The Moral Power of Curiosity

Thank you David Brook's for your editorial. It generated a quite a lot of comment, such as from

Rachel

 NJ/NY Yesterday

"I think that the psychology of Wall Street traders follows that old dictum that it is hard to get a man to understand something when his salary depends on his not understanding it. I don't see Wall Street as a lot of evil people, but as a culture in which it is very convenient and profitable for people to gloss over the moral elements of what they are doing. Saying that they are "smarter" is an easy way to justify immoral behavior. And making bankers work 80 hours/week immerses them in the culture so much that they will lack the perspective that they might otherwise have from experiences outside their field (not to mention justifying the mythology that they "just work harder" than others.)

But seriously, Mr. Brooks: "If market-rigging is defeated, it won't be by regulators, it will be through market innovation in which a good exchange replaces bad exchanges"? Who is going to demand the market innovate? Not the people earning a lot of money and power from the current system. No, it has to be an outsider, and it has to be legislated. I might add that this is exactly the sort of task the government is supposed to do: protect the little guy (meaning the everyday investor) against the big fish who have infinitely more resources. The government is supposed to be the "resource" of the everyday citizen. That is why we have police and a justice system, remember? So rich people can't just buy the justice they want. No "market system" can replace the social compact."

Apparently she did not read the book where the SEC (Securities and Exchange Commission an institution meant to protect investors) turned out to be more than useless, actually complicit and quick to defend the front running activity with the expectation of some of the young regulators transitioning to the High Speed Trading world as highly paid consultants or lobbyist. This response is quite normal in finance where those being regulated out gun the regulators every time.

The best point of the book is that the good guys are going to come out on top because of free market forces. The activity described in Lewis's book is how professional investors were the victims of High Speed Trading Networks. Now that the dirty secret is out and well understood these very same people will vote with their feet and and take their business to banks that give them a fair deal. This expose shines a very bright light into Wall Street that is much better than a short and concise Dodd Frank Act could ever pretend to be; I was about to write ten Dodd Franks but that would make it weaker then with its current complexity making it fodder for gaming to total irrelevance.