The 2,000-Year-Old Ethics Test That Most Modern CEOs Fail

0:00On a December morning in 43 BC, the

0:02citizens of Rome walked into the forum

0:05and found two hands nailed to the

0:07speaker's platform.

0:09Above them, a head. The crowd knew the

0:11face immediately.

0:13Every one of them had stood in that

0:15square and listened to that man speak.

0:18He was the greatest orator Rome had ever

0:20produced, the finest writer in the Latin

0:22language, a former consul of the

0:24Republic, the man who once saved the

0:26city from a coup.

0:29And the placement wasn't random. That is

0:30the thing you have got to understand

0:32about this. It was curated. The hands

0:35were nailed up because they were the

0:36hands that wrote the letters. The head

0:38was nailed up above the platform where

0:39the speeches have been given. His

0:42killers wanted Rome to see the specific

0:45body parts that had done the specific

0:46work.

0:48And this is what makes it one of the

0:49strangest deaths in history.

0:51In the last full year of his life, while

0:53he was being hunted, while he knew

0:55exactly how this was going to end, that

0:57man sat down and wrote a book for his

1:00son.

1:01And he wrote it in a matter of weeks at

1:03speed, three volumes. And the question

1:05at the center of it was the only

1:06question that he thought was worth

1:08leaving behind to his son. What do we

1:10owe one another? And what happens to a

1:12society when it forgets? He called it De

1:16Officiis, On Duties. And 1,400 years

1:19later, when Gutenberg's press changed

1:21the world, the first thing printed was

1:23the Bible. And the second was this book.

1:26I'm Ari Wein Geffen. This is The

1:28Timeless Investor, where we study 3,000

1:31years of capital cycles to understand

1:33the one that we are living through

1:34today.

1:36And today's not a story about fraud.

1:38It's the story of the book that helps

1:40explain every fraud that we've ever

1:42really covered on this channel.

1:44Stay till the end because in the middle

1:46of this thing, there's a 2,000-year-old

1:48ethics problem about a grain ship, and I

1:50promise you it is one of the hardest

1:52questions anybody has asked you about

1:54your own business in a very long time.

1:56Most people fail it. Most people fail it

1:59and they feel smart about failing it.

2:03To understand why the book matters, you

2:05have to understand what it cost the man

2:07who wrote it. So, let's go back.

2:10Marcus Tullius Cicero was born in 106 BC

2:13in Arpinum, a hill town about 70 mi

2:16southeast of Rome. His family had money,

2:19but it did not have was a name.

2:22In the Roman Republic, that was very

2:24nearly everything.

2:26Roman politics was run by a closed

2:28circle of aristocratic families who've

2:30been trading the highest offices amongst

2:32themselves for centuries.

2:34If your ancestors had not held the

2:36consulship, the assumption was that you

2:39never would.

2:40The Romans had a term for a man who

2:42broke into that circle anyways. Novus

2:44homo, a new man. It was not a

2:47compliment. It has never been a

2:48compliment. Just consider that. It is

2:51literally nobody has ever thought that

2:53was a complimentary thing to say. Yet,

2:54today we love it. We prioritize it.

2:57Cicero had exactly one asset and he

3:01sharpened it into a weapon. He could

3:04speak. Not well, devastatingly well. He

3:08went into the law courts and took cases

3:09the establishment wouldn't touch and he

3:11won them in public in front of crowds

3:13with a command of the Latin language

3:15that people are still studying 21

3:18centuries later.

3:19And he climbed

3:21every office at the youngest legal age

3:24that you could hold it. And then, in 63

3:26BC, at 43 years old, the outsider from

3:29the hill town became consul of Rome, the

3:33highest office in the Republic. And in

3:35his consular year, he discovered and

3:38uncovered a conspiracy.

3:41A bankrupt aristocrat named Catiline had

3:43assembled a plot to murder the

3:44magistrates, burn parts of the city, and

3:46seize the state. Cicero exposed it from

3:49the Senate floor and then made the

3:51decision that defined the rest of his

3:52life, he had five of the conspirators

3:55executed without a trial.

3:58He believed he was saving the Republic.

4:00He probably was. He was also in that

4:02moment handing his enemies the knife

4:04that they would eventually use against

4:06him because a Roman citizen had a right

4:08to a trial and Cicero had denied it to

4:11five of them.

4:12And years later they used it. He was

4:14driven into exile. His house on the

4:16Palatine was torn down and a shrine was

4:18built on the ground so he could never

4:19rebuild. He came back, Rome needing him

4:22again, but he never again had the

4:24standing that he had that year.

