I'm back to blogging after a hiatus drafting the handbook article on peacemaking. Pardon my impetuousness at posting this polemic without the editing readers might deserve. This just came out of me:-)
Here I hark back my Hoosier roots:
WALL STREET CASINO
Hal Pepinsky, firstname.lastname@example.org, pepinsky.blogspot.com
May 2, 2010
In 1851, Hoosiers added section 8 to article 15 of the Indiana Constitution, forbidding authorization of a “lottery” and the sale of “lottery tickets.” Over the years, this came to be taken as a prohibition of gambling. In 1988, the Constitution was amended to repeal art. 15, sec. 8. I recall this as the major issue in the 1988 election campaign. Once the repeal was in effect, it was conceded by proponents and opponents of legalized gambling that any legalization had to be “authorized” by the General Assembly. In 1993, legalization began with the establishment of a “lottery and gaming” commission empowered to regulate riverboat casino gambling.
Six years before the repeal, my Indiana University criminal justice colleague Paul Jesilow had persuaded me to move the pension money I had invested in the stock market to my annuities fund, where all my pension has rested since. That fund (TIAA’s first pension fund, classically an investment in bonds for municipal infrastructure) promised a return of at least 3 percent a year and has over the past 38 years in fact accrued 5 percent interest. Paul argued that I should divest from Wall Street on moral grounds, citing Adam Smith (The Wealth of Nations, 1776) for the idea that the amorality of for-profit incorporation was the primary threat to free-market operation of the “invisible hand” of seller competition to offer honest value for product. Smith argued that the natural result of incorporation is market oligopoly, or worse, monopoly (known these days as “too big to fail,” formerly recognized as an illegal “trust,” a “combination in restraint of trade.”
For my part, for all the addictions I may have had, gambling is not one of them. Like an observant Muslim, I have always felt it immoral to make money simply from having money. Personally, I am a dedicated fiscal conservative. All during the 1988 gambling debate in Indiana, I kept asking myself and fellow Hoosiers: If gambling is prohibited in Indiana, how come we license stockbrokers to do business in this state?
I’m in favor of investing, as Jill and I have for instance in lives of our parents, children and grandchildren. My problem is with investing in enterprises in which I have no personal stake simply for the sake of increasing my personal wealth. When for instance I hear the anger and shock of people who lost everything investing with Bernie Medoff, I ask myself: What on earth makes any human being feel s/he is entitled to a 14 percent annual return on investment? It has to be at someone’s expense. As surely as a growing tension among earth plates sometime results in an earthquake, economic bubbles inevitably burst. This results in the death of corporate entities like Lehman Brothers as well as in personal tragedy of those who have invested life savings in a Citicorp. When I am offered “investment opportunities,” I feel a fiduciary responsibility to my family to decline.
There was considerable human drama when Goldman Sachs executives appeared last week on Capitol Hill. As I listened to comments by members of Congress and other commentators, I kept hearing the message that Goldman Sachs executives had crossed the line between ethical investment and “gambling” with their clients’ money. To me, the blame game is just a way to avoid the major issue: a magical thinking that leads us so widely to gamble our financial futures so recklessly, period. Back to Pogo: We have met our enemy and the enemy is us.
Face it: Wall Street is a gambling center pure and simple. In 1988, I recall that trading on the New York Exchange was just pushing past a million trades a day. Now trades number in billions. How’s that for growth in personal , corporate and governmental fiscal irresponsibility—a post WWII mega-gold rush?
We have a lot of historical amnesia. Does anyone but me remember President George W. Bush’s first legislative initiative in 2001, aborted by 9/11? It was to kill what was deemed by some Republicans to be the last hated bastion of the New Deal: Social Security. Bush proposed that people be allowed to divert their social security taxes into Wall Street pension funds. One good thing to come of 9/11 is that social security pensions remained secure when Wall Street collapsed. Every cloud has a silver lining. Love and peace--hal