Reading at the Crossroads

Reading at the Crossroads is an archive for columns and letters which appeared in the Terre Haute Tribune Star. I also blog here when my patience is exhausted by what I feel is irritating, irrational and/or ironic in life. --gary daily

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Location: Terre Haute, Indiana, United States

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Tuesday, December 20, 2005

Jackasses Loose in the Land of Opir

[gary daily col. 26 July 21, 2002]

“Corporation, n. An ingenious device for obtaining individual profit without individual responsibility.” -Ambrose Bierce

Does Enron’s and Haliburton’s energy shenanigans match or exceed Tea Pot Dome in the 1920s? Is it time to reissue Louis D. Brandeis’s Other People’s Money (1910), a classic book of informed muckraking journalism that called avaricious banks and insurance companies to task? Will tomorrow’s personal finance headlines shout: “Bernie Ebbers, the Robber Barons and Your 401(K)”? Is President Bush going to end up in the history books standing next to a cartoon image of an oil derrick embracing “W” while pumping money from sweetheart loans into his pockets?

Editorialists and political commentators are thrashing about searching for examples from the past that parallel or provide insight into the scandals, corruption, and manias wracking our economy today. Unfortunately, the history of our economy is regularly punctuated with corresponding circumstances.

It’s possible these references will miss the mark with the historically challenged. Take the example of “W” and the money pumping oil derrick. How many people know that Bush’s closest advisor, Karl Rove, has a favorite past president, William McKinley? Or, more to the point, that in McKinley’s day political cartoonists often depicted him standing next to a robust fellow with dollar signs covering his chest and stomach? This was “Dollar” Mark Hanna, the big donor bag man behind McKinley and the Republican Party in 1900.

One would suspect that Rove’s first job at the White House was removing all pictures and other evidence that Theodore Roosevelt ever came near the oval office. It was McKinley’s successor, the Republican Roosevelt, who railed against and regulated what he called the “malefactors of great wealth.”

But money movers and securities shakers need people to move and shake. That’s where the proverbial “little guy” comes in, sometimes by choice sometimes not. Examples of trying to jump on the gravy train and ending up with grease spots all over your financial statements go way back.

Though sometimes mentioned in the business press and used as a source for Louis Rukeyser type humor, I would guess that Charles McKay’s book, Extraordinary Popular Delusions and the Madness of Crowds (1852) is rarely read today. It details some of the many occurrences in history of mob psychology, financial and otherwise. For our purposes, the chapter on the South-Sea Bubble in early eighteenth century England is particularly relevant for our times. The recent dot-com fiasco has nothing on the bubble schemes of this era.

As McKay tells it, hard-working Englishmen, along with the always numerous “I’m smarter than you” types, threw money at proposals tenuously tied to a treaty giving the British a monopoly in trade with Latin America. Before it was over fortunes large and small were depleted. Schemes attracting investors included the importation of Spanish jackasses to improve the stock of mules. There was also something described as a company “to discover the land of Opir and monopolize its gold and silver.” I guess this passed for what current day stock analysts call a “story stock.”

During our current troubled times of “War on Terrorism” and the ascendancy of the National Rifle Association, my creepy favorite from this earlier era of Bubble companies was the proposed manufacture of a firearm which could discriminate among its targets. This gun would have the capability of launching square bullets at infidels (and the expanding British empire had a lot of these to deal with) and round bullets at Christians. Perhaps armed airline pilots today could be fitted with a similar model, one that could distinguish between First Class and Economy Class passengers.

A final example editorialists might draw on is Edward Bellamy’s Looking Backward: 2000-1887 (1888). This book was a phemomenal best seller and much better known than McKay’s work. It examines the origins and workings of a utopian society in the year 2000 from the point of view of a time traveler who has arrived there from the year 1887.

I remember two striking things about “Looking Backward.” Bellamy rejects the “invisible hand” of the market place. His vision rejects random acts of selfishness and embraces an optimistic and highly rationalistic view of how life might be ordered. As explained to the time traveler, the utopia he finds himself in all came into existence because the true and noble nature of human beings was allowed to evolve free of the greed and grasping of capitalistic competition. You don’t have to look very far to notice that Bellamy’s hopes for the future ended, for better or worse, far wide of the mark on that one.

The other thing I remembered was Bellamy predicting the coming of the marketing behemoth of the western world, Wal-Mart. Here’s the prescient passage: “The great city bazaar crushed its country rivals with branch stores, . . . absorbed its smaller rivals till the business of a whole quarter was concentrated under one roof, with a hundred former proprietors of shops serving as clerks.” Wal-Mart execs are perplexed, they're not sure if they should sell this book or try to outsource it to a desert trench in western China.

So look for Brandeis, McKay, and Bellamy to come up in editorials, Op Ed pieces, and even in TV news commentaries. I wonder if “W” knows about any of this history or these books? Karl Rove does, but he’s not telling.

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