Got Protests? Why the Outside World Hates Wall Street – And What to Do About It
Yes, you read that headline correctly: this is a post about current events (sort of) and what’s going on in the world today.
I don’t like to write these types of articles because the content quickly goes out of date, but these protests are hard to ignore completely.
Plus, it’s a fun break from writing about the usual topics here and I get to rant about silly anti-capitalists.
Let’s get started and learn why everyone hates Wall Street so much, where it all began, and what to do about it.
A History of Hatred
The United States has a long history of economic protests, starting with this little “Boston Tea Party” incident back in 1774.
But this is not history class, so you can read through the entire history of economic protests on your own via that link above.
Long story short, there have been many protests in the past 200 years but most of them have had more substance: massive depressions, actual people who are working rather than unemployed students shouting nonsense, and specific, legitimate demands.
Are Any of These Complaints Valid?
As you can see, the list of complaints / demands is borderline ridiculous and consists of points that would be either technically impossible (see the one about alternative energy) or ones that would bankrupt the country – that is, bankrupt it more than it already is.
Oh, and the points are mostly unrelated to Wall Street or the financial system – way to pick a name, guys.
The composition of the protesters (at least when it started) also makes it hard to take them seriously: if you’re not working it’s easy to lump everyone in “finance” together and denounce capitalism, the Federal Reserve, and whatever else you’ve randomly decided to hate.
And yes, you might also be in the same age range as some of these protesters but if you’re reading this site you must like capitalism – which makes you significantly smarter and more realistic than them.
Money matters and it only grows more important as you grow older.
If I were writing a tech blog, the way that the protest movement is spreading via social media would be interesting to discuss.
But the more important point on this site is not what this specific protest means or how it’s spreading, but what all the hatred for Wall Street means for you and how to deal with it.
Do Bankers Deserve the Hate?
Blaming “Wall Street” for the economic problems in the developed world is an oversimplification and ignores:
- The fact that banks have repaid TARP, with interest.
- Predatory mortgage lending practices from the failed Fannie Mae and Freddie Mac.
- Governments worldwide spending far too much on entitlement programs and not collecting nearly enough in revenue to be solvent.
- The unstoppable force of globalization and how it has transformed every market.
If you define “banker” as “someone in finance,” then yes, bankers are partially responsible for the problems since they created and sold “financial weapons of mass destruction.”
[UPDATE: After some comments below I removed this part about the separation between bankers and traders. I agree that it is a bit silly and that there is some overlap so I have not distinguished between them here.]
So financiers could be blamed for some of the mayhem, but certainly not all of it. They are guilty, but they’re not 100% responsible for everything that has happened.
Nevertheless, bankers take a lot of flak for everything partially because they brought it on themselves – by spending too lavishly, making silly statements, or otherwise not explaining “what they do” to the world at large.
For more on spending too lavishly, read all about the mayhem of holiday parties and how much firms spent in boom times; news of how much PE and HF Partners spend on mansions, exotic artwork, and other displays of wealth hasn’t helped the situation much, either.
The best example of a recent, stupid statement coming from a financier is this horrible interview with a trader who said, “We don’t really care about how they fix the economy… our job is to make money from it … I go to bed every night and I dream of a recession.”
If How to Win Friends and Influence People gets an update anytime soon, this interview should go in it as an example of what not to say.
Finally, finance is a poorly understood industry and most people fear what they do not understand. No one who works in the industry takes the time out to explain what they do or how it contributes to the economy and job creation.
As Yoda might say, “Lack of explanation is the path to the dark side. Lack of explanation leads to misunderstanding. And misunderstanding leads to fear. And fear leads to protests and lots of people getting pissed off at Wall Street.”
Will You Be Hated? And Can We Do Anything About It?
This brings up two new questions:
- Once you break into finance, will you be hated simply because of the industry you work in?
- Is there anything we can do about it? Should we even try to reduce the hatred for Wall Street?
The answer to the first question is “Yes, people will hate you for working in finance due to a combination of the media, lack of understanding, and jealousy over how much money you make. Better get used to it.”
Back when I first got into finance, friends who were joining big companies like Google also labeled me a “sell-out” (ironically, the ones who joined Facebook ended up making far more than me); luckily if you’re at a school where everyone does finance or consulting anyway, this will be less of an issue.
