Monday, October 03, 2011

Occupy Wall Street

One of my readers asked me what I think of the Occupy Wall Street movement, and that's a good question. I don't know what to think, so I keep reading. In the last few days I read Nikolas Krystof's piece in the Times, this critique of it, this piece in Dissent magazine, this piece in the Awl, and other stuff too.

The truth is somewhere in the middle, and the truth is that I've been working in and around finance for a decade and I'm not always happy with what I see.  I was in the hedge fund world for a few years and I was pretty disgusted, not necessarily with the people who made a lot of money, and I didn't see so much of them, as the hoi polloi in the crowds who fawned on them with so much adulation and so coveted their ducats.  Many of the people who were actually making money were in fact pretty interesting people, and really focused on understanding things clearly -- which is how they became successful -- rather than on strutting around displaying their wealth.  Though I never went to any of their houses. Had I done so, I may well have been disgusted.

So I've been in and around finance for a decade, and have developed a fondness for companies that focus on providing good value to clients.  I love Vanguard, though most of my money's at Fidelity (long story).

So, do I think everybody on Wall Street are criminals? No, but there is a degree of nastiness that gets distasteful.

Do I think that the answer to our health care problems can just be fixed with a stroke of the pen and saying that everybody gets free health care?  No.

Do I think that the wealth dispersion in this country is bad for our society?  Yes.
Do I think that this problem is easily remediated by just taxing the hell out of the rich? No.
Do I think that the Bush tax cuts were one of the stupidest policy decisions of our lifetime?  Yes.
Do I think that the war in Iraq has been the stupidest foreign policy venture of my sentient lifetime? Yes.

Similarly, excessive executive compensation is definitely a problem, but it can't be solved by just outlawing big salaries. More progressive taxation is probably par of the answer, if not a somehow simplified tax code (I'm not a tax guru so I won't pontificate on what it should be).

But do I think that the solution to our fiscal situation is as simple as banksters stealing people's money?  No. Increases in longevity and demographic curves (all the retiring boomers) as well as chronic diseases (obesity, diabetes, etc.) have changed the picture for us. Entitlements will need to be tweaked as we age.

But yes, McDonald's et al. are pretty evil.

But am I substantially invested in the stock market?  Yes.  I'm too lazy to own rental real estate and I think that burying gold in one's backyard is nihilism.  Though the regulatory structure we have is imperfect and Harry Markopolos of Madoff fame clearly demonstrated that it is worse than that in certain ways, the free press and some pretty hard-nosed and hard-working analysts provide a level of corporate governance in the US that's better than most other places (compare recent experiences in China and the collapse of Satyam in India in 2008). I believe that, net net, capital markets are a reasonable way to channel savings towards productive enterprises.  I just prefer index funds because I don't want to pay high fees. Not because fund managers are criminals, but because, on average, they suck.

And, being in the markets, and being employed near the industry, and with a child headed off to college in 7 years for which I'm saving and investing, I feel conflicted and a little guilty watching Occupy Wall Street.
So, in the end, I guess I come down being somewhere close to Kristof. I think that Occupy Wall Street is a good thing all told. Certainly the cops don't need to be spraying pepper spray in the face of non-violent protesters. It gives voice to people on the left who are pissed, and by doing so increases the probability that Obama won't be unseated by some right-wing freak.

But he should be chastened.

Off to bed. Tomorrow I'll surely think of something else.


Anonymous said...

They are complete idiots. When unemployment is this high it is easy to start a movement, but difficult to separate it from a bowel movement.

Graham Klarkovich Illiorum said...

I have to disagree with you about that. The occupiers are showing a lot of conviction. I spent some time here the other night

Wealth dispersion is a huge problem in this country now, and we're not creating good jobs or futures for people. OccupyWallStreet is infinitely preferable to the Tea Party. There is no easy fix, but good consciousness raising is going on and it's more likely that good can be done now if the momentum continues to build.

Anonymous said...

During the Great Depression my grandfather left home when he was 14 years old. He left because his mother could not feed him and his father had died of cancer. He never bitched about Wall Street or expected the government to "correct wealth dispersion inequalities". 90% of our current jobs are in the service sector. Free trade means our corporations allocate capital and invest in growth in countries which produce goods less expensively than we do. Eventually, the rising tide of wealth in developing countries creates more demand and higher labor costs abroad and job growth returns to the US. The playing field levels very slowly, and until it does, this generation of Americans is every bit as screwed as those poor souls who lived through the Great Depression.

Graham Klarkovich Illiorum said...

The distribution of wealth is never natural, it is always an effect of tax code and other factors. I think attempts to implement punitive tax code changes will backfire and fail.

At the same time, I think people have been paying too few taxes for a while. The Bush tax cuts were idiocy, and the deficits we have now are partly to do with them.

I am in the top 15% of earners but not the top 1%, and I think I should be paying more in taxes.

That said, from Reagan forward the Right has exerted a good generally good influence on politics by asking continually what businesses the government should be in. I think there's no clear answer to this question, and it's one that's always worth raising. Diplomacy and defense are legitimate functions for government, regulation another, infrastructure another, education another, and public health and R&D others. But that doesn't mean that government is always going to acquit these functions well.

I think there is no dogma here, only ongoing debate. In that regard both the Tea Party and Occupy Wall Street are good for public culture, extent when they silence others. I am more sympathetic to the Occupation than I am to the Tea Party, but I'm also much closer to you on free trade than I am to them.