By Melik Kaylan
October 14, 2008 | Forbes.com
At cocktail parties, I am expected to have authoritative opinions on the financial crisis. I have almost none.
I tell people that I cover culture and politics, that I grew up in a time when only stockbrokers knew about "the market," only grandparents had dealings with them and government took care of much else, which it did very inefficiently. The Reagan-Thatcher years mercifully swept away the collective dependencies of the nanny state era, which meant we could shape our individual destinies unhampered.
Ultimately, the day came when we were all expected to be our own stockbrokers to some degree, and it seemed incontrovertible that the path to happiness lay in the wisdom of one's investments. You could update Mr. Micawber's dictum to "the market goes up X percent, result happiness, it goes down X percent, result misery." Market gurus replaced swamis; rates of return replaced states of bliss. The hallowed metaphysicians of the age were those who could perform occult interpretations of the market's moods rather in the way that Etruscan priests interpreted the clouds.
For a while I went along with this, thinking that they knew what I didn't, which was quite a lot, and it was quantifiable--"X billion under management." That was the measure and mass of how much they knew and the size of my ignorance. Yet I began to grow skeptical, not merely out of envy, or based on any profound business sense, but because life's ordinary unerring indicators were showing that things were topsy-turvy. I cite a few such examples in no particular order.
--Anyone with training in the humanities had to lay aside their education to make a "real" living.
--Anyone who spoke of an "idea" referred not to something in the realm of ideas, but to a venture, a pitch or a sellable notion, and its value lay not in the amount of truth it contained but in its marketability.
--The most successful people were often the most formidably boring at a dinner table.
--It was often impossible to understand what people in finance did for a living.
--Businessmen acclaimed for being really smart were the most devious, calculating, un-transparent specimens of humanity.
--The worst people seemed to have the most money.
--On a given day, after I scoured the market for the best deals in cellphones, networks, insurance, mortgages, Internet access, brokers, schools, kids camps, car repair and cable; and I fought with the insurance company, the telephone company, the contractor, the airline and the credit card company ... I had no time for anything. I knew about nothing but the marketplace in everything.
In the early 1980s all sensible folk abandoned faith in socialist ideas because it became clear that socialism was what socialists did--not what it promised. It promised utopia, but you had to sacrifice to the system. If you had faith in the machine, it would save you. The results said otherwise. We all said "no thanks" to that idiot utopia.
Enter, instead, the new cult of the free market, aka the Chicago School. The entire economy of South America collapsed, as did the post-Soviet economies. Some said the cause was too much free market, some said not enough. If only we could get just the right amount of free market. If we stuck with it, if the entire globe competed freely, non-stop, around-the-clock, we'd all be rich. Possibly dead from exhaustion, but rich for sure. Now the world's economy is collapsing and nobody has a clue. What we lack, apparently, is confidence in the market. In other words, faith.
There is doubtless a lot of truth to that. If no one goes to the marketplace to buy and sell eggs and butter because they don't trust the pricing, there will be none available. But it's also true that we have suffered from too much faith. Now that we're disabused, we won't believe again for a while. Too many common sense doubts remain un-addressed, or so it seems to a layman like me. At times like these when the media blizzard roars loudest, it always seems that the most glaring questions don't get asked. Here again, in no particular order and in all humility, I offer a few such probes.
--If the marketplace is global, but the rules that oversee it are national, how can that work?
--If we don't understand the "products" of the market because they are too complex--credit swaps, derivatives etc.--how can we, the citizens, know if they are properly regulated?
--If the bailouts are ultimately paid by the taxpayer, where will the taxpayer get the money from as the economy collapses? From the bailouts? This would involve the government taking our money in order to give it back. What do you call this system?
--Top CEOs get sweetheart contracts because of competition for hiring them. They get rewarded even if the company fails. If the company's big enough, it destabilizes the economy and hits the taxpayer. We didn't elect those CEOs and we didn't have a say in their contracts. Is this not taxation without representation?
--Every five to 10 years, the stock market loses a third of its value, it seems. Does this mean its true total value is nearer the bottom and the rest is hype, or nearer the top and the rest is fear?
--If China becomes the world's manufacturing center, sells us its products, takes our money, and lends us the money back to keep buying from them, is this global wealth or codependency?
--Hedge funds, buyouts and the like, are all about cutting fat, revamping productivity and value, which ultimately leads to everyone working around the clock to be competitive--that is, everyone in the world. The world's capitals are already full of boring people (and their spoilt, neglected, designer-obsessed brood), the only ones who can afford it, who work impossible hours in order to make everyone else work like them. Their single virtue was that they "created wealth." It turns out they didn't. What about their philanthropy? It was ultimately borrowed from us. What do you call this system of wealth distribution?
I call it the socialism of bankers.
Melik Kaylan, a writer based in New York, writes a weekly column for Forbes.com.
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