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Guest Post SuperReview Part II of VI: The Occupy Handbook Part I: How We Got Here

March 20, 2013

Whatsup.

This is a review of Part I of The Occupy Handbook. Part I consists of twelve pieces ranging in quality from excellent to awful. But enough from me, in Janet Byrne’s own words:

Part 1, “How We Got Here,” takes a look at events that may be considered precursors of OWS: the stories of a brakeman in 1877 who went up against the railroads; of the four men from an all-black college in North Carolina who staged the first lunch counter sit-in of the 1960s; of the out-of-work doctor whose nationwide, bizarrely personal Townsend Club movement led to the passage of Social Security. We go back to the 1930s and the New Deal and, in Carmen M. Reinhart and Kenneth S. Rogoff‘s “nutshell” version of their book This Time Is Different: Eight Centuries of Financial Folly, even further.

Ms. Byrne did a bang-up job getting one Nobel Prize Winner in economics (Paul Krugman), two future Economics Nobel Prize winners (Robert Shiller, Daron Acemoglu) and two maybes (sorry Raghuram Rajan and Kenneth Rogoff) to contribute excellent essays to this section alone. Powerhouse financial journalists Gillian Tett, Michael Hilztik, John Cassidy, Bethany McLean and the prolific Michael Lewis all drop important and poignant pieces into this section. Arrogant yet angry anthropologist Arjun Appadurai writes one of the worst essays I’ve ever had the misfortune of reading and the ubiquitous Brandon Adams make his first of many mediocre appearances interviewing Robert Shiller. Clocking in at 135 pages, this is the shortest section of the book yet varies the most in quality. You can skip Professor Appadurai and Cassidy’s essays, but the rest are worth reading.

Advice from the 1 Percent: Lever Up, Drop Out by Michael Lewis

Framed as a strategy memo circulated among one-percenters, Lewis’ satirical piece written after the clearing of Zucotti Park begins with a bang.

The rabble has been driven from the public parks. Our adversaries, now defined by the freaks and criminals among them, have demonstrated only that they have no idea what they are doing. They have failed to identify a single achievable goal.

Indeed, the absurd fixation on holding Zuccotti Park and refusal to issue demands because doing so “would validate the system” crippled Occupy Wall Street (OWS). So far OWS has had a single, but massive success: it shifted the conversation back to the United States’ out of control wealth inequality managed to do so in time for the election, sealing the deal on Romney. In this manner, OWS functioned as a holding action by the 99% in the interests of the 99%.

We have identified two looming threats: the first is the shifting relationship between ambitious young people and money. There’s a reason the Lower 99 currently lack leadership: anyone with the ability to organize large numbers of unsuccessful people has been diverted into Wall Street jobs, mainly in the analyst programs at Morgan Stanley and Goldman Sachs. Those jobs no longer exist, at least not in the quantities sufficient to distract an entire generation from examining the meaning of their lives. Our Wall Street friends, wounded and weakened, can no longer pick up the tab for sucking the idealism out of America’s youth.We on the committee are resigned to all elite universities becoming breeding grounds for insurrection, with the possible exception of Princeton.

Michael Lewis speaks from experience; he is a Princeton alum and a 1 percenter himself. More than that however, he is also a Wall Street alum from Salomon Brothers during the 1980s snafu and wrote about it in the original guide to Wall Street, Liar’s Poker. Perhaps because of his atypicality (and dash of solipsism), he does not have a strong handle on human(s) nature(s). By the time of his next column in Bloomberg, protests had broken out at Princeton.

Ultimately ineffectual, but still better than…

Lewis was right in the end, but more than anyone sympathetic to the movement might like. OccupyPrinceton now consists of only two bloggers, one of which has graduated and deleted all his work from an already quiet site and another who is a senior this year. OccupyHarvard contains a single poorly written essay on the front page. Although OccupyNewHaven outlasted the original Occupation, Occupy Yale no longer exists. Occupy Dartmouth hasn’t been active for over a year, although it has a rather pathetic Twitter feed here. Occupy Cornell, Brown, Caltech, MIT and Columbia don’t exist, but some have active facebook pages. Occupy Michigan State, Rutgers and NYU appear to have had active branches as recently as eight months ago, but have gone silent since. Functionally, Occupy Berkeley and its equivalents at UCBerkeley predate the Occupy movement and continue but Occupy Stanford hasn’t been active for over a year. Anecdotally, I recall my friends expressing some skepticism that any cells of the Occupy movement still existed.

