Playboy Interview: Louis Rukeyser

Wall Street raiders, white knights and greenmailers wage wars for control of some of the nation's prize companies. A new tax law, the most revolutionary in decades, affects every American's 1040. Business journalists, once relegated to the financial section, now find themselves covering front-page human-interest stories on layoffs and cutbacks that cost thousands of jobs. Not a few work the police beat, as the greatest insider-trading scandal in Wall Street's history continues its spasms.

It's no surprise, then, that the business media have themselves become a blue-chip growth industry. New publications have proliferated; existing ones have grown fatter. Money is the hot magazine. Television serves up a potpourri of specialized business shows where once situation comedies reigned.

Well, not entirely. For 17 years, there has been Friday night's "Wall Street Week," with Louis Rukeyser as host. Produced by Maryland Public Television, the show began as a limited-run series on just a few Eastern PBS stations, then gradually grew to its present prominence: almost 300 stations and an audience of 10,000,000, twice the weekly circulation of The Wall Street Journal. Along the way, Lou Rukeyser emerged as the best-known star of public television--with the possible exception of Big Bird.

Why all the hubbub? Rukeyser says it's because the financial show (now retitled "Wall Street Week with Louis Rukeyser") is broadcast in English, a fact that he mentions to guests when they seem poised to lapse into financial jargon. He also thinks people are fascinated by money--"one of only two surefire subjects," especially, says Rukeyser, when presented with "a little bit of flair."

That flair is principally Rukeyser's wit, his ability to find the humor in the nation's money supply or the latest merger. Each show, he delivers a tart monolog that skewers those perpetrators on and off Wall Street who had a hand in shaping the week's events. Inevitably, he ventures into politics. ("Johnny Carson and I are the only two people on television doing topical humor," he claims.)

"Wall Street Week" is nothing if not a formula show. After his solo opening, Rukeyser leads a panel of resident Wall Streeters (chosen from a select repertory company of 19) through an interpretation of the week in finance. The experts answer viewers' questions, and each week the host and his panelists grill a guest who has played a key role on the Street or in the board room.

While it's not a stock-tip show, according to Rukeyser, issues have been known to move a point or two on the basis of a mention on "Wall Street Week." Invariably, Rukeyser asks his guests to "name names," though he refrains from picking stocks himself, often steering the discussion toward the big picture: the budget deficit, international-trade considerations, problems and prospects in particular industries. Such a canvas reflects his belief that for too long the news has been dominated by political reporters who are convinced that their stories constitute the "high-policy stuff, the news about war and peace." In Rukeyser's vision, economics underlies all events, and "if you haven't got the economics straight, nothing else matters."

He has plenty of perspective to support that view. Born in 1933, he went to Princeton and graduated in 1954. Then, after a stint in the Army, he joined the staff of the Baltimore Sun. He worked his way up, becoming chief political correspondent for The Evening Sun and then, at the age of 26, becoming chief of The Sun's London bureau. Later he became the paper's principal Asian correspondent. Rukeyser's reporting from New Delhi, Hong Kong and Saigon (just as the Vietnam war was heating up) won him two Overseas Press Club awards. But being a ham, he found the lure of TV too hard to resist and signed on as ABC's Paris correspondent in 1965. A year later, he moved across the Channel to head the network's London bureau.

In 1968, Rukeyser returned to the United States, where ABC gave him a newly created post--economics editor. He lobbied hard for the job, facing resistance from top executives who felt that the subject was "too dull and too complex for viewers used to sitcoms and shoot-'em-ups."

Rukeyser continued to make waves--and not a few enemies--by charging that none of his colleagues was versed in economics and that it received scandalously scant coverage on television news. As he grew increasingly comfortable with the subject, he became the in-house economics expert, fulfilling, perhaps, his genetic legacy. Rukeyser's father, Merryle, had been financial editor of the New York Tribune and a syndicated financial columnist.

As ABC's economic editor, Rukeyser began delivering a twice-weekly commentary on the ABC Evening News and served as host for several special reports, such as "The Great Dollar Robbery: Can We Arrest Inflation," which won him a 1970 Emmy nomination. That same year, he was approached by the Maryland Center for Public Broadcasting to advise on a show called "Wall Street Week," which would relate economic developments to the wallet of the average person. When the producer asked Rukeyser to recommend a host, he drew a blank--and was asked to fill the spot himself. Rukeyser moonlighted at "W.S.W." while continuing to work at ABC. "Wall Street Week" was picked up by the entire PBS network in 1972 and a year later, Rukeyser quit ABC. His career promptly took off. He became a highly paid regular on the lecture circuit and, beginning in 1976, returned to the typewriter as a syndicated newspaper columnist. He has since written two books, "How to Make Money in Wall Street" ("You'd have to be a dullard to cover the subject and not pick up any expertise") and "What's Ahead for the Economy," published in 1983 and the title of the 40 or 50 speeches he gives each year.

To target the business beat in this era of corporate superstars, Wall Street scandals and take-over mania, Playboy sent Warren Kalbacker to talk with the man who was there first. Kalbacker's report:

"The Boesky affair, involving trader Ivan Boesky's illegal use of inside information to reap huge profits on Wall Street, had broken shortly before our first scheduled session. The stock market had plunged 40-odd points the previous day, and there was gloom in the air--a definite whiff of bear on Wall Street. Rukeyser dived right into the scandal story, of course, but he didn't let it get in the way of his peppiness about the economy in general. At the end of our long conversation, he checked the market for the day and noted that it was down just a bit. 'They're selling off the crooks,' he cracked. Nothing was about to shake Lou Rukeyser's faith in the free-enterprise system.

"Rukeyser has a great deal to say about capitalism and was eager to do so in a more expansive medium than his 45-second TV answers or the 750-word bites of his weekly newspaper column. His spacious house in Greenwich, Connecticut, provided the setting for several early interview sessions. But Rukeyser seems to be on the road as often as he is at home, and our talks also took place in hotel rooms, aboard airliners and in taxis and rented cars.

"Clearly, he enjoys the niche he's created for himself out of broadcasting, playing the pundit and taking his show on the road. The crowds, prosperous and seemingly Republican, obviously regard him as one of their own, though Rukeyser insists that he takes umbrage at being called a conservative. He can work a room with consummate skill and timing, but he reminds you often that he considers himself a working journalist.