4:26And hold on to this because I I really

4:28think this is the gist of everything

4:30that follows. This is a man who already

4:33knew from personal experience that doing

4:36what he believed was right could cost

4:38him absolutely everything.

4:40He was not writing about duty from a

4:42comfortable chair. He had already paid.

4:47Now, March 15th, 44 BC.

4:51Julius Caesar is stabbed to death on the

4:54Senate floor. Cicero is in the building.

4:57He is not part of the plot, but the

4:58conspirators call out his name as they

5:00hold up the knives

5:02because they believe they are doing the

5:04thing he spent his career arguing for,

5:07restoring the Roman Republic.

5:10But they are wrong. There is no Republic

5:12to restore. And what follows is a

5:14slow-motion collapse over 18 months.

5:16Mark Antony, Caesar's lieutenant and a

5:18man Cicero loathed,

5:21begins consolidating power.

5:23Caesar's teenage heir, Octavian, arrives

5:25from nowhere with an army and money. The

5:27old constitutional order that Cicero

5:29spent 40 years defending in the courts

5:31and on the Senate floor comes apart in

5:32real time in public and he can do

5:35nothing about it.

5:36He is 62 years old. His health is

5:38failing. His beloved daughter, Tullia,

5:41died a year earlier in childbirth and he

5:42has not recovered from it. His marriage

5:44has collapsed. His son, Marcus, is in

5:47Athens officially studying philosophy,

5:49but in practice doing the path of many

5:52young philosophy degrees and drinking

5:53his way through it. And so in the autumn

5:55of 44 BC, the greatest order Rome had

5:58ever produced does something very

6:00strange. He goes home to a villa on the

6:02coast and starts writing a letter to his

6:04son.

6:05That letter turns into a book, three of

6:07them.

6:08He is writing at extraordinary speed,

6:11weeks

6:12instead of years, the typical time it

6:14might take to write something as

6:16magnificent as this. And you can feel

6:19why

6:19>> [music]

6:19>> in his prose. This is a man who has done

6:22the math. The walls are closing in on

6:24him. Everything he has built politically

6:27is gone

6:28>> [music]

6:28>> or going.

6:29So he does the only thing he has left.

6:31He tries to hand the operating system to

6:34the next generation before the lights go

6:36out.

6:37And the astonishing thing is that he

6:39doesn't write what he doesn't write

6:40about. He's not writing about how to

6:43seize power or how to survive a purge or

6:45how to pick the winning side. Any of

6:47these

6:48would have probably been useful.

6:50But he writes instead about obligation,

6:53about what a person of standing owes to

6:55the people who depend upon them.

6:58In the year he is being hunted

7:01and people are attempting to kill him.

7:03That, my friends, is a choice.

7:06Now before we get into what it says, you

7:08got to understand the size of this thing

7:10because I think many people watching

7:12have either never heard of De Officiis

7:14and that in

7:15>> [music]

7:15>> fact is itself a story.

7:18For roughly 17 centuries, this book was

7:22treated as the single most important

7:24guide to practical ethics in the Western

7:26world.

7:27Not one of several,

7:29the book.

7:30It is what you read to learn how to hold

7:33office, manage an estate, conduct

7:35business, carry obligations, and do all

7:37of it without disgracing yourself.

7:40And when the printing press arrived in

7:42the 1450s, the technology that literally

7:45rewired and changed human civilization,

7:48the first thing as I said off of it was

7:50scripture.

7:51And among the very first secular works

7:53to follow was a Roman statesman's letter

7:55to his son about duty.

7:59You consider like everything that was

8:00available to print at that time, every

8:03philosopher, every poet, every historian

8:06in the canon, but they reached for this

8:08and then it lands in America. The

8:11founders of this country read Cicero as

8:14a literary literal, excuse me, operating

8:18manual. John Adams quoted him

8:20constantly. Jefferson called him the

8:21master. The entire vocabulary of the

8:25founding generation, virtue, duty, the

8:28public good, the difference between a

8:29republic and a faction is downstream of

8:33this exact text. When you read the

8:35Federalist papers, you are reading

8:37people who had this book

8:39in their hearts and in their bones.

8:42And then somewhere in the last 100

8:44years,

8:45we put it down.

8:46And here is what we replaced it with. We

8:48replaced duty with compliance. We

8:51replaced what is honorable with what is

8:53permitted. We built a civilization of

8:56operating agreements and disclosure

8:58schedules and arms-length terms and we

9:00quietly decided that if a thing is

9:03illegal, it is therefore fine.

