Odd Lots - An Anthropologist Explains How Wall Street Culture Reshaped The Entire Economy

Episode Date: November 4, 2019

Where did the notion come from that the obligation of a company's management is to maximize shareholder returns, even if it means pain for workers? On this week's Odd Lots podcast, we speak with Karen Ho, a professor of anthropology at the University of Minnesota, who can answer the above question. Unlike your typical anthropologist, she did her field work inside a Wall Street bank to discover how the specific culture of finance bled through to the real economy.See omnystudio.com/listener for privacy information.

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Hello, Oddlott's listeners, it's Joe Wisenthal. Now, before we get to today's show, I wanted to tell you about another one of our great podcasts here

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Joe, did you get retweeted by Ann Coulter today? But you weren't expecting that. What made you bring that up? Why would you start an episode with that fact? But yes, I did. I was trying to think of an intro. So I'm just going to say as, let's just say, in an effort to... Wait, how did you even notice that?

Wait, wait, wait, wait a second. Wait, wait a second. How did you even notice that? I'm not going to tell you. Someone sent it to me. Okay. So in an effort to even out the political scales of your Twitter feed at the moment, today we're going to be talking about something that actually relates to Elizabeth Warren's campaign platform.

Okay. Go on. Okay. I'm intrigued. No, no, I'm excited. Also intrigued at this elaborate intro that you're concocting here. But go on. I'm trying to thread a bunch of different stuff together.

Okay, but I think it's fair to say that in the upcoming 2020 presidential election, there is this undercurrent of anger at the existing system of capitalism. People are upset about inequality. They think that lots of money just accrues to the 1%. And so there are all these political proposals on the table, including Elizabeth Warren's Accountable Capitalism Act, to try to fix this problem. And the interesting thing that's happened recently is that we've even seen some company executives, including Jamie Diamond, the CEO of J.P. Morgan, also make some noises about that.

Right. I mean, there's a lot of things going on. So absolutely, the sort of lingering anger from the financial sector that we've seen over the last 10 years, it really does not seem like it's faded very much. If anything, maybe it's spread to other sectors like tech, but there still is, no one has really got. over the crisis from a political perspective. And you do see, as you point out, more and more CEOs, in some sense, trying to pay lip service to this, saying things like, oh, we're going to do more than just focus on shareholder returns. Usually it just seems like that rhetoric, but, you know, obviously they sort of see which way the winds are blowing. Right. So we can never be that sure about how serious these CEOs and executives are about changing.

this shareholder first paradigm, but they're definitely making noises about it. And in fact, Jamie Diamond and all these other companies wrote this big statement, talking about the idea of sort of embracing a new idea of value, one that wasn't focused on short-term earnings targets and, you know, shareholder returns, but one that presumably also cares about employees and society and the overall national economy and things like that. So that is, go on. Well, no, I mean, I think you're totally right. And one thing that I do believe is genuine, whether they're going to change their long or short-term focus or focus on constituencies beyond the short-term,

is that I think people are really waking up to the degree to which culture matters inside a corporation. and to which a corporation's culture can be, have its own inertia and be extraordinarily hard to change. I think Wells Fargo and the scandals that they've suffered in recent years are a really good example of that where there's just all these scandals that are essentially about, you know, sort of at its root, basically about short-term operations and hitting these arbitrary targets being extraordinarily difficult to tamp down and to just get a handle on how far they've spread internally. Right.

So I'm glad you said culture. That is the name of the game today. We're going to be talking to an anthropologist who actually did a field study of culture in the financial industry on Wall Street and did an entire book talking about how that culture or discussing how that culture actually feeds into the way we think about corporations now and their purpose. So why is it that lots of people seem to think that a company's main reason for being raised on Detra is to maximize shareholder value? Where did that idea come from? And what is the link to Wall Street culture?

