost: $14. Looking for other ideas about what to get a writerly friend (or yourself)? See my Gifts For Writers page.

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I received just great feedback to my Holiday Gifts For Writers post that I thought I’d sometimes feature potential gifts for writers throughout the year. I’ll tag them all, so if you’re ever looking for gift ideas for your writer friends (or for yourself!) you can just browse all my tagged ‘Gifts For Writers‘ posts; click on the title of any post to see photos and details. Or you can just click on the new GIFTS/BUY for writers link at the top right corner of each page. (more…)

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Above: a wonderful notebook I recently bought from CalligraphyByErin’s Etsy shop. Yes, those are actually small scrabble tiles on the front cover. Only $10!

A survey: how many of you still use paper (yes, that non-digital writing material!) (more…)

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I love this miniature typewriter with the beginning of the novel Paul Clifford, now famous for that line. To me, this is both the perfect gift for a writer, and book/writing art. AND it’s jewelry, too–a pin/broach. And the price is amazing–$5.00 US. Wow, huh? I love looking at it.

You can get yourself one from Ptierney Designs over at Etsy.

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My daughter made it for me, when she was about eleven. It's a square of cloth, which she tied with a ribbon. Look what's inside:




OK, now, beyond the fact that this is a wonderful, hand-made gift, I was bowled over by how she took my writing seriously. She knew what I did besides be her mom, and she gave me a fun, practical way to do my job better. How great is that?

Here's a list of what's in the Idea Bag. I'm not certain which of these things were in the original bag, because I've added to mine over the years. (Which is another great thing about this gift!)

a small red block
a sparkly butterfly hairclip
a pink jack
a sliver of green quartz
a psychedelic marble
a ribbon rose off a sweater
a flattened penny
a tiny figure of an astronaut with an American flag
a clay pretzel
a key
a shiny penny
a screw
a black bicycle
a rock with a cross painted on it
a pink foam hair roller
a ceramic owl
a dragonfly, made of twisted wire and rock
a black clay kitten
a pair of red plastic shoes
a multi-colored friendship bracelet
a translucent, ear-shaped rock
a button
a folded note on yellow, lined paper
a jade stone with the word MERCY on it
a handmade necklace with a hand-painted sun
a fat, red and white die (now showing the number 3)

Do you need an Idea Bag? I'm thinking that on those days when the Big Things are overwhelming, a few small things could help... Read the rest of this post

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I should have thought up a shiny bow of a name for these gift posts. As it stands, I can only present you with links for Part One and Part Two.

Stop with the puns. On to the shopping!

Made of recycled newspaper. (You can see layers of newsprint when you sharpen them.) Plus, they have two of my favorite foods: rootbeer and popcorn. No custom scents, yet, but maybe if all the writers and readers beg together we can get Scent of a New Book. (If you want eau de old paperback, go here.)

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At the International Spy Museum in Washington, D.C., you can buy the following real items. Wouldn't they make perfect gifts for writers?

• A rubber bracelet that reads: I LIE FOR A LIVING (fiction writers only, please)


• A T-shirt imprinted with the words: YOU DON'T KNOW ME (perfect for the pre-published writer or the sales-challenged)


• A coffee mug that says: DENY EVERYTHING (2 for 1, for ghostwriters)
  


• A Nancy Drew MadLibs game (to solve cases of writer's block. Bess and George, extra.)
  


• A digital spy plane (for research) Replaces earlier model, Pigeon Camera.


• The book, The Enemy Within (15 % discount if you show your internal critic)


• Handcuff earrings (only if you're re-writing Pretty Woman)


• An electronic voice transformer (instantly converts 1st person to 3rd)


• Crystal lipstick pen (guaranteed to produce a hot pink cover)
  


• An invisible journal (to record your first royalty statement)

Please note:
• Tree Stump Listening Device no longer available, due to protests about The Giving Tree

Happy shopping!

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