I Crashed a Wall Street Secret Society
nymag.com
nymag.com
I'm shocked! Shocked, I tell you!
It's just as well we don't live in a glass house! It would be pretty embarrassing if tech industry people were to spend millions on, say a lavish, LotR-themed wedding. Or if our awards ceremonies attracted protesters.
It would have been way more shocking if it had been done in public speech. Not because it would have been known, but because it does not convey the same meaning. In a private context, you can expect people to know you are joking, or that this is a personal opinion you are able not to impose to others. In a public context, you are expected to express yourself clearly and to take position.
In regards to the conclusion of the sting, I can also understand that they would not like that kind of material to be published. Imagine someone threatening to publish recordings of you in shameful situations during a party? From what I read, they were reasonable they seem to have let him go without much trouble (I think they could have called the police and have his phone confiscated without too much hassle).
For a different (arguably larger) example, if someone is making light of (or celebrating) genocide/slavery/some atrocity (that they or their compatriots caused) and it comes out, that is very different than pictures of Obama/Zuckerberg/Guy down the street being blackout drunk or even doing drugs at a party.
Ribald, insensitive, bad humor happens when you put booze and a bunch of middle aged men in a room.
As George Carlin said "anything can be funny" (even rape). But its going to be incredibly hard for a convicted rapist to come up with a joke, about the rape he committed, that is funny, doesn't offend basically everyone, or make him come off as a total insensitive twat.
Do you see the difference?
It's a pretty normal human affliction, and in large I agree with you - while the effects were catastrophic - the actual act is not something that should be demonized, the people are not the problem, the system is - fixing the system is the solution, not blaming the people.
I'd go on even further and argue this kind of behavior is normal, and even healthy, and seen in any 'insider' group - I run SciFi conventions (so do nearly all my friends), and we were building a cards against humanity work-alike, many of the jokes were jibes against the attendees or the community within which we operate, no one thought anything of it, because its a cathartic way of dealing with the stresses of our hobby, in their case, its a cathartic way of dealing with the stresses of a very very stressful industry, and ribald and in poor taste it is - but as often is the case, poor taste can be quite funny.
It was obviously not an ad-hoc evening get-together but an event people had prepared for for a while, including likely sober people working on dance routines and skits in bad taste.
Enough people directly committed acts some would deem fraudulent (sell baskets of bad loans to unsuspecting municipalities, approve bogus mortgage loan docs, etc.) that they can't fall on the crutch of systemic breakdown.
It'd be like if these Googlers and Facebook-ers wrote software that inflated real estate prices, driving out the poor and increasing the value of their equity in their homes, before an inevitable collapse in which some government bailout had to occur to prevent urban blight in San Francisco, thereby creating a safety-net for the rich homeowners.
Their actions, writing the software, aren't necessarily malicious or risky. To their mind they're just doing what everyone else is doing and trying to create the best system.
Then they have an awards ceremony to celebrate the best software. Maybe in poor taste, but they're not even really considering the real estate market. Their game is software, and the financiers game is profit.
Like we don't generally think about the lives of people who make our clothes or computers, because our game is fashion or programming.
It's groupthink that caused the financial crisis (and most other problems), not necessarily malice.
Take a silly example: If Justin Bieber decides it's okay to drink sizzurp and drag race, millions of impressionable pre-teens may see this as acceptable behavior. Take a relevant example: If John Doerr says that the best startup talent tends to be white, male, nerds who've dropped out of Harvard or Stanford, this can have a negative influence on men and women of color who have startup aspirations (or dropped out of MIT).
Now consider who we're talking about here in this context. Every person here benefited from the lead-up to the financial crash and then benefited from tax-paying dollars in the financial bailout. While it's debatable whether or not Wall Street was let down easy (for some, they will point to no criminal charges, watered-down finance reform, etc.), I think both sides can agree that there exists a loud, populist movement that believes Wall Street is irresponsibly reckless, benefiting from moral hazard. Knowing this, wouldn't you take some precaution to not be shown to be callous and indifferent to today's economic state?
To those who say this was an entirely private affair, I'd argue the opposite. This was a dinner with place-cards and catering at the St. Regis. If they were to have this conversation truly in private (and as a former investment banker, I've participated in these private discussions), then we wouldn't be discussing this on HN.
I believe an organization like this has outsized responsibilities because of the influence they wield. Do you know how hard it is to get men and women of this caliber in a single room? Imagine if they harnessed their passion towards something their community would deem constructive?