"His affection for his roots in the newspaper business is obvious, down to the manual typewriter on which he pounds out the script for 'Wall Street Week' and the city-room atmosphere before the show on Friday evening.

"Television, though, has made him the celebrity he is. He is frequently stopped in hotel lobbies and airports by people thanking him for investment advice gleaned from his show; only a few claim that the tips were bum steers. One young woman recognized him and offered him some advice of her own: 'Jesus saves.' Rukeyser's aside, a line no doubt awaiting just such a setup, was 'But Moses invests.'

"Rukeyser claims to be the champion of the small investor. At least he tried to be with this small investor. Before one holiday weekend, he predicted which way the stock market would move on the basis of his intuition--plus some 'leading indicators,' naturally. At our next meeting, he wagged his finger. 'See, if you hadn't been so busy plying me with questions, you might have made a nice piece of change.'

"Story of a lot of people's lives, I thought. But not Rukeyser's. He asks questions and makes a nice piece of change."

[Q] Playboy: Despite record highs on the Dow Jones, haven't the scandals of the past year produced a record amount of fear and loathing on Wall Street?

[A] Rukeyser: I think the scare was healthy. There was an arrogance in many quarters of the investment world. A lot of those guys, the arbitragers who trade on giant take-overs, have gotten a well-deserved black eye, and if they're knocked out permanently, that won't disturb me one bit.

[Q] Playboy: As you say on Wall Street Week, care to name any names?

[A] Rukeyser: Well, Ivan Boesky, of course. And Dennis Levine. [Both were charged with illegal inside trading.] The wry joke among arbitragers is that since the arrest of Levine, the new definition of arbitrager on Wall Street is someone who says he's never even met or talked with Dennis Levine. Now they're all racing to tell us they've never done business with Boesky.

[A] Actually, I was thinking of some of the others, whom I probably shouldn't mention by name, because they haven't been charged--yet. Yes, Wall Street is under fire, and the question is, Is it no longer a place for the average person's money?

[Q] Playboy: And the answer is?

[A] Rukeyser: That the average person ought to try to keep it all in perspective. The indignation is justified. There's nothing wrong with someone's being smarter than I am and figuring out that Company XYZ is selling at a bargain price and is a likely take-over target. But if that someone is proceeding because of a surreptitious tip from a merge lawyer or the vice-president's mate, then he's stealing. He's robbing the rest of us. On the basis of evidence we have now, Boesky was a purveyor of stolen goods. He was illegally provided information from those who had a fiduciary responsibility not to reveal it and he was fencing it in the market place.

[A] But overall, I don't think the financial markets run corruptly. It wouldn't be in their self-interest to do so. The chairman of the Securities and Exchange Commission, the people charged with cracking down on this, says himself that the extent of such illicit activities is far less than gossip and rumor would suggest. And I think the SEC is right on this.

[A] The true insiders--the heads of investment firms--are the first to recognize that they have to expunge this cancer completely, publicly. They need everybody's money--they need cash for these markets, and a lot of people are being scared off legitimate operations because of the stench of the improper ones. The heads of investment firms want these guys taken care of real fast. They're terrified.

[Q] Playboy: Whom do you represent when you reassure people about Wall Street? Publicly, you speak up for the small investor, but you rub shoulders with a lot of big-time insiders.

[A] Rukeyser: I represent the customer. I have a warm identification with the small investor for the excellent reason that I am one. I'm just a working journalist. Actually, in the course of an average Wall Street Week, we practice three basic forms of journalism--reporting, analysis and commentary. It's a little unusual that the same guy is doing all three, but I think it's perfectly clear when I'm reporting something--giving people the Dow Jones average for the week. When I analyze, I try to figure out what some events mean to the average guy. And I comment when I do something like offer a presumptuous proposal for reforming Social Security.

[Q] Playboy: We'll get back to Wall Street insiders; but in the larger sense, we might not be having this conversation if business and banking hadn't become so fashionable these past few years. Why do you think all this has happened?

[A] Rukeyser: Fads come and go in occupations. Investment banking is the place to go for the bucks, they say, and it has become the subject of cover stories in magazines and general-interest TV programs. But maybe a year from now the hot new profession is going to be interior design.

[A] When I started going on college campuses, in the late Sixties, I used to say that there were two extreme positions--the radicals said that we were the most immoral society in 3000 years and the moderates said no, only 2000. To me, there was always a hypocrisy to the so-called Sixties idealism. Very often it was "Daddy is a terrible materialist, fascist s.o.b. I really hate the guy, and besides, where's the check for my stereo?" Then, in the Seventies, the realization set in that none of this works by magic. It is not predestined that America will always have world economic leadership and that every American is entitled to live better than his parents did.

[A] When I lectured on college campuses during the height of the miscalled energy crisis and explained that it wasn't just some scam got up by the big oil companies, I'd say to students, "This is a free country and you have the right to disbelieve what I've just said. If so, I have a suggestion: If you think that the big oil companies are ripping off the American people and have this great profiteering scam, you can get in on the scam. All you have to do is put together enough money or borrow some from your father--it'll be one of the most useful things you ever borrowed for--and get yourself a share or two of these rip-off artists and you can be part of the rip-off."

[Q] Playboy: Obviously, they didn't all take you up on it.

[A] Rukeyser: No. And why? Because anyone who then got into the real world--as opposed to the ivory tower--discovered that it wasn't such a rip-off, that it wasn't a guaranteed route to obscene profits. That was the beginning of wisdom on that subject. So we had a terrific change. The most popular major on college campuses today is business. That would have been unthinkable 20 years ago.

[Q] Playboy: And the M.B.A. degree is the ticket to success in this brave new business world?

[A] Rukeyser: The M.B.A. degree is in the same position as the high school diploma was two decades ago. It's now the entry 0level requirement in many occupations. But the way the M.B.A.s view themselves and the way they're viewed by the business community could be two different movies. Most of the self-made executives have total contempt for M.B.A.s. Others complain that graduates of our most prestigious business schools come in expecting to run the business in two weeks and have only a limited view of how they can preserve their inflated salaries.

[Q] Playboy: You think they want too much too soon?

