Most people would not think about this movie as one that shows rich people as good, but it is. The rich person in question is Danny DeVito’s character of Larry “The Liquidator” Garfield. This movie was made at the beginning of the 90’s near the end of the major round of liquidations and hostile takeovers in public display.
The story follows Garfield as he attempts to take over and liquidate a failing wire cable company. The company, headed by the heir to the original founder of the company is played by Gregory Peck. But unlike Peck’s other roles, Andrew Jorgenson is not the competent character we have come to expect from Peck’s performances. No in this case, he is the CEO of New England Wire and Cable, a company that can’t make a profit to save its life (quite literally) and he refuses to admit that it a losing business, preferring to throw good money after bad to keep the family business going. That can sometimes be an admirable position when it’s your own money that you’re throwing away…but New England Wire and Cable is a publically traded company and answerable to stockholders…worse it’s so poorly managed that while the company and all it’s holdings are worth almost $26 dollars a share if liquidated, it’s only trading at $10. This is usually either the sign of a startup that hasn’t taken off yet…or a company that is failing. $10 for $26 is a good buy for a company that could turn a profit…but for a company losing money it is a sign that you should liquidate and put the funds in a place that can produce.
So let’s talk about Larry the Liquidator. As the tag line for the movie describes him “Arrogant. Greedy. Self-centered. Ruthless. You gotta love the guy.” I might add crude and vulgar. But the movie, very strangely for a Hollywood film, make Garfiled a somewhat likeable character. Lawrence Garfield is shown to not be vicious or intentionally cruel as the media would love to depict liquidators, it is rather the game itself he is interested in. He has no desire to hurt the employees, liquidation the kind he is proposing would almost certainly come with a severance package, and he thought it was a good thing the company’s pension fund was fully funded. He even agrees to sell the company back to the employees when they have a plan that will actually work. His problem was that the business was failing and would continue to fail…those workers were going to lose their jobs one way or another whether he liquidated the company or not…he was concerned that everyone else didn’t lose out too (mainly himself, yes, but as Adam Smith showed we all benefit from self interest). He loves the game of corporate warfare, and is out to provide his clients, his investors the best return on their money.
Now some might point to his crude and almost misogynist habits as a reason to help him…but such people would not be watching the movie. All of this behavior is in reference to Penelope Ann Miller’s character Kate Sullivan. They would be missing that all of the highly sexualized conversation was actually akin to chess moves, tactics designed to put each other off balance…that and Sullivan gives as good as she gets. As Lawrence points out, “We’re the same… We care more about the game than the players.”
Lawrence also does have standards. When offered “greenmail” (basically buying him out at above market rate to make him go away), Sullivan points out to him: “Why so uptight. It’s not illegal.” To which Lawrence responds “It’s immoral—a distinction that has no relevance for lawyers. But it matters to me.” And then describes what is wrong with greenmail.
“Everybody walks out happy. I get paid off. Jorgy keeps his company. The employees keep their yobs [sic]. The lawyer gets a big fat fee. Everybody walks out. Yumping Yiminny [sic]. Except for the stock holders. Their stock falls out of bed they don’t know what hit’em”
“Now your Albert Schweitzer?”
“Not Albert Schweitzer. Robin Hood. I take from the rich. And give to the middle class… Well, the upper middle class.”
As vicious as he can be, he will not hurt the people whom the company is supposed to be concerned with (yes, I think people forget, it’s the stock holder not the employee who should be the first concern because companies that care about stock holders grow and prosper and hire more people…companies that screw the stock holder tend to go the way of the Dodo and pink slip everyone in time.)
Further, something almost unheard of in this day and age, Larry actually treats people like adults. He doesn’t lie or bullshit them (except with Sullivan, but again it’s a game with them that they both implicitly understand the rules of). Nowhere is this seen better than near the end when he tell stock holders why they should let him liquidate the company. And never I have seen such a perfect description of what economists call creative destruction:
Amen. And amen. And amen. You have to forgive me. I’m not familiar with the local custom. Where I come from, you always say “Amen” after you hear a prayer. Because that’s what you just heard – a prayer. Where I come from, that particular prayer is called “The Prayer for the Dead.” You just heard The Prayer for the Dead, my fellow stockholders, and you didn’t say, “Amen.” This company is dead. I didn’t kill it. Don’t blame me. It was dead when I got here. It’s too late for prayers. For even if the prayers were answered, and a miracle occurred, and the yen did this, and the dollar did that, and the infrastructure did the other thing, we would still be dead. You know why? Fiber optics. New technologies. Obsolescence. We’re dead alright. We’re just not broke. And you know the surest way to go broke? Keep getting an increasing share of a shrinking market. Down the tubes. Slow but sure. You know, at one time there must’ve been dozens of companies making buggy whips. And I’ll bet the last company around was the one that made the best goddamn buggy whip you ever saw. Now how would you have liked to have been a stockholder in that company? You invested in a business and this business is dead. Let’s have the intelligence, let’s have the decency to sign the death certificate, collect the insurance, and invest in something with a future. “Ah, but we can’t,” goes the prayer. “We can’t because we have responsibility, a responsibility to our employees, to our community. What will happen to them?” I got two words for that: Who cares? Care about them? Why? They didn’t care about you. They sucked you dry. You have no responsibility to them. For the last ten years this company bled your money. Did this community ever say, “We know times are tough. We’ll lower taxes, reduce water and sewer.” Check it out: You’re paying twice what you did ten years ago. And our devoted employees, who have taken no increases for the past three years, are still making twice what they made ten years ago; and our stock – one-sixth what it was ten years ago. Who cares? I’ll tell you. Me. I’m not your best friend. I’m your only friend. I don’t make anything? I’m making you money. And lest we forget, that’s the only reason any of you became stockholders in the first place. You want to make money! You don’t care if they manufacture wire and cable, fried chicken, or grow tangerines! You want to make money! I’m the only friend you’ve got. I’m making you money. Take the money. Invest it somewhere else. Maybe, maybe you’ll get lucky and it’ll be used productively. And if it is, you’ll create new jobs and provide a service for the economy and, God forbid, even make a few bucks for yourselves. And if anybody asks, tell ’em ya gave at the plant. And by the way, it pleases me that I am called “Larry the Liquidator.” You know why, fellow stockholders? Because at my funeral, you’ll leave with a smile on your face and a few bucks in your pocket. Now that’s a funeral worth having!
So, yeah, while Larry Garfield isn’t perfect, he is shown to be more of a human being than any liberal stereotype would like you to think of the people who liquidate companies.
I love money. I love money more than the things it can buy. Does that surprise you? Money. It don’t care whether I’m good or not, it don’t care whether I snore or not, it don’t care which God I pray to. There are only three things in this world with that kind of unconditional acceptance. Dogs. Doughnuts. And money. Only money is better. You know why? Because it don’t make you fat and it don’t poop all over the living room floor. There’s only one thing I like better. OTHER PEOPLE’S MONEY.
*Yes I know I haven’t come back to this series in a long time…the post election depression made me give up on it when I should have finished it, and I’m just now coming back.