May 28, 2015

What Money Can’t Buy

It’s graduation time in Boston, and the Class of 2015 is asking “Now what?” If our young ones need help choosing, the market is back and ready to nudge them toward a gilded path. A new survey ...

It’s graduation time in Boston, and the Class of 2015 is asking “Now what?” If our young ones need help choosing, the market is back and ready to nudge them toward a gilded path. A new survey of Harvard seniors says that, after a dip in money jobs, fully a third of them will go to work in consulting or finance this year.

This week, we dared to enter the market for grad wisdom, rounding up a justice thinker, an historian, an entrepreneur, and a novelist to offer some last-minute commencement advice — and the latest installment in our capitalism series.

8467881527_34514ccc62_o (1) Harvard’s own rockstar philosopher Michael Sandel said that the high-dollar scramble for young minds is part of a phenomenon he sees the world over. What used to be a market economy has morphed and spread over 30 years into a market way of everything:

Because we fear the disagreement, the controversy that would result from engaging in that kind of that debate, because we worry about the majority coercing or imposing on the minority their values, we reach for what seems to be a neutral way of deciding hard public questions. Markets and market thinking have played that role, I think, mistakenly. The result is we have a kind of emptiness, a void, in public discourse and people everywhere are frustrated about it.

 

How did a nation of yeoman farmers and proud producers financialize its economy, and then its civics and its morality? Our historian of capitalism, Julia Ott, said that the process began in World War I when the Woodrow Wilson, desperate “to demonstrate the consent of the American population towards the war effort,” became bond salesman to the nation. War bonds and war savings campaigns encouraged Americans to see “the ownership of federal debt as a way of demonstrating that they not only support the war, but that they support a democracy, they support the foundational principle of private property rights.”

What stays with us for the rest of the 20th century and up until today are the ideas that property ownership are fundamental to American citizenship, that financial securities markets play a handmaiden to the realization of that goal, whether it’s through your 401k plan or through your house which you need a mortgage for.

Entrepreneur Semyon Dukach arrived from Russia celebrating those principles of American financial capitalism. Dukach told us he sees (and lived) the greed, but it’s trumped by good old fashioned business ethics.

Marilynne_Robinson (2)Customer-first ethics seems a thin substitute for a morality, though. And what of the older, pre-commercial American values? Novelist Marilynne Robinson said they’ve been crowded out and replaced by “this weird, ideologized ‘capitalism,’ which is not a phrase that ever occurs in our early literature.”

…The word “value” has been narrowed in its meaning so that it sort of means “profit,” something you can put in the bank. But value historically, value culturally, has always meant the enhancement of people’s lives. It has always meant the arts and the sciences and all these things that we have still implicit in the culture but are turning on, because they’re anomalous in terms of this novel, mindless ideology that so many people have been persuaded of… These spectacular universities and so on that we ought to be just enjoying! This idea that everything is monetizable. You know, the sort of thing where you take the little freshmen aside and say “not everything is monetizable!”

Now that the seniors are leaving — jobs offered and accepted (hopefully) — what are the “little freshmen” to think about markets and morals? If money doesn’t buy or point to the good life, what does?

Leave a comment, and let us know what you think.

This Week's Show •

The Meaning of Money

Michael Lewis has become the great teller of modern morality tales around money: from the story of how high finance bubbled up, then popped, in Ireland and Iceland to the story of how a handful of eccentric ...

Michael Lewis has become the great teller of modern morality tales around money: from the story of how high finance bubbled up, then popped, in Ireland and Iceland to the story of how a handful of eccentric thinkers saw a mortgage crisis brewing before it took down the world economy in 2007 and 2008.

In his latest book, Flash Boys: A Wall Street Revolt, Lewis sounds worried. After that last great crash, finance has gone digital. The action has moved off the downtown trading floors and into black-box servers stationed in New Jersey. Wall Street’s work has become so automatic, algorithmic and obscure that ordinary buyers and sellers have less understanding than ever of what’s happening with their savings.