[A] Rukeyser: Generally, yes, though there are areas where youth and remuneration are associated. For example, the commodities pits. And particularly with the most recent innovations, such as stock-index futures and stock-index options, the average participant is barely eligible to purchase a razor. But those casino areas of finance have always had the lure of instant wealth. My own view is that those who approach Wall Street as if it were a casino should expect casino odds. Of course, some people hit.

[A] Money doesn't care where it goes. I've never agreed with those theologians who think the acquisition of wealth is associated with some inner grace that is not bestowed on those who make less. Take the highly paid rock star. I don't begrudge him the money. Nobody is being compelled to go to his concerts. These people offer their wares and the market puts a price on them. If someone has legitimately built an enterprise, he's entitled to every penny. But it's important that he abide by the law. Just because a jerk like Ivan Boesky abuses the system is no reason to junk the system. Those of us who believe in the system have to be the most indignant of all when people abuse it. The crook should be jailed, and fast.

[Q] Playboy: We've had laws against insider trading for years. Why are we only now seeing really big busts?

[A] Rukeyser: As long as there's been a Wall Street Week, I've been hectoring every successive chairman of the SEC about insider trading. You didn't have to be a genius to recognize that before every major news announcement, there had been activity in the securities industry that smacked of illegality. I'd been asking them about it for years and they mumbled and stalled. The current SEC targeted this as one of their major priorities and said as clearly as they could that they now had computers that could trace this sort of thing more rapidly and accurately, and they have proceeded as good as their word. I think the next step clearly will be SEC: The Movie.

[Q] Playboy: And the plot?

[A] Rukeyser: The story contains all the great elements of human interest: enormous sums of money, spectacular examples of high living beyond the dreams of anybody, crime on a scale that would have intrigued Rasputin. It's not surprising or improper that people are consumed by it.

[A] What worries me is that we're going to let the crime story overshadow the reality, which is that these markets perform a valuable service and that most of those in them are decent--as they have to be in their own self-interest.

[A] The market needs the small investor, because he provides liquidity, depth, stability--things the great institutions very often don't provide--and because he, and I use the word he only generically, buys many stocks that are considered too small and too unimportant for the great behemoths of investing.

[Q] Playboy: You defend the little guy; but without the kind of inside information those behemoths have, does he ever really stand a chance?

[A] Rukeyser: You don't need this kind of information to make money on Wall Street. In my observations over the years, more money is lost than made on so-called inside tips. By the time the average person hears what he or she is told is the inside stuff, the information is neither illegal nor valuable. You shouldn't worry about trying to figure out the inside tips. What you have to do is pick the quality companies that are going to grow with America and stick with them through the kind of blowout that has everyone murmuring that the whole thing is a scam. The Boesky affair demonstrates the need to stick to the fundamentals of investing and consider such old-fashioned questions as whether or not there really is a company there and whether or not it has taken on more debt than the government of Argentina.

[Q] Playboy: And now you're going to instruct us in the fundamentals of investing.

[A] Rukeyser: On Wall Street Week, what I've been telling people for 17 years now is, if somebody says something useful on a Friday night, don't rush in when the market opens Monday morning and buy, buy, buy, because 10,000,000 other people have heard that as well. Follow it up. See if it is a good suggestion. If it is a good suggestion, it will be a good suggestion in three days or four weeks--long after the initial flurry of enthusiasm has occurred. I don't think people anywhere should be grabbing a sliver of information and rushing to commit their hard-earned money.

[Q] Playboy: You're welcome to plug your TV program up to a point, but isn't it a fact that large institutions have achieved real dominance in the financial markets?

[A] Rukeyser: We have an interesting situation now in terms of the individual investor. People are scared by figures that came out well before it was revealed that Boesky had to pay $100,000,000, part of which was restitution, part of which was penalty. According to recent figures, as much as 89 percent of the trading on the New York Stock Exchange is done by institutions--pension funds, banks, mutual funds, insurance companies. So people ask what chance the small investor has. My view is that he has a terrific chance if he avoids the temptation to be a slickly sophisticated in-and-out trader.

[A] But getting back to that 89 percent figure, although the institutions dominate the daily trading on the New York Stock Exchange, that's not true of all markets. On the over-the-counter market, they're still a minority. And they don't even own the majority of shares on the New York Stock Exchange, even though they're shuffling them back and forth pretty fast.

[Q] Playboy: And how does the small investor play this?

[A] Rukeyser: The best thing the small investor has going for him is the stupidity of the large traders. I mean that quite sincerely. The lofty institutional investors have all the faults they ascribe to the small investor: They get very emotional. They tend to panic at critical moments. They all buy and sell stocks at the same time--which sends the price up or down. The arbitragers are always at pains to try to minimize that impact, and the individual who is not swept up in that kind of institutional hysteria has a terrific advantage. He has two others as well. He doesn't have very much money; the amount of money involved is so picayune that we do not influence the course of the market. You and I can go along for the ride without influencing the price. The third advantage is that we don't have to report our results--if you can resist the temptation to brag to your spouse or friends or tell everyone at a cocktail party. These other fellows are always dressing up their portfolios to make everybody believe that at the end of the quarter, they held all the hot stocks and none of the cold ones.

[Q] Playboy: Are the hot-shot money managers attempting to take themselves out of the loop with this new phenomenon known as programed trading?

[A] Rukeyser: Programed trading occurs when somebody--usually a large institution; it could be a very fat cat--buys a bunch of stocks and sells a stock-index future or an option against that basket of stocks.

[A] It's all done with computers. It doesn't even take as much brains as the average politician has. Arguably, it can be done with as little as $5,000,000. The generally accepted minimum, though, is as high as $25,000,000. It's more money than most of the gang I hang out with can put up for the average transaction. It's a way for these institutions to make, in effect, a riskless investment. All they care about is getting a return that's higher than the yield on Treasury bills.

[A] I happen to think it's an antisocial activity and that they should quit. I blew the whistle on it in my column. I think I was the first one to write about it. It scares the hell out of small investors. Most of them, of course, protest about it when it sends the market down. They don't protest on the other days, when it sends the market up.

[Q] Playboy: Won't the institutional investors devise new ways to get the jump on the average investor?

[A] Rukeyser: Sure; you've got to remember that these fellows are paid enormous sums of money, and if they just parrot the conventional wisdom, people may occasionally wonder why they're being paid all that money, so they have to come up with these games from time to time.