I can't wait. Okay, great. So I'm really excited to say our guest for this episode is Karen Ho. She is the author of Liquidated and Ethnography of Wall Street, and she is now Associate Professor of Anthropology at the University of Minnesota. Karen, thanks so much for coming on. Thank you all for having me. So I have to say, I read your book quite a few years ago shortly after it came out, which I think

was after the financial crisis. But maybe just to begin with, you could sort of set up the time period that you were working in and what exactly your field research entailed. Because I think that's kind of central to the discussion that we're about to have. That's right. Sure. So I'm a social cultural anthropologist. And from the late 1990s and into the millennium, I actually did an ethnographic field study,

of Wall Street Investment Bankers and Banks. In order to do so, I actually took a leave of absence from graduate school and entered the Princeton University recruitment process. Now, because I'm an anthropologist and in anthropology, want the key tenets, especially given our rise as a discipline in the sort of British colonial period, one of the sort of tenets of our discipline is actually to let our informants, our friends are the people in which we're engaging in, understand what our larger project is, our projects are. So I took a leave of absence from graduate school and actually got a job at Bankers Trust, which is now Dogea Bank. And for a year,

I actually worked on Wall Street. But during that year, I was a not doing field work. I call it pre-field work language study. But it's through that experience that I helped to, well, I started to learn the language of finance. And from then, I actually amassed a web of contacts that I then actually engaged in conversations, interviews, what anthropologists called deep hanging out in order to understand the sort of culture and practices and mores of Wall Street. And certainly I did field work during the time of the longest bull market and continue to do field work until around 2002. Then I actually got a position at the University of Minnesota where I continue to engage with Wall Street and write up the ethnography.

So does an anthropologist go into a scenario like this with a specific question in mind? I mean, just as someone who is not steeped or that familiar with academic anthropology, what is the sort of when you start? Is it just to hear things? Is it just to talk? Or did you start by having a few specific goals in mind of things you wanted to learn or specific patterns you wanted to see if existed within the Wall Street realm? I did. And often anthropologists go into a particular field site with a burning question mind. And my burning question actually stem from a social economic observation.

So in 1995, AT&T, which is based in New Jersey, actually announced one of the largest corporate restructurings and downsizings in corporate history. And, you know, close to 100,000 employees were let go, right size, downsized, what have you. And in the New York Times business pages the next day, you know, there are certainly articles about the social and economic dislocation of employees and communities, etc. But the sort of large, the larger journalistic context was that Wall Street, so AT&T stock went up to a 52-week high in the wake of that announcement. And the sort of larger coverage around Wall Street investment banks was that Wall Street cheered at this news. And immediately my anthropological ear, or sort of, you know, anthropological spidey sense, if you will, began to sort of tingle, right? The idea of, well, here's this sort of massive social dislocation. And at the same time, why did they actually have to use the word cheer?

Why were there so much sort of odd celebration around this news? And part of what an anthropological tenant is is that you want to get at the native's point of view. So you don't want to presume from the outside, oh gosh, these folks are just masochistic. That's why they're cheering. But rather you want to get at what, why does it make sense for them? What is it about the way investment bankers and investment banks are being socialized, incentivized, etc., etc., such that for them this is interpreted and understood as relatively, good news or actually great news. So it was it was that question and that quandary, right? For me as

an anthropology graduate student, I thought of this as terrible news. And yet there are people who were just, you know, 50 miles away from me who were cheering. And so I wanted to understand from their perspective, from their social and economic location, from the natives point of view, in this case, the natives being Wall Street investment bankers, how they came to this. ethos, what motivated and how do they sort of come to this larger understanding? So I love the contrast between those two different points of view. So someone who studies societies for a living, basically wondering why people think a massive societal dislocation is a good thing. And then people who are focused on money basically thinking that it's great and cheering it on,

as you put it. Nowadays, we kind of take for granted that when a company announces cost-cutting programs, which are usually layoffs or salary reductions or things like that, that it's a good thing for the bottom line. But you point out in your work that that wasn't always the case. In fact, that's sort of a recent development. How did we get to that point where corporations maximizing shareholder value became the sort of norm? Even the sort of framing of corporations maximizing shareholder value is important to critique because I think what many studies have shown is that corporations maximizing shareholder value as a strategy actually shoots long-term shareholder value in the foot.

