The Last Word On Nothing

The late 1990s spawned a particular kind of candy-coated teen movie–for example, Can’t Hardly Wait and 10 Things I Hate About You–in which every character is so obliviously affluent it feels almost a little bit embarrassing to watch it now. Children driving Range Rovers, high schools that look like castles, and no one ever feels the need to talk about money.

The rental car company guy who drove me to the airport told me that he’s just waiting for the economy to get better. He used to make $23 an hour driving big rigs, now he has to wear a yellow shirt and smile a lot. He says he’s going to get back to driving trucks as soon as the economy clears up.

It seems like a lot of people feel that way, like they’re just in a holding pattern waiting to things to return to normal. But that holding pattern is getting old. When the bubble that produced those fun, escape-fantasy movies popped in 2000, the people weaned on all that affluence porn seemed to be holding their breath waiting for the recession to clear so that it could be the 1990s again. That didn’t happen, despite a brief moment of delusion in the mid-2000s that ended in 2008 with the end of the housing bubble.

I’m giving you this tour of the stuff you already know because I’ve started to wonder if this is the permanent condition. The advertising business certainly thinks so. Industry journal Ad Age declared a few months ago that the era of mass affluence is over.

This despite the fact that the banks themselves are doing quite well. Our tools are more sophisticated than ever– algorithms that trade on the stock market don’t even really need us. The world is now optimized for algorithms that trade with each other and leave us humans in the dust. “New York City is being optimized to run like a motherboard,” said Kevin Slavin. “All of you are just loitering.” The financial industry is now ruled by machines that don’t think on our time scales and by equations that can lazily survey a landscape with dimensions we can’t even conceive of. Phrases like “high frequency trading” and “flash crash” dominate an industry that has gotten major mission creep.

Because the initial mission was pretty simple. Initially, banks were supposed to be nothing more than a medium– the only game in town that had the infrastructure to consolidate all the money other people wanted to put into savings, and use that money to lend to people, and yield a nice return for the people whose money they were lending out. Work 8-3, give away a couple of toasters, and you’re done. When the banks started looking at more complex instruments as a way to make more money, they deviated from the original mission, and things got complicated.

These new priorities are failing us. And yet, as has been reported again and again, despite the fact that algorithms are doing all the work, and the economic situation is getting steadily more grim, there’s still one group of people that’s doing fairly well–bankers, whose bonuses don’t appear to be drying up at the same rate as the rest of the country’s money.

So to recap: we’re pretty much in a perma-recession, small banks are failing left and right, the biggest ones get bailed out, but the people who are in charge of the financial world–which is now optimized for algorithms, not people–are still burning $100 bills to light their Cohibas.

Isn’t this the kind of primordial soup that spawns an industry’s overhaul? I mean, people in my line of work got our asses handed to us by the democratizing effect of technology. Journalism used to be a few powerful people dictating what information you need to know, and now look at us. Blogs, twitter, well, I don’t need to rehash this old saw. Journalism was gutted by technology, in some cases for better, in some cases for worse.

The beginnings of the revolution are starting to become apparent. Though the 5 minutes of Bitcoin ended ignominiously, this new digital currency seemed like a great alternative.

But reinventing money might be a red herring. After all, it’s just fiction anyway–we’ve been reinventing it continuously since we stopped bartering, as This American Life reported in January in a brilliant episode called “The Invention of Money“. The stuff bankers and algorithms are playing fast and loose with is not really money. It’s ones and zeroes that are being shuttled around the planet, and which is just the logical end point of its evolution from from esoteric physical representations of debt to gold to pieces of paper to 1s and 0s. What’s the point of abstracting money yet another level?

Instead, how might the world change if we abstracted the bank? Surely the same technological infrastructure that rearranged the face of journalism is available for banking. Certainly that world is ripe for a takeover. If a situation is grim and unchanging, one thing technology can do is help you take things into your own hands. You don’t like Dan Rather’s reporting, you go fact check it. You don’t like the way banks are shaping the financial world in which you exist, you set up something better. I wonder who’s working on this problem.

Photo credit: LosHawlos