[Q] Playboy: You noted that the gang you hang out with can't come up with enormous sums, but you wouldn't consider yourself an average trader, would you?

[A] Rukeyser: Of course not. Anyone who tries to be a trader has to have a healthy ego.

[Q] Playboy: You display a fair amount of self-confidence.

[A] Rukeyser: I think that's just good journalism. I think most journalists, if they're good journalists, do not live in awe of anybody. If you're sensitive to hierarchies, you probably should find another field of endeavor. But I don't devote most of my investing effort, time or dollars to trading.

[Q] Playboy: We did happen to note your keen personal interest in the stock market the other day. You were pretty absorbed in your portable quote reader.

[A] Rukeyser: It was a Friday and I was going to do my program and there was a Playboy interviewer who wanted to distract me from my work. I had to keep up with what was going on. That was my journalistic responsibility.

[Q] Playboy: You did indicate a deeper, perhaps more personal interest when you filled us in enthusiastically on stock-index futures, if we recall correctly.

[A] Rukeyser: I was just trying to educate you in an arcane area of the market. The stock-index futures, which have been around only since 1982, are, in effect, a way of buying the entire market for short periods. There are many useful, conservative ways to use these futures. I don't use them in any of those conservative ways. For me, this is a hobby. When I have a feeling, from time to time, that I know in which way the market is going to head, I may buy or sell futures; and what I like about them is that they eliminate all the bull normally associated with investing.

[Q] Playboy: What bull is that?

[A] Rukeyser: Bull excrement. The bull himself, of course, is vital to upward markets. Anyway, futures are not all the tools available for windows, orphans or people of sober temperament. I just do a little bit of it because I enjoy it and find it fun.

[Q] Playboy: You also mentioned something about building a new swimming pool.

[A] Rukeyser: Well, the payoff tends to be in real dollars. I actually don't want to talk too much about the fact that I've had some pleasant successes over the years.

[Q] Playboy: You've also had some unpleasant surprises in your personal finances. The IRS is disputing your tax returns for several years, and Money magazine reported that with some relish. When Money asked you to comment on some of your disputed tax-shelter deals, you offered a very terse explanation.

[A] Rukeyser: You told me you weren't going to ask about that.

[Q] Playboy: We said we wouldn't make it the focus of this interview. But it's a topic in the press.

[Q] Rukeyser: Well, that's what it is--a silly-little intramedia furor. A little witch-hunt that turned up no witch. A would-be hatchet job with a blunted ax.

[A] Playboy: Then why not set the record straight? It'll be tax time when the interview comes out; if there's one thing people sympathize with, it's IRS problems.

[Q] Rukeyser: I'm taking the IRS to court because it made some erroneous assessments, as we will demonstrate. Anybody who knows me can be sure that anything I've undertaken in my personal financial affairs is not only legal but legitimate and appropriate. The IRS, like all human institutions, is capable of error. They're not all J. Edgar Hoovers in pursuit of Dillingers; sometimes they're just bureaucrats making mistakes. That's what happened in my case.

[Q] Playboy: According to reports, the IRS is saying that you earned more than $700,000 in 1982 and paid no taxes at all.

[A] Rukeyser: I assure you we pay a lot of taxes every year. And while I'm not in full emotional agreement with Oliver Wendell Holmes that taxes are the price of civilization--because I fear that the uses to which our taxes are put aren't necessarily civilizing--I've paid plenty of taxes in the past and will pay plenty in the future. Plainly, I don't plan my life with the IRS in the forefront of my consciousness. I've said for years that the best way to keep money in perspective is to get some of it, but anyone who knows me knows that money doesn't obsess my life or conversation 24 hours a day. Nor am I a financial expert in my personal affairs. Anyone who wanted to prove that would have to look no further than my involvement with horses. I'm now the sole support of five horses, all paid for with after-tax dollars. Does that satisfy your interest in my financial affairs?

[Q] Playboy: Just fulfilling our journalistic responsibilities. Let's turn from your tax problems to tax reform in general. What do you think about the new law?

[A] Rukeyser: It's anti-American. It's anti-growth. It's antisuccess. It's anti--upward mobility. It isn't a tax cut.

[Q] Playboy: Don't like the tax-reform bill, eh?

[A] Rukeyser: All over this country, people think it's a wonderful tax cut. That's the way it was sold. Yet the Government talked about its being revenue-neutral, meaning it was not a tax cut. How do you do that? It's a scam. They say there's a very big tax cut for what they call people, balanced by a big tax increase for what they call business. In the end, only people pay taxes, so there is no tax cut there. Supporters of the bill say it will encourage savings and investment, but really it's a backward step because of what it does to capital gains, IRAs, and so forth. The most obvious scam here concerns the net long-term effects of the tax bill. We're all going to be paying for this.

[Q] Playboy: You worry about the effects of tax reform. But aren't the economic effects of all this take-over activity--the layoffs, and so on--much tougher on people? Aren't the take-over artists doing more harm than the tax reformers?

[A] Rukeyser: I don't accept the judgment, prevalent as we speak, that all these mergers are pernicious. These corporate raiders are out to make a big buck, and they are out to make a quick buck, but I don't think the net effect of their activities has been negative. Yes, they're upsetting to entrenched managements and, certainly, to the people whose jobs have been threatened. But the U.S. has been losing competitiveness, and unless we get our corporations in fighting condition, we may find it a fight we can't win.

[Q] Playboy: But, again, fighting condition translates into layoffs, firing, for management as well as labor.

[A] Rukeyser: Look, many U.S. corporate managements had grown stagnant and complacent and contemptuous of their own stockholders, the ultimate owners of the corporation. They were told they were corporate statesmen and they were major figures in our society and they had roles and responsibilities far beyond the vulgar one of making money for their shareholders. I think all this went to their heads. And this self-importance was matched by self-indulgence. They not only paid themselves handsome salaries but they lived the lives of 19th Century maharajas.

[Q] Playboy: So you'd prescribe fewer perks for these guys?