And I think this is many of the sort of critiques coming in the wake of 2008, right? So it's like trying to run a marathon, but telling the corporation to do sprints every 400 feet. If you do a sprint every 400 feet, i.e. maximize short-term value, you're actually going to never finish the marathon. And so the strategy of short-term stop price spikes actually even shoot shareholder value in the foot, even for the sort of biggest adherence. But what I found in my research is that the idea that corporations should simply be or primarily be framed by stock price primacy was really emergent and becoming dominant. that time. And it was highly contested. There were a lot of folks who thought of corporations as long-term social institutions, right? Institutions that were sort of stewards, community stewards, that were, one of their sort of key promises was that of employment, long-term productivity, right, benefits.

So there's actually quite a contested thing when I actually went to do research was a sort of a fight between corporations as a long-term social institution and corporations as a stock price. And I think, unfortunately, corporations access stock price won out in large part because of Wall Street financial advocacy. So that that sort of anticipates where I was going, what I was going to ask next is what was going on? And I take it, this is sort of why you focused your anthropological work from the perspective of the banks. But why don't you start to tell us what was going on inside the banks and their own internal requirements and their own internal expectations and their own internal culture and goals that then bled through to this new expectation

on, I guess, non-bank corporations? So what was going on inside Wall Street Investment Banks was what I call in my research a so-called culture of smartness. And investment banks in Wall Street at the time had really germinated this strategy in the 1980s and 1990s of only recruiting front office employees from the most elite universities in the U.S. The sort of two greatest feeder schools were Harvard University and Princeton University. And so part of the work that that did was what I call this halo effect, right? So Wall Street, by recruiting from universities that were already branded by the larger society as the best and the brightest, got conferred onto them that, yes, Wall Street, you could trust Wall Street with financial advice and you could trust Wall Street models as a model for how you should run your business because they are populated by the smartest in the world.

Now, there are a few things that actually happen after this. That smartness gets oddly catalyzed by what I call a culture of overwork. So you have these Wall Street investment bankers that are in many ways working their butts off, right, 100 plus hour weeks. This sort of overwork for those who actually continue on often gets read by them as evidence of their superiority in many ways as, you know, better. than or the best of or better than the average worker, right? And it's often sort of framed and start contradistinction to those sort of regular workers who only work nine to five. Now, also in addition to this, you have the larger Wall Street institutional culture where there's a continual revolving door, right? Another piece of Wall Street's self-identity and representation is that they are

real time with the market. Right. So when people think of the market, they think of Wall Street. right so there's this sort of market simultaneity what's going on to wall street should be we should actually emulate what we think is going on with the stock market now historically the stock market was actually separate from the domain of most corporations the whole point of having a large organization was that you could ameliorate you could um attenuate some of the madness going on with the short-termism in the stock market the two were not conflated now what happened during the 1980s and 90s was that the culture and the time and the models of what were going on in the financial markets came to sub-infor and become a model for what should actually happen within organizations.

And this was where Wall Street was taking the lead, right? So their understanding of being real-time with the market made it so that they continually had to close desks, open new desks, closed departments, just so that they could showcase, right, that they were sort of real-time with the market. In the crisis, they often, call this, I-B-G-Y-B-G, I'll be gone, you'll be gone. So I'm not here to actually fix the mistakes that I help to rot, right, the unsustainability, because I'm not going to be here. And then the final piece to this is that Wall Street Investment Bankers are paid and compensated

by the number of deals they're able to push through, right? So their bonuses are actually based on the number of transactions, not the wonderfulness of the advice, right? nor their sustainability, nor their ability to actually create long-term productivity. And so think about this sort of crazy cocktail. You have people who think of themselves as the smartest in the world, who think of themselves as superior workers, who are themselves not going to be at their job for a very long time. There's a continual expiration date and revolving door to their jobs.

IBG, YBG, they're compensated by the number of deals they can push through, not their efficacy or their long-termism. And surely this is recipe for crisis, right? Unsustainable deals that push the market up that then also then set the stage for the crash. Right. So this is also where the liquidated in the title of the book comes from, this idea that even though you're supposed to be one of the smartest people in the world and you're working 100-hour weeks and the company is supposed to be valuing your work. and by company, I mean the Wall Street firm that you're working at, yet you're really, really disposable. Yes, yes, absolutely.

