The people who once would have been gangsters can now be found in the darker corners of finance
I suspect that many readers of the Financial Times will find something objectionable in Martin Scorsese’s latest film, The Wolf of Wall Street. Running at three hours, it explores the pleasures of snorting cocaine, swallowing sedatives, lying, stealing, cursing, cheating on your wife, hiding money in Switzerland, taking part in orgies and dwarf tossing.
But for anyone interested in business – and the way it is practised in New York – the movie is food for thought. Mr Scorsese is a leading chronicler of the American underworld, and he has documented a disturbing chapter in its evolution. The auteur himself has noticed that the kinds of people who used to do terrible things in his old mob films have found profitable homes in the darker corners of finance.
The Wolf of Wall Street is based on the memoirs of a New Yorker called Jordan Belfort. Before he was sent to a federal prison for 22 months in the last decade, he made millions of dollars in the 1980s and 1990s running a brokerage called Stratton Oakmont on Long Island (where I grew up). It specialised in a racket known as “pump and dump” – using high-pressure sales tactics to con people into buying dodgy stocks in smaller companies as a way to generate commissions.
By his own admission, Belfort is a bad person. After his release, he boasted to CNBC in 2007 that he had “played the game of crime very carefully for many, many years, and covered my tracks with zest and zeal”. As portrayed in the film by Leonardo DiCaprio, he is an archetypical Scorsese “wise guy”, familiar to anyone who has seen the director’s later Mafia movies, such as Goodfellas and Casino. He chases after the easy money, and flaunts it when he gets it. He cracks jokes with the boys – in this case, mostly former small-time pot dealers – and he cannot resist the blondes.
The big difference between Belfort and earlier Scorsese hoodlums is in their choice of weaponry. Belfort has no need to pick up a gun to make money. He never has to wield an ice pick or use his fists to take care of a business problem (although he punches his wife in the stomach when the marital going gets tough). Belfort only has to pick up a phone to become another Robert De Niro, Joe Pesci or Ray Liotta.
It makes for a very different initiation. In the old Mafia movies, a gangster made his bones – that is to say, qualified for membership – by killing someone. In this film, Belfort lets his fingers do the walking. At his first brokerage, the neophyte nogoodnik’s initial orders involve making 500 calls a day.
Yet Belfort soon learns he can get away with murder, as it were, with the right rap. At Stratton Oakmont, he inspires his troops by speaking of their telephones in martial terms. He describes the devices as M16s wielded by killers “who will not take no for an answer” when they are pushing a public offering. He tells them that, to get rich, they have to become “telephone f***ing terrorists”.
Guns in the movie are almost a symbol of low status. They are wielded by people who do not make the really big money. The first time a firearm is fired it is being used for target practice by Belfort’s pursuer, a strait-laced FBI agent who notes later, almost sheepishly: “You get a free handgun when you join the bureau.”
The agent ultimately brings down Belfort, but Mr Scorsese depicts the winner of the battle as a somewhat sad sack. Towards the end of the film, the agent is seen reading about the case in the Long Island newspaper Newsday as he rides the subway alone, surrounded by beaten-down commuters.
Belfort, on the other hand, emerges from prison with a career as a motivational speaker, teaching the poor saps in lesser burgs (the name of which was changed in the film to Auckland, New Zealand) how to sell stuff. The viewer is left with the sense that his story is not over.
Nor, I would argue, have we seen the last of the Belforts in our financial midst. Now that the wise guys can make serious money by picking up phones (or plugging in laptops, for that matter) rather than wielding guns, crime has become easier. What the economists call the barriers to entry have come down.
The gangsters in Mr Scorsese’s older oeuvre did dirty work; they saw the blood of their victims and heard their cries of pain. Belfort and his ilk found cleaner hustles. They were tough guys at a distance, and we will see more of them in the years to come. There are plenty of other people on Long Island who want to party.