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Originally Posted by Ralph Sir Edward
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I've been trying to decide whether these instances of bait-and-switch in your arguments are deliberate or unconscious. Ultimately, it doesn't matter because the results are still prejudiced against a huge number of people who have nothing to do with the conditions, outcomes and anecdotes you've relayed and described.
You're telling us about the behavior of a small group of crooks in the banking and finance industries and equating them with
all New Yorkers (including journalists). This is the veritable exception to Godwin's Law because you're actually talking about New Yorkers in the same way that people talk about Jewish New Yorkers, who are thought by anti-Semites to dominate the those industries.
This isn't a New York issue, it's an issue with deregulation and neoliberalism (in the Chicago School of Economics sense, not in the sense of political liberalism). The same people who've screwed the citizens of Texas have done so to the citizens of New York. This is the hub of the financial empire and the empire is corrupt.
Ask Canadian citizens if they have these banking issues in their supposedly socialist country (which of course it isn't in the accurate sense).
If I wanted to be unfair, I could blame all Southerners for voting in the sorts of politicians that ushered in an age of deregulation that made these examples of corporate kleptomania possible.
But then, of course, I'd be painting people in other states with the same broad brush with which you've continually painted all New Yorkers.
Don't blame all New York voters and journalists for removing the restrictions that led to those events. Blame the two economists who decided that CEOs would behave more responsibly if they were made major shareholders of their companies (see below).
You'll get no argument from me that real estate, banking and the stock market service industries are corrupt, and that the lawyers involved had a lot to do with the present situation. But it's pointlessly divisive to blame the entire population of a city for the crimes of individuals. This is the same argument one sometimes has with British citizens over the responsibility of all Americans for the government we now have and all crimes associated with the empire (going as far back as the Ajax initiative).
Besides which, by dividing voters and potential activists into Lilliputian territories, you derail a possible consensus between all of us that could result in actual change. And that's exactly how the powers that have made you angry want this to end.
(Here's the pertinent link)
Here's the pertinent bit (but don't go hating everyone in Chicago once you digest it!):
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Michael Jensen and William Meckling had graduate degrees from the University of Chicago, where Milton Friedman and his disciples taught that there was little wrong with the American economy that more competition wouldn’t resolve. During the early seventies, Jensen and Meck*ling, who were then both at the Univer*sity of Rochester, tried to apply this idea to the internal workings of the public company. They began with the supposi*tion that senior managers, faced with competition from other firms, would do the best they could for their stockhold*ers, by cutting costs and trying to make as big a profit as possible. "But the more we thought about it the more we real*ized that what we had been taught in Chicago and believed most of our lives wasn’t true," Jensen recalled recently. "It wasn’t automatically true that corpora*tions would maximize value."
Jensen and Meckling couched their arguments in the mathematical jargon favored by assistant professors seek*ing tenure, but the model they came up with had an enormous practical impact. It planted the idea that the most im*portant people in any company are not the employees or the managers but the owners -- the stockholders and bond*holders. This model provided an intel*lectual rationale, of sorts, for the con*troversial explosion in CEO pay that began in the nineteen eighties; and it justified the widespread adoption of executive stock options. Jensen and Meckling analyzed the relationship between stockholders and managers as a “principal-agent prob*lem” -- a dilemma that arises whenever one party (the principal) employs an*other (the agent) to do a job for him. It might be a family hiring a contractor to renovate its house, a company hiring a brokerage firm to manage its retire*ment fund, or even an electorate choos*ing a government. In all these cases, the same issue arises: How can the prin*cipal insure that the agent acts in his or her interest? As anybody who has dealt with a contractor knows, there is no simple solution. One option is to de*sign a contract that rewards the con*tractor for doing the job well. . . .
The rise of the stock option revolutionized the culture of corporate America. The chief executives of blue chip companies, who in the nineteen eighties had portrayed Icahn, Pickens, and their ilk as corporate vandals, now embraced the values of the raiders as their own. For decades, the Business Roundtable, a lobbying group that represents the CEOs of dozens of major companies, had stressed the social role that corporations played in their communities, as well as the financial obligations they owed their stockholders. In 1997, the Business Roundtable changed its position to read, “The paramount duty of management and board is to the shareholder.”
In many cases, the CEOs turned into corporate raiders themselves, albeit internal raiders. Companies like IBM, Xerox, and Proctor & Gamble, acting on their own volition, fired tens of thousands of workers. Their chief executive insisted that the “downsizing” was necessary to compete effectively, and that was sometimes true. But once the CEOs were in possession of mega options, they had another motivating factor: an enormous vested interest in boosting their firms’ stock price. For the first time, they had an opportunity to create fortunes on a scale hitherto reserved for industrial pioneers like Rockefeller, Morgan, and Gates. In 1997, Michael Eisner, the chairman and chief executive of Walt Disney, earned five hundred and seventy million dollars. A year later, Mel Karmazin, the chief executive of CBS, exercised options worth almost two hundred million dollars
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--"The Greed Cycle: How the financial system encouraged corporations to go crazy," by John Cassidy,
The New Yorker (Sep't 23, 2002).
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Originally Posted by Ralph Sir Edward
It's rants like this that reinforce the attitudes from the "fly over" country.
Biased? Hmmm... Here's a true tale. (anybody can look it up.)
In 1983, the price of oil peaked and dropped sharply. The result was a collapse of the economies of the "oil patch" (Texas, Oklahoma, and Louisiana). In Texas, 9 out of the top 10 banks were allowed to fail. Houston, Texas, was the largest city in the area. Its population shrank by 20% in 2 years, and the remaining population had 20% unemployment. The term "jingle mail" was invented in Houston, 1985. The response from the New York media? It was good because lower energy price helped hold down inflation in other places in the US....(I was a begining programmer for the only surviving bank in 1980-1989)
Flash forward to 2007. The residential real estate market collapses. This time is the "money center" banks (mostly New York City banks) on ground zero. Were 9 out 10 of them allowed to collapse? Did New York City's population shrink by 20% and still have 20% unemployment? I don't THIIINK so. THEY got bailed out, (except for the one obligatory Investment Bank who got shot, just like 1974, 1980, 1982, 1990, and 1997). Who is PAYING for the bailout? Those very same suckers who got hammered by the "Oil Patch" collapse in the 1980's.
But we know, we're all ignorant and biased...
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