The psychopathic 1 percent

The board of the failed Royal Bank of Scotland, which has been bailed out by the British government, wants to give its chairman, Sir Philip Hampton, a $2 million bonus on top of his $2 million salary. A “senior banker” told the Financial Times that Royal Bank employees will be demoralized if he doesn’t get it.

Dick Fuld, the former CEO of failed Lehman Brothers, told his staff he wanted to rip out his competitors’ hearts and eat them while they were still alive.  E-mails revealed Goldman Sachs executives gloating about how they’d unloaded worthless securities on unsuspecting customers.

How to you explain such behavior?  Certain British academics speculate that such people are, literally, psychopaths.

Clive R. Boddy, most recently a professor at the Nottingham Business School at Nottingham Trent University, says psychopaths are the 1 percent of “people who, perhaps due to physical factors to do with abnormal brain connectivity and chemistry” lack a “conscience, have few emotions and display an inability to have any feelings, sympathy or empathy for other people.”

As a result, Boddy argues in a recent issue of the Journal of Business Ethics, such people are “extraordinarily cold, much more calculating and ruthless towards others than most people are and therefore a menace to the companies they work for and to society.”

How do people with such obvious personality flaws make it to the top of seemingly successful corporations? Boddy says psychopaths take advantage of the “relative chaotic nature of the modern corporation,” including “rapid change, constant renewal” and high turnover of “key personnel.”  Such circumstances allow them to ascend through a combination of “charm” and “charisma,” which makes “their behavior invisible” and “makes them appear normal and even to be ideal leaders.”

via Bloomberg.

Boddy admits this is an unproved hypothesis.  But he thinks it wouldn’t hurt to have those whose decisions affect the well-being of other people to undergo a psychological test just to make sure they’re not psychopaths.  Does this seem far-fetched?  Two other British psychologists found that psychological profiles of 39 British senior managers and CEOs matched profiles of the criminally insane.

In a study published by the journal Psychology, Crime and Law, Belinda Board and Katarina Fritzon tested 39 senior managers and chief executives from leading British businesses.  They compared the results to the same tests on patients at Broadmoor special hospital, where people who have been convicted of serious crimes are incarcerated.  On certain indicators of psychopathy, the bosses’s scores either matched or exceeded those of the patients.  In fact, on these criteria, they beat even the subset of patients who had been diagnosed with psychopathic personality disorders.

The psychopathic traits on which the bosses scored so highly, Board and Fritzon point out, closely resemble the characteristics that companies look for.  Those who have these traits often possess great skill in flattering and manipulating powerful people.  Egocentricity, a strong sense of entitlement, a readiness to exploit others and a lack of empathy and conscience are also unlikely to damage their prospects in many corporations.

Via The Guardian

Brian Basham, a British financial journalist, knows of at least one important bank that gave psychological tests not to screen out psychopaths, but to make sure to hire them.

Cut to a pleasantly warm evening in Bahrain.  My companion, a senior UK investment banker and I, are discussing the most successful banking types we know and what makes them tick.  I argue that they often conform to the characteristics displayed by social psychopaths.  To my surprise, my friend agrees.

He then makes an astonishing confession: “At one major investment bank for which I worked, we used psychometric testing to recruit social psychopaths because their characteristics exactly suited them to senior corporate finance roles.”

Here was one of the biggest investment banks in the world seeking psychopaths as recruits.

via The Independent.

I do not mean to imply that all Wall Street bankers or individuals in the 1 percent income bracket are psychopaths.  No doubt many of them are fine human beings.  But nowadays psychopathic behavior in business has fewer risks and greater rewards than a few decades ago.  Laws and regulations are less restrictive, social ties are weaker, institutions are in flux and “breaking the rules” is something to be proud of.

Click on Did Psychopaths Take Over the Wall Street Asylum? for William D. Cohan’s Bloomberg Business News article on the ideas of Clive R. Boddy.

Click on The 1% are the very best destroyers of wealth the world has ever seen for George Monbriot’s article in The Guardian citing the Board and Fritzon study.

Click on Beware Corporate Psychopaths: They Are Still Occupying Positions of Power for Brian Basham’s article about Boddy in The Independent.

Click on Welfare Recipients’ Stunning Sense of Entitlement for more on Sir Philip Hampton and the Royal Bank of Scotland.

Click on One in 25 Business Leaders May Be a Psychopath, Study Finds for a study of American business.

Click on Milton Friedman and the price of human life for an earlier post of mine on the divorce of economic thinking from ordinary human moral intuition.

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