9:06Cicero would have diagnosed this problem

9:09in about 10 seconds because he watched

9:11his republic die of it.

9:14So this is the part I really want to get

9:15into now. Everything up to now was sort

9:17of the setup for this, okay? In book

9:19three, Cicero poses a very hard

9:22question.

9:24Not a hypothetical trolley problem, a

9:27real commercial situation a Roman of

9:29standing would have actually faced.

9:32Imagine this. A merchant from Rhodes

9:35loads his ship with grain and sails for

9:37a city that is in the middle of a

9:38famine.

9:39He arrives. The people are starving.

9:42Grain is scarce. The price is enormous.

9:46And the merchant knows something

9:49that no one on that dock knows.

9:51A whole fleet of grain ships is right

9:54behind him, days away, loaded with the

9:56same cargo, which means the price is

9:58about to collapse. So,

10:01what can he do?

10:02He can sell today at the famine [music]

10:04price to starving people, take an

10:07extraordinary margin, and be over the

10:09horizon and gone and back to his home

10:11before the fleet appears.

10:13Does he have to tell them

10:16that the grain fleet is coming?

10:18By the law of the market, the answer is

10:20no. He obtained the information fairly.

10:23He made no false statement. There was no

10:25contract compelling disclosure. This is

10:28an arms-length deal

10:30between consenting adults.

10:33Caveat emptor. Let the buyer beware.

10:37And if you are honest with yourself,

10:38some part of you just did the math and

10:40thought, "That's a good trade. Think I'd

10:42do it."

10:43But I want you to notice the reflex,

10:45because the reflex today is the whole

10:47subject of this video. Cicero's answer

10:50is that the merchant who conceals the

10:52fleet in order to harvest the famine

10:54price has done something dishonorable.

10:56And therefore, in the only accounting

10:58that ultimately matters, something

11:00against his own interests.

11:02To withhold what the other party needs

11:05in order to do side well, purely to

11:07extract advantage from their ignorance,

11:09is to treat another human being as prey.

11:12Now, I'll be honest about my own

11:13reaction here, because I think you're

11:14probably thinking the same thing. And I

11:16think, "That sounds kind of naive. It

11:18sounds like something a person says who

11:20has never had to close a deal."

11:23But the reason it sounds naive is this.

11:25The entire architecture of modern

11:27finance is built on the exact opposite

11:30principle. We have institutionalized the

11:33famine price. We gave it a clear, clean,

11:36technical name. We like to call it

11:38information asymmetry. And we decided

11:40it's not merely legal, but quite clever,

11:43in fact. The whole game in a lot of the

11:45corners of this industry is to know the

11:47fleet is coming and sell at the famine

11:49price anyway. And then feel

11:51sophisticated about it. To describe it

11:53at drinks as your edge. Tell your

11:56buddies on the golf course, brag about

11:58it at a dinner table. It's not an

12:00accusation of anyone in particular.

12:02Hell, we've all done it. We've been

12:04there. This is just a description of the

12:06water that we swim in today.

12:08So, let's get into the actual engine of

12:10the book, okay? Like, what is the point

12:13of this story? Because Cicero is not

12:14making a sentimental argument here. He

12:17is making a claim about time.

12:20He says, when a person faces a decision,

12:23they weigh two things.

12:24The honestum, what is honorable and what

12:27is right. And the utile, what is useful,

12:29advantageous, profitable, and expedient.

12:32And he says the entire moral life comes

12:34down to what do you do when those two

12:38appear to be in conflict? And here's the

12:40core claim

12:41of my man Cicero.

12:43Cicero argues that the honorable and the

12:46useful can never truly be in conflict.

12:49When something appears genuinely

12:51advantageous, but is dishonorable,

12:55the appearance is a lie. The conflict is

12:58an illusion produced by looking at too

13:01short a time horizon. What is

13:04dishonorable can never truly be useful

13:07for you because the cost has simply not

13:10come yet.

13:13Read or listen to that again as an

13:16investor.

13:17This is a man in 44 BC describing the

13:20single thing that I think destroys

13:22capital in every cycle we have ever

13:24covered on this channel. The trade that

13:27looks brilliant in the quarter and turns

13:29out to be ruinous across the decade. The

13:32expedient move that prices in exactly

13:35zero cost for the broken trust that it

13:38engenders or requires. Every fraud story

13:42that I've ever told you is this, every

13:45single one. Roberto Calvi and his secret

13:48counter letters hanging under

13:49Blackfire's Bridge in the Vatican

13:51banking scandal story. Elizabeth Holmes

13:54faking the blood test. Charles Ponzi,

13:57the sponsor who tells his investors what

14:00they want to hear because the truth is

14:02inconvenient.