I believe in individual rights so certainly, everyone is entitled to their free speech. But no one should be surprised when a backlash occurs.
Edit: To the person who asked how the Justin Bieber example is relevant, I say it has to do with the fame/wealth/power and influence argument. It is not a perfect analogy and I did not intend it to be. I used a silly example to initially diffuse what I think was going to be a serious indictment of bad behavior.
To the post below, it is entirely possible to be extremely wealthy and have no responsibility.
Empirically, however, most people have generated wealth through direct and indirect actions that have benefited and hurt others.
Society has agreed implicitly that those better off should hold some responsibility for those worst off. This is demonstrated via progressive taxation and through societal pressures to give to charity.
You can completely disagree with that statement, which is your prerogative. But in modern society, specifically in the US, this is the status quo.
Furthermore, those in the financial industry have had an outsized impact on the global financial crisis, from which many believe there should be more culpability. Again, you can think differently but I'm just stating facts.
When you destroy lives (I'm referring to the financiers here, not Gates ;-) you don't make fun of it and expect normal people not to be outraged.
Wow. Exaggeration much?
Shameless related plug: By the way, I'll be organizing a Hacker News DC meetup in the near future. Check the meetup group for updates. I'll likely send something out later this week.
The one relevant point, which you kind of get to, is that this was meant to be private conversation amongst friends.
Not the same as celebrating having people lose their jobs and becoming homeless.
I think articles like this, honestly, are a disservice. They're comfortable. They're easy. They put the blame on the wealthy -- "Oh look, those billionaires and plutocrats are at it again!" -- without asking the real question: what systemic changes can we work towards today to ensure that people like Vikram Pandit, Dick Fuld and Jimmy Cayne can't wreak the same kind of havoc that they did in 2007? What can we do to ensure that people appreciate the impact that obscure financial regulations have on their everyday lives?
(To the extent that I'm actually unsure of your intent.)
Instead of being starved, the threat is to get fired. Instead of lack of education, people are blasted with advertisement. I think to say that the fault is "within us" is a platitude about as banal as "the answer is somewhere in the middle".
I'm not even talking about solutions. I think talking about solutions is entirely premature at this point. We haven't even identified the problem yet. Why do a significant fraction of Americans vote against their own economic best interests, even when they know that their vote is harming them?
Money begets power, power protects money.
There really doesn't seem to be much you can do about it... If you 'throw the bums out' you get a whole new set of bums. Its a terrible thing but also a possible fact of life.
One thing I would like to see though... Those who get caught actually getting punished... Even if it is just for 'revenge among kings' purposes. The fact that no one really gets in any serious trouble, for doing the sorts of things you mentioned, shows the system is really broken, rather than the things happening (because they will regardless).
Can you actually think of a case in the real world where that's happened? Where the CEO of a multi-billion dollar corporation has personally made a breakthrough discovery in his or her field? Of course not. Billion+ dollar companies are crazy complex machines, and our hypothetical CEO has far too much to be doing to be merely mucking around in the lab like a lowly research scientist. He (and I use the masculine deliberately) has a corporation to run. He has decisions to make!
No, the closest thing I can think of to Hank Rearden is Tony Stark or Bruce Wayne. Genius CEOs of multi-billion dollar corporations who, by virtue of their sheer brilliance come up with discoveries that all their trained underlings miss, despite having far less time to devote to the topic at hand. And, for that reason, I find Ayn Rand's scenarios to be deeply irrelevant. Her characters, plot, and morality are more suited to comic books than novels. There is no ambivalence, no ambiguity in any of her characters or her situations, and her books turn into thousand page morality plays that one reads without gaining any insight into how one should actually behave in the real world.
To say that a living person corresponds to a character in an Ayn Rand novel is akin to saying that a living oak tree corresponds to a page in a notebook. You can argue that there are commonalities. But the commonalities between living wood and dead paper do more to obscure than clarify. It is the same with comparisons to Ayn Rand characters. At this point, I'm ready to just throw out Ayn Rand analogies altogether in my rhetoric, for they seem to add more heat to the discussion than light.
The systems come about and develop by many methods, such as the physical forces in the case of atoms or biological evolution in the case of animals. But in every case they succeed at being better generators of entropy.
If we want to make society work for us then we have to understand how society can generate more entropy - and at the same time create roles for us (its component parts) that we want to live. Free market democracy has succeeded precisely because it does this exceptionally well. It creates a framework in which innovation is embraced and people are encouraged to work and consume (creating a very efficient dynamic for entropy production - literally turning resources into shit.)
