The book is not so much an indictment of Wall Street as it is a presentation of the way the Street understands its place in the scheme of things. She highlights the self-understanding of investment bankers as ‘being’ the market, an understanding that goes as far as to justify, on the one hand, receiving insanely huge bonuses, and on the other, being very liquid individuals themselves. The rate of staff turnover on Wall Street is extremely high.
Perhaps the point that I found most instructive is the way Wall Street has changed corporate American culture in the past 25 years. Corporations, which were seen as part of the welfare capitalism of the post 2nd World War era gradually lost their status as social institutions. Shareholder value has become naturalised as the sole reason for the existence of corporations, and anything that can improve shareholder value, no matter how short that increase in value lasts, is encouraged. This sometimes includes hostile takeover, and almost always demands massive job cuts and downsizing. Once corporations are no longer seen as social institutions that provide jobs and care for customers, those are rather easy things to do. Perhaps inconvenient, but easy.
The emphasis on shareholder value has led to short-term thinking and has often robbed corporations of the ability to make long-term plans. If a group of investors buy up a company by leveraging that same company on the junk bonds market, with the plan to cut spendings on R&D and cut jobs in order to ‘improve’ the shareholder value of the company before selling it off, how would they make long-term plans for such company? This could happen to corporations that are healthy, all things – including stock price – considered.
This leads me to thinking about what is currently happening in the Nigerian banking industry. I blogged about it when five banks were taken over by the Nigerian Central Bank. Shortly after, that the Central Bank published a list debtors of the banks. In all that, what was not mentioned was the corporate practices of those banks during the Nigerian stock market bubble. Actually, the practices of the banks was what created the bubble. Increasing their own shareholder value became the main job of the banks. Of course, in a weird way, this is understandable. Wall Street could claim to work on increasing shareholder value of corporate America; in Nigeria, the banking industry is corporate Nigeria.
It is not by chance that it was after the bubble burst that the Central Bank took over the banks. Before then, the profits banks were declaring were highly manipulated figures that bore no relationship to the actual condition of the banks. Now, they have to find a way of reconciling their balance sheet, somehow. I was in Nigeria a couple of weeks ago, and the cry was, and still is, that banks are laying off staff in droves and closing up branches.
It is perhaps obvious from this post that a lot of things are still not clear, at least to me. Newspaper commentaries I have been reading since the banking crisis started have not helped me much. This is probably due to the fact that we are always too quick to resort to simplistic explanations – one of which was the publication of the list of debtors – that we (the public, and even journalists) stop asking questions that might lead to a better understanding of what happened. As if the only reason the banks are in trouble is because they gave out too much in loans.
I am now thinking that it might be a nice idea to do an ethnographic study of the Nigerian financial sector when I am done with my second-hand clothing dissertation.One of the biggest strengths of anthropology is the fact that anthropologists ask basic and simple questions, questions whose answers are sometimes assumed, until they are asked. Wouldn’t it be interesting to turn that kind of attitude towards the Nigerian banking industry?
You can listen to Karen Ho on Laurie Taylor’s Thinking Allowed programme on the BBC.