[A] Rukeyser: Boone Pickens, the great oil-company raider, told me once after he appeared on Wall Street Week, "Lou, I almost got into the corporate oil club myself. I was a good ol' boy from Oklahoma and I didn't scare them the way you Easterners do. I used to be invited to the fancy hunting lodges and the parties, the largest ones." He said that the chairman of one of the biggest oil companies had said to him, "Boone, you're a bright young fellow. What would you do if you were running my company? Ha. Ha. Ha." And Pickens said he looked at the fellow and said, "Well, the first thing I'd do would be to go to work for the shareholders for a change." Boone said that after that, he found the invitations to the hunting lodges hard to come by. It's clear that Pickens and others like him have touched many establishment executives on the raw nerve--their privileges. The smallest audience I addressed in the past year was the board of directors of one of the major oil companies. We had a lovely lunch, and afterward a very distinguished older man came up to me and said, "You were too nice to that son of a bitch Boone Pickens."

[Q] Playboy: As a shareholder yourself, you no doubt have some ideas about how hard managements should work for you.

[A] Rukeyser: It's getting back to corporate basics. Making a product people want to buy. Producing it efficiently. Emphasizing quality. Things that used to be associated with American industry.

[A] Akio Morita, the chairman of Sony, found the situation almost the reverse of what it is today when he first came over here in the Fifties. I asked him about the American worker--a much-maligned character who's now taking so much criticism. Sony has a major operation in San Diego, and Morita said that American workers are fine--not just fine but every bit as admirable as Japanese workers. But he wasn't so charitable about American management. He thought that there was a tendency to focus too much on quarter-by-quarter results instead of on long-term planning, and he thought we had a number of other hierarchical ways of separating labor from management that were impeding our progress.

[Q] Playboy: So your ideal manager has to watch out for the Wall Street take-over artist, stay on guard against foreign competition--and eat in the cafeteria with the blue-collar employees.

[A] Rukeyser: In the long run, I think this new awareness of the possibility that somebody is going to come up and throw a brick at you is going to be good first for the stockholders and, in the end, for all of us, for the competitiveness of American industry, for the ability of the country to survive in the 21st Century.

[Q] Playboy: Those are fighting words to business school students and Wall Street Week viewers but may not sound so encouraging to the auto worker who's just been laid off or to the flight attendant grounded because her airline has just been gobbled up.

[A] Rukeyser: Certainly, there is pruning that is inevitable. There are pluses and minuses in this. The flight attendant who's furious at the airline C.E.O. is very often mad at the wrong guy. The same thing that's making her mad is making her sister down the road deliriously happy because she's able to travel more cheaply than before.

[Q] Playboy: You think a lot of Morita. Do any Americans come to mind? Lee Iacocca has done quite a job of downsizing Chrysler.

[A] Rukeyser: From a purely business standpoint, Iacocca has done a marvelous job for the shareholders of Chrysler. But I'm bemused by his role as culture hero. If he really were to become President, we would save on-the-job training, because he already knows his way to the public till. People forget how significant that aid was at a critical moment. He did, indeed, pay back his loans, but Senator Proxmire--who is, God knows, no right-wing zealot--has suggested that in the end, it didn't even save any jobs in the auto industry. Those lost by Chrysler would have gone to General Motors and Ford.

[Q] Playboy: Perhaps not. The auto industry hasn't exactly been providing lifetime employment.

[A] Rukeyser: The auto industry was the classic arrogant industry. It thought it knew better than its customers what its customers ought to have. In the Fifties and the Sixties, auto executives were sneering at demands for smaller and cheaper cars, and quality control became more and more of a joke. In the early years of Wall Street Week, we had as a guest the number-one automobile analyst on Wall Street, and I asked him why the Japanese were having such success in selling their cars in our country. He looked at me and said, "Lou, first of all, they make better cars."

[A] When I was a kid, we were all sold the myth that--to put it in terms of General Motors--you started out with a Chevy, then worked your way up to a Pontiac, to an Oldsmobile, to a Buick and, if you were massively successful, you could someday aspire to a Cadillac. Now, I don't know too many 19-year-olds in America today who care one thing about that alleged progression--in part, because the Yuppie aspires to an imported car. But being able to identify every car that passed--not only to tell the Chevy from the Plymouth but to identify it by year and by model--that notion has vanished entirely. It would take a perceptive eye to do that on the American street corner today. The fins went up and down. The number of holes punched in the sides varied. After a while, we realized that that was nonsense. It had nothing to do with why we were buying a car. Our self-image could be based on more solid grounds. And I think it's sad that insight into the changing American character was born abroad.

[Q] Playboy: Where does labor fit into this world of lean-and-mean companies?

[A] Rukeyser: I've spoken half a dozen times in Youngstown, Ohio. Each time I've been there, people have asked, "Does Youngstown have a future?" My answer is always the same. I say, "Yes, Youngstown has a future, but only if it will look for the future in the future; if you wait for some politician to promise you that he'll restore the conditions of 1958, you'll wait in vain."

[A] The person who says, "My grandfather was a Youngstown steelworker; my father was a Youngstown steelworker; I have a right to be a Youngstown steelworker" is making a very foolish mistake personally. In terms of his own self-interest, he's making a mistake.

[Q] Playboy: Maybe so, but it's not easy to trade a high-paying job for work in a fast-food restaurant.

[A] Rukeyser: The big cliche is that people are going from these high-paying assembly-line jobs to McDonald's. But what we call service in a service economy is by no means all short-order cooks. It encompasses information services, financial services and a lot of professions that are extremely high-paying. The over-all course of employment, income and spending has been relatively favorable.

[A] But anything you say about the economy is going to sound wrong to somebody. You don't have to be a genius to know that many Americans are hurting in the farmlands, in the oil patches, in heavy manufacturing and in the export industries.

[Q] Playboy: You're a big booster for capitalism, but what about the human costs? Do you see no advantage to the way some West European countries have tried to advance their economies while expanding government benefits for their people?

[A] Rukeyser: I've always been told that the Europeans are more humane, but I'm not sure they're right. We've increased our living standards, and I don't think we've done it in a harsh, inhumane way. The key to living better is not redistribution, it's economic growth. The role of government is to provide backup for the truly needy, not to provide services for Americans who could find help themselves at a lower price.

[Q] Playboy: So you have no compunctions about capitalism's inherent greed?

[A] Rukeyser: Capitalism. The word is pronounced with a sneer by those who've provided their people with far less. Of course I condone greed. It's a universal human emotion. Naturally, we ascribe greed to the other guy and say that as far as we're concerned, it's just a legitimate desire to improve our condition. If you're unemployed, then to you the unemployment rate is 100 percent, and it's the dominant problem. But our system deals with greed in a way to best let the average guy improve his situation. After all, when labor leader Samuel Gompers was asked what labor wanted, he answered, "More."

