There has been a lot of deserved talk about the three legs of corporatism: the right wing message machine, religious fundamentalists, and corporate billionaire funding. However, not as much has been said about Wall Street’s overarching contribution: its creeping dominance over our economy and how its amoral philosophical values have seeped into every part of our culture.Wall Street has not always been so dominant in our philosophical discussions nor in our economy.
When I was a college student in the early 1980s, the spiderweb of international finance dominating our lives did not look as it does now.
- Mainstream use of credit cards was less than a decade old. Household debt and saving levels had been relatively stable.
- Equitable wealth distribution was near its peak.
- America has always had a fascination with wealth, but it was somewhat in remission during this period. The superrich we knew about were recluses and outright nuts with names like Rockefeller and Howard Hughes.
- Middle class and older people circa 1980 grew up believing that medicine and law were the most prestigious and wealth-attracting professions, not banking. Ben Casey and Perry Mason were admirable. Milburn Drysdale, not so much.
- The market hates uncertainty, and the 1970s gave us Vietnam, leaving the gold standard, and the worst market since the Great Depression, finishing with sustained high inflation and public interest rates north of 20%.
All this means that banking and investing were not the “go-to” professions that they have been more recently.
In the 1980s, that changed. As Reagan began shifting the tax code toward the wealthy and smashing the regulatory structures built over decades, general business majors saw new opportunity in finance. A doctor or lawyer could only charge so much per hour or per visit, but financiers had leverage.
By the end of the 1980s, we had seen Lifestyles of the Rich and Famous, Wall Street, Boesky, Milken, a scary one-day market plunge, and a junk bond crisis. We also saw a drastic shift in wealth distribution and the beginning of personal credit acceleration that would continue until 2009. It’s hard to convey how much the whole cultural notion of wealth and where and how to get it had been drastically changed.
And it has stayed pretty much the same since then. The market has been infinitely more interesting, even exciting, peaking in the dotcom era but still strong today.
In the 1970s, ambitious and marginally honest people went into law. It was considered the fastest way to wealth next to medicine. Not coincidentally, there were a lot of jokes about what sharks lawyers were. In the 1980s, I went to law school (also hugely popular because of L.A. Law) so I heard a lot of them.
Starting in the late 1980s, banker and broker jokes gained steam and, in my experience, eventually surpassed the lawyer jokes.
In the late 1980s I often rode the elevator with young guys in expensive suits bragging to each other about their big… financing deals. Since the 1980s, more of the best and brightest and certainly the greediest college students have gone to work on Wall Street. I know you’ve heard that statistic before. Here is what it has meant in deeper terms.
Those business majors from the 1980s are in their 40s and 50s now, and they are running things. Wall Street has left the hands of the financial steward generation and is now in the hands of the profiteers, those who have conflated moral values and business goals.
Medicine, law, accounting, and other professions have been turned from practices into profit centers.
Manufacturing and unions, which have faded in the last 30 years, never had a chance at bright people who might have created innovation they needed to stay vital.
Non-profit and public service work was denigrated. Many talented people set their sights elsewhere.
Universities that used to do research for the government have been made research arms of Wall Street with little thought given to using their research for public benefit, e.g., to teach financial literacy to the public. Public surveys reflect the dismal state of the public’s financial knowledge.
Thousands saw their retirements compromised when businesses were not held accountable to keep their promises to fund pensions for retired workers and were also allowed to convert accrued pension time into less valuable defined contribution retirement accounts.
The ethos of Wall Street, such as it is, has dominated public discourse. The Republican propaganda machine has recently promoted these ideas for its own purposes, but these ideas are children of Wall Street and the industrial revolution.
- Government regulation as a burden on business rather than protection for people
- Taxes as stealing instead of a duty to community
- The privatization movement—that private enterprise can do everything better than government.
- Viability has been twisted to mean economic productivity, even for things that are not supposed to be economically productive.
- Corporate strategizing has been twisted to mean preserving short-term shareholder value, even at the expense of long-term health.
- Profit is indispensible. Everything is expendable to achieve profits. Those who don’t agree are “not tough enough.” That which does not generate profit is inherently less valuable.
- The purpose of investing has become to trick people out of their money instead of to gather capital to grow the economy. Finance is viewed and functions as a caveat emptor arena of predators instead of a tool to make things better for everyone.
- Citizens United: abstract legal entities have the same rights as humans.
- Wall Street is the largest holder of U.S. government debt (Treasuries). Cutting government spending improves the market value of existing debt.
The young turks of the last 30 years have been pouring into Wall Street, building up the intricate international network of banking, gambling, investing, money laundering, privatized gains and public losses that we have today. And we let them. We were dazzled by Robin Leach, the gold bathroom fixtures and the chinchilla dog beds. We didn’t spot that while real economic growth lifts everyone, financing played this way is a zero-sum game. That gold faucet came from some unfortunate investor’s college fund.
It could have been different. And that is what I will write about next.
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- For His Eyes Only: Mitt Romney’s Financial Shell Game - Thu, Jul 5th, 2012
