Is this one of the dumbest things a top banker has ever said, or was it very smart?
The case for making out that Blankfein was being dumb is pretty self-evident. The banking system has just been bailed out to the tune of a trillion dollars plus; Goldman is making profits only because the rest of the system has been floating on free cash from the government.
The result: Goldman's staff are in line for bumper bonuses ($700,000 a head), funded by taxpayers who are fearful for their jobs and suffering a recession. The "God's work" claim is at best undiplomatic, and at worst total lunacy.
So why would a smart person say such a dumb thing? There are two reasons.
First, he probably really believes it. His logic has to be built on three beliefs:
- Capitalism is the only way in which the world advances (as an alternative you could try North Korean communism or Cuban socialism).
- Banks help capitalism by allocating capital efficiently (alternatively, do we really trust government to allocate and spend capital well?)
- Goldman Sachs is a good bank: it no longer relies on the taxpayer directly, even although the rest of the system does.
As for why they need to be paid so much to do God's work (unlike priests, for example) -- it is simply a matter of capitalist economics.
Second, how do you deal with the accusation that your bank is, as Rolling Stone Magazine put, "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money"?
For starters, you do not argue with accusation directly. The more you mention vampire squids, the more the debate is anchored around vampire squids. You need to anchor the discussion elsewhere.
So you put down an anchor as far away as possible from anchor squids: you are doing God's work. That now sets up a real debate around two extremes, not one extreme.
Goldman Sachs wins if the argument settles somewhere in the middle. Blankfein does not need to persuade shopping mall America: he needs to persuade policy makers and influencers. He has just reshaped the debate in a way that favours Goldman Sachs.
Is his remark offensive, blinkered and insular? Possibly. Was it smart or dumb? You decide.