Simon Johnson (“The Quiet Coup,” May Atlantic) offers a bold and pathbreaking idea for dealing with the present global economic crisis.
Johnson’s basic thesis is that “the financial industry has effectively captured” the government of the U.S. and many other countries and that “recovery will fail unless we break the financial oligarchy that is blocking essential reform.” His bold agenda for banking reform may come to seem modest when we take into account the tectonic shifts and major transformations that are now developing in the world economy. For one thing, breaking up the banking oligarchy may spur the breakup of other corporate oligopolies and the termination of big federal subsidies. Americans may adopt Teddy Roosevelt’s mood of “trust-busting,” with the aim of promoting real competition in place of the elaborate pretense of competition that we see in much of our present system. At the extreme, we would perhaps get into the much-debated system of “industrial planning”—or even the virtual nationalization of industry.
Yet this evolution would still have further to go. We must reckon nowadays with the spreading “deindustrialization” of the U.S., Japan, much of western Europe, and other “advanced” nations. In this, the driving force is industrial competition from China and other “emerging” economies. Increasingly equipped with modern technology, supplied with vast labor forces available for a mere fraction of Western wages and benefits, and given open access to international “free trade,” emerging nations already undersell and will eventually sweep away the corresponding industries in the West. The American economy will be reduced mainly to a system of services: locally bound and mostly small-scale, but generally high quality, capable of attracting foreign investment and foreign visitors as well as serving its own people.
Is this apocalyptic vision of a metamorphosed U.S. economy just a nightmare? Or is it the probable result of financial restrictions and undersold manufacturing? And would it be a more stable, more democratic, and more egalitarian system than we have today?
Edwin P. Reubens
Emeritus Professor of Economics City University of New York
Jeffrey Goldberg’s article (“What Now?,” May Atlantic) was an eye-opening and impressive look into our depressive economic state of affairs. His article made me think of a simpler time, when you borrowed money at 6 percent and received 3 percent on your passbook savings account. In 1945 my parents bought the house they lived in for 60 years for $1,500. They had to put 15 percent down, and Dad had to prove he had a stable job working for the railroad. Like my grandfather before him, he planted a huge garden that fed us (and some of the neighbors) all summer long. Mom canned, which got us through the winter. For spending money, us kids would shovel sidewalks in the winter. Believe it or not, these were the happiest times of my life. I now have a lot more money than my father had, but I also have the stress and worry that goes with it. Maybe it’s time to take Mr. Goldberg’s advice. Take the 3 percent interest down at the local credit union and plant a huge garden. We may not die rich, but we’ll be a hell of a lot happier than we are now.
“What now?” asks Jeffrey Goldberg. To get an answer, he spoke to economists, hedge-fund managers, survivalists, and one professional adviser—and apparently not one of them had the right answer: get an independent, credentialed, fee-based adviser, preferably someone who was already advising independently before 2008.
Independent advisers have been around for decades, and our ranks are growing. (Though beware, many of those now joining are desperate brokers leaving their desperate employers.) Many independent advisers are fiduciaries, working conflict-free and fully on behalf of their beneficiary clients. In contrast, as Mr. Goldberg discovered the hard way, most brokers are not fiduciaries, and the law requires only that they purchase “suitable” investments for clients, a low hurdle to clear.
We are the ones offering sound financial advice on a foundation of careful, reasoned analysis and empathetic client care, and regardless of the magnitude of a client’s net worth, we are there—for Jeffrey Goldberg, the readers of The Atlantic, and the nation.
Leonard M. Golub
Chartered Financial Analyst
New Capital Management LP
Jeffrey Goldberg replies:
It is true that fee-based advisers have fewer conflicts of interest than the typical broker, and it is true that fiduciaries are duty-bound to act in more-responsible ways than, say, my ex-brokerage house, Merrill Lynch. On the other hand, these independent advisers still might not know anything about investing. I went to top hedge-fund managers to test my suspicion that there are two classes of professionals on Wall Street: a small group of them who know, and a large group of them who don’t know, but act like they know in order to separate the small investor from his money. My conclusion is that very few people in the financial-services industry, including members of the subset of increasingly smug independent advisers, have the access, contacts, and brainpower to match the kings of Wall Street. Unless you can persuade a top dog to manage your money—and to do that, you have to have a large amount of money to begin with—the advice remains the same: pay down debt, keep a healthy supply of cash on hand, look for index funds and general-obligation municipal bonds in which to invest, and be exceedingly happy if you earn more than 3 percent a year on your investments.
If the vastness of the universe is enough to convince Thomas Mallon (“Across the Universe,” May Atlantic) that there must be intelligent life elsewhere, would he also agree that identical copies of himself must be out there? By what logic does he conclude that he is so vastly improbable as to occur only once, whereas intelligent life is so probable as to occur more than once? As long as we have only one observed instance of intelligent life (or of Thomas Mallon), whether multiple instances occur is nothing more than conjecture, and any back-of-the-envelope arithmetic is obfuscation.
Santa Monica, Calif.
Thomas Mallon replies:
Identical copies? I can’t imagine. Intergalactic kissing cousins? I’d bet on it.
Perspective and context are missing from Robert D. Kaplan’s article “India’s New Face” (April Atlantic). India is one of the world’s oldest civilizations, and from its history, we gather an extraordinarily long-standing tradition of diversity rooted in the freedom of thought and dissent. India has seen the development of fundamental math and physics and of an immense breadth of literature and art. And of course, it is the birthplace of multiple religions, including Hinduism, Buddhism, Jainism, and Sikhism. Jews have continuously lived in India since the Second Temple was destroyed by the Roman Empire, and many cite India as the only land with no history of anti-Semitism. India is where the Zoroastrians have lived and thrived since being expelled from their ancient homeland of Persia; where Christianity has had a home for 2,000 years; and where of course the Dalai Lama and the Tibetan government in exile have resided since the Chinese takeover of their land. Against this backdrop, modern India declared itself secular upon independence. It has elected three Muslim presidents, the prime minister is Sikh, and the head of the ruling party is an Italian Catholic woman.
India’s challenges remain immense, but its history of tolerance, diversity, and intellectual curiosity provides hope for all 1 billion of its citizens.
Vin Mathur, M.D.
New York, N.Y.
I don’t want to sound like a snobbish Francophile, since I like the idea of eating local produce just as much as Corby Kummer does (“Graze Locally,” May Atlantic), but I must point out that the explanation of what he calls French pre-salé lamb just ain’t right. First of all, if the term meant “pre-salted” lamb (as in “pre-owned vehicle”), there would be an acute accent on the first e (pré, as in présélection). But the real problem is that the pré part (with its acute accent) of pré-salé actually means “field or meadow,” since those much-prized French lambs are raised on salt meadows or marshes near salt water, just like those now nibbling “the salty grass of Martha’s Vineyard” that Kummer mentions in the same sentence. In other words, it’s not the lambs who are salted or pre-salted, but the grass they eat. Ah, what an accent can do! Especially if it is French.
Steven F. Walker
Professor of Comparative Literature
New Brunswick, N.J.
Corby Kummer replies:
I could prevaricate, but I had previous knowledge that should have prevented this preposterous error! My preternaturally humble apologies.
We want to hear what you think about this article. Submit a letter to the editor or write to email@example.com.