Class Warfare & A Crap Game

The language of the demagogue almost always includes appeal to "us" versus "them". If done well it motivates the larger and ostensibly disadvantaged group to revolt against the smaller but more successful, affluent or privileged bunch.

Go back to the language of Marx and Lenin. It was a laced with the terminology of class struggle, workers against opppressive owners, bourgeousie to be overthrown by proletarians. It worked, in terms of getting masses to take to the streets. It eventually failed in some areas because elimination of the bourgeousie led to inept management of the means of production. It failed in the capitalist society of the West because of co-optation of the workers into a middle class which was unanticipated by Marx. When workers participate in profit-sharing and can rise to middle management, they thrive. When the business survives the ownership prospers and the ownership in a capitalist society is filled with proles. We all want to be bourgeousie.

The language of today is the meme of Wall Street versus Main Street. Somehow we are are asked to create the familiar us-vs-them conflict and ignore the fact that Wall Street is incredibly small relative to the massive but fictitious creation of an isolated and disadvantaged citizenry on Main Street. We, the people of fly-over country are Main Street. We participate in retirement plans, we buy mutual funds, we have profit sharing and 401(k) plans, we aspire to be owners rather than renters. We are Wall Street AND Main Street.

Why should the masses demand that government, which quite arguably is inept at every enterprise it attempts to manage, take over or regulate the brokerage of Wall Street?

Wall Street possesses all of the equality of a full-blown crap game. If you've ever considered gambling in a Las Vegas casino you would quickly learn that the best chance you've got to come out a winner is at the crap table. Multi-deck blackjack favors the house. Slots are a fool's game. Roulette is a joke for James Bond movies. Poker is for flamboyant reality TV shows and basement games for the bar-room buddies. Craps is your closest approach to even odds.

The reason is simple. At the crap table, if you know what you are doing, you can bet either side of any proposition. You can bet "pass" or "don't pass"; you can get odds on any number; you can initiate your own new game regardless of what the shooter is doing. You make your choice and the house doesn't care.

Wall Street is the same way. You can buy when you want to buy, sell when you wish to sell. You can buy risky or secure investments. You can sell short or long, effectively investing in a stock to succeed or fail as you judge more likely. Wall Street doesn't care. They make a margin or arbitrage for each transaction, whichever way you go. For everyone who wins there is someone else who loses. It isn't Wall Street's choice.

But, like the crap game, you've got to do your homework. In investing it is called due diligence. In craps it is as simple as staying away from hard-way bets and any craps.

Sure, someone made profits on derivatives by betting them to lose. But someone else lost and each player had a chance to do their homework.

Now would someone please go explain that to Chris Dodd and Barney Frank.