PIRATES get a bad press, or so Rodolphe Durand and Jean-Philippe Vergne conclude in their short history of the profession. Pirates are not marauding egotists who prize only bullion and rum, argue the two French professors; they are in fact heroic risk-takers who defy the excesses of capitalism and the tentacles of state control. Nor are they simply the hook-handed, peg-legged sea dogs of popular legend. Modern Blackbeards are hackers and gene-tinkerers. They will come to change capitalism for the better, Messrs Durand and Vergne think, as pirates often do.
Pirates have a long history, from plunderers of the Barbary coast to modern Chinese cybercriminals. St Augustine reported a convicted pirate’s testy exchange with Alexander the Great: “Because I have only one rickety ship, I’m called a bandit, and because you have a large fleet, you are called an emperor,” says the plucky seafarer. Defenders of internet freedom make similar stands. A 1996 act bringing in anti-indecency rules to the web “attempts to place more restrictive constraints on the conversation in cyberspace than presently exist in the Senate cafeteria,” said John Perry Barlow. Hackers rallied to his cause.
It has been four long winters since the federal government, in the hulking, shaven-skulled, Alien Nation-esque form of then-Treasury Secretary Hank Paulson, committed $700 billion in taxpayer money to rescue Wall Street from its own chicanery and greed. To listen to the bankers and their allies in Washington tell it, you’d think the bailout was the best thing to hit the American economy since the invention of the assembly line. Not only did it prevent another Great Depression, we’ve been told, but the money has all been paid back, and the government even made a profit. No harm, no foul – right?
It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyperconcentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it. The result is one of those deals where one wrong decision early on blossoms into a lush nightmare of unintended consequences. We thought we were just letting a friend crash at the house for a few days; we ended up with a family of hillbillies who moved in forever, sleeping nine to a bed and building a meth lab on the front lawn.
Mishra was in the city to discuss his book From the Ruins of Empire: The Intellectuals Who Remade Asia, at the Hong Kong International Literary Festival in October. The Economist named the book one of the best of 2012 – describing Mishra as “the heir to Edward Said” and having a “surprising new perspective”.
In person there is only a hint of the caustic, mischievous wit he expresses with full force in his writing. He has a knack for taking people down a notch.
In 1999, when fellow Indian novelist Salman Rushdie was already an established member of the global literary elite, Mishra wrote a review describing the former’s novel The Ground Beneath her Feet as “an alarming new kind of anti-literature”. More recently, Mishra criticised Rushdie for calling Nobel laureate Mo Yan a “patsy” for refusing to sign a petition calling for the release of writer/human rights activist Liu Xiaobo. In an article for The Guardian newspaper, he accused Rushdie of being guilty of accepting the “unexamined assumption lurking in the Western scorn for Mo Yan’s proximity to the Chinese regime: that Anglo-American writers, naturally possessed of loftier virtue, stand along with their governments on the right side of history”.
The financial crisis had many causes—too much borrowing, foolish investments, misguided regulation—but at its core, the panic resulted from a lack of transparency. The reason no one wanted to lend to or trade with the banks during the fall of 2008, when Lehman Brothers collapsed, was that no one could understand the banks’ risks. It was impossible to tell, from looking at a particular bank’s disclosures, whether it might suddenly implode.
For the past four years, the nation’s political leaders and bankers have made enormous—in some cases unprecedented—efforts to save the financial industry, clean up the banks, and reform regulation in order to restore trust and confidence in the American financial system. This hasn’t worked. Banks today are bigger and more opaque than ever, and they continue to behave in many of the same ways they did before the crash.
Consider JPMorgan’s widely scrutinized trading loss last year. Before the episode, investors considered JPMorgan one of the safest and best-managed corporations in America. Jamie Dimon, the firm’s charismatic CEO, had kept his institution upright throughout the financial crisis, and by early 2012, it appeared as stable and healthy as ever.
One reason was that the firm’s huge commercial bank—the unit responsible for the old-line business of lending—looked safe, sound, and solidly profitable. But then, in May, JPMorgan announced the financial equivalent of sudden cardiac arrest: a stunning loss initially estimated at $2 billion and later revised to $6 billion. It may yet grow larger; as of this writing, investigators are still struggling to comprehend the bank’s condition.