In Flash Boys Michael Lewis focused on the practice of ‘high-frequency trading’ — a game of arbitrage conducted in the course of microseconds, well handled on Radiolab. But in a new afterword he says HFT is just a symptom of a larger problem. The market’s big players have once again abdicated their “clear responsibility to protect investors… and to create a fair marketplace,” meaning that the game may be more dangerous than ever.

So we’re asking the $64,000 question: can we build a more crash-proof, less leveraged, more equitable financial system? Our guest Jeremy Allaire would argue that the technology known as Bitcoin can do just that: bring back transparency and a simple standard of honest exchange. But we’re reminded that the American dream runs on credit — and we may just be too dependent on the boom-and-bust market we’ve made.

Life Under The Cheese-Grater

London — ever more a 21st-century financial capital — is undergoing the building boom. Our guest John Lanchester — novelist-journalist who’s become an obsessive wrestler of big-money topics — can see those buildings from his study window, and he’s (ever so slightly) flustered.

Lanchester says the meaning of those enormous buildings — nicknamed the Gherkin, the Spire, the Walkie-Talkie, the Cheese Grater — comes from their being built without a context, comically dwarfing the Tower Bridge and what’s left of that Dickensian skyline.

Hear our whole conversation with John Lanchester below, and — even more — buy his high-spirited book on How to Speak Money:

The Not-So-Mighty Dollar

On Medium you can read a piece asking what Bitcoin technology might actually accomplish by our newest producer, Pat Tomaino:

Here’s what I learned. Whether you see Bitcoin as a solution depends on who you are and how you define the problem. While the debate continues, here’s a rough scorecard on Bitcoin, what it can do, and for whom.

Berkshare20+50

And there’s a longer piece by Max Larkin about Berkshares, a small but resilient local currency used in Berkshire County, Mass.:

One thinks of a few Berkshire towns — like North Adams, out of Berkshare buying range — as monuments to the power of modern capital: how it all but literally floats in and floats out of a place. Like a kind of slow-motion weather event, money has whipped into Detroit, and Haverhill, Mass., and Gary, Ind. —  building up their physical plant and infrastructure so long as that promoted profit —  then whipped out and away, leaving something skeletal and defunct behind it.

This is, by the terms of the market, a morally neutral phenomenon. Monopoly capitalism of this kind is indeed like weather, in that one accomplishes nothing by complaining about it.

Bird's-eye_View_of_North_Adams,_MA

 

Podcast • February 10, 2014

John Lanchester on London in the Age of Inequality

Economic inequality is still on our minds after last week’s show with MIT economist Daron Acemoglu and Rolling Stone editor Matt Taibbi. Here’s an interview we recorded with John Lanchester in 2012 after the publication ...

Economic inequality is still on our minds after last week’s show with MIT economist Daron Acemoglu and Rolling Stone editor Matt Taibbi. Here’s an interview we recorded with John Lanchester in 2012 after the publication of his novel Capital.

My sense of this period and of the decade or so ahead is that it’s going to be one with — if we’re not careful, and I see no signs of us being careful — the same theme dominating conversation and politics everywhere. And that will be about inequality. It’s a very striking thing that a society like China, which only had private property 10 minutes ago, had effectively — this is a very broad-brush thing to say, but — had effectively abolished inequality. You know, there was a tiny crust of elite, but in essense for ordinary people China was a complely equal state. That came at a very, very high price. They moved away from that to astonishing economic growth, growth of a sort that the world’s never seen, numerically — that number of people being raised out of poverty so fast, hundreds of millions of them. And in the process they in effect invented inequality. Talk to people in China: inequality is a huge issue for them in this coming decade, the gap between coast and the center, between cities and the country. China has on a huge scale winners and losers in a way it never did before. Same thing in India. Same thing in Latin America — lots of countries that went broke and then recovered, with a new class in charge. That’s usually what happens. Old middle classes largely got wiped out. You have a new class of economic winners. Obviously inequality is a huge issue here in the States. It’s a huge issue in Europe and in the U.K. — summed up by the Occupy movement’s thing about the “one percent.” We’re just noticing this thing — everyone’s noticing it at the same time. And yet the trends that are propelling that gap are continuing. One of the reasons I thought it was an interesting moment to write about London is that there’s a global thing taking place there. And I think the world doing the split is part of that.

