Do you have to be a psychopath to work in finance?
first aired on EUROPEAN CEO | 03 Mar 2015
European CEO speaks to Jeremy Josse, author of Dinosaur Derivatives and Other Trades, on white-collar psychopaths.
European CEO: Jeremy, you talk of white-collar psychopaths, do you have to be a psychopath to work in finance, or does it just hep?
Jeremy Josse: That’s a very funny question. No, you do not have to be a psychopath to work in finance. If you are a psychopath, please don’t go into finance, and most financiers are not psychopaths. Unfortunately, the finance industry got a pretty bad rap as a result of the credit crisis, and I’m not going to justify many of the practices that went on leading to 2007/2008, but most bankers are fairly ordinary people.
If you are a psychopath, please don’t go into finance
The financial psychopath that you’re talking about and I write about is very different, and I think unfortunately there are white-collar psychopaths out there. Not many, but on the normal distribution of moral behaviour they’re somewhere way out here, and they’re virtually different beings altogether. They fit many of the actual psychological profiles of psychopaths.
They are often on the one hand very energetic, can be quite dynamic, but also have a total lack of empathy, deeply narcissistic personality, often extremely compelling, and we ordinary human beings can often be attracted to them like flies. They use that compelling, superficial attractiveness to take people to bad places.
Of course, this happens in world history and on much grander scales, some of the worst dictators in world history were psychopaths who exploited just the ordinary moral weakness of your average man out there.
European CEO: But letting the Patrick Batemans of this world run amok, surely there’s some benefit?
Jeremy Josse: That sort of comes back to regulation. I don’t believe you should regulate stuff to death. All sorts of entrepreneurs have achieved all sorts of long-term benefits by misbehaving badly. We don’t want to have a regulatory environment where an entrepreneurial but maybe a little bit on-the-edge guy can’t do his stuff, because as you say then can be great innovators.
But many of the real psychopaths actually cause terrible damage. Bernie Madoff was one example of that. Bernie Madoff made initially a mistake that many fund managers made. He was short of working capital and he dipped into his client accounts to try and fill the working capital in his firm. There are a lot of fund managers who do that. It’s not allowed, but they do it out of desperation, they’re running out of money.
The usual Joe, the usual guy, fesses up to his problem after a year or two and he says “look I did wrong and we’ve got to fix this.” The difference between a Bernie Madoff is he industrialised that process. He really didn’t care that he’d stolen from client money, and he just continued to steal from all his clients’ money and churn it all round in a Ponzi scheme. That went on for 20 years and probably would never have been found out but for the credit crisis.
So that is different. The Bernie Madoffs, no they are psychopaths, and they are bad and we need to have protection from them.