The only way to deal with this is to be low-key and/or hang out with people who won’t label you because of where you work.
It’s almost impossible to find friends who are completely nonjudgmental, though, so the real solution is to hang out only with other finance people.
Just kidding, sort of…
So What Should You Do About It?
If your friends and the general public will hate you and you can’t fix it in the short-term, could you do anything in the long-term to improve Wall Street’s reputation?
The solutions are similar to the solutions to what to do about analysts and associates secretly wanting to kill each other – or your last drunken night out when you passed out after getting bottle service:
Take One for the Team
Pay in the finance industry will decrease in the future – there’s no way around that with increased regulation and worsening economies in the developed world.
So you’ll have to either accept still-higher-than-normal-jobs-but-not-as-high-as-before pay, or go get a job at a normal company… doing… something boring.
Yes, everyone wants to get paid more but that’s not going to happen these days.
And if you do happen to get a fatty bonus, don’t be foolish and show it off so lavishly – that just inspires more hatred from everyone else as they claim that bankers get paid “too much” for doing work they don’t understand.
Sure, you can brag about it to your co-workers or debate bonus numbers with friends in the industry, but mentioning anything to other people is a horrible idea.
One time a friend met an acquaintance at a hedge fund, and that acquaintance started the conversion by mentioning how he made a lot of money and just bought a $50,000 watch.
You can bet that he didn’t win too many friends or influence too many people after that meeting…
Lower Your Standards
Another related issue is that nowadays people go into Wall Street expecting to get rich, whereas in the 1980s they went to Wall Street hoping to get rich.
I often get emails and comments asking variants of, “So, I want to make $1 million by age 25 without taking any risk and also without working more than 40 hours per week. What should I do?”
If you’re OK with possibly going to jail, you may want to consider a career in dealing crystal meth – because you certainly won’t get $1 million for less than 40 hours per week in finance.
You should lower your standards because:
- More and more pay will be in the form of deferred compensation in the future. A few relatively junior trader friends have already received 50% stock-based bonuses and/or other forms of deferred bonuses recently.
- The government can do whatever the hell it wants – just like the “millionaire’s tax,” they can cap salaries and bonuses at banks and the banks can’t exactly start an “Occupy Government” movement to protest the decision.
- History supports lower bonuses – up through the 1970s, you didn’t even make much more in finance than in other industries. Back then smart people actually wanted to go into engineering, law, and medicine since the pay difference wasn’t as high.
Be a Teacher
Finally, you need to explain how your work impacts the world at large.
So do the opposite of what that trader who “dreams of recession” did and point out how:
- People in finance can actually create jobs and boost the economy by taking companies public and raising funds for new technologies.
- Bankers do add value… by getting company founders appropriate prices when they sell, which in turn leads many of the founders to invest in new ventures and create more jobs.
- Financiers also give fund managers at places like Fidelity – AKA the people who manage retirement savings accounts for millions of people – places to invest their money.
- Banks play a critical role in the economy by allowing businesses to borrow, expand, and hire new employees, thereby creating jobs in the process.
I’m not going to suggest that financiers do good for the world in the same way that teachers or doctors do – they don’t.
But they do play a critical role in the economy and the more transparency there is around that role, the less hatred there will be.
Know When to Back Off
If you meet someone who really hates everything and everyone in finance and will listen to nothing you say, back off.
Some people are 100% set in their beliefs and will never accept the possibility that they might be wrong about something or that there are multiple interpretations.
Don’t bother trying to preach to the non-believers – either preach to the choir, or to those who are possibly interested in joining the choir one day.
Does Any of This Matter? Should You Care?
I don’t expect anything to change as a result of publishing this article – these are just a few of my own thoughts on the recent protests and all the negative news about Wall Street.
At the very least, we can hope that all the protesters disappear and go back home soon because they’re starting to make nearby parks dirty and cost the NYPD millions in overtime fees.
And if they don’t go away organically, maybe you can drop by and buy everyone bottle service to lure them away and clear the streets once again.
UPDATE: Comments are now closed on this post because they’ve gone way off-topic, and everything useful that can be said has already been said. I don’t want to spend time/money moderating comments on an off-topic post like this when the purpose of this site is to help you get into banking and learn what it’s like on the job.
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