14:04They're all making the identical wager.

14:08The one Cicero says is impossible to

14:10win. That you can separate what pays

14:12from what is right,

14:14pocket the difference, and never have to

14:16settle up. And the republic that died

14:19around Cicero, as he wrote, was proof of

14:22concept at civilizational scale. Rome

14:25had become spectacularly

14:27good at the utile.

14:30Conquest, plunder, the expedient

14:33alliance, the strategic betrayal, and it

14:35hollowed out the honestum that held the

14:38whole thing together. Within a

14:39generation, it was an empire with an

14:41emperor, and the thing Cicero died

14:43defending was simply gone.

14:45Now, here's something that genuinely

14:47surprised me when I went into this and

14:49prepared for this video.

14:50We think fiduciary duty is a modern

14:53legal invention. Something the SEC

14:56bolted on to our paperwork in the 1940s.

14:58Something your fund counsel papers up

15:00with three defensive paragraphs. Blah,

15:02blah, blah, I'm a fiduciary, so on so

15:04forth. But, it isn't it isn't. The word

15:07itself gives it away. Fiducia, Latin, it

15:10means trust. Specifically, a thing

15:13handed to you on the understanding that

15:16you will hold it as faithfully as if it

15:19were the other person's own. The Romans

15:22had the concept fully formed. The tutor

15:24who managed the ward's estate, the

15:26friend who held property in fiducia for

15:29another.

15:30Bound not by a contract enumerating

15:31every contingency, bound by fides.

15:34Good faith itself. And Cicero's line on

15:38it is the one I would carve above the

15:41door. Fundamentum autem est iustitiae

15:44fides. Pardon my Latin. The foundation

15:47of justice

15:48is good faith. Take it away and there is

15:53no contract, no partnership, no estate

15:56held for an heir, no capital entrusted

15:58to a manager. There is only the famine

16:02price charged by everyone to everyone

16:04forever. And if you think that is

16:06abstract, look at your own paperwork.

16:09Your investor agreements, your loan

16:11covenants, your lease, your operating

16:13agreement. None of those documents

16:14actually work because of the enforcement

16:16clause. They work because the

16:18overwhelming majority of the time.

16:21Everybody honors them and nobody ever

16:23goes to court. The legal machinery is

16:24the backstop, but it's not the mechanism

16:27itself. The thing that actually runs the

16:29system is fides. The expectation that

16:32the person holding your money will treat

16:34it as if it were their own.

16:36Which is exactly why it's lootable.

16:38Trust by design is extended in advance

16:41of verification. That's what makes it

16:42valuable. That's also what makes it

16:44stealable. Calby borrowed the Vatican's,

16:46Ponzi borrowed his investors. Every one

16:48of them figured out that they could

16:49borrow against the trust, spend it and

16:51run before the actual bill came due.

16:55Now, let me bring this all the way home

16:56to the world that I actually live in.

16:59Real estate syndications, capital raised

17:01from people who trusted me with it.

17:03Here is the uncomfortable thing Cicero

17:05forces on anyone who manages other

17:07people's money.

17:08The document defines your liability,

17:11but it does not define your duty. They

17:14are They're the same thing and confusing

17:16them is how many good operators slowly

17:19turn into bad ones without really

17:20noticing that it happened.

17:22The operating agreement tells you what

17:24you can be sued for. It is almost

17:26totally silent on the things that

17:27actually matter.

17:28Four examples from my own business. One,

17:31nothing in that document tells you to

17:33call your investors before the bad

17:34quarter while there is still time for

17:36them to understand and ask questions

17:38instead of burying it in a footnote at

17:40the year-end statement. Ask the merchant

17:41and the fleet, do you mention the ships?

17:44Two, nothing tells you to disclose

17:46conflict. The affiliated property

17:48manager, the acquisition fees, related

17:49party loans, it's sort of disclosed and

17:52talked about, but you generally try not

17:54to talk about it, right? If you're Most

17:56sponsors don't want to talk about it,

17:57don't want to discuss it.

17:59In plain English, when a vague

18:01disclosure would technically satisfy

18:04this requirement. Technically satisfying

18:06the requirement is not the same as

18:09providing full and upfront disclosure,

18:11your duty to your investors. Three,

18:14nobody tells you that a tenant's

18:15habitability and the habitability of

18:17their space is a duty, and not a line

18:20item to be minimized until somebody

18:22complains loudly enough.