[Q] Playboy: Let's get back to your arena, Wall Street. As we speak, the stock market is still doing well. In the long run, what do you think is going to happen?

[A] Rukeyser: The most striking development in the financial world is that a forecast I once made no longer looks so loony. I wrote a column for New Year's 1980 saying that the Eighties would be the decade of the common stocks. It didn't take a genius to see that common stocks were in the bargain basement--they were dirt-cheap. The mood of the country was changing--it was less hostile to business, to profits, to savings and economic growth generally. Finally, nobody believed me. That helped convince me that my conclusion was correct. In the history of investing, when nobody wants to buy common stocks, it's usually a good time to buy them. The great, powerful bull move began in 1982, though by some measurements it began in 1974, and I think we have further to go. Stocks never go straight up. The market will have what are laughingly called corrections. I think there will be severe, sickening down spells, but I don't think we've seen the end of the upward movement.

[Q] Playboy: That sounds like something close to a prediction. Do you want to be specific?

[A] Rukeyser: I don't know any more than any other human being. Please do not hate me for that, though. Only the charlatans will tell you they can call every turn of any financial market.

[A] On Wall Street Week, we show the record of the Dow Jones over the years, and underneath that we show the real Dow, adjusted for inflation. By that measurement, you'll find something highly interesting. The all-time highs were not reached in 1986. They were reached in 1966. To establish a true all-time high in 1986, the Dow would have had to close over 3300.

[Q] Playboy: Is it written in stone that Wall Street will always go for a Republican Administration?

[A] Rukeyser: Anyone who attempts to get too partisan about the economy is going to fail every time. There's no coherence to either party's side. Decades ago, the Democrats were the party of free trade and the Republicans were the high-tariff party. Now such lip service as Washington pays to free trade comes from the Republicans, while the Democrats say we have to protect American industry. You'll find this on issue after issue.

[A] For instance, Federal spending. I think that should have been an election issue. Everybody is now obsessed with the deficit, which means that there is always a convenient excuse to raise taxes. But the problem isn't that taxes are too low. The problem is that spending is too high. When Reagan came into office, he made a lot of promises. People react in terms of whether they despise or adore him. When people suggest to me that I'm being too tough on Reagan, I always have to ask them which Reagan they mean. Do they mean the Reagan who said he would balance the budget no later than 1983? Or do they mean the Reagan who tells us now that that was just a $200,000,000 misunderstanding? So instead of saying I'm pro-Reagan or anti-Reagan, I try to talk in terms of common sense, which immediately disqualifies me for anything under discussion in Washington. I'm willing to say things politicians won't say.

[A] I think most people instinctively get too partisan about this. The point they miss--in addition to the fact that there is no intellectual coherence to any of these bozos--is that we're playing their game when we do that. What politicians--Republicans, Democrats, vegetarians, prohibitionists--want is for us to get highly partisan about these affairs, because once you've become highly partisan, they've got you hooked. Then you become afraid to say anything critical of your guy, whoever he may be, even when you can see he's going astray. Then you become surprised and disappointed two or three years down the road when he hasn't made any difference, either.

[A] Think what Ronald Reagan would be saying if someone else had been President for the past six years and that person had presided cheerfully over a doubling of the U.S. national debt, had more than a 220-billion-dollar deficit in the fourth year of a national economic recovery. Just imagine the sizzling one-liners that would come crackling off Reagan's three-by-five cards at that point. I find it hard to envision that there would have been any major difference if he'd run on the other ticket. We all get excited about other issues, but in terms of the economy, I think there has been such bipartisan malfeasance that we ought to jail the lot of them.

[Q] Playboy: That may be the case by the time this appears. Incidentally, do you think the Iran arms scandal is as significant to Reagan's standing as the deficit?

[A] Rukeyser: No. The attention is on Iran now, but economics is the issue on which people vote.

[B] Playboy: Does it upset some people that you sound off politically rather than stick to economics?

[A] Rukeyser: Sometimes people say to me, "You get into politics an awful lot." And I always say, "I'll make a deal with you. I will stay out of politics if you will get the politicians out of the economy." The 19th Century had a great understanding of the subject. It was taught as one subject: political economy. In the 20th Century, we have made an artificial attempt to separate the subjects. The only people buffaloed by this are some journalists who think that since they are political reporters, they need not know how to add.

(continued on page 139) Louis Rukeyser (continued from base 62)

[Q] Playboy: And you feel that you're better rounded.

[A] Rukeyser: Yes. I had more than ten years as a foreign correspondent. Most people in financial journalism do not have that kind of background. In order to understand what's happening in the financial world, you have to understand what's going on outside. That's not just true in the big-picture stuff, such as "Is there going to be a war?" You have to make an assessment of what's going to happen in American society generally--women, family demographics, etc. Things that are most remote from Wall Street may often be most relevant.

[Q] Playboy: With business stories regularly hitting the front pages, would you say now that the press is doing a good job?

[A] Rukeyser: I had to conduct tutorial sessions over a lengthy period of years, but they're still not doing what they should be doing. There's a need for more commentary and analysis. One of the problems is that media coverage tends to be reactive rather than analytical, and it goes with the maximum of one idea at a time. It's a pretty good story when people are going to jail and paying $100,000,000 settlements. But over the past dozen years in America, we've had economic obsessions that did not coexist. Number one was the "energy crisis." Then we had inflation. Then we have tax reform--as it is called. It would be nice if we could think about more than one thing at a time, and it would be helpful if journalists broadened the public mind more than they have done.

[Q] Playboy: One of those obsessions, inflation, certainly rated reams of copy a few years ago.

[A] Rukeyser: I think probably more nonsense was talked about inflation than almost any other economic subject except energy. We were told repeatedly that we couldn't lick inflation, that it was a world-wide phenomenon. Well, in the Eighties, we stopped printing money at such a rapid rate and prices came down. I think that was the key reason inflation came down. There were other contributing factors, with the move from perceived oil shortage to perceived oil glut helping, and there was a world-wide oversupply of agricultural products. That helped. In the worst recession in arguably half a century, people sobered up on the wage front. Once-militant unions moderated their demands and in many cases even participated in at least temporary give-backs to their employers. All that helped, but I think the underlying reason was that the Government stopped printing so much money.

