The American Dream

A Lesson in Personal Responsibility

by Larry Elder - November 1st, 2007 - Townhall.com

Who is Stanley O'Neal? Born in segregated Alabama in 1951, O'Neal spent his early childhood delivering newspapers, picking corn and cotton on the family farm, and being educated in a one-room school built by his grandfather. He landed a job on General Motors' assembly line, and won a place studying engineering and industrial administration at the General Motors Institute. O'Neal later secured a Harvard scholarship, where he earned an MBA. "I really didn't have an understanding of the world or any role models, but I had a strong desire to learn, and I think that is what pulled me through," said O'Neal.

He left General Motors for Merrill Lynch in 1986, beginning a meteoric rise to CFO in 1998, president in 2000 and CEO in 2002. In July 2002, when Fortune magazine named O'Neal the most powerful black executive in the country, O'Neal refused to comment for the story. Most interviewers found O'Neal disinclined to talk about his race and background, as Fortune later wrote: "[O'Neal] is even reluctant to discuss what it's like to be the first African American to run a major Wall Street firm."

Last year business pundits praised O'Neal, and his firm rewarded him for their record $7.5 billion net income by paying O'Neal $48 million, one of Wall Street's richest packages.

This story says a huge amount about the America we live in today. The lessons are in two areas.

First about race. Stan O'Neal was not made CEO of Merrill Lynch because he was black. His race did not matter. No one is given control of a multi billion dollar corporation as a token. This was not affirmative action, it was about merit.

Second about corporate leadership. Merrill Lynch was enchanted with the profits that could be made from sub-prime loans, just like every other major wall street firm. However when the market changed and the profits disappeared, managing the marketing process was not enough. Corporate heads are rolling, not because of their race, but because they did not protect the corporation from the down side of this market mistake. Even the first black man to head a major firm is not exempt.

It does not matter that we pay our corporate executives too much money. It does not matter that we fire them too quickly for the good of either the corporations or American free enterprise. At least one interesting lesson is that in neither hiring nor firing will race matter at this time.

That lesson is a good one. It means we are coming much closer to Martin Luther King's goal that we will judge a man by the content of his character rather than the color of his skin. That is good for America as it means we are closer to the American Dream.

I just wish we had not allowed our free enterprise system be so corrupted by the courts. Today, there is no consequence for mistakes. Every major Wall Street firm went along with the sub-prime effort because of short term focus driven by court actions. Firing the heads who allowed this is not a replacement for avoiding the herd mentality that is the basis for modern business management. The CEOs all knew that as long as they went along with the herd, they would get their golden parachutes. This idiocy is driven by court decisions that punish any firm for trying to practice accountability.

Two lessons about America today. One good. One bad. This is the American Dream?