John Lanchester with Chris Lydon in Boston, June 20, 2012

John Lanchester has written a sprawling neo-Dickensian novel CAPITAL about London in the age of funny money and the crash of 2008. He got the germ of it five years ago, noticing a parade of “florists, dog-walkers, pilates instructors” on his own once-modest street south of the Thames, being radically made-over for bankers and the blooming investment-services class — “manifestly symptomatic,” as he says, “of a boom that would turn into a bust.” Like Bleak House or Our Mutual Friend, CAPITAL has what the Brits call a “state of the nation” feel, delivered in the voice attributed to Dickens of the “special correspondent for posterity.” But of course he’s illuminating an affliction gone global by now, describing life as lived in New York, too, or Shanghai, or Boston for that matter. One moral that Lanchester has given his tale is: “We are not in this together,” inverting the Tory slogan. In conversation he adds a touch from the Gospel of Mark: “To them that hath shall be given.” I marvel at how casino capitalism and its costs come clearer, stranger, more ridiculous, more destructive, more outrageous in fiction than in fact – how the right novels can feel truer than the news.

John Lanchester is eminent also as a non-fiction economics correspondent, a main contributor over 25 years to the London Review of Books. He’s been steadfast against the fictions of market doctrine, and strong in his underlying judgment: “The financial system in its current condition poses an existential threat to Western democracy far exceeding any terrorist threat,” he wrote in the LRB last April. “We have at the moment this monstrous hybrid, state capitalism… This is a parody of economic order, in which the general public bears all the risks and the financial sector takes all the rewards – an extraordinarily pure form of what used to be called ‘socialism for the rich’. But ‘socialism for the rich’ was supposed to be a joke. The truth is that it is now genuinely the way the global economy is working.”

In conversation, John Lanchester is extending our thread on the late Tony Judt‘s parting shots in Ill Fares the Land:

Judt makes very important points, I think, about the tragic loss of belief in our ability to act collectively for the good. Let’s gang up, get together, figure out the thing we want to change for the better, and then go ahead and make that change. It seems entirely true when he says the younger generation has entirely lost that sense. I’m writing now about the Underground in London for the 150th anniversary of the Underground next year, the first underground trains. The Victorians were obviously very different from us in lots of respects, but one of the crucial things, I’ve come to think, was their morale. When they were building the Underground, they knew it would change the city forever, for generations to come, and they were certain they that that change was for the better. It was risky, and it was expensive, and it was difficult, and it was right on the edge of what was technologically possible, and they were inventing new techniqes to make the Underground as they did it. But they knew it was going to completely remake the city, and that was the whole point. And I was just thinking: what do we see around us that has that equivalent thing: that you know: we’re doing it and in a hundred years’ time they’ll be using it every day. In London, we’re using Victorian sewers, power networks, holes the Victorians dug. They actually made that world that we’re living in. And that confidence where you can make the world of the future — it’s very sad to have mislaid that, and I see no good reason why we feel we have. It’s just somehow that the frame of the debate has shifted, so that it’s all kind of managerial. You can tweak this and tweak that, but you can’t really change anything. And I wonder: who wrote that rule?

In London or the world, I’m wondering, what corresponds to the Underground, as an artistic or architectural monument of this time?

