I’m always amazed at all of the interesting ways the moral rectitude of Boomer (born 1943-1960) comes back to bite them.
A couple of random examples:
- We once wanted to protect the freedom and privacy of college-age youth (and inspired FERPA and other legislation to ensure this). Now, guess what, we’re angry that we—as parents—have been stripped of our God-given right to see our kids’ grades and health records.
- We once believed that society would function better if everyone were a bit less inhibited about sex—and more transparent about what they do as leaders. Then came Bill Clinton and Monica Lewinski, which nearly persuaded Boomer-dominated Congress to impeach a President for being a bit less inhibited… and a bit more transparent.
All of this brings to—enough silly preamble—my latest example: The “scandal” at Goldman Sachs.
I would wager to say that, back in the 1960s and 1970s, nothing infuriated Boomers more about how the American economy was run than the idea that powerful greasy old men, dressed in oversize pin-striped suits and hidden away in smoke-filled rooms, essentially made all the strategic decisions about where capital would flow and (therefore) what would be produced and consumed. These anonymous titans, from their “commanding heights,” claimed they exercised prudent and responsible judgment, but their very paternalism just infuriated us more. We wanted to blow it all up.
And guess, what? We succeeded. The ascendancy of Boomers as voters and leaders since the late 1970s has coincided with a radical deregulation of our economy, especially in those areas, like investment and finance, where trusted “fiduciaries” were supposed to take care of others. In the new Boomer world, the market was the great leveler and everyone was liberated to take care of themselves. Today, you buy and sell on ebay as you wish, you invest your 401(k) money as you wish, you purchase and liquidate hotels or firms as you wish, and you can even invent new financial instruments (this brings us to derivatives) to gamble or hedge or arbitrage against any event you wish. Goldman Sachs, run by G.I.s back when Boomers were young, was your typical “investment bank.” It was supposed to watch out for the rest of us and steer capital accordingly. Now Goldman Sachs, run by Boomers, is no longer really an investment bank at all. It’s just a hedge fund and its purpose is to make money, just like everybody else. And let’s face it, because everything is deregulated and competitive, there’s no real money to be made in investment banking anymore any way.
And now we’re shocked that GS set up a derivative that it sold to clients on both the long and short side? That it didn’t warn these billionaire speculators that they might lose money? And that they, GS, might be taking the other side of that transaction? (We’re not talking about widows and orphans here.) This is crazy. Boomers set up this new world. Many Boomers have made billions off it. And, so be it, other Boomers should be allowed to *lose* billions off it. Yes, a deregulated hands-off financial system may make it easier for the next Steve Jobs and Bill Gates to get start up funding (something that wasn’t easy for them back in the “bad old days”). But it also makes it easier to lose vast amounts of money on bad bets.
You can’t have it both ways. Nothing infuriates Americans more than the idea that, for these very rich 50- and 60-somethings, we’ve privatized risk on the up side but socialized risk on the down side.
Boomers should stifle their shock. It’s like being bothered by the sight of Bill Clinton caught with his fly open. Boomers have taken America all the way here on that whole long crazy trip of theirs. And now they have to accept the consequences.
In the longer run, Samuelson’s final question looms large: “But if Wall Street can’t control itself, someone else will.” Prediction: Come the next First Turning (the High), some new institution (maybe a new government agency, maybe some new business cartel) will be in charge. Which means that, come the next Second Turning (Awakening), the young [Prophets] of that era will have something to rage about.