It all started with massive downsizing at AT&T. In the mid-1990s, Karen Ho was studying anthropology as a graduate student at Princeton, searching for the focus of her dissertation. Ho, now an assistant professor of anthropology at the University of Minnesota, remembers thinking that 40,000 workers losing their jobs was horrible news. But the stock market applauded it, sending AT&T shares up.
Fascinated and confused by the different reactions, she'd found her dissertation topic. Ho took a leave from graduate school and embedded herself as a business analyst at Bankers Trust, now part of Deutsche Bank, to "learn the language of finance." She stayed for a year, until, ironically, her entire work group was downsized.
She spent the next few years working on her ethnography, or study of Wall Street culture, by being a self-described pain in the you-know-what: interviewing hundreds of people, shadowing investment bankers at work and hanging out with them at bars and industry conferences. She's turned that research into her forthcoming book "Liquidated: An Ethnography of Wall Street," out this summer. Today, amid Wall Street's biggest crisis since the 1930s, her insights are fascinating for investors and regulators alike.
Q How are investment bankers different from the rest of us?
A Investment bankers are structured toward the next bonus. They're compensated on how many deals they can push through, not on the quality of the deals or long-term strategy. Investment bankers have tons of job insecurity; they are a total revolving door. But what's interesting is that because of their fairly elite biographies and kind of privileged networks they move in, as well as their lavish compensation, the way they experience downsizing is very different from that of the average worker.
One of the things I argue in the book is that they cultivate a culture of liquidity, of continual restructuring and downsizing that they understand from their particular cultural point of view and privileged location as a productive challenge, as a building of character, precisely because their cushion is so thick. They can say, "Hey look, I have a really risky job, but that's why I just got paid $1 million last year." They'll actually recommend this kind of churning for other workers who have a very different experience. This actually affects corporate America, how other industries are operating.
Q What are some other themes in the book?
A One of the main ideas is to figure out how short-term shareholder value became the undisputed mission of most corporations from the 1980s onward. Throughout the mid-20th century, Business Roundtable leaders would say: "Our mission is to negotiate the long-term interests of multiple stakeholders -- consumers, employees, distributors, as well as the shareholder." After 1980, it's: "We don't have to negotiate all these other interests; we just have to be concerned about the shareholder." The corporate takeover movement Wall Street led in the 1980s helped to culturally make that shift so CEOs now imbibe that Wall Street mantra.
