Wall Street's War On Main Street Is One Of The Greatest Fake News Stories Of All

Forbes ^ | Dec 18, 2016 @ 09:00 AM | John Tamny

[expat_panama]

Author David Smick is the latest pundit to argue that the U.S. economy is performing sub-optimally thanks to the outsize prominence of “Wall Street.” Smick has entered a crowded echo chamber populated by the self-righteous who think big is bad, and small is good. Supposedly “Main Street” represents small and wholesome compared to large and elite Wall Street. Eager to sell a book, Smick has published various op-eds of late asking the incoming Trump administration to shift its focus to the people, and away from finance. Supposedly booming economic growth will be our reward if some of the brightest financial minds in the world are neutered.

Interesting about Smick’s commentary is that he’s unwittingly promoting the very cronyism that he’s presently ascribing to big, bad Wall Street. Apparently the latter, along with the large companies it allegedly services without regard to the small, thrives thanks to its coziness with government. And while such an assumption ignores the normally sclerotic nature of industries with close ties to politicians (think airlines, banking, farming, and carmakers in the U.S.), Smick’s hope that the Trump administration will elevate the status of the small speaks to the very favoritism that Smick claims advantages “Wall Street” as is.

Worse, it misses the basic truth that Wall Street and Main Street are joined at the hip...

...Put simply, immense Wall Street wealth is a function of financing companies that remove unease from the lives of those who have nothing to do with finance.

And then in order for businesses to increase hiring, they must attract investment first. What this means is that when Wall Street investment bankers are thriving, they are simply because they’re bringing financial means to companies that will hire people who live on Main Street.

[XEHRpa]

I call BS

[Hans]

Cute!

As the swamp is drained, what will we find?
I wonder who is paying the 70,000 plus lobbyists?

[ari-freedom]

Gotta love all these pundits (Michael Lind is another that comes to mind) who think they know more about the economy than Trump, Ross and Mnuchin

[Nextrush]

If Wall Street is about the big multinational corporations and big banks AND IT IS, then Wall Street is the problem because the super corporations and super banks work with big government through those lobbyists to regulate things so the little people get the short end of the stick.

[Mr. Jeeves]

Exactly. The author’s premise only works if you define General Electric as “Main Street” :)

[nathanbedford]

As any entrepreneur can attest, nothing is more difficult than raising capital. Nothing. This is why investment bankers are paid so well. They find growth capital for companies that look promising, but that will also most likely fail.

Populists take note, our capitalist system operates, when it operates best, in the private sector. But that sector is a Darwinian, even Hobbesian world. It is a place where failure lurks at every turn and success is elusive and the competition for it is fierce. The siren of populism is that we can at a stroke do away with all this bloody business and have it done for us by elites in Washington who will substitute their judgment for the judgment of the elites at Goldman Sachs and then we get an added bonus into the bargain, we keep our hands clean of all that blood.

If we permit the government to sort out the claimants for startup capital, or for any kind of capital, we have a command economy but we also have crony capitalism. It does not matter whether we use allocation of capital for startups or protection of existing businesses by tariffs, we are engaging in a kind of economic fascism. Inevitably, we will have corruption. Sometimes, as currently is the case in our university system, the corruption wears an elegant face.

Even if we do not have corruption, we will have distortions, we will lose the cleansing if bloody discipline of the free market. We will have inefficiencies, we will lose competitive advantage, we will slowly cease innovating. The whole system will break down given enough time. We will ultimately go the way of the Soviet Union or Venezuela. But politically the populist takeover will he successful-until it fails.

On the other hand, if we do nothing we risk losing the race for mercantilist Victor. To lose that race is to slip into second class status as a nation state, to be on the wrong end of value-added trade between nations, to ultimately be eclipsed militarily. The hard truth is that someone must suffer so that others may prosper, that some soldiers must die in battle that the whole society can live in liberty, that some sectors of the economy must pay the price for victory in the world marketplace.

There is no free lunch, survival costs. But there is transparency and democracy.

[central_va]

The globalist Corporate crony’s want to operate a world devoid of borders and to be free form politics by buying off politicians. They despise patriotism and putting America first. That is until the next “big one”.