And what cushions your disposability is the fact that you're so highly compensated, right, is your bonus. And so oftentimes the sort of irony of this is that the short-term temporalness, the disposability of high-level Wall Street financiers and employees, that experience of being downsized and yet landing on their feet or having the cushion to land on their feet often makes them less sympathetic to the plight of the average worker for whom being downsized often leads to massive social economic precarity and downward mobility. And so their experience of precarity gets often read back to them as creating men of metal, right people who can withstand precarity when in fact their structural position is quite different today's show is brought to you by vanguard to all the financial advisors listening let's talk bonds

for a minute capturing value and fixed income is not easy bond markets are massive murky and let's be real lots of firms throw a couple flashy funds your way and call it a day but not vanguard at vanguard institutional quality isn't a tagline it's a commitment to your clients we're talking top grade products across the board of over 80 bond funds, actively managed by a 200-person global squad of sector specialists, analysts, and traders. These folks live and breathe fixed income. So if you're looking to give your clients consistent results year in and year out, go see the record for yourself at vanguard.com slash audio. That's vanguard.com slash audio. All investing in subject to risk, Vanguard Marketing Corporation distributor. Karen, I'd love to hear you talk a little bit more

about that year you spent at Bankers Trust. What did you do? What was your job that year? And I'm curious what your mental state isn't exactly the word I'm looking for, but sort of going in as an academic and sort of knowing that these ideas, this pre-field work, as you're talking about it, was percolating. What was it like to do a job day to day, but also know that it was laying the groundwork for a sort of longer academic study? In Bankers Trust, I was a analyst. I was a analyst and the position I had was an analyst as part of an internal management consulting group. And part of the role of an internal management consulting analyst was to actually rotate around the bank or within the bank, I should say, and understand different departments. And anthropologically

speaking, it was actually a great position because I could learn the sort of mores and the understandings and sort of how the larger bank worked in relation to Wall Street, larger financial services, et cetera. Now, in terms of the kinds of bifurcations that I would constantly have to navigate because I wanted to sort of leave Wall Street after, you know, a year or so and actually come back and apply for grants and do field work. It was actually very, very stressful. And I I struggled quite a bit with it now. My sort of co-workers and people who I reported to all knew that I was an anthropology graduate student, that I would want to come back and actually study Wall Street, culture, et cetera, et cetera. So I feel fine about that because what I did not want to do is to be

framed as somebody who was doing covert research, right? I was not doing covert research. I was working. I was an employee for a year. People knew my sort of larger goal. and hopes and I would come back in the future. And yet how to actually operationalize that created quite a bit of anxiety. However, Wall Street, ironically to the rescue, our entire department, our entire management consulting group within Bankers Trust actually got downsized. And it was actually the very first time that I recognized the people with my coworkers, again, sort of this is the, you know, coming back to the conversation we were having, that my co-workers were actually dealing with constant insecurity themselves.

And previously, before this experience, I had imagined Wall Street financiers as in some sort of oblique sense downsizers, right? And rank and fall employees in corporate America as those people being downsized. And what I came to see was, oh my gosh, Wall Street was actually using its model. on itself, right? Wall Street financiers were, again, this idea of real time were constantly being subject to their own dominant models. Right. So they're sort of drinking the collective cool aid of maximizing shareholder value as well. I have one more fieldwork question and then I want to sort of fast forward into today's discussion about capitalism and the roles of companies. But as an anthropologist,

