Never mind the Sanders-Clinton-Trump complaints. Capital
markets have been a blessing to untold millions.
‘I happen to believe that the business
model of Wall Street,” Democratic presidential candidate Bernie Sanders said earlier this year, “is fraud and
deception.” Hillary Clinton is only slightly more subtle. “I went
to Wall Street,” she said in the recent Democratic debate, “in December of
2007—before the big crash that we had—and I basically said, ‘Cut it out! Quit
foreclosing on homes! Quit engaging in these kinds of speculative behaviors!’ ”
Trump has gotten in on
the act. “The hedge fund guys didn’t build this nation,” the billionaire
Republican candidate told CBS. “These are guys who shift paper around
and they get lucky.”
Given the magnitude of
the past decade’s financial crisis, it isn’t surprising that political
opportunists are running against “Wall Street.” What’s surprising is how
unsophisticated the arguments have become. Attacking finance, an industry that,
according to the Bureau of Labor Statistics, employs six million people in the
U.S., the vast majority of whom are in the middle class, has become an
Those of us committed to
the industry feel no need to defend the indefensible—like predatory
lending—committed in the name of “financial innovation.” We also don’t oppose
common-sense regulations such as higher capital requirements for companies
considered too big to fail.
Still, many of us are
saddened by how little political leaders and pundits understand capital markets
or appreciate their role in powering the greatest economic engine the world has
ever known. Many of them seem to see banks as useful only for storing wealth
and facilitating transactions—providing savings accounts and debit cards.
Virtually no attention is paid to the next step, which is turning those
deposits into capital. Money that banks lend to businesses is transformed into
productive resources—factories, machine tools, trucks and the like.
The West’s establishment
of property rights, and the banking system that grew up around them, turned
assets into capital—and the ambitions of entrepreneurs and inventors into
reality. Modern banking, while imperfect and subject at times to excess, has
been an enormous contributor to human progress, which has put a serious dent in
the crushing poverty that was once, even among Western countries, the norm
rather than the exception.
The ability to raise
capital breathed life into the dreams of Vanderbilt and Rockefeller, Gates and Jobs. Charlie Merrill, co-founder of Merrill Lynch, was the
first to understand that the distinction between “Wall Street” and “Main
Street” was artificial. He believed that the average American—not just the
wealthy—should be able to buy shares in the country’s greatest companies. His
legacy has allowed untold millions of savers to put money in the stock market
and retire in comfort.
Listening to the
politicians, populists and pundits, one might be forgiven for thinking that
Wall Street is comprised only of soulless overachievers who will do anything to
make a buck. High finance, like any other business, does have its fair share of
scoundrels. But the financial-services industry also includes hundreds of
thousands of regular, middle-class people. They take the subway to work. They
worry about paying the mortgage and sending their children to college. And they
do their best to provide their clients with quality advice and good service.
Since the financial
crisis, it has been increasingly popular to draw distinctions between
Americans: rich and poor, black and white, men and women, whatever. It would be
nice to see a political candidate emerge who encouraged everyone to remember
that America is best when we’re all in this thing together. Perhaps we can look
to Muhammad Ali for inspiration.
The writer George Plimpton claimed that the great boxer once
recited the shortest poem in the English language at a Harvard ceremony: “Me /
We.” That’s half the length of Ogden Nash’s “Fleas”—“Adam / Had ’em”—and twice
“Me / We,” indeed. It
even fits on a campaign button.