Apr 28, 2012

Occupy the SEC and Public Virtue

I was very interested to read Suzy Khimm's long take on the Occupy the SEC group, who are apparently in large part composed of former Wall Street traders and the like: 
In its heyday, the tea party turned to elections to enact change, rallying supporters to primary incumbents and helping the GOP retake the House. Occupy Wall Street, by contrast, has largely eschewed the traditional political process. Instead, as protesters have moved off the streets, a small minority of Occupiers has waded deep into the weeds of the federal regulations, legal decisions and banking practices that make up the actual architecture of Wall Street. And they’re drawing on the technical expertise of the financial industry’s own refugees, exiles and dissidents to do so. 
Many of the Occupy wonks once worked on Wall Street, and some of them still do. They’re former derivatives traders, risk analysts, compliance officers and hedge fund quants. They hail from Morgan Stanley, Deutsche Bank, Bear Stearns, D.E. Shaw, Merrill Lynch and JPMorgan Chase — and at least one is a former Securities and Exchange Commission regulator. They’re more likely to use a flowchart than protest signs to fight big banks. But they identify with the movement’s animating belief that America’s financial heavyweights wield too much power, and that its political leaders are too eager to do their bidding.
This is a prime example of my working thesis that public virtue is extremely important for developing and maintaining the inclusive institutions described in Why Nations Fail. It's important to think of the incentive structure of institutions, maintaining watchful and vigorous oversight to prevent corruption, and so forth, but these people aren't even part of a traditional institution. They're working on their own time to try and restrain the power of the financial sector, by attacking one of its most powerful weapons--the nearly-incomprehensible complexity and tediousness of financial operations.

Again, it's obvious that these people won't succeed in breaking Wall Street's power by themselves. But it's a good example of how unselfish motives can genuinely help to make a more successful society.

2 comments:

  1. Many people complain that OWS doesn't have a coherent message that politicians can attempt to meet, sincerely or not. I've always found it to be a charming quality of OWS to be so ambiguous, and that it speaks volumes to the general discontent we have with the basic structure of or society. It's good to see some knowledgeable people take a good swing at such an undeniably corrupt institution.

    It seems that there is a growing population of people that simply want our value system to allow for both profit and social good that work cooperatively. Career options tend to hold these goals as mutually exclusive; private or public interest.

    Someone introduced me to concept of Benefit Corporations the other day. Not a bad idea. After reading about them I can't imagine why this isn't a model that every company aspires to. It seems a bit empty to suck up as much profits as possible at the expense of your employees or community.

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  2. True, true. I'm just glad in general to see some kind of movement that isn't either a bunch of deluded right-wingers or Astroturf corporate hacks. I'd like to see more Benefit Corporations as well. I sort of wish Google would have been set up like that.

    My only complaint with Occupy is that they don't seem to have a very realistic view of how to defeat the monied elite. There's a strand there of disengagement with politics, which is a sure way to fade into irrelevance. Wall Street has colonized our political institutions like some enormous fungus, and they'll use those institutions to beat back reform. Only by reclaiming the political process, perhaps by running against Wall Street, can they be stopped.

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