Recently, I posted on Facebook that "Wall Streeters only do what the trading software tells them to do." It's become a bit of a mantra for me when I try to explain to folks who don't understand why these protests are happening. I had a chance last night to try and educate an obviously angry woman at our First Friday gathering as to why this all matters and what I think is at stake.
Simply: We have to "rehumanize" our economy and our country. Wall Street is one of the last places where people get to be human, to have the power to be human.
My next door neighbor in New Jersey was a Pakistani immigrant with a dual PhD in statistics and physics from a Swiss university. That's the best education you can get. His job? He created the trading algorithms that operated the "black box" for a large financial concern. What did this hedge fund do? It covered payroll for that concern. When this concern went under during the collapse of the housing market and was absorbed by a large US bank, he lost his job, but, interestingly, few, if any, of the traders and brokers who "signed off" on the output of his algorithms lost their jobs.
As he explained it to me, most of Wall Street operates on these algorithms, but the contractual and legal stuff requires a couple of human-based steps along the way. The old days of people making trades, face-to-face, on the floor are long gone and the quaint stuff one sees on the NYSE floor is basically a show. Still, someone has to sign off and, essentially, be exposed to the trade and its consequences. On average, the NYSE sees about 1.5 to 2 billion shares change hands every trading day. As mind boggling as this seems, there are still responsible parties tied to each and every share. But do they actually trade them? Well, no. That's mostly handled through the electronic bourses that exist today. Still, there's a name attached to it, and for that, they get paid big bucks. They work inasmuch as they can cook up a concept such as "mortgage-backed derivatives" and most of the "cook up" comes from consultation with statistical specialists who look at the feasibility of the models involved ... one would hope.
There's never been anything like this before. Capital accumulation schemes have always required investment, risk, and efficiency. I've been trying for the past three years to understand how two of these three things have been eliminated, and one has been pushed off onto national economies. Being exposed means, essentially, not being able to collect a fee, not under the gaze of regulation and punitive measures for market breaking activity. Investment meant skin in the game. With everything on margin, the skin is credit, not actual capital investment. Investment has been eliminated and risk is now expected to land in the laps of tax payers. As for efficiency, the one internal activity of a capitalist system that always made so much sense and suffered from so little contradiction has been exploited, via the black box, and rendered just another tool to accumulated, no longer by productivity, but by dispossession.
What's been pulled out to make this all work? What has disappeared from the system? Humanity. By dehumanizing the economy, we have created a world in which we are separate from and incapable of participating in, but one on which everything rides. For a few, that human interface still exists, but they risk so little. The difference between $10 billion and $5 billion means nothing to a single human life, but it means so much to several million human lives.
So, a woman asked us what was going on as the Occupy marchers went by. It was either be really wonky, or just try to explain it simply. My response was: "They just want to be human." She didn't seem to get it. "They should get jobs. They are trust funders. How can you live without corporations? You have to invest so you can retire." What can you say to someone who just repeats what they are told? "They want jobs. If they have trust funds, those trust funds are more and more worthless each day. They'd love to work for a just corporation that values its employees and community. They'd like to be able to participate in investment that does good." That's about it.
The system is arrayed in such a way that it can't be changed from the inside by its own rules, but it also can't be attacked from without. There is no "without." The only way out of this mess is to put humans back in place with all of our risk behaviors and all of our foibles. At least, that will give us accountability toward each other at every scale from life as lived to the global.
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