Did you ever regret not doing field work on, I guess, a more traditional subject? Like, most people think of anthropologists going off into the jungle or to Papua New Guinea or something to live with remote tribes. And you were on Wall Street drawing, you know, field maps of downtown Manhattan. Didn't you ever regret not going elsewhere? And what did your colleagues say about your choice of fieldwork? Yes. No, admittedly, in the late 1990s, choosing to study Wall Street financiers was incredibly odd and certainly there was pushback. But, you know, I hope I made the case, which is that part of the critical eye of anthropology

that often gets honed through long-term immersion and engagement in the ideas and values and practices of people's communities, ideologies. we want to understand and apprehend. That kind of engagement was often missing from larger social scientific studies of the powerful. And part of what I wanted to do was to use the tools of anthropology and getting at the ethos and the ethics and the values and how they come to be structurally reproduced and instantiated by individuals in a larger cultural web. I wanted to use a tools of anthropology to see and to understand how this is happening for the powerful. Oftentimes the powerful have a cloak of invisibility, right, what sort of a social scientist

called the black box. And part of what that cloak of invisibility does is that it shields them from critique, from rendering specific the historical contingency and the cultural specificity of their practices and from engaging with the values that then make up this big behemoth called finance. And one of the sort of points is in order to actually engage and unpack and critique and maybe reform and maybe restructure and maybe undo some of the kinds of sort of bad cultural practices or the practices that lead to larger socioeconomic inequalities, we actually have to understand how to get made in the first place.

And so it was training the sort of eyes of anthropology to the corridors of power. I want to ask a question that's sort of specific to what got you interested in this topic in the first place. And you mentioned the AT&T layoffs and how they were cheered on Wall Street. And something that you notice whether you hear about a country in distress or a company in distress is you often hear what the cult of what I would call like the tough choices. like, oh, this government is going to have to make some tough choices about where they're going to cut social spending or this company is going to have to make tough choices about layoffs, things like that. And I often wonder if when you hear an example of Wall Street quote unquote cheering at layoffs,

and of course you still hear that over 20 years later, how much is it about the actual presumed increased profit that the company will demonstrate by having fewer employees on its payrolls and theoretically it becomes a leaner, more efficient operation versus the signaling that a CEO sends that they're willing to make a tough choice and the message that that sends to the people who themselves are dealing with the grueling lifestyle of Wall Street so that it's less so about the increase to the bottom line per se, but the signal that it sends to the bankers that, yes, we are willing to make the tough choice. We are willing to do something painful that nobody likes to do as a demonstration of our sort of willingness to be good stewards of capital.

I guess what I would say to that is oftentimes CEOs who are often advised by Wall Street financiers often get a sort of false choice in their head, right? The idea that we need to do this in order to save jobs in the end. And that hasn't actually panned out. What often happens is the kind of restructuring, whether it's mergers and acquisitions or financial restructuring or taking on debt or downsizing or merging or acquiring.

What that often does is actually sort of create these transactions that downsizes pieces of the institution and takes those so-called savings and reinvest it up top. Right? So the sort of restructuring that often happens is recaptured and sort of use to sort of fuel investor wealth. And I actually would frame that as much more of an extractive model that's not so much about getting the corporation in shape and actually fixing the longstanding problems, but rather doing a relatively quick extraction for short-term shareholder or investor gain. And oftentimes folks get sort of socialized, I would say, as understanding, well, it doesn't matter because as long as shareholder gains, the owners gain. And so there's another sort of false choice here.

And that is the assumption that historically and even into the present that shareholders actually own the company. I would actually say that shareholders own shares of the company, but they don't necessarily own the entirety of the corporation itself. And that's sort of being sort of highly contested. And that debate's really sort of coming up in the public realm discourse today. I have a sort of related question, but how much responsibility do the companies bear here? Because it feels like even if Wall Street culture might be a little distorted under your observations, the role is actually quite clear. like Wall Street is selling a package of services to corporate clients, whether it's M&A advisory or fundraising and things like that. And the companies that hire them don't necessarily have to

accept those services and yet often they seem to. That's right. That's right. What I would also say is that in that throughout the 1990s, what happened was that Wall Street really worked quite closely with top-level corporate management to really restructure the ways in which high-level executives and managers in most of the largest corporations actually got compensated. And so the sort of shift to finance, the shift to the financial markets for most sort of large corporations really happened in the 1980s and 1990s, where corporate executives actually came to be paid through their stock options. right and in so doing instead of actually relying on a salary that's in a sense in a context with the larger organizational culture in which they were embedded they were reoriented to wall street timeframes and understandings by actually being paid through stock and not through organizational salaries so what happened over that 1990s time frame was that many executives actually came to see their roles