[Q] Playboy: Are you about to say something good about Government?

[A] Rukeyser: I think credit for stopping inflation really doesn't belong to the White House or to Congress. It belongs to the Federal Reserve Board, where chairman Paul Volcker and his colleagues pursued a highly unpopular policy that resulted in a historic success.

[Q] Playboy: High praise.

[A] Rukeyser: Now, I wouldn't give the Fed an A-plus, either. I think they alternately stepped on the gas and the brakes with too much severity. I think that exacerbated the recession and made unemployment worse than it otherwise would have been, and I wish they had operated much more openly and with less mystery and deliberate deception. But we have so few victories in the economic sense that I don't want to be chary in giving credit where it's due.

[Q] Playboy: Do you have any lingering concerns about inflation?

[A] Rukeyser: I don't think we've permanently licked inflation. I think we are too complacent. We are plainly in a lull. Compared with the kind of inflation rates we grew used to less than a decade ago, this is nirvana. But by historical standards, it's not really that terrific. I think the aim of public policy should be to eliminate the darn thing. Now, you can never entirely eliminate inflation over an extended period, and some economists argue that if you just figure in things like product improvements, something like one percent inflation is virtually no inflation at all. But if the rate begins to creep up-and I fear we're probably going to be on the upswing over the next year or two--I don't think we should forget everything else and call in the fire brigade, but we should keep our eye on it and begin to demand that the politicians do some of the fundamental things they have yet to do to put it under control. I am not a raving optimist.

[Q] Playboy: Just how much response do you think you get from politicians themselves when you take off on one of your political commentaries?

[A] Rukeyser: You never know. I think the job for any of us who are lucky enough to comment on the news should be to avoid the temptation to seek popularity the way politicians do. The reason they are unable to put together two consecutive sentences of common sense is that they want to convince everybody that they agree with them on every possible subject.

[Q] Playboy: You've got a substantial audience yourself. We've even heard you addressed as "guru Lou."

[A] Rukeyser: All that stuff is a giggle. But I know who I am. I'm not some 18-year-old rock star. I had a family life and a professional life long before a lofty gentleman like yourself ever cared to ask me questions. I'll still be the same guy when people stop asking me those questions.

[Q] Playboy: Here's one a lot of people are probably curious about: How can you maintain a reporter's objectivity about Wall Street as an investor yourself?

[A] Rukeyser: Well, I think the empathy is a large part of it. I think some financial-newsletter writers boast of the fact that they don't own stocks and that therefore this is supposed to make them more objective. I think that's nonsense. I think very often that has made them more reckless. If one is practicing what he preaches, he learns not to preach baloney.

[Q] Playboy: But you trade strictly as a hobby?

[A] Rukeyser: The bulk of my investing is done in a grown-up manner. I've tried to get rich slow by picking good-quality companies and not being scared out of the market every time some would-be guru shouted, "Fire!" My first stock investment was made when I was 17 years old. I was graduating from high school. It was 1950 and the Korean War had just started.

[A] The conventional left-wing view is that Wall Street is a haven for capitalist warmongers. In fact, Karl Marx was wrong. Nobody marching in the streets in the Sixties was more devoted to peace and stability than the stock market. The market traditionally and repeatedly sells off hysterically in the face of rumors of war, and it did just that when the Korean War started. I invested my earnings as a high school sportswriter and bought $260 worth--three shares--of General Motors. I was stepping in heroically, you understand, to rescue the American economy at a time of crisis. The stock split several times, paid dividends along the way, and by the time I sold it in the late Sixties to get part of the down payment on my first house, that investment had increased seven or eight times in value.

[A] That experience is one of the reasons I'm always skeptical of anyone who tells you that you need an awful lot of money to get started in the stock market. If somebody had told me that that was too little to invest in stocks, think how the course of Western civilization would have changed. My first experience, of course, was a very positive one. I wondered how long this sort of thing had been going on.

[Q] Playboy: You've done pretty well by Wall Street. But do you ever regret not working in Wall Street and earning megabucks instead of a mere high six figures?

[A] Rukeyser: No. When I got my bachelor's degree, I wanted to go out into the world and start earning a living, which I promptly did at the highly remunerated job of reporter for the Baltimore Evening Sun. It was the big money that attracted me. I mean, it wasn't everyone who could pull down $55 a week. I've made more money than I ever expected to make. I do what I enjoy, and many of my professional activities are not chosen for their remunerative value. I repeat, I'm just a simple working newsman.

[Q] Playboy: Are you doing as much legwork these days?

[A] Rukeyser: A reader of my column asked me recently how large my staff is. You're looking at the staff of my column. I go all over the country all year and I talk with people and I read a lot. I'm on the phone a lot, as you noted; but that, to me, is just working journalism. Some focus on the fact that I make a very good wage by journalistic standards; they tend to be overly concerned with that.

[A] When I left my job as economics editor at ABC in 1973, I didn't do it for financial reasons. I wanted to go out on my own and see if I could make it. I wanted to try a little more independence in my professional life. I figured it would be five years before I could replace the income I was giving up. Well, it took less than six months, happily. The market for my wares was greater than I had expected.

[Q] Playboy: Fifteen thousand dollars to $20,000 per speaking engagement is certainly a living wage.

[A] Rukeyser: People focus on the lectures because they pay me a lot of money--and they do. But there's another benefit beyond the fees--the instant feedback. I get to run my own poll of America, and I'm able to spot trends before the general press does and stay abreast of things in a way you don't get in any other medium.

[Q] Playboy: As a simple working journalist should.

[A] Rukeyser: I am a working journalist. Don't forget that I've been a working journalist since I was 11 years old. I was writing for the school page of the New Rochelle Standard-Star when I was 11. They didn't start to pay me until I started writing sports, when I was 16. Do you know how much they paid me? Do you care about that, since you're so absorbed with my financial affairs?

[Q] Playboy: Sure.

[A] Rukeyser: They paid me 50 cents an hour as a sports reporter at the New Rochelle Standard-Star. And after I'd been doing it for a few months, I got a raise to 75 cents, for three reasons. One, I was the finest reporter since Richard Harding Davis. Two, I was the most gifted writer since F. Scott Fitzgerald. And three, Congress raised the minimum wage to 75 cents. Those three factors taken together produced the increase.

