Greed Doesn't Work: A Reflection on Banking De-Regulation

In Oliver Stone’s Wall Street, antagonist Gordon Gekko noted that “greed is right, greed works.”

If by that he meant that the desire to better one’s life is the driving force underlying free market capitalism, he’s right. But, if he meant that strictly Adam Smithian, laissez-faire principles should govern the U.S. and other modern economies, he’s wrong.

History has proven that unregulated economies produce Darwinian disparities in wealth; an environment in which only the fittest survive and prosper. While it is true that such thinking produced the Gilded Age and the Robber Barons - the Carnegies, the Rockefellers, and the Astors - it also produced stock-shorting and manipulation, trusts, price fixing, industrial labor abuse, poverty and The Great Depression.

As a society, we decided long ago that America should be a place of greater “fairness.” Consequently, it became permissible to intervene in economic machinations in order to establish a safety net; a more level playing field; greater opportunities for a greater number of citizens. It was a “fair deal” that Franklin Roosevelt conceived of and offered the people of the United States, and it helped right a sinking ship of state.

But this past year’s near collapse of the nation’s leading banking and financial institutions has demonstrated that we have not learned from the lessons of history. 

In 1933, Congress passed the Glass-Steagall Act. It established a critical separation between commercial banks, which take deposits and make loans, and investment banks, which underwrite securities. In the face of runs on banks and proliferating failures, the Act was designed to protect the savings of average Americans. The government was saying that banks engaged in certain types of risky derivatives investments could not also be in the business of routine banking.

Ten years ago, in 1999, the Glass-Steagall Act was repealed and replaced by the Gramm-Leach-Bliley Act, the result of a $300 million lobbying effort on the part of Citibank, Travelers and other power players of the day, who sought consolidation, autonomy and power.

This year’s nearly systemic financial collapse seems at least partially the result of deregulation; a pendulum swing that has allowed a gradual return to the Smithian free market.  While it is true that the majority of banking problems centered on pure investment institutions like Lehman Brothers, the huge commercial banking conglomerates that arose with the passage of Gramm-Leach-Bliley (Citigroup) and the insurance companies that were allowed to barter securities (AIG) would not have faced dire collapse had Glass-Steagall remained in effect.

Ultimately, unrestrained greed is not good, and despite Gordon Gekko’s eloquent phraseology, greed doesn’t “work.” Instead, moderation is the rising tide that lifts all boats.

For more on the Glass Steagall banking Act of 1933 and post NRA banking legislation, go to PBS online. 

Most people are not ordinarily concerned with birds. I must admit that I don't give them much thought. But, I have always been enthralled by dinosaurs; resurrected skeletal frames at the museum; boyhood dreams of fern forests and primordial landscapes; and giant creatures that ran across swamps, swam in the oceans and soared in the skies for 140 million years.

And every dinosaur fan knows about Archaeopteryx, a primitive bird-like animal that, when excavated shortly after the publication of Darwin's Origin of Species in 1860, seemed to confirm both evolution itself and the notion that birds and certain dinosaurs are closely linked. Steven Spielberg more than suggested the connection in his movie Jurassic Park, which offered the cladographic or phylogenic descent as proven science. So, after this little introduction, you might appropriately conclude that I am interested in birds, at least insofar as they are related to dinosaurs.

But, last week, a New York Times article by John Noble Winford threw my gestalt view on the subject into a tizzy and got me thinking a good deal about avians. Apparently, scientists now believe that Archaeopteryx "grew at a rate faster than living reptiles but only one-third as fast as that of modern birds...evidence, [that] challenges the hypothesis that Archaeopteryx had already developed characteristics of a physiologically modern bird."

Additionally, and in important part, it said that "under a polarizing microscope, the dense microstructure of the [remaining] bone showed few traces of blood vessels...evidence of a slow metabolism by which the individual probably took more than two years to reach adult size. Birds have especially fast metabolisms, making them able to leave the nest in days or a few weeks."

In other words, unlike modern birds, Archaeopteryx physiology was slow, inefficient and probably ectothermic or cold blooded, like that of dinosaurs.