as similar to that of Wall Street. And also not surprisingly, many corporate executives were actually hired from finance, right? So the sort of idea of sort of growing up within the organization, that pretty much ended in the 1980s and 1990s where many executives were then hired in vis-a-vis finance or through finance programs after their MBAs. I'm curious, you know, obviously it's no secret or mystery. that within the halls of academia, there are a lot of people of a sort of the more left persuasion who are going to be very critical of Wall Street and big business.

I'm curious, though, from your perspective, whether you think that other colleagues in your field, whether they have any blind spots that because they haven't actually gone in and done the work and actually been involved in working in a bank that causes them to misunderstand aspects of how this all works. Academia certainly shares a large part of the critique. And one of the sort of key points is that, you know, certainly there are many economists who really help to promote this idea that shareholders are the sort of owners of companies that the purpose of business is to create a profit,

right? Sort of agency theory that the whole role of managers is actually to fulfill their role as agents to the principal, which are the shareholders. These are all constructed academic paradigms that are actually disconnected a little bit from corporate history, right, that then got promoted as the truth, that then got also taken up by Wall Street, right? So in many ways, academia actually helped to hatch this idea that financiers then ran with, the Milton Graemeans of the world.

And the Michael Jensen's of the world, even though he later critiques some of his viewpoints. Getting back to my convoluted political intro, we are seeing more and more politicians make noise about reforming the reasons that companies exist. So Elizabeth Warren is talking about redistributing shareholder value towards the middle class. Jamie Diamond is talking about making companies less short. short-term focused and, you know, maybe reorient them towards something that isn't just quarterly earnings. What do you think of those types of movements, those proposals, and how would one actually go about changing the culture that gave rise to this existing system? You know, many of these kinds of large-scale reforms would be important to actually think through and take on. And one sort of

example is, I believe it lives with Warren, but many other folks are talking about what's happening with the private equity industry. And oftentimes the private equity industry will say, hey, look, we're sort of different than the people who do short-term shareholder value because instead of actually doing the evil eye and quarter-by-quarter short-term returns on a public company, what we're doing is we're actually taking companies private. But I would argue that many of the same kinds of ideologies and values of extraction, right? And paying oneself a dividend and loading on debt onto companies in order to extract those dividends. It's a similar ideology that private equity firms have done. And yet, by and large, they're not regulated. And so one sort of iconic

example is Toys R Us. Tories are Us, oftentimes people will say, well, what's the reason Toys R Us went bankrupt? People will say, well, because of Amazon. And yet, what? What? What folks are often missing is that Toys R Us wasn't doing wonderfully, but it actually wasn't doing that badly, right? Because private equity funds often want to take over companies or buy companies that actually have a really good cash flow. Right. So this idea that these companies will have been bankrupt anyway or they're terribly distressed, again, is a false choice. Is a sort of problematic representation that Poys R Us was doing okay, not wonderfully. and yet what sort of the takeover or the buying up of turning towards R Us into a portfolio company

of Bain Capital KKR and Vornado Realty Trust, what that did was it engendered its bankruptcy by loading on billions of dollars of debt so that they actually could not have the bandwidth, right, or the capital to invest in the kinds of online presence that they actually needed to do. I'm curious, you know, I imagine that someone in your position today who is thinking about doing a sort of similar ethnography might be tempted to go into big tech these days and get a job at Facebook or Google because we know that there's so much scrutiny of these companies and arguably some of the anger that was directed towards Wall Street has been redirected of late towards them. what would you advise and what would be the kind of questions that if you were, say, doing the same thing or you had a student who wanted to do something similar but at a big tech company, what would be the kind of questions you might encourage them to look out for or to start focusing their work? Wow. So tech companies, huh? Well, you know, if I can sort of take one piece of that question. Sure. And that is that I think it would be really difficult to do the kind of field orthodox. I did back then, actually today. And when I was doing the field work back then, it was before 2008.