As for Lewis’ other points, I’m extremely skeptical about “examined lives” being undermined by Wall Street. As someone who started in math and slowly worked his way into finance, I can safely say that I’ve been excited by many of the computing, economic, and theoretical problems quants face in their day-to-day work and I’m typical. I, and everyone who has lived long-enough, knows a handful of geniuses who have thought long and hard about the kinds of lives they want to lead and realized that A. there is no point to life unless you make one and B. making money is as good a point as any. I know one individual, after working as a professional chemist prior to college,who decided to in his words, “fuck it and be an iBanker.” He’s an associate at DB. At elite schools, my friend’s decision is the rule rather than the exception, roughly half of Harvard will take jobs in finance and consulting (for finance) this year. Another friend, an exception, quit a promising career in operations research to travel the world as a pick-up artist. Could one really say that either the operations researcher or the chemist failed to examine their lives or that with further examinations they would have come up with something more “meaningful”?

One of the social hacks to give lie to Lewis-style idealism-emerging-from-an attempt-to-examine-ones-life is to ask freshpeople at Ivy League schools what they’d like to do when they graduate and observe their choices four years later. The optimal solution for a sociopath just admitted to a top school might be to claim they’d like to do something in the peace corp, science or volunteering for the social status. Then go on to work in academia, finance, law or tech or marriage and household formation with someone who works in the former. This path is functionally similar to what many “average” elite college students will do, sociopathic or not. Lewis appears to be sincere in his misunderstanding of human(s) nature(s). In another book he reveals that he was surprised at the reaction to Liar’s Poker – most students who had read the book “treated it as a how-to manual” and cynically asked him for tips on how to land analyst jobs in the bulge bracket. It’s true that there might be some things money can’t buy, but an immensely pleasurablemeaningful life do not seem to be one of them. Today for the vast majority of humans in the Western world, expectations of sufficient levels of cold hard cash are necessary conditions for happiness.

In short and contra Lewis, little has changed. As of this moment, Occupy has proven so harmless to existing institutions that during her opening address Princeton University’s president Shirley Tilghman called on the freshmen in the class of 2016 to “Occupy” Princeton. No freshpeople have taken up her injunction. (Most?) parts of Occupy’s failure to make a lasting impact on college campuses appear to be structural; Occupy might not have succeeded even with better strategy. As the Ivy League became more and more meritocratic and better at discovering talent, many of the brilliant minds that would have fallen into the 99% and become its most effective advocates have been extracted and reached their so-called career potential, typically defined by income or status level. More meritocratic systems undermine instability by making the most talented individuals part of the class-to-be-overthrown, rather than the over throwers of that system. In an even somewhat meritocratic system, minor injustices can be tolerated: Asians and poor rural whites are classes where there is obvious evidence of discrimination relative to “merit and the decision to apply” in elite gatekeeper college admissions (and thus, life outcomes generally) and neither group expresses revolutionary sentiment on a system-threatening scale, even as the latter group’s life expectancy has begun to decline from its already low levels. In the contemporary United States it appears that even as people’s expectations of material security evaporate, the mere possibility of wealth bolsters and helps to secure inequities in existing institutions.

Lewis continues:

Hence our committee’s conclusion: we must be able to quit American society altogether, and they must know it.The modern Greeks offer the example in the world today that is, the committee has determined, best in class. Ordinary Greeks seldom harass their rich, for the simple reason that they have no idea where to find them. To a member of the Greek Lower 99 a Greek Upper One is as good as invisible.

He pays no taxes, lives no place and bears no relationship to his fellow citizens. As the public expects nothing of him, he always meets, and sometimes even exceeds, their expectations. As a result, the chief concern of the ordinary Greek about the rich Greek is that he will cease to pay the occasional visit.

Michael Lewis is a wise man.

I can recall a conversation with one of my Professors; an expert on Democratic Kampuchea (American: Khmer Rouge), she explained that for a long time the identity of the oligarchy ruling the country was kept secret from its citizens. She identified this obvious subversion of republican principles (how can you have control over your future when you don’t even know who runs your region?) as a weakness of the regime. Au contraire, I suggested, once you realize your masters are not gods, but merely humans with human characteristics, that they: eat, sleep, think, dream, have sex, recreate, poop and die – all their mystique, their claims to superior knowledge divine or earthly are instantly undermined. De facto segregation has made upper classes in the nation more secure by allowing them to hide their day-to-day opulence from people who have lost their homes, job and medical care because of that opulence. Neuroscience will eventually reveal that being mysterious makes you appear more sexy, socially dominant, and powerful, thus making your claims to power and dominance more secure (Kautsky et. al. 2018).*

If the majority of Americans manage to recognize that our two tiered legal system has created a class whose actual claim to the US immense wealth stems from, for the most part, a toxic combination of Congressional pork, regulatory and enforcement agency capture and inheritance rather than merit, there will be hell to pay. Meanwhile, resentment continues to grow. Even on the extreme right one can now regularly read things like:

Now, I think I’d be downright happy to vote for the first politician to run on a policy of sending killer drones after every single banker who has received a post-2007 bonus from a bank that received bailout money. And I’m a freaking libertarian; imagine how those who support bombing Iraqi children because they hate us for our freedoms are going to react once they finally begin to grasp how badly they’ve been screwed over by the bankers. The irony is that a banker-assassination policy would be entirely constitutional according to the current administration; it is very easy to prove that the bankers are much more serious enemies of the state than al Qaeda. They’ve certainly done considerably more damage.

