Market ‘magic’ relied on greed

WASHINGTON — In the convulsed carnival of personal greed and public irresponsibility of these last weeks, one picks onself up over one shock, only to be smitten anew by unimagined calamities and biblical afflictions. Where, in all the billions of words written about the billions of lost dollars, is the key to the destitution we may face?

After a long search, I found that key in one paragraph, short but wise, in the recent Time magazine article “The Price of Greed” by Andy Serwer and Allan Sloan. Indeed, its simplicity lent clarity to its central truths.

“Didn’t the folks on Wall Street, who are nothing if not smart, know that someday the music would end?” the two men write. “Sure. But they couldn’t help behaving the way they did because of Wall Street’s classic business model, which works like a dream for Wall Street employees (during good times) but can be a nightmare for the customers.

“Here’s how it goes (my emphasis). You bet big with someone else’s money. If you win, you get a huge bonus, based on the profits. If you lose, you lose someone else’s money rather than your own, and you move on to the next job.” They then go on to remind us that, as the company employees’ and shareholders’ earnings were dropping off of cliffs, Lehman CEO Dick Fuld walked away with a cool $490 million.

And therein lies the core of the problem in this entire saga of Wall Street: the divorce of personal responsibility from one’s actions, the absence of accountability written into the soul of the man or into the spirit of the system and, finally, the almost total lack of any police walking the carnival.

We focus today on Wall Street, that path of deceptive dreams and lingering nightmares; but in truth these are the problems writ into our America today. Think of our beloved newspapers. Readers are abandoning them, new and uninterested owners are cutting their staffs like butter for toast, and philosophers ponder without answer who will be the “gatekeepers” of the truth for the “new reporting” on the Internet and its imprecise world.

Publically traded stock

Six years ago at a meeting of the International Press Institute in Europe, I deliberately went around the room during a reception and asked six of the leading American newspaper editors what had gone wrong in the world of the print press. Every single one, including the able former L.A. Times editor Shelby Coffey, said that the problem began when papers’ stocks were traded publically (for most, that was in the mid-’90s).

“You have never experienced this as a correspondent,” Coffey told me. “We editors would have to sit up there at meetings and have these Wall Street guys barrage us with demands. Some of us were making 25 to 28 percent a year, but that wasn’t enough. They kept demanding why we weren’t making more.”

And yet, we are confused (at least, I am!) as we look around this incredible country and see innumerable millions of wonderful, giving, responsible, kind and community-wise Americans. The model of Wall Street doesn’t fit the country, but then we realize that the question is one of private morality versus public morality. Private morality is very often healthy, working and wise; public morality has hit the pits.

While both political parties bear some of the guilt for our present problems, the fact is that the Republican administration of the last eight years is the major malefactor. The George W. Bush people actually believe that free markets will solve everything; they actually believe that you can “democratize” countries far away through fighting them to a standstill; and they still believe it. One of the neocons said on television this week, “They still believe in our model all over the world!” They do?

Free lunches

Under the Bush team, we have been involved in an imaginary world of magic markets and free lunches, but as a matter of fact, there ain’t none of these unless you’re being taken for a ride. Look, Ma, the “invisible hand,” followed soon by your invisible money! They didn’t snooker only us, they snookered themselves. From the wise men of the ’50s to the wise guys of the 21st century, that’s America today.

Universal Press Syndicate