If you want a socio-economic system that is less corrupt then you have to work out how to create one that has the benefits of the free market, but without the downsides. That is a hard problem to solve. But I think it is solvable, and so I have spent the last few years working on a new economic platform called Babbling Brook. http://babblingbrook.net
It is not a new economic system in itself. It is a protocol for social networking activity, that is based on an understanding of emergently complex non equilibrium thermodynamics. Which is essentially means it is an open ended platform with built in feedback loops that allow for increasingly complex systems of exchange to emerge.
The (really) wealthy owns the governments, how do you make them accountable ?
Because they control public opinion via the media, the politicians via lobbying, and based on the disproportionate sentencing that gets reported (bank laundering cartel money gets nothing, woman gets jailed for not returning a rented movie), I'm inclined to wonder whether they control the justice system too.
The fear of prison concentrates the mind in a way the prospect of writing a check on a corporate account does not. “And from a moral standpoint,” Judge Rakoff writes, “punishing a company and its many innocent employees and shareholders for the crimes committed by some unprosecuted individuals seems contrary to elementary notions of moral responsibility.”
http://www.nytimes.com/2013/12/17/us/judge-raises-questions-...
The article does not explicitly blame them for the financial crisis. It describes a party and makes judgements on the participants based on the contrast between their role in society and their behaviour in the party.
And thats exactly why we need more articles like this.
I'll tell you as someone around that income range in New York... I don't get invited to parties where we discuss how to screw over the working man. I ride my bike to work, spend half the day there, ride my bike around Brooklyn, watch some TV on a 720p LCD that I bought 6 or 7 years ago, and then go to bed in my bedroom that's too small to actually contain a bed. (The mattress fits.)
Admittedly, I've accumulated some savings this way, but still, New York is really fucking expensive, and it's not hard to spend make what sounds like a lot of money on ordinary things like food and shelter in non-premium neighborhoods.
"The 1 percent threshold for net worth in the Fed data was nearly $8.4 million"
Source: economix.blogs.nytimes.com/2012/01/17/measuring-the-top-1-by-wealth-not-income/
www.nytimes.com/2012/01/15/business/the-1-percent-paint-a-more-nuanced-portrait-of-the-rich.html
It continued to be a common refrain against upper bracket tax reductions for a decade, and it was still being used in that sense by politicians and activists at the time it graduated into the slogans of Occupy Wall Street.
[1] http://www.debates.org/?page=october-17-2000-debate-transcri...
Only if you define "any professional" as less than 1% of the population. Accept the fact that you are a high income person, and react according to what your morality dictates for high income people.
In a room with 100 random Americans, you are as likely as not to have the highest income in the room.
It's strange how most of the time the two groups get along so well!
Tangentially, this is what struck me about visiting America. We went to Hearst castle and the reverence which the guides and the people on the tour paid to the ghost and myth of Hearst was unnerving. Explains a lot about how wall st gets away with stuff though.
The reverence for the wealthy in America really is a whole other weird thing. America doesn't have the history (in time span) to really have many historical heros other than those who were wealthy enough to 'do things' so we have to make due with what we've got.
That is not to say that a great deal of any given place's heros of the past were not also wealthy in their time though.
Luck is invented to be an excuse for the feeble minded.
There is no luck involved in getting rich. If you want to get rich you have to 1) work hard 2) be smart 3) be unscrupulous.
The 3rd dependency is often misunderstood and the results of it are attributed to "luck".
In a past life, presumably.
And for the record, Paris Hilton did not get rich. She was born rich.
Luck is the (favorable) interconnecting of previously unrelated happenings. People use it instead of "chance". The thing is, you can improve your chances with your actions, thus improve your "luck". The majority of people though, conveniently believe that luck is what happens to you, and some people are just "lucky" and things happen for them.
That may be true for a very small number of people (who won the lottery), the rest of the "lucky" bunch were fortunate because of outside factors, or stacked the deck in their favor.
> Luck is invented to be an excuse for the feeble minded.
> There is no luck involved in getting rich. If you want to get rich you have to 1) work hard 2) be smart 3) be unscrupulous.
...to drawing a fatuous semantic distinction between luck and good fortune, on the basis that luck is pseudo-random, and good fortune is not ... when the whole point that you're ducking is precisely that the advantages of the economic elite are not random at all, but pretty easy to define and empirically measure.