What? I had always imagined that dinos were actually warm blooded like us, and I still have reason to believe that they were. Let's examine the following:

1) Their size must have required an awful lot of eating (hunting or grazing); activity that would have necessitated warm blooded efficiency. 2) A cold blooded condition would have meant that they needed to warm themselves in the sun to reach an "active state." How long would a 10 or 20 ton animal with a huge surface area need to sit before becoming active? 3) The size of many dinosaurs and the length of their blood vessels, especially those with long necks like Diplodocus or Brachiasaurus, suggests a heavy column of fluid that would have required significant hydrostatic pressure to pump.

In my opinion, these facts and scenarios still argue in favor of endothermic dinosaur physiology, but where does that leave our fine, feathered friend, Archaeopteryx? Well, perhaps on an evolutionary lineage that, somewhere in the remote past, diverged from both dinosaurs and birds. Perhaps it leaves Archaeopteryx out on a limb that projected over the abyss of extinction. Either way, I think we can still safely embrace childhood preconceptions.

For the moment, revisionism is for the birds.

Excerpts from JOHN NOBLE WILFORD

The New York Times - October 8, 2009

Looks like an interesting documentary...

Saw a trailer for this very interesting film and thought to share my enthusiasm before its debut.

In Nazi occupied Hungary, Rezso Kasztner, a Jew, dared to negotiate with Adolf Eichmann. While the Nazi killing machine was at its peak, Kasztner secured a rescue train for 1684 Jews from Budapest and bargained for tens of thousands of more lives. It may have been the largest rescue of its kind during the Holocaust, more than were saved by Oskar Schindler. Yet Kasztner was condemned as a traitor in his adopted country of Israel; accused as a collaborator in a trial, a verdict that divided a nation and forever stamped him as the “man who sold his soul to the devil.” He was ultimately assassinated by Jewish right wing extremists in Tel Aviv in 1957.

The film asks whether Kasztner was a heroic rescuer of Jews or a villain colluding with the Nazis - and it pursues the answer through accounts of the inflammatory political trial, startling revelations by Kasztner’s assassin, Ze’ev Eckstein, and a chilling meeting between the killer and Kasztner’s daughter.

It won critical acclaim at the Toronto International Film Festival and played to sold out houses in Israel.

Seems worth checking out or putting on your Netflix list when it comes out on DVD.

Go to Trailer

Ardi - New Shared Ancestor

I thought it was very cool that scientists from UC Berkeley, just announced the discovery of a Homind older than Lucy. They call it Ardipithecus ramidus. At an age of 4.4 million years, it lived well before and was much more primitive than the famous 3.2-million-year-old Lucy, of the species Australopithecus afarensis.
The adult female specimen, probably stood four feet tall and weighed about 120 pounds, almost a foot taller and twice the weight of Lucy. Its brain was no larger than a modern chimp’s. It retained an agility for tree-climbing but already walked upright on two legs, a transforming innovation in hominids, though not as efficiently as Lucy’s kin.
Ardi’s feet had yet to develop the arch-like structure that came later with Lucy and on to humans. The hands were more like those of extinct apes. And its very long arms and short legs resembled the proportions of extinct apes, or even monkeys.
Tim D. White of the University of California, Berkeley, a leader of the team, said in an interview this week that the genus Ardipithecus appeared to resolve many uncertainties about “the initial stage of evolutionary adaptation” after the hominid lineage split from that of the chimpanzees. No fossil trace of the last common ancestor, which lived some time before six million years ago, according to genetic studies, has yet come to light.
The other two significant stages occurred with the rise of Australopithecus, which lived from about four million to one million years ago, and then the emergence of Homo, our own genus, before two million years ago. The ancestral relationship of Ardipithecus to Australopithecus has not been determined, but Lucy’s australopithecine kin are generally recognized as the ancestral group from which Homo evolved.
Scientists not involved in the new research hailed its importance, placing the Ardi skeleton on a pedestal alongside notable figures of hominid evolution like Lucy and the 1.6-million-year-old Turkana Boy from Kenya, an almost complete specimen of Homo erectus with anatomy remarkably similar to modern Homo sapiens.
Importantly, Giday WoldeGabriel, a geologist at Los Alamos National Laboratory, said the discovery countered the hypothesis that upright walking had evolved as an adaptation to life on grassy savanna.

From JOHN NOBLE WILFORD

Published: October 1, 2009 - The New York Times