[Q] Playboy: So you have benefited from Government intervention after all. How well do you think journalists and other outsiders cover the business world?

[A] Rukeyser: I always tell my board-room friends that journalism is the same as other professions--notably including Wall Street--in that outsiders always tend to overrate the malice and underrate the incompetence. There are very few people in any profession who get things straight. And those who are wounded by such incompetence tend to assume malice where it may not exist. TV journalism is the problem, of course. I don't think anyone ever learned journalism in a TV studio. The ability to ask the fourth, fifth and sixth questions generally comes from people with experience outside the make-up room. If Lincoln delivered the Gettysburg Address today, TV would find the most important 45 seconds, not necessarily to the enlightenment of the republic. That's why the successful politician these days tends not to be the most profound but the one who can put the best spin on the evening news. It seemed to me as long as 20 years ago that the requirement for being a successful Cabinet officer was not to know anything or have useful policies for the nation but to be able to provide a confident, articulate 45-second answer to every question--whether or not it was right.

[Q] Playboy: And now you have business-people training to handle the media as politicians do.

[A] Rukeyser: Yes, now we have the new business heroes, who are learning how to manipulate the media every bit as successfully as the average ward heeler.

[Q] Playboy: Meaning Lee Iacocca?

[A] Rukeyser: 0Iacocca has been able to put his message across in a largely controlled environment. I think that if he really were to run for President, he'd have to subject himself to rude questioning by irreverent reporters. Some of the ideas that now seem persuasive might then seem less so. I'm thinking particularly of such areas as trade relations and industrial relations. And maybe even personal relations. As I understand it, one of the meanest things Henry Ford did to Iacocca was to have one of the Ford Company masseurs stop calling at Iacocca's house. Now, I'm not sure that's an issue on which Joe Six-Pack would march to the barricades.

[Q] Playboy: Isn't the high profile a rather new pose for the American C.E.O.?

[A] Rukeyser: Yes. The classic, legendary corporate C.E.O. in America not only was not a popular hero but would have disdained the role. The job was to stay out of the newspaper. Now, the myth was never the entire reality. There have been great corporate financial heroes throughout American history. Early in this century, we had Henry Ford and Bernard Baruch and others. What we have now is not just the pop-hero syndrome but the active solicitation of that role through the hiring of media consultants, public-relations firms, authorities on everything from what one should wear to precisely which hairpiece would be most suitable. That's the real change. Ford didn't set out to be a culture hero. He set out to mass-produce cars and make a fortune. Baruch set out to make himself a pile of money.

[A] Of course, the classic public-relations transformation was the humanizing of John D. Rockefeller. Rockefeller, to put it mildly, was as rapacious as anyone involved in the present scandals. He put together--with massive cleverness, taking advantage of a very different regulatory and media climate--a dominance in the U.S. oil business that would be unthinkable in modern terms. Then he paid for some early PR advice, which started the legend about his handing out dime tips and encouraged him, in a more substantial way, to become a great benefactor. The average American now thinks of the Rockefellers as great benefactors, not in terms of the amassing of wealth.

[A] My own view is that we have things backward in America. We tend to assign great social cachet to people the further they are, chronologically, from the making of the money. But my own experience is that the most interesting characters are usually the ones who put the fortune together.

[Q] Playboy: And you're acquainted with a few of them.

[A] Rukeyser: Yes, but I'm so democratic in my tastes, I will even have lunch with executive vice-presidents.

[Q] Playboy: Do your board-room friends ever suggest to you ... well, how incorruptible is Lou Rukeyser?

[A] Rukeyser: Several years ago, I was speaking at a college in the South and a student got up and said, "Couldn't you use your position to make a little money for yourself on the side?" And I said, "Come on. The times are supposed to be more up front than that--why don't you ask the question directly? Your question really is, Are you a crook, too?"

[A] I suppose that, not being the dumbest person in America, I could figure out on many a Thursday what a Wall Street Week guest was likely to say on Friday and buy some of the stocks he or she was likely to mention and then sell them on Monday morning when the great crowds rushed in, having heard the recommendation on national television. And I suppose I could probably get away with it two or three times before the SEC caught up with me. And if you think they would not, you take them to be far stupider than they are.

[A] If I were to make the most hard-nosed assessment of my career assets, I'd have to conclude that number one was honor and credibility, and it would be foolish in the extreme for me to tamper with my honor and credibility, even if I were tempted. Which, happily, I am not.

People are forever offering me money, which I have to turn down. But it's usually not in a criminal way, because the word is out that you can't get anywhere with Louis Rukeyser on that. What people will offer me is vast sums of money to do, say, a commercial for them or to be a corporate spokesman. One great U.S. corporation recently offered me an annual guarantee in excess--well, an annual guarantee running into seven figures, and I wouldn't have had to do very much for it.

[Q] Playboy: We presume it could have justified the move to hard-nosed shareholders. The raiders may be lurking.

[A] Rukeyser: Well, there's a limit. I don't see anybody racing to take over IBM, even though in the world of inflated financing that's available today, that would not be an impossibility.

[Q] Playboy: IBM has been under quite a bit of pressure in the past year.

[A] Rukeyser: They're being pressed more than they've been pressed in the history of the industry. I don't think that means they're doomed. They're coming out with a new range of products. Maybe they're going to regain their position. But it means that nobody can just rest on his laurels. Excellence is not a permanent condition in corporate life. You've got to earn your wings every day--to quote a soon-to-disappear airline.

[Q] Playboy: We've reported and analyzed. Do you want to sign off with a commentary?

[A] Rukeyser: Calvin Coolidge was right when he asserted that the business of America is business. It's the business of any country. In 1978, Congress wrote legislation that was much more favorable to savings and investment than any we'd had in a decade. They didn't do it because they had a conversion on the road to the District of Columbia that day; they did it because they sensed a different wind from their constituents. The wind was less hostile to business, less hostile to profits, less hostile to savings and economic growth. I think that wind is still blowing. I think the smartest political figures in both parties are sensitive to it and are trying to shape their 1988 programs in recognition of it. I think that change is good for the country. I also think it's good for the stock market.

"The best thing the small investor has going for him is the stupidity of the large traders."