In recent times David Weidner, MarketWatch commentator, has written some truly thought-provoking essays about Wall Street. In several articles he courageously challenges the accepted market ethic, prodding market participants to find higher standards and better practices. Admirably, Mr. Weidner does not shelter the wrong-doings of the Street. His recommendations provide plausible ways forward at a time when regulators need a fresh vision.
While many of us applaud the type of regulatory reforms now gaining visibility, some of us would like to see the overhauls go further. The whole architecture of Wall Street finance capitalism is misguided and works against the common interest and sustainable Republican liberties. Indeed, it can be argued that Middle East terrorism is nowhere near the threat to American well-being as is the economic terrorism plied by Wall Street. The plundering ways of the Street, broadly documented, contributed to resentments on a global basis. These resentments made it possible for Islamic terrorists to find safe harbor leading up to the tragedy of 9-11.
A systematically unjust financial sector cannot be regulated into the shape of a public asset. Wall Street is predatory by design, its obscene profits predicated on theory that the investing public will be wrong most of the time when they take things in their own hands. It is the Wall Street practice of leveraging against the ignorance and mistakes of the public — including the public’s sin of being habitually tardy to the sector rotation party — that makes it possible for the 2007 average salary and bonus compensation at Goldman Sachs to be over $660,000 per employee (30,500+ employees). No honest endeavor in a competitive marketplace can pay this many people such sums of money. There must be monopolistic powers at work — powers focused on strategies that cannot be honorable in the traditional sense of right doing. This kind of compensation necessitates the existence of widespread exploitation and devious design. Republican liberties must, in the final analysis, be threatened by such large scale schemes.
Regulation by itself is not going to chase off wrong-doing when the financial architecture and rules allow massive unmerited money to be made by those who game the nation’s retirement savings. It is not enough to cut back on CEO pay: Wall Street’s dominant role as the middleman for Americans’ investment endeavors must be rescinded.
We need a system where working Americans participate in robust fashion in the real profit flow of corporations. This would be a better system than one that requires Americans to buy low and sell high in order to obtain investment returns in competition with Wall Street’s gaming wizards. Most Americans’ circumstances will not allow them to comply with a competitive investment imperative, the natural result being that the wealth generated by productive labor is persistently sucked away by the most exploitative segment of the financial class. In the long run many good productive people lose sizeable chunks of their investment savings while parasites amass it. What democratic justice is this?
Wall Street needs to be opened up to honorable competition and real fairness. If average compensation for people on Wall Street was one-fourth of what it is now, these people would still make far more than most Americans. If three-fourths of the money going into Wall Street’s compensation schemes could be preserved for the public domain, stress could be taken off the Social Security system (thus reducing the pressure to raise taxes in the future). Furthermore, Wall Street would be less of a magnet for people with impaired scruples.
One of our national calamities has been the tendency of Wall Street to attract many of the nation’s brightest young minds from our highest ranked universities. Once on Wall Street these people become inducted into the culture of greed and exploitation. As they live in an environment where so many higher level employees work at exploitative plays, the conscience becomes seared. Not only is the character of many talented people ruined by Wall Street temptations but the nation suffers the opportunity cost of having fewer top minds working faithfully on the most pressing challenges of the day. From this perspective, Wall Street is a cultural disaster for America.
We can begin a new chapter in American history by trading out Wall Street capitalism for a prudent and honorable capitalism — one that does not exploit the many for the sake of the few. If new pages are to be turned we need larger numbers of traders and executives on Wall Street to take humanity’s interests to heart. No stone should be left unturned in bringing greed to accountability and replacing unfair practices with constructive ones. If we fail to do demonstrate ethical leadership in this, what justification will we have in advocating democratic capitalism to the world? Bona fide national greatness must be founded in a culture of integrity, accountability and goodwill.