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Q: OK, but isn't the purpose of any capitalist company to make money? You certainly made a lot of money at Goldman. (Smith says he made in the "high hundreds of thousands of dollars" in his best years but declines to be more specific. His publisher declines to say what he was paid for the book.) A: Capitalism should be where everyone competes hard and makes money, in an environment where there is fair play and competitiveness. Right now the system is stacked against everyone else in favor of the banks. It's a little like a casino. A real casino is regulated and there are cameras everywhere and the casino cannot see your cards. With Wall Street today, the bank can see what every government, every pension fund, every hedge fund in the world is doing. They can effectively see everyone's cards. Then, instead of facilitating the client's will, they're trying to get the client to facilitate their will. Q: What do you hope to accomplish with your book? A: People know there's this huge conflict, and that things are being done that are unethical but are not necessarily illegal. But nobody can put their finger on exactly what the problem is. My goal with the book was to write it to a general reader who knows nothing about finance. By the time someone reaches the end of the book, they can say, "I can now speak more intelligently about where the conflicts of interest are, and I can lobby my congressman or I can speak about it more." If people are not educated about what the issues are, they're powerless. That was the problem with Occupy Wall Street
-- they didn't know what they were protesting. Q: The banks are going to say any bad practices were caused by just a few bad actors, and that those guys are gone. A: This is not some conspiracy of five people sitting in a room plotting to destroy the world. This is far more boring. This is where people have created a perverse incentive system. If someone can overcharge a client by a million dollars, their leaders are going to say, "Great job, we just made an extra million dollars off this pension fund." Q: So the endemic part is that people don't speak up? A: People don't like being asked or compelled to make morally dubious decisions. But unfortunately a lot of people's livelihoods are tied up in this, and it's not an easy thing to unwind. Their lives are caught up in this system where they're sending their kids to private schools
-- it's almost like the machine for them is working so well that there's no way to undo it unless you want to change your lifestyle. Q: Why should we care about what happens on Wall Street? A: You see a lot of commentary that Wall Street is just rich people gambling with other rich people's money. I want people to know that it ultimately affects everyone. In 2008, banks had to be bailed out and that hits taxpayers. If you're a teacher or a fireman or a charity, and you have an investment fund that is trading with Wall Street, and Wall Street is not being held accountable and behaving ethically, then that directly impacts everyone. Q: What about the reaction of your family and friends to all this? You didn't tell them about the editorial beforehand. A: No, my mother would have been really upset, and frankly my mother is still very upset. She's mostly worried about how I don't have a job right now. For my parents' generation, the idea of stability is very important, while my generation is a little more idealistic about wanting to actually change things, even if it involves some kind of personal risk. It took me a while to show my mother that I was actually very proud of this.
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