18:23The lease sets the floor of what you

18:26have to do, but the floor shouldn't be

18:28the standard. And four, nothing tells

18:31you what to volunteer to your lender

18:33when the DSCR, your debt service

18:35coverage ratio, your ability to support

18:37your loan is drifting and you're still

18:38inside becoming it. Silence is legal in

18:41this case, but the phone call might be

18:43the honorable thing to do. Everyone in

18:45this business knows exactly which one is

18:47more common.

18:48In all four,

18:50the utile and the honestum appear to

18:52diverge. The expedient move is almost

18:55always the same. Say less, disclose

18:57later, minimize, wait to be asked.

19:00In Cicero's claim, the whole book

19:03in a sentence, is that the divergence is

19:05an illusion. That the trust you preserve

19:07by doing the honorable thing is the

19:10single most valuable asset on your

19:11balance sheet. It is the one asset that

19:13that will never appear on it.

19:16Reputation is the ultimate compounding

19:18machine. It is built one honored

19:20obligation at a time over decades at the

19:23exact moments when breaking the

19:24obligation would have been cheaper and

19:27easier for you. And it can be destroyed

19:29in a single quarter by one famine price

19:32charged once to the wrong person.

19:35Here's my prediction and I'd like you to

19:36hold me to it. The sponsors who blow up

19:39in this cycle will almost all be legally

19:41fine. That is the entire point. They

19:43will have disclosed what they were

19:45required to disclose. They will have

19:46stayed inside the four corners of the

19:48documents. Their lawyers, their

19:50attorneys, their counsel will have done

19:52excellent work. And their investors will

19:54never call them again because somewhere

19:56along the way they decided that

19:57technically legal and honorable were the

19:59same word and the market eventually will

20:01enforce the difference.

20:03One more thing on this because I think

20:05people mishear it as sentimentality.

20:07When Goldman Sachs needed capital at the

20:09bottom of the financial crisis, they

20:11went to Warren Buffett.

20:13Consider this. A lot of people had money

20:16at the time. There were many people that

20:18would have been happy to do this deal.

20:19The money was not the scarce input in

20:21that transaction. What Goldman needed

20:24was for the world to see who was

20:25standing behind them.

20:27They were not just getting money. They

20:29were renting reputation. One that had

20:31been built been built over 50 years one

20:34honored obligation at a time.

20:36That is the utile et and the honestum

20:38converging in public in real life in a

20:41real scenario we can remember. And it

20:43just took 50 years to show up in the

20:45income statement.

20:47Cicero finished De Officiis and within

20:49about 18 months he was dead. He was

20:51caught near Formiae in December of 43 BC

20:54trying to reach the coast in a ship. The

20:56accounts say he told his servants to set

20:58the litter down and he leaned his head

21:00out to make it easier for the man with

21:02the sword. And then his hands and his

21:04head went up on the Rostra nailed there

21:06by men who had decided that the utile

21:08raw power of the expedient murder was

21:11worth more than any duty owed to the

21:12Republic or a citizen. And in the short

21:15run, they were completely, conclusively

21:17right. Anthony won, the Republic fell,

21:20the honorable course got Cicero killed

21:22in the road. And yet, 2,000 years later,

21:26we do not print Mark Antony's letters.

21:29We printed Cicero's, second only to the

21:32Bible, and we handed them to the men who

21:33built the country that I live in today.

21:35The expedient man won the year, but the

21:38honorable man won the millennia. [music]

21:40That is more or less the entire thesis

21:42of the channel, written down before

21:44there was even a market to apply it to.

21:47The terrain today has changed beyond

21:49recognition. The fiber, the silicon, the

21:51offshore shells, the disclosure

21:53schedules, much of it would not be

21:55legible to a Roman. But the question

21:57itself has not moved an inch.

22:00What do you actually owe the person who

22:02handed you their trust? Not what you

22:05could be sued for, what do you owe?

22:08Think well, act wisely, build something

22:11timeless.

22:13My friends, the full written essay,

22:15including Cicero's own text on the grain

22:17merchant and complete operators read, is

22:19available on the Timeless Investor

22:21Substack. Link in the description, free

22:23to subscribe. If this one landed,

22:25subscribe here, too, to the Timeless

22:27Investor channel. We publish a new deep

22:29dive into 3,000 years of capital cycles

22:32every week,

22:33and I'll see you next one.

22:35Take care. Thank you for being here.