Wise financiers know when it’s time to cash in their chips and disappear. Rarely, they can even pull it off with class.

The rest of part I reviewed tomorrow. Hang in there people.

Addendum 1: If your comment amounts to something like “the Nobel Prize in Economics is actually called the The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel” and thus “not a real Nobel Prize” you are correct, yet I will still delete your comment and ban your IP.

*Addendum 2: More on this will come when we talk about the Saez-Delong discussion in part III.

  1. March 21, 2013 at 11:38 am

    Come home soon, Cathy!

    • March 21, 2013 at 11:54 am

      Cathy will be back for the 27th.

  2. Linda
    March 21, 2013 at 2:38 pm

    Dear Leon: I respectfully disagree with you that Michael Lewis is inaccurate in his understanding of human nature, at least in reference to your generation. I think you would qualify as Exhibit A of what he is talking about, as an intellectually gifted, curious, basically humane person who believes that “making money is as good a point as any” in an examined life, a belief you seem to share with half of Harvard’s recent graduates. You’re right—“a meaningful life” is a vague and slippery term if it can encompass someone who wants to perfect his skills as a pickup artist. Let’s try some other descriptions: in each area of human endeavor, some people move the story forward, whether it is the person who invented the wheel or the artists who figured out how to show perspective in a two-dimensional painting. I think of the Australian doctors who discovered, after doing experiments on themselves, that ulcers were not caused primarily by stress but by a certain strain of bacterium. That is what Occupy Wall Street hoped and hopes to do—move the story forward.
    What seems especially seductive about finance is that it combines complexity, mathematics, computer innovation and the knowledge that all of this is being applied in the real world—markets crash, fortunes are made and lost, buildings get built or abandoned. And you could argue that people are moving the story forward in finance as well, inventing new products and formulae to generate profits in new ways. But as Cathy has written, this usually seems to be Smart Money figuring out more ways to take advantage of Dumb Money. Instead, wouldn’t it be a wonderful thing to be the person who made it impossible for payday lenders to continually extract payments from bank accounts that the owners have been blocked from closing?
    Your generation does seem to be coming to terms with natural limits to growth—climate change and pollution and our inability to dispose of massive amounts of trash. So it won’t be the case that continued economic expansion will mean that there’s more and more for everybody. Your more is somebody else’s less. So it will be interesting to see if you use your intelligence and energy to take your place among smart people working to become rich, or if you decide that there is part of the story that you want to move forward.
    With affection, Linda

    • March 21, 2013 at 3:11 pm

      Thanks for the kind response Linda,
      There is no doubt that I’ve used some hyperbole here.
      Can’t wait to see you on Sunday!

  3. March 21, 2013 at 3:56 pm

    Actually, your comment has inspired some further remarks about the book. Slippery language is often a found whenever someone is making proposals outside of the current doxa; I suspect that this is in part a function of diversity.

    People of many different backgrounds might have trouble finding concrete common ground without offending each other (extreme case: try to imagine how a real-life Borat might fare in NYC!) and so generalities can help smooth the process out and prevent interested parties from walking away from the table for nothing.

    The tradeoff, of course, is that generalities and vagueness not only can lead to misinterpretation, but deaden your writing. I saw not a few passages in The Occupy Handbook that violated some basic principles outlined in Orwell’s 1946 Politics and the English language (i.e. they ventured into newspeak).

    Disaster strikes when even generalities don’t quite cover the phenomenon in question. For instance, while I liked Ms. Byrne’s introduction she gets a little too newspeaky when she writes:

    “…that people were willing to contribute to a book like this at all – can be explained, I think, by the unnaturalness of the postures that income inequality has led us to assume. The postures are unsustainable. Income inequality is a form of inauthenticity, and in 2011, from Egypt to Iowa, citizens of the world threw off the yoke.” –

    I found this remark to be in appalling taste. “Postures” and a lack of “authenticity” are distinctly not the cause of the uprisings in Egypt or really any Arab Spring country. These are 1%’er concerns, projected onto, and by her sloppiness taking the place of, the interests of the immense majority.
    A slightly deeper problem is that I’m not sure Ms. Byrne or anyone in positions of power and tasked with representing Occupy (or social movement X) can help themselves.

    What I mean by that is self-segregation, made more effective by capitalist and government sorting mechanisms (real estate purchases, section 8 housing, better information about locales, wide differences in public school quality) effectively divide the 1% and 99% into separate spheres, ne’er the twain shall meet. This in turn helps prevent the wealthy from developing a deep sense of empathy (and possibly the ability to give good advice/help) for the actual problems advanced world poor, while also preventing a high level of resentment in the poor and middle classes.

    We might be stuck in a crappy, difficult-to-escape, equilibrium.

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