It’s probably a bad idea for someone like me, with a weak grounding in economics, to think about economics. But you can’t help thinking about economics nowadays. And I probably should have been thinking about it all along.
Thinking about it is hard work for me, in part because so many people I instinctively dislike and mistrust have weighed in on it so loudly, with opinions that seem to me based on flawed premises. But that doesn’t mean their conclusions are to be dismissed.
Look, here’s what I see. I’m 50. When I was a teenager, banks were local. In Philadelphia, you had PSFS and you had Girard. Both storied old names with deep local roots. You could open a savings account there and get 4% or 5% interest on $100. It taught you how to invest and grow your money. Both are gone now. The banks you see now on the city’s streets, I don’t even know where they have headquarters.
And nobody except rich dudes and eccentrics played the stock market. It was understood to be a form of legalized gambling in which the small and uninitiated investor was almost certainly going to be cheated, unless he worked his tail off at it. When you bought stock, you got a big engraved piece of paper with the name of the company on it.
When you had a good job, you had a pension fund. Your employers, who probably were local, had it invested in a local bank, which lent it out at interest to people it knew and trusted, to buy homes, build stores, etc.
There were many problems and pitfalls in all this. But it seemed to work well enough for modest growth and reasonably good employment.
Then, in 1978, along came the 401(k). I don’t think anyone intended it to have the effect it had. But it eventually made everyone an investor in the global financial markets. Nobody except government workers seems to have a pension fund now. In short, all of us gradually came to feel our interests were identical to those of the Wall Street sharks, because our pension funds were parked in the same places as their play money.
Worse, new financial products were devised which sliced and diced and repackaged investments like sausage meat. So you didn’t know if your money was in this company or that company, but you felt you were playing the game. And you were, but now it was a shell game. By the mid-1980s, guys in the barbershops were reading the stocks pages and bragging about their investments. As though the shark tank had become a Disney ride, as though they still weren’t guppies.
Short term, big profit. If someone bought up the local silverware making company and shipped the work off to China and Mexico, that put 150 people in your town out of work, but it also meant that company could make a lot more profit, and as we all were, technically, invested in corporate profits, it seemed like a good thing in the end overall. A little sad, maybe, if you knew one of the unlucky few. But we had learned to think of ourselves like little tycoons.
The Wall Street mentality. I don’t know any bankers, or any investment house executives. But I know the kind of rapacious swine they brought in to take over newspapers in the 1980s and ’90s, when they passed from family hands to corporate investments. They are people you don’t ever want to be beholden to for anything.
This guy can tell you what really killed journalism in America. The newspaper is a product that, unlike a lightbulb, can’t be outsourced to China or India to make (though, gods help them, they have tried). Doesn’t matter. It was subject to the same evisceration as any other American industry:
In fact, when newspaper chains began cutting personnel and content, their industry was one of the most profitable yet discovered by Wall Street money. We know now – because bankruptcy has opened the books – that the Baltimore Sun was eliminating its afternoon edition and trimming nearly 100 editors and reporters in an era when the paper was achieving 37 percent profits. In the years before the Internet deluge, the men and women who might have made The Sun a more essential vehicle for news and commentary – something so strong that it might have charged for its product online – they were being ushered out the door so that Wall Street could command short-term profits in the extreme.
Such short-sighted arrogance rivals that of Detroit in the 1970s, when automakers – confident that American consumers were mere captives – offered up Chevy Vegas, and Pacers and Gremlins without the slightest worry that mediocrity would be challenged by better-made cars from Germany or Japan.
In short, my industry butchered itself and we did so at the behest of Wall Street and the same unfettered, free-market logic that has proved so disastrous for so many American industries. And the original sin of American newspapering lies, indeed, in going to Wall Street in the first place.
When locally-based, family-owned newspapers like The Sun were consolidated into publicly-owned newspaper chains, an essential dynamic, an essential trust between journalism and the communities served by that journalism was betrayed.
So didn’t it all start with the gentle, subtle, paradigm shift that made the average American worker (when there still was such a thing) feel like his interests were aligned with those of the worst sort of corporate bosses? That has occasionally happened before in our history (in the 1830s and 1850s, for instance), but it is not a stable position, because it is so palpably false. But now it’s become the fiction that sank the ship we rode this far.
I don’t think anyone did all of this deliberately, even though it was accomplished in a lifetime. I don’t think any one political party is to blame for all of it. But I do think some people steered it and nudged it for their own benefit. And they still have not been called to account for it.
And I would like to see them all shipped off to a barren rock of an island in shark-infested waters, with no trees and no shade and no fresh water, and left there. I’d even go get a pilot’s license and fly them there myself.