Arbitragers

In my early teens I asked my father what a neighbor who used to take me fishing did for a living. I thought less of the man after being told that he played the stock market. From the perspective of a fourteen year old he was one of the idle rich who did nothing.

Years later another seminal moment for me came on looking up the definition of “arbitrager,” the occupation of Ivan Boesky, one of the pioneers in the breed of culprits spawned during the Reagan presidency. It reads “Someone {engaged in arbitrage} who purchases securities in one market for immediate resale in another in the hope of profiting from the price differential.”              

This definition clearly delineates the function of many of the richest and, in my opinion, least deserving among us. Those who make this profession their life’s work contribute little or nothing other than the portion of their personal wealth spent as consumers. I separate them from the majority of workers in the financial community. It’s doubtful that knowledge of the Goldman Sachs capers went far down the chain of command. While these mid to lower level employees were acting on the instructions of those who support them financially, the same can’t be said of their higher ups, unless the clients who contribute to their livelihood wanted to lose a cool billion.

A recent letter to the editor in the N.Y. Times mentioned that many of today’s rich are not creators, but harvesters of wealth, true in the case of income from interest and dividends on investments. But it is a charitable appraisal of much of the current crop of arbitragers who operate by bringing in the sheaves of crops planted by others. This is not harvesting. It’s poaching. In an ethical context it’s not investment. It’s thievery.

Thievery is punishable by law. But there is historical evidence of it being committed long and often enough for the stolen goods to become not only de facto, but legal property of the thieves. This happened to land once inhabited by American Indians. It is now our property because we were squatters long enough to qualify as owners. We’ve heard the term “squatters’ rights.”  Thieves don’t have these rights as long as they’re simply thieves. If new rules governing the financial community aren’t adopted and enforced, these thieves will one day become accepted legal owners, not only of the swag they’ve accumulated, but whatever they acquire by the same means until further notice.