LONDON – “What a commentary on the state of twentieth-century capitalism,” mused “motivational speaker” Jordan Belfort as he looked back on his life of fraud, sex, and drugs. As head of the brokerage firm Stratton Oakmont, he fleeced investors of hundreds of millions of dollars in the early 1990’s. I saw Martin Scorsese’s film The Wolf of Wall Street and was sufficiently intrigued to read Belfort’s memoir, on which the screenplay is based. I learned quite a lot.
For example, the scam known as “pump and dump,” which netted Belfort and his fellow Strattonites their ill-gotten gains, comes into much clearer view in the memoir than it does in the film. The technique works by buying up the stock of worthless companies through nominees, selling it on a rising market to genuine investors, and then unloading all of it.
It was not just small investors who were ruined; what stands out is the greed and gullibility of the rich who were sold the same rubbish by the “young and stupid” salesmen Belfort preferred to hire. Belfort was (is) obviously a super-slick snake-oil merchant, brilliant in his trade until drugs ruined his judgment.
Belfort, once again selling the elixir of success after a brief stint in prison, professes to feel shame for his behavior; but I suspect that deep down his contempt for those he swindled outweighs any sense of remorse. In a recent book, Capital in the Twenty-First Century, the economist Thomas Piketty highlights the phenomenon of “meritocratic extremism” – the culmination of a century-long passage from the old inequality, characterized by inherited wealth and discreet lifestyles, to the new inequality, with its outsize bonuses and conspicuous consumption. Stratton Oakmont was a conspicuous example of this trajectory.