And I should also say it was before the ubiquity of a smartphone. And so, and the idea of the smartphone is that one's work email, one's Gmail, one's phone numbers are all sort of conflated together. And so the kind of sort of immersive fieldwork that I did for three plus years with digital recordings and tape recordings that would never have gone viral, right? Of course, I'm under an anthropological pledge that these are all confidential and then the data is destroyed, etc. But certainly given the scrutiny of finance and, you know, tech today, post-2008, I'm not sure I would have actually gotten the kind of approval to do the same kind of field work. And even though many of the sort of executives, et cetera, are still, you know, quite powerful, if not as powerful or if not more powerful than they were, they also feel much more scrutinized. And that's a tough cocktail, right?

To think of oneself as under scrutiny and perhaps a victim, but also be very powerful. That's not a good combination to have. Well, Karen, I found that conversation really, really fascinating. Just the idea of an anthropologist going to Wall Street and conducting their field work is absolutely amazing. And the book is great. So thank you so much for being with us today. Thank you so much for having me. Yeah, thank you, Karen. That was great.

I loved it. So, Joe, I found that conversation really fascinating. And part of what's great about Karen's work is just the dedication of good. going and actually working this really intense, you know, work schedule in order to do long-term field research on Wall Street. I think that's really great. I thought that was really fascinating, too. And you know, it's funny. So, like, our last several episodes, we've been doing a lot about things relating to balance sheets and the sort of demands of balance sheet and accounting requirements and how they affect the economy. And this kind of

seemed like a break, but I actually think it's pretty connected because ultimately what, ultimately, the sort of, the constraints imposed on companies by Wall Street, by the people who can go out and fundraise is going to have a very real effect on how corporations behave and whether financial conditions are loose, whether they're available, to whom they're available, who gets to decide who they're available to, what are the conditions of those people. I do think it's actually very much connected in a sort of more theoretical sense or a sort of more personal sense to a lot of the themes we've actually already been discussing lately. So I really enjoyed that.

Oh, I totally agree, except I would sort of flip it and say that, you know, in the past 10 years or so, we've had extremely loose financial conditions by virtue of very, very low interest rates. And in that environment, the only constraint on corporate behavior is basically cultural, right? It's like the extent to which you are willing to undertake a number of transactions, whether it's debt financing or M&A activity or buybacks, the constraint there is cultural. And so I think the conversation we just had about this idea that doing something has sort of become embedded in the Wall Street ethos. I think it's really important. No, I totally agree with you. The other thing, and I didn't get to mention it, but Karen alluded to it several times,

it's interesting to think about an era of corporations that actually existed before the view that the corporation's goal was to just get the stock price up. And if you read a book like John Galbraith's new industrial state, He talks about all this stuff about corporations viewing itself, not as a profit maximization entity per se, but more from the perspective of insurance and having the ability to create an entity that would weather different economic cycles and different idiosyncratic risks and so forth. It's really hard, I think, in 2019 to imagine that corporations ever had a different purpose besides just getting the stock price up. But it actually is, I think I really appreciate

hearing her talk about how it's kind of a modern idea. Oh, yeah. So in Karen's work, it's quite clear that this is something that only really started to happen in the 1980s, so quite a recent shift. And it's weird, again, to think about how embedded it is in our modern notions of finance and the economy. This is how the financial system is supposed to work. Of course, capitalism is about making money and therefore companies are trying to maximize their profits for shareholders, but just two or three decades ago, or I should say, I always forget what era it is, just three or four decades ago, that wasn't necessarily the case. Totally. All right. Well, this has been another episode of the All Thoughts podcast. I'm Tracy Allaway. You can follow me on Twitter

at Tracy Allaway. And I'm Joe Wisenthal. You can follow me on Twitter at The Stallwart. And you should follow our producer on Twitter, Laura Carlson. She's at Laura M. Carlson. And check out all of Bloomberg's podcasts on Twitter at podcasts. Thanks for listening. The news doesn't stop on the weekends.

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