StuartHayashi Image The media’s exploitation of the 2001 corporate scandals in its hysterical (and popular) campaign to defame businesspeople in general harkens back to another anti-capitalist witch hunt they conducted in the 1980s. That era is now pejoratively dubbed “the Decade of Greed,” as it saw the proliferation of honest but controversial characters known as “corporate raiders.” “Corporate raiders” are the mavericks who launch “hostile takeovers,” trying to take over failing mega-corporations for themselves. (Successful companies have higher stock prices and are thus harder to buy out.) To do this in the 1980s, a corporate raider, with the help of the unfairly reviled investment banker Michael Milken, utilized his own smaller firm in issuing high-risk, high-yield bonds (called “junk bonds”), with which he raised enough funds to purchase a large stake in the corporation he wanted to gain control of. Should the raider succeed in conquering the organization this way, the organization itself becomes the collateral if he cannot pay back the bondholders. Once the raider gains enough power in the poorly-performing company, he will often either the liquidate it to spare the stockholders from even greater losses in the future, or he will implement changes in the management in order to turn the company around and save it — and this usually involves terminating many top managers. Raiders famous for partaking in the latter activity are also called “turnaround artists,” because they choose to improve the company’s financial status, thereby making the company’s shares — and therefore the shares that ”they themselves” own — increase in value. Not surprisingly, many people, including executives, look upon “corporate raiding” with revulsion, pronouncing it cold-blooded and deplorable. But is it? When the raider buys a corporation’s stock, he does so only because the shareholders and directors consent. If they don’t want potentially unsavory individuals gaining a stake in their outfit, they should not publicly sell stock at all. Just as important, even though rank-and-file employees commonly fear being fired during a hostile takeover, their jobs aren’t the ones in greatest jeopardy. When raiders want to fire people in their newly acquired companies, the primary targets are almost always the top managers, for raiders know what banker John Allison knows: “[W]hen a company fails, it is practically never true that the average employee of the failed company is intrinsically less competent than the average employee of a successful company. It is almost always true that the reason for failure is poor leadership at the top of the organization.” Therefore, unless the raider is confident that incompetent managers can clean up their own acts, he will likely terminate them before he lays off any rank-and-file worker. The rank-and-filers’ employment is only at risk if the raider believes that the top managers wasted too much company funds by hiring more people than necessary. But isn’t it still cruel to come out of nowhere and let go of an unsuspecting manager who cannot rescue his company? Actually, there is nothing innately immoral about that. A manager’s responsibility is to maximize the shareholders’ return on investment, without abrogating anyone’s rights, and he deserves his position mostly to the extent that he fulfills this mission. If the manager is truly capable, then the raider will keep him in place so that he will eventually end up improving the company and making it — and therefore the raider — richer. As a “raider,” Ron Perelman took over the Revlon corporation in its darkest days and saved it from ruin. Revlon’s current human resources policies may not be up to par (a former employee I know was unfairly let go), but, if it were not for Perelman seizing control of the corporation, firing certain managers, and then using his own vision to guide the company back to success, the company could have gone out of business and ”everyone” would have lost their employment. Therefore, on a net balance, Perelman probably ”saved” numerous jobs, and, because he nursed Revlon back to health, its stock price shot upward, profiting him and the other shareholders. A corporate raider taking over a company through the voluntary sale of stock, firing its worst executives, and then bringing it to safety, does not violate anyone’s rights to life, liberty or property. In truth, “corporate raiders” ”raid nothing.” They do, however, create more wealth for other people, like working-class and middle-class stockholders. So “corporate raiders” do not deserve the denunciation they receive from society, but some gratitude. They already have the cash, but it is about time that we also give them some credit. ”Stuart K. Hayashi is the president of the Reason Club of Honolulu and an undergraduate in Entrepreneurial Studies at Hawaii Pacific University, though his opinions do not necessarily reflect that of either institution. He can be reached at and an index of his past editorials for can be seen at”