We had a fascinating and enlightening conversation recently with the novelist Sanjay Sanghooe about Wall Street, where he once worked for a major hedge fund. We wanted to hear his thoughts on good vs. evil in the financial world, and in the larger world of American business. Here are some of his insightful observations about are current economic predicament.

So much of our economic problems at the top of the pyramid are endemic aren’t they? Behavior that makes no sense, with the big picture in mind, have become simply part of the status quo on Wall Street.

Yes I’ve worked with hedge funds so I’ve seen this first hand. They don’t take time investigating the industry they’ve invested in, so they pressure companies to do things that aren’t in the companies’ best long-term interest. CEO pay is out of whack. When times are good, people want to get paid a lot of money and when times are bad they want to wash their hands of the whole thing and say “we’re not really responsible for this.” There’s a lack of accountability in corporate America. That’s where a shareholder activist can be valuable in terms of holding senior managements’ feet to the fire and saying, “hey guys, if you don’t make good decisions, you don’t get paid.” Dodd-Frank gives shareholders say-on-pay but it’s not really binding on the board. The boards are in bed with senior management.  There needs to be a checking force, which can happen from shareholder activism, but not from people like Carl Icahn.

So we’ve moved into a subject that preoccupies me:  what’s right and wrong, and what’s good and evil, in the business world.  You’re talking about it.

This concept of evil, and how it plays out in this area, is very interesting.  Evil is not always easy to identify especially in the business world in terms of how we traditionally define evil. It’s a very interesting question. There is definitely a form of evil in the corporate world today, not in the traditional sense of people trying to hurt each other, but people trying to help themselves—to the exclusion of other peoples’ interest. Darwinian capitalism has really taken over our corporate mentality today so that it’s incredibly prevalent, and it is celebrated. If you can make one more buck doing something, whatever that is, it’s celebrated and you are considered a good capitalist whereas if you are trying to balance different stakeholders, you aren’t considered as good.

We’re hoping to find ways out of this, but first you have to wake people up to the dangers of ignoring all these other stakeholders.

The issue in investment banking there was this saying, “I’ll be gone. You’ll be gone.” It came up in the mid-90s. Until then investment banking was white-shoe profession where there were a lot of long-standing relationships, which kept bankers honest in providing real value and services to their clients. It all changed because of the technology boom. The business model became transaction-oriented. All that mattered were the fees in the deal. Can I get my money right now? I’ll be gone, you’ll be gone. That was the attitude. You don’t care about the relationship with the client, because you’ll be gone.

This is true throughout business. Once corporations were run by people who built them or were identified with the long-term interest of the company. Now you have people who come in and don’t care about the larger issues, the relationship with the community, and so on.

That’s right. If I’m a top executive, I want to maximize my personal wealth. The company doesn’t care about me. Why should I care about what would happen two years from now. The difference obviously is, you do have some visionaries, like Steve Jobs and Bill Gates when he created Microsoft. There was a bigger aim. Not just to make money but to change the world. They may be concerned with money but also focused on the long-term as well. What you have now are professional CEOs. They come in. They’re good on the camera. They have a Rolodex. They have ties in Washington. Their job is to put a good marketing spin on the company, and to meet quarterly estimates. The stock price keeps going up. As long as they do that, they get paid exorbitant amounts of money and they leave. It’s amazing to me. It’s amazing to me that you can have a CEO who works in the computer business who can suddenly get hired to run a meat processing company. What does he know about meat processing? Nothing. And they’re being included for their professional CEO skills but these are people who aren’t even committed to the industry. That culture has become so widespread that changing that . . . from company to company it can happen occasionally but it’s a very hard thing to change in our system.

Part of it goes back to our reward system. We’ll get our rewards and move on. Have you thought about how this could change? What steps could be taken?

I believe our culture is such that until things go horribly wrong, we refuse to change. We respond to crisis. We are a young country. We have a young perspective on things, and like a young person, until things go terribly wrong, as long as things keep rolling, we don’t change. Will we hit a wall with the corporate structures that we have and will that start hurting people enough that we will be forced to change. That might be two decades away.

Really?

Well, I mean, if you think about it, if you look at Wal-Mart for example. They are under fire for low wages and will do anything and everything to maximize their bottom line. They are a horrible employer. Yet Wal-Mart keeps rolling on. They are exploitative with their workers. No one is going to rock the boat in a system that just manages to squeak through until enough workers are so unsatisfied or enough people get the working class riled up enough and say you have to stand up in a concerted way and revolt against such exploitative practices—then a company like Wal-Mart will change. But that won’t happen any time soon. It will happen when Wal-Mart has pushed the envelope enough and people look at their paychecks and decide “we can’t make it.” We aren’t there yet. Right now people are still sort of trapped in their hamster’s wheels and we are managing to survive, the kids want to the new iPhone and as long as people are just comfortable enough not to want to revolt, why should Wal-Mart care. They will pay a few hundred million dollars in settlements, and it will all go away

And the job market. There’s no alternative.

Unemployment is high. When it comes to social issues Americans have a revolutionary spirit, but when it comes to economic issues, we don’t have the spirit we used to. There are little spurts but business goes back to business as usual. Until people are unhappy enough to push for real change, management won’t do it.