MY VIEW BY MENCKEN'S GHOST | NOVEMBER 2, 2011
Editor note: Don is off this week and asked us to share this column with you in his "My View" space.
How banking and government became masters of the universe
The “Occupy” demonstrators might want to know from an insider how the nation has gotten to the point where Wall Street financiers and bankers, along with their cronies in government, became masters of the universe, and, in the process, destroyed the free-market economy and the nation’s dominance in manufacturing. Tea Partiers might also want to know.
They won’t like the ugly truth I’m going to tell.
It began about 1972, which is the year I was released from active duty as an artillery officer with a MBA. Fortunate to find a job in a recession, I moved to Chicago to work for Continental Illinois National Bank and Trust, the eighth-largest U.S. bank at the time, a bank that would later go bankrupt. Hired to help automate the backroom processing department of 3,000 employees, I was later offered a job as a bond trader, which I turned down and subsequently left the bank after only a year. My career would eventually take me on a path I liked a lot better than banking: to manufacturing and mining.
That path went in the opposite direction of where the country was heading and where the nation’s best and brightest were heading. They were heading for the lure of big cities and for the high pay of finance, the law and consulting; or for the power, status and influence of government. I remember very clearly the disdain they had for the “hick towns” where manufacturing plants were located, for the noise and smoke of factories, and for engineers with pocket protectors and bump hats who worked in those awful places. It didn’t dawn on the geniuses that much of the wealth they would deal in, and benefit from, had been produced for generations in such places by such people.
To skip forward, the disdain eventually became so acculturated that the intelligentsia spoke of the future being in “knowledge work,” not in making stuff. Academics like Professor Richard Florida convinced urban planners across the land that cities had to be gentrified to appeal to knowledge workers. Factories, warehouses, power plants, railroad yards, and docks were blights to be razed and transformed into condos, cafes and sports complexes, all connected by light rail. Downtowns became centers for software writers, government offices, and businesses that were dependent on government, such as banks, law firms, and municipal bond underwriters.
The disdain was particularly pronounced in Manhattan, as I learned firsthand from working for ten years in New Jersey for two manufacturing companies. Hoity-toity New Yorkers would look down their snooty noses at the Garden State. Similarly, the greens in Soho, the Village, and the Upper East Side would brag about how little carbon they burned compared to the car-crazy suburbanites in New Jersey.
They were blind. They couldn’t see the power plants, refineries, distribution centers, and factories that stretched along I-95 from the George Washington Bridge to Philadelphia. They couldn’t see the long lines of trucks crossing bridges and tunnels all evening to bring goods to the city and leaving their diesel engines running in the streets where they double-parked. Nor could they see the barges and trucks filled with Manhattan garbage that would be sent to New Jersey to be loaded on trains for shipment to landfills in Pennsylvania. They couldn’t see that they had outsourced their crap and carbon to not only New Jersey but to other states and nations.
They reminded me of the bankers and traders at Continental Illinois National Bank in their ornate offices with huge mahogany desks and fireplaces. They looked with disdain on the people in the backrooms who worked at metal desks and processed their paperwork and securities.
Disdain for industry among the elites and masses eventually turned into animosity. Manufacturing plants and power plants became something to hate and fear. After all, they brought pollution and cancer and melted the polar icecaps. The experts said so.
As an example of the animosity, several years ago a middle-class neighborhood in Phoenix fought the building of an electronics plant. They didn’t want a high-wage plant but were okay with convenience stores on every corner, where their sons and daughters could work for minimum wage, after meeting the principal hiring qualification of having grotesque tattoos.
No doubt, many of the “Occupy” demonstrators have the same animosity. Many Tea Partiers probably do, too.
Twenty years after entering the world of work, I was ready to leave it. In fact, I did leave it. Walking away from a six-figure job and profession, I wrote a management book on the causes and cures of bureaucracy and was fortunate to have it published by a mainstream publisher. I walked away because in those two decades, the regulatory state had grown so much that the preponderance of my working day had shifted from making companies more efficient and productive to administering government-required red tape. At the same time, I had organized and led a large and influential community-action group to fight the overreach of a federal agency.
One of the triggers for my decision to walk away was a conference I had attended in Washington, D.C. at a swank hotel. The conference was about new OSHA regulations and was conducted by former high-ranking apparatchiks at the Occupational Safety and Health Administration who had written the new regulations. They had become consultants who charged high fees to help companies comply with the abstruse regulations. In other words, their incentive while at OSHA was to make the regulations as burdensome and complex as possible, thus ensuring that they could make a lot of money as consultants later.
The same growth in numbers and complexity was happening with labor laws, discrimination laws, and laws governing employee benefits. As a result, the human resources profession, which used to focus on employing, motivating and retaining employees, turned into a de facto agency of the federal government. Self-serving human resources managers used the regulatory state to build corporate empires and to feather their own nests. Simultaneously, the least capable employees in companies used the regulatory state to extort their employers with phony claims of discrimination.
In 1995, an article of mine published by the Wall Street Journal detailed the massive costs of just this one aspect of the regulatory state. Tellingly, the president of the Society for Human Resource Management called to lambaste me for writing the piece.
It’s the same story in just about every profession nowadays. Whether Democrat or Republican, liberal or conservative, millions of Americans are dependent on the regulatory state for their livelihood. They rail against big government while benefiting financially from big government. Then, after their host inevitably becomes insolvent from being sucked dry, they will be the first to take to the streets to demand fairness and justice.
To summarize, it’s just not bankers who are greedy and in bed with government.
As I said, they won’t like the ugly truth.
Mencken’s Ghost is the nom de plume of an Arizona writer who can be reached at [email protected].
