Sunday, January 01, 2012

Sarah Leonard: Occupy Wall St. and the Downfall of the Smartest Guys in the Room

OWS and the Downfall of the Smartest Guys in the Room
by Sarah Leonard

The problem with Occupy Wall Street, an investment banker wrote to me, is that financial mechanisms are very complicated, and the protesters don't understand them. On the day that the New York occupation of Zuccotti Park spread to Washington Square, another visitor from finance looked out over the milling malcontents: "Things definitely went wrong, but you have to understand how the system works. Looking at these signs doesn't give me a lot of confidence."

And it was certainly true that, by themselves, the signs bobbing through the crowd urged a panoply of measures: Abolish the Fed! Tax the rich! Bail out the people! Lloyd Blankfein's head on a pike! Now! All this hectic sloganeering lent a sort of poignant sweetness to a placard that pointed out, reasonably enough, that "the economy could be more fair." But the mood got more rancorous the closer one got to the center of the action at Zuccotti Park, with anarchists, union folks, frustrated reformers, and hard-line anti-capitalists making up the bulk of the crowd. This was a far cry from a sensible policy luncheon at the liberal Center for American Progress.

And for some liberal critics of the Occupy movement, that's precisely the problem. The New Republic's first article on the movement by Mark Schmitt cautioned glumly, "Our Tea Party has come. And so all the good work and focused protests are tossed aside as liberals gravitate to the thing that looks and feels most like the early days of the Tea Party." The essay might have been called "Remember the Think Tanks!"

In a similar vein, consider the testimony of Peter Orszag, Obama's former budget director, darling of both the Democratic establishment and a media consensus uncritically accepting of his youthful good looks as telltale evidence of a fresh and creative interior. Rather than scolding the unruly masses at Zuccotti Park, Orszag hailed the virtues of the revolving door between Washington and Wall Street as generative of those experts who would provide the real solutions to economic crisis. After Orszag had left the OMB for the far grander emoluments on offer at Citibank he announced a paradigm shift in the making. "I am getting exposed to lots of different issues and problems, and that will then better inform my thinking and public writing," he informed New York magazine's Gabriel Sherman. "Direct experience need not undermine one's intellectual integrity; sometimes it can even bolster it."

If anything, Orszag was understating how our professional-managerial caste views the organic union that binds pelf and knowledge. Across the ideological spectrum, responsible adults agree that one must work in finance to understand it well enough to regulate it. As a former Goldman Sachs partner told Sherman, "If you think that someone's past work on Wall Street disqualifies them from playing a role in something as complex as government, you'll essentially have people who have no understanding how financial markets operate . . . . That's a dangerous and scary thing." Lest anyone mistake where the tacit logic of such positions lead, Orszag himself graciously spelled it out in the New Republic, when he baldly announced that when it comes to the management of economic matters "certain aspects of representative government can end up posing serious problems. And so, we might be a healthier democracy if we were a slightly less democratic one."

There are at least two obvious objections to raise here. First, of course, there's the means-and-ends issue of abdicating the expansion of the democratic experiment to ensure that the finance sector can go about its business more smoothly, regulated by regulators who have spent their careers cultivating a deep understanding of its needs and wants. But more concretely, Orszag's argument advocates the empowerment of a set of experts who have already compiled an atrociously bad track record on their own terms. Rendering our political economy less democratic for their sake would be akin to putting Herbert Hoover in charge of the Civil Works Administration because he knew so much about unemployment.

After all, the whole Occupy Wall Street movement wouldn't exist in this time and place were it not for the handiwork of our financial betters (or bettors, if you prefer). The whole American economy is now reaping the whirlwind after fastidiously ensuring that policy makers, regulators and our representatives in Washington all lavished extra solicitude on the lords of Wall Street for being "smart." The first thing that anyone in finance will tell you about their choice to enter the sector, is that it's a way to be surrounded by the smartest people. Not the most famous or honorable, not even the richest; the smartest. Karen Ho, in her marvelous book Liquidated: An Ethnography of Wall Street (2009) depicts a recruitment process wherein finance representatives convince Ivy League students that finance is the only intellectually challenging, fast-paced atmosphere suited to their superior minds. Wall Street shares the same basic estimation of its stature that Princeton does: a place where nobody is stupid or slow. Later on in their careers, finance workers use this "smartness" to justify the inherent "rightness" of what Wall Street does. Take a merger that results in cashiering of a hundred or so low-level employees who now can't feed their families, as well as the gradual selling off of a once functional business enterprise into sub-securitized assets designed principally to hoover up broker fees. This sounds bad all around, right? Wrong! It is, don't forget, a creation of our smartest people, who are able to discern what the market demands.

To Read the Rest of the Essay

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