Ayn and Sears

Salon has a new piece on Sears CEO Eddie Lampert, former Goldman honcho and noted acolyte of Ayn Rand. The argument: Rand-ism failed because Lampert has pretty much destroyed the company.

Lampert is now known as one of the worst CEOs in America — the man who flushed Sears down the toilet with his demented management style and harebrained approach to retail. Sears stock is tanking. His hedge fun is down 40 percent, and the business press has turned from praising Lampert’s genius towatching gleefully as his ship sinks. Investors are running from “Crazy Eddie” like the plague.

That’s what happens when Ayn Rand is the basis for your business plan.

Crazy Eddie has been one of America’s most vocal advocates of discredited free-market economics, so obsessed with Ayn Rand he could rattle off memorized passages of her novels. As Mina Kimes explained in a fascinating profile in Bloomberg Businessweek, Lampert took the myth that humans perform best when acting selfishly as gospel, pitting Sears company managers against each other in a kind of Lord of the Flies death match. This, he believed, would cause them to act rationally and boost performance.

As his company was descending into Randian mayhem, Lampert continued to cheerfully inform stockholders that his revolutionary ideas would soon produce earth-shattering results. Reality: Sears has lost half its value in five years. Since 2010, Sears has closed more than half of its stores. Sears Holdings is financially distressed and Lampert’s own hedge fund has reduced its stake in the company. The Sears store in Oakland, California, open for business with boarded-up windows, has even been cited for urban blight.

The counter-argument: Perhaps Eddie's craziness demonstrates the success of Randism. After all, a true disciple of Ayn cares only about Number 1. Has Eddie's personal bottom line suffered or profited from the gutting of Sears?

I'm not sure. But we do have this:

“Almost since the day he acquired control of Sears, he has been milking the company for cash as opposed to maximizing its performance as a retailer,” says Craig Johnson, president of Customer Growth Partners. “Its decline began way before Eddie Lampert, but look at the stuff he’s done. He hasn’t invested in stores, in marketing. He’s doing nothing to grow the business.”

True, Lambert says that he hasn't sold his personal shares. I don't think he was under oath when he made that statement, and I don't know how many shares he personally owns. He has been working for $1 a year. Instead, he got stock, taxed at a lower rate. And as noted, he controls the hedge fund.

It is not unheard-of for a CEO to short the stock of his own company. Check it out. I'm not saying Lampert did that. I'm just...exploring possibilities.