"Racism"

Can we just agree that “racist” is an adjective that has evolved to describe a whole lot of things that aren’t actually racist?

The more that I grow up and step into my own understandings of politics and the broader societal landscape around me, the more that I find myself thinking that we are about two generations away from any real chance at a “post-racial” reality. My generation is absolutely ready for it, but those before us are not. The generation of our grandparents is one of actual racism and bigotry; the kind that segregates schools and sits in the back of a bus. The generation of our parents may have broken color barriers and desegregated school systems, but the process of it all was painful. Our nation’s history of interracial animosity may have been greatly rewritten and redirected during their lifetimes, but the reach of its former ugliness seems difficult to forget, and even more difficult to prevent from defining their continued path forward. They laid a foundation on which they will never truly walk.

Our grandparents did not vote for Obama because he was black. Our parents voted for Obama because he was black. My friends and I voted for Obama with a relative indifference to the color of his skin.

I am not trying to say that racism doesn’t exist in my generation, because it definitely does. Despite all attempts by the African American community to reclaim ownership, the N-word still belongs equally to mouths black and white. However, I think that growing cultural overlays have lessened the deep-rootedness of racism in American society, making it somehow less visceral. Rap/hip-hop culture is nearly as much suburban as it is ghetto, and the most socially relevant and accurate television series on inner-city drug culture (The Wire) was written by a couple of white guys. Media has in many ways leant a certain understanding to cross-cultural differences that removes the “us versus them” and the “they’re different from us” from our personal frames of reference.

In time, I think that this mutual connectedness will serve as a foundation for a truly post-racial society. Much the same way that when I met a college student in Xian, China two years ago whose favorite band was Linkin Park and his favorite show Prison Break, I found myself thinking that the music and movie industries will have as much to do with the eventual downfall of communism as governments will. But, until then, we are left with the Jesse Jacksons and the NAACPs of the world.

Not only do I not agree that Dan Gilbert’s comments regarding Lebron James reflected the mentality of a slave master, I can honestly say that the notion of race did not even cross my mind until Jackson venomously injected it into the conversation. Lebron will be hated in Cleveland the same way that Art Model is- as someone who left a city without hope, not a cotton gin without cloth; his departure televised in primetime for a nation to see, not covered up and hidden along an underground railroad.

Similarly, the NAACP’s labeling of the Tea Party as a racist political faction is ridiculous. Agreed, there are fringe elements of the movement who are racists and bigots. But there are crazy radicals on the fringe of any movement, group, or idea. Some Muslims are terrorists, some Christians are skinheads, some blacks are drug dealers, and some extreme liberals are self-identified anti-Americans. We can no more define the Tea Party by its fringe element than we could Obama by the comments of Reverend Wright, or the Democratic Party by those who held signs of President Bush with a Hitler mustache during his presidency. Disagreeing with a President’s policies is not the same as disparaging his ethnicity.

Pulling the word racism into every single situation involving race does not enlighten our society to its presence, but instead desensitizes us to its evocation. It lessens our individual capacity to differentiate real racism from the nonexistent, and it lessens the power of the term. Racism becomes a card that is pulled whenever the going gets tough, or someone says something we don’t like. The more worn the word becomes, the more we lose the sense that there is a categorical understanding of its definition.

A post-racial society will require restraint and responsibility from both sides of the racial divide. Defining our world through the lens of black and white is lazy. It oversimplifies our problems into too easy of a construct. It’s too confined a perspective, and racism is too important a concept to make so trivial.

The Big Short On Trial

April 18, 2010

Read the Fed’s case against Goldman Sachs, or read any article describing the case against Goldman Sachs, and it sound a little bit like Michael Lewis’ new book The Big Short. Actually, it sounds a lot of bit like The Big Short. More or less, it’s a replication of it.

Lewis’ book, which I would argue is the single best and most easily accessible narrative of the subprime mortgage meltdown, explains the “Great Recession” from the perspective of those who saw it and profited from it. He follows the handful of investors and hedge fund managers who used complex credit default SWAPs to place bets against specific tranches of subprime mortgages that they identified as extremely likely to go into default. Inevitably, in order to profit on these side bets, there had to be a losing side to the wager. In this case, that loser was AIG, Morgan Stanley, Lehman Brothers, and an assorted list of other Wall Street firms and foreign investors. Apparently, the market for suckers was far and wide, and well-lubricated by middle-men such as Goldman Sachs who were more than happy to match supply with demand (for a fee of course).

Where things begin to dip into a bit of an ethical quagmire (and where the Feds have now focused their criminal investigations) is with the advent of CDOs (i.e. Collateralized Debt Obligations). For purposes of an over-simplified explanation, think of CDOs as combined pools of several different groups of low-grade subprime mortgages. By pooling the different groups together, investment banks argued that they had created diversified portfolios and mitigated risk, which in turn allowed ratings agencies to grade the new CDOs significantly higher than they would have rated any of the independent groups of mortgages that comprised the CDO. The end result was to disguise risk, increase marketability of the debt instrument to potential buyers (i.e. the eventual losers of the whole subprime bet), and in the process to generate more transactional fees for the investment banks that served as middle-men in the game.

At the center of the case against Goldman Sachs is whether or not these CDOs were actually intentionally designed to fail. The charges allege that the mortgages within the CDOs were specifically selected as the most likely to default (a point proven in Lewis’ book), the new debt instrument was designed to disguise its real risk (a point discussed above and in Lewis’ book), and that the firm lured investors into the CDOs in order to generate revenues through transactional fees (also a point that Lewis makes).

If you want to know how the whole “subprime doomsday machine” worked, it’s written all through Lewis’ book and the pages of the charges against Goldman…in pretty much the exact same way. Almost as if some Federal prosecutor finished reading it and decided: “Hey- that’s pretty messed up, and I should maybe do something about it”.

If you ask me, that’s probably exactly what happened.

I think we sometimes assign some super-human understanding to agencies of power that, more often than not, does not exist. In the same way that we used to think our Parents knew everything about anything, we think that the government is always there watching and protecting us from every imaginable danger out there. But the fact of the matter is that they aren’t. Analysts in Wall Street firms are smarter than the analysts watching them in governmental oversight agencies, just as myself and my colleagues are probably smarter than the IRS agents reviewing our work. Talent follows money and firms that are willing to dole out a bunch of it; so while Fred from the Fed is packing up at 4:45 to leave exactly at 5, the guy from Goldman and I are getting a second Starbucks and getting ready for the late night push.

The government doesn’t know anything near everything, just the same way that your Mom can’t walk you through a Calculus II equation and your Dad probably can’t show you how to perform brain surgery. Their just a bunch of guys with slightly more access to information than you or I. That, or maybe just guys privy to advance copies of Michael Lewis books from Barnes and Noble.

So, the Feds can go and have fun touting their own horns about this whole case, calling it a prime example of the need for effective federal intervention into free markets. I think it’s more like an example of what you can do with a library card and a badge. But I guess showing up late to a party is better than never.