I think it’s in the rash of buildings trying to be iconic. A thing that’s very much of the moment is these buildings that are trying to be free standing, these buildings that are almost their own brand. Lorenzo Piano’s Shard. Or what’s known as the Gherkin, the Erotic Gherkin, a Norman Foster building which does look indeed like half a gherkin, half a penis, 40 stories high. It’s from the idea of Frank Gehry’s Guggenheim-Bilbao, which I think is a wonderful building. But I think it started a trend for the idea that the building is a sort of picture, an icon. It’s not much to with the place; it’s not much to do with anything. It sums itself up and is its own logo, in a way. And we’re seeing an awful lot of those, so I think that’s going to be this moment — the idea of a slightly self-contained, self-reflexive, anti-humanistic building because they look worse when you put people in and around them. They’re better without the humans. And when you interact with them you feel like one of those tiny model figures in an architect’s diagram, and you’re meant to. So there is an anti-humanistic aspect to those guys’ buildings, and I think that’s the kind of thing we’ll look back on and say: oh well, that sums up that period.

January 23, 2014

Activism in Memory of Aaron Swartz

  Aaron Swartz, before he became the first saint of the Internet age, seemed the perfect boy-child of the Internet, the algorithm made flesh, a human embodiment of the Internet’s voraciousness and connectivity, its head-spinning ...

 

Aaron Swartz, before he became the first saint of the Internet age, seemed the perfect boy-child of the Internet, the algorithm made flesh, a human embodiment of the Internet’s voraciousness and connectivity, its head-spinning drive toward an open banquet of knowledge. The inventor of the Web, Tim Berners-Lee, pictured Aaron Swartz “blazing across the dark sky of ordinary people, broken systems, a shining force for good.” And then in Aaron Swartz’s death by suicide, at age 26, one year ago, it seemed a promise had been crushed — the machinery of surveillance, censorship, and control had won the day. A year later the invitation is to see deeper into a vision of technology but also of culture and humanity, and to recover something of Aaron Swartz’s ambition, as he put it shyly, “to save the world.”

Lawrence Lessig, the Harvard law professor and for a decade Aaron Swartz’s closest grown-up friend, leads us this hour from the cold, snowy trek he calls the the New Hampshire Rebellion. It’s a mission to save a corrupted Republic, to ransom the Congress of the United States, to smash the money shackles on our politics. It is part of the project to renew Swartz’s spirit. Lessig may be the preeminent legal advocate before the Supreme Court and elsewhere of the free Internet – free as in freedom, not as in ‘free lunch’, as the saying goes. He is the author of Republic Lost: How Money Corrupts Congress and a Plan to Stop It.

We’re trying also to locate Aaron Swartz as a landmark in the culture and the age. Matt Stoller, an incisive, sometimes scathing blogger on politics and money, was Swartz’s close friend and contemporary inside politics. The author Maria Bustillos corresponded with Aaron Swartz and has written wonderfully on his literary appetite and his own writing. He’d commented after his arrest two years ago that he read Kafka differently: The Trial, he realized, was not fiction but meticulous documentary coverage. And finally: nothing engages me more about Aaron Swartz than the news (to me, anyway) that he was an astute reader and commentator on David Foster Wallace and his mad epic Infinite Jest. On his blog Swartz had “solved” the mysterious ending of Wallace’s novel. It is as if he were trying to deduce the algorithm in Wallace’s head that produced the book. I am feeling tremors of a convergence here of iconic figures — two geniuses, two suicides and perhaps two parallel visions of an American apocalypse.

A reading list, for those interested.

A year ago Professor Lessig gave a TED talk about campaign finance reform, and how he sees the issue:

 

Podcast • June 18, 2013

Mark Blyth (9) : On the Dead End of Austerity

The Great Gatsby is out as a film again. Go see it! Think about it. Basically you have this tiny elite. How many yachts can they buy, right? They have all the goddam cash. And ...

markblyth5-1

The Great Gatsby is out as a film again. Go see it! Think about it. Basically you have this tiny elite. How many yachts can they buy, right? They have all the goddam cash. And they don’t need to invest in a recession because they can live off the interest on their investments, so they’re fine. Everybody else is screwed if they don’t have investments. They can’t consume enough because of the wage skew. We’re back to where we were in the Twenties and Thirties.

Political economist Mark Blyth, with Chris Lydon. June, 2013.

