40,000 AT&T workers lost their job. This sounds like terrible news. But the stock market applauded it, sending AT&T shares up. Why? Anthropologist Karen Ho was fascinated and confused by the different reactions and wrote her dissertation about it. In July, her book Liquidated: An Ethnography of Wall Street will come out.
Ho went on fieldwork as a business analyst to “learn the language of finance.” She interviewed hundreds of people, shadowed investment bankers at work and hang out with them at bars and industry conferences. “Today, amid Wall Street’s biggest crisis since the 1930s, her insights are fascinating for investors and regulators alike", Kara McGuire writes in the Star Tribune.
McGuire interviews the anthropologist and asks questions like “How are investment bankers different from the rest of us?” That’s the way, I think, the members of finance or wall street culture should be treated. They seem to live in a totally different world than most of us, a world with their own logic. They seem to represent a totally different culture.
Karen Ho answers:
Investment bankers are structured toward the next bonus. They’re compensated on how many deals they can push through, not on the quality of the deals or long-term strategy. Investment bankers have tons of job insecurity; they are a total revolving door. But what’s interesting is that because of their fairly elite biographies and kind of privileged networks they move in, as well as their lavish compensation, the way they experience downsizing is very different from that of the average worker.
One of the things I argue in the book is that they cultivate a culture of liquidity, of continual restructuring and downsizing that they understand from their particular cultural point of view and privileged location as a productive challenge, as a building of character, precisely because their cushion is so thick. They can say, “Hey look, I have a really risky job, but that’s why I just got paid $1 million last year.” They’ll actually recommend this kind of churning for other workers who have a very different experience. This actually affects corporate America, how other industries are operating.
In her forthcoming book, she focuses on a cultural shift in finance. One of the main ideas of the book is to figure out how short-term shareholder value became the undisputed mission of most corporations from the 1980s onward:
Throughout the mid-20th century, Business Roundtable leaders would say: “Our mission is to negotiate the long-term interests of multiple stakeholders – consumers, employees, distributors, as well as the shareholder.” After 1980, it’s: “We don’t have to negotiate all these other interests; we just have to be concerned about the shareholder.”
The corporate takeover movement Wall Street led in the 1980s helped to culturally make that shift so CEOs now imbibe that Wall Street mantra. (…) Corporations get rewarded and investment bankers get rewarded for financial dealmaking that actually does not increase productive capability.
PS: Ah, saw too late that this story (of course!) already was mentioned in Savage Minds’ “Around The Web”