Sunday, January 15, 2012


In my last post, I mentioned an article in The New York Times today making the point that 1-percenters really, really aren't all that bad. I don't mean to pick on The New York Times -- it probably contains more pieces sympathetic to progressive arguments about the nature of contemporary capitalism (particularly from its editorial board and from Paul Krugman) than just about any national media outlet (though that's a fairly low bar to clear) -- but in today's Times Magazine there's yet another article, from Adam Davidson (who also works for NPR's "Planet Money"), in which the treatment of Occupy Wall Street's main argument is essentially "Well, this is a satisfying thing to say if you feel like venting, but really, you can't be serious":

Hating Wall Street is an American tradition that dates back even to the days when Thomas Jefferson cursed that money lover Alexander Hamilton. And for centuries, the complaints about it have largely stayed the same: It does nothing! It creates chaos! It's a parasite that sucks hardworking Americans dry! (Or something to that effect.) But these are distortions of a fundamentally beneficial business....

Davidson goes on to describe what Wall Street does as more than "fundamentally beneficial" -- he describes it as the reason life as we know it exists:

Perhaps the best way to really appreciate what Wall Street does is to imagine life without it.


In the U.S., we use credit cards, mortgages, credit scores, securitized loans and other Wall Street innovations to do the miraculous: to persuade some institution with a lot of money to hand it over to someone who doesn't have that much....


Or at least it would look a whole lot different than it does today.... The financial-services industry ... performs a kind of fiscal time travel by pooling the nation's collective savings and transforming it into all sorts of loans. This allows people to spend money now that they won't earn until later. When spent wisely, this money borrowed from the future actually makes the future quite a bit brighter....


I'm going to stop there and let you be physically ill for a second. That last subhead is the journalistic equivalent of that icky, singsongy, deliberately cloying folk music that was hip a few years ago (remember the soundtrack to Juno?). The point made under this subhead is that Wall Street finances businesses. Wow, awesome! It's the reason multinational drug companies and my favorite chevre producer can stay in business! Gee whillikers! So I guess we really should let Wall Streeters do whatever they want and be subjected whatever minuscule tax rate they prefer, and we should pay the tab every time they screw up, and not demand that they go to jail even if they were violating laws!

Davidson doesn't actually say that. Here's what he does say:

Wall Street's central function is to make our financial system more robust and less susceptible to unexpected risk, but it did precisely the opposite while, maddeningly, avoiding paying the price.

... perhaps the biggest reason to hate Wall Street is that it has made so many Americans hate such an indispensable system.

No, Adam. The biggest reason to hate Wall Street is that that avoidance of responsibility isn't something that "maddeningly" just so happened to occur, it's something that's built into the system. These guys have bought off the vast majority of our elected officials and have thus purchased immunity for whatever they do. They've also bought and paid for the privilege of sticking us with the tab every time they destroy all or part of the economy.

Davidson also says:

One lesson of this crisis is that regulation -- no matter how well intended -- cannot be trusted to rein in Wall Street.

No, that isn't a lesson of this crisis. As Paul Krugman says repeatedly, we did regulate finance -- from the days of FDR to the days of Ronald Reagan -- in such a way that we didn't have massive bubbles that burst and took the system (and lots of unwitting ordinary schmucks) down with them. We just don't have those regulations (Glass-Steagall and the like) now.

Most of the "awesome" stuff Wall Street gives us is stuff that it gave us back when we regulated it effectively. Some of the awesomeness actually started in those days -- the rise of the credit card, for instance, began in the postwar, highly regulated era of finance.

This, of course, is all just a way of saying that critics of the status quo, from Occupy and elsewhere, are hyperbolic children. It's what Occupy, or some part of the left, needs to push back against effectively right now. There was a moment when a skeptical view of capitalism was actually getting a hearing -- but that moment is slipping away. It's going to be completely lost soon if progressives don't seize it.


c u n d gulag said...

Sorry, Steve, but I'll come back to talk about this post tomorrow.

Tonight, I'm celebrating the NY Giants win over the the GB Packers!!!

And, yes, 'Bread and Circuses,' I know...

But, let me enjoy this!

Danp said...

If you can't argue with what they say, argue with what they didn't say. In this case, no one is making the case against a banking system or the concept of a stock market. I would assume the NYT knows this.