Mark Blyth, the butcher’s son from Dundee, is sounding off again in the Scottish pub where we all belong — if you want the news of wealth in our time deciphered, and if you can listen as fast as Mark Blyth talks. The authority of his brash gab is reinforced by the reviews hither and yon of his pithy new treatise from Oxford on the false doctrine of the day: Austerity: The History of a Dangerous Idea. That idea he’s been bashing in our conversations for almost three years now is the doctrine (rampant in official Europe, fashionable in the US) that governments can shrink their way out of debt by slashing their public budgets. Professor Blyth’s counter here is that it’s government’s job to grow the economy and the taxes that will service the debt.

Not the least of what’s new in Mark Blyth’s book is the argument that austerity (not inflation) was the proximate cause of Naziism in Germany in the Thirties — also of Japanese expansionism in the same period that led to World War 2. So there may be a grim warning in his evocation of Scott Fitzgerald’s Gatsby and the Jazz Age.

In the class-divided skies of British Airways nowadays he sees another flash of where we’re going:

I fly a lot on British Airways, which now has four classes in its planes when you go trans-Atlantic. It’s the medieval class structure brought back to life. At the very front of the plane where you turn left instead of right as you come in the nose — first class! — that’s the Aristocrats. They’re the ones you never get to see. Literally, the Lords and Ladies. Then, when you turn right, you go through all these flat lie-down beds. These are the trans-Atlantic Knights of the Financial Nobility. Then you get past that to Premium Economy, which is like the Serfs with Money — you notice that’s a very small section of the plane. And then: one third of the air frame has two thirds of the passengers. Cattle. Cargo. Self-loading. Everybody else. It’s a bit like the societies we’ve built for ourselves. And until the people — not at the bottom but the ones in the middle, the ones whose voices matter the most in politics — say: you know what? I just can’t afford $50,000 a year for whatever Ivy League or non-Ivy League university my kids gets into. How am I going to do this? Let’s say you earned $150,000 a year… That’s a lot of money — it’s three times the median income. You’ve got a chunk of change, but you still have to eat. Let’s say you save $40,000 of that. That’s still not enough for one year of college. And you won’t get financial aid because you’re making $150,000. I know professors who can’t send their kids to these schools. And that’s if they have one. What if they have two? So when that constituency starts to say: hang on a minute; there’s something seriously wrong here. That’s when you’ll begin to see change.

austerityMark Blyth’s argument here is drawn from life — that is, from his own:

Let’s go back to my experience. My mother died when I was very young, and I was raised by my paternal grand-mother. Basically all we had was her state retirement pension and occasional handouts from my manual-worker father, who was a butcher; and that was usually in the form of in-kind: bits of dead things were dropped off at the house on a Friday. And we made our way through. I went to school with holes in my shoes. So then I got to university and all the rest of it. I did this with all these state-funded ladders of achievement. Schools worked. If you were smart enough you got in. There were grants available. You didn’t have to have complete financial records. You did not have to go miles into debt to do this, and that was that. People say to me: good for you, but someone had to pay for that; basically you’re taking from others and enjoying yourself. Well, my answer is: you gotta be kidding me. Do you know the taxes I pay now? Suppose I hadn’t exactly advantaged myself through the education system. Suppose I’d stayed in Dundee. Well, I probably would have been in the military which is a huge tax loss. Or I’d have been in jail, which is very expensive. Or I’d have been a marginal worker, and I’d have paid very little taxes into the public purse. Instead of which I come over here and as somebody who’s done pretty well I pay a lot more taxes over my lifetime than I ever took out of the welfare expense.

This stuff pays for itself. It creates an equal society. It creates the possibility of mobility. It creates the idea, the ideal and also the belief that it’s possible to succeed. And we are dangerously close to creating a world where those ladders of mobility and that belief — that all-important belief that’s critical to the germination of capitalism — is going away. We have a winner-takes-all society where those who can opt out and those who are left behind do what they must. That is what worries me. That is where the scary politics start.

Mark Blyth in conversation with Chris Lydon. June, 2013.