At a very high level, the function of every institution on Wall Street, including banks, brokerages, and other financial services providers is identical. Because we as individual humans and organizations cannot reasonably gather sufficient information to trust every agent or system with whom we would like to transact, we outsource that relationship-proxying task to a third party trusted by all transacting parties. For this service, the third party receives a modest commission in cash and/or information. That commission /should/ cost all parties less than would be required to perform the service themselves.
Thus, a customer and a shopkeeper both trust Interac or Maestro or Cirrus to transfer money from the customer's account to the shopkeeper's. Pension fund trustees in turn trust funds managers to make good decisions about which relationships to develop with which shopkeepers by investing capital. Funds managers in turn trust transaction brokers to carry out their trades on exchanges. Public companies trust exchanges to list and match orders for their stocks. etc.
Every relationship is built on trust (trust in another party's characteristics, or in their *lack* of particular characteristics), which in our financial system, is represented in bits of information in various computer systems and databases. And with billions of transactions per day needing trust to be verified, any third party that takes part in testing trust or moving resources is well positioned to be greatly profitable, especially if the trust-verification service becomes a de facto requirement for all transactions, even those that do not require the service. Counterbalancing this structurally advantageous position is a clusterpile of piecemeal and contradictory legislation and regulation accumulated over centuries which acts as a perpetual source of loopholes to be exploited.
Legislation and regulation are logical propositions and algorithms that form a model of the universe according to which we are to socially operate the immediately accessible physical universe. It is notoriously difficult to develop or prove that algoritms run bug-free for all possible inputs. Of consequence, many combinations of unexpected inputs can be readily discovered and applied to circumvent the non-technical intent of any legislation.
It is my conjecture that because writing bug-free legislation is nigh impossible, and because trying new exploitative gimmicks is easier than enacting formal restraints against new gimmicks, no combination of further piecemeal amendments to the legislations and regulations concerning Wall Street will achieve the desired outcomes. Wall Street will not suddenly become noble defenders of the middle class just because legislators have made it slightly more difficult for them to systematically exploit the loopholes.
Piles of amendments are unlikely to disable interested parties from discovering and exploiting internal contradictions that violate the social intent of legislation and regulation concerning Wall Street. Legislators could literally pass every day a new reasonable demand about legislative and regulatory reform from the occupy-foo supporters, and still not sustainably prevent rules from being exploited. Legislatively killing the entire top layer of exploitative information brokers in the US or any subset of jurisdictions would simply push the physical locus of exploitative activity out to less restrictive jurisdictions, or to a different layer of intermediary. Thanks, Internet.
Because the outsourced trust-brokering service has been designed and infused into almost every aspect of social intercourse, stopping the use of electronic payment systems, information systems, or other transactions into which brokers currently mediate, value and opportunities will continue to trickle up for as long as we depend on the brokers' services for our transaction routines.
Analogous arguments can be made about lobbyists, elected officials, and activists, who all attempt purchase influence with cash and information (and time).
The 99% must pay for a cost for this transition, but the costs do not necessarily need to trickle up according to current relationships or structures.
If we can't nuke the top layer from orbit, how could we act? Assuming that a vast majority of citizens, say, 99 percent, could agree to act in a coordinated manner, several possibilities are indicated.
a) Recall that currency pre-dates silicon-based information brokerage by several thousand years. We don't *need* fee-based third-party services to buy objects or influence using cash or social trust. (This also implies that no campaign finance reform could be effective in the long run.) The under-employed and unfairly compensated have available more time than money, and, unlike money, time cannot be freely created or destroyed by policy.
b) But we still need access to large concentrations of resources in order to fund any large project unobtainable by any one individual's wealth. We do not need aggregators of public wealth for public projects to take on any particular government or private form or other activities. The pains professed by various law enforcement agencies about underground global financial networks is a testament to the robustness of grassroots models.
c) Information brokerage systems run continuously, regardless of whether they are used to capacity. Running a non-full system is costly and inefficient. Hence, unlike in most protests, even temporary boycotts generate real costs for the targets. Millions of individuals can each buffer a slightly higher cost for individual transactions than the handful of top-level predators whose models depend on volume (of transactions, votes, eyeballs, dollars).
d) Externally induced broad-based FDIC event. The Coase theorm (http://en.wikipedia.org/wiki/Coase_theorem) suggests that the overall outcome for the 99% will not be any worse than the current situation, even though some of that 99% will temporarily suffer more than others. Shaking up the 1% in this manner will enable all parties to explore the solution space, and perhaps work toward some superior Pareto efficiency.
The 99% need only to look up and step back to realize that they could achieve the outcomes they seek, and that the outcomes *DO NOT* depend on the cooperation of the 1%.
In summary: The model assumed by the occupy-foo movement incorrectly assumes that its success depends on working through current top-level mechanisms and structures. I believe that the 99% working in coordination can be much more powerful if they break out of the mental model imposed by the very 1% they seek to depose. They do not need permission from the 1%, or from the designated activist opposition.
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