Oh what a tangled web we weave, when first we practice to defend a position that is nutso bonkers.
EDIT: fixed the paraphrase
The point is, there are many people who do 'have what it takes' in those terms who will never, ever be rich. Are you seriously arguing that somebody with a comfortable Orange County upbringing has the same barriers to entry for riches, wealth and glory than somebody who assiduously grafts out a bare existence in some Rio slum?
> And for the record, Paris Hilton did not get rich. She was born rich.
Alas, now you have conceded the principle, and we can negotiate over the price. Paris Hilton was 'born rich'; what about, say, the child of a family wealthy enough to afford a private education? Who got preferential treatment in an Ivy League admissions process because they were born to an alumnus? Whose uncle got them an internship at some bank?
No arguing there. I never said everyone should aim to be a millionaire. I just find self-deception amusing and sometimes even irritating. Perhaps because I fall for the same self-preservation techniques in different context at times.
We're all just temporarily embarrassed billionaires.
The "Left" believes extreme wealth will inevitably corrupt the political process. It's naive to think that billionaires will not use their money to buy power and more wealth. The "Right" thinks that the state will inevitably corrupt business and/or be corrupted by wealth. It's naive to think that bureaucrats with a rubber stamps that adds a zero to the value of land or a semi legitimate patent into an 8 figure asset asset will not be corrupted by wealth. They call it regulatory capture.
IMO both these views, if we call them views are impoverished. They rely on economic and political narratives that have "capital" & "labour" as their basis. They are based on the idea that trade between Moscow & Vladivostok is different to trade between Moscow & Milan.
We're always looking for ways to address power & money and their role in our world. We're still not there.
We've got jokes about policeman, about blondes, about the French, about mostly everybody... So, if the target of a joke is a woman, it doesn't mean that it's a sexist joke, and a joke about being gay isn't a homophobic joke. If anything, making fun of something means accepting is as normal, as part of everyday life!
Based on the few I've met, these sorts of people aren't exactly shrinking violets. Yet they live in fear that the rest of society will learn their opinions and that bad things will come of it.
Back in the tech world, it makes me think of the attacks on Pax Dickinson and Paul Graham. No matter how rich, powerful and competent you are, you live in fear of the opinion makers accusing you of sexism/homophobia/insensitivity/etc.
Definitely makes it clear where the real power lies in our society.
It does? I don't think the logic follows. Just because Wall Streeters are paranoid and sensitive about their public image doesn't mean they are not invincible.
This will hardly be a blip in the news, because of apathy, and because anyone who would be mad about Wall Street guys acting like this is already mad and can't do anything about it anyway. I don't think a few more Rachel Maddow rants are really going to bring the system crashing down.
On a more serious note: congrats on the reporter for having the balls to crash that party. Most things were expected, and properly offensive. But I don't understand the shock at finance themed parody songs.
This is just a bunch of guys hanging out with the only group of people who understand their pressures. There's no conspiracy here, there's no "great insight" to be had. I'm angry I wasted my time reading the article.
It's a shame, because there's definitely a story to be told about these people involving the 2008 crisis and the enormous drain on the public purse that the bailout caused. That story is surely more juicy than 'the rich think the rest of us are suckers for rescuing them.'
If we're going to be upvoting TMZ-style articles, they could at least be properly scandalous.
But you wouldn't expect accuracy from a guy who appears genuinely surprised that financial executives have a club. Guess what? Sometimes, they play golf and tennis together too. Someone alert the SEC...
I think you're seriously underestimating the wealth of the 1%:
"The 1 percent threshold for net worth in the Fed data was nearly $8.4 million"
So basically, everyone in the 1% has 10 million or more. I doubt a weekend stay at the St. Regis makes a significant dent.
Source: economix.blogs.nytimes.com/2012/01/17/measuring-the-top-1-by-wealth-not-income/
www.nytimes.com/2012/01/15/business/the-1-percent-paint-a-more-nuanced-portrait-of-the-rich.html
"Some readers wondered if the 1 percent by wealth weren’t an entirely different group of people from the 1 percent by income. But there is substantial overlap: the Fed data suggests that about half of the top 1 percent of earners are also among the top 1 percent in the net worth category."
When I think of the 1%, I think of the former, but I guess many are referencing the latter.
In any case, I am neither :P
This isn't new and it is unlikely to change unless Tyler Durden comes along.