From “Why I Fired My Broker”, a piece in the May Atlantic by Jeffrey Goldberg, in which he tries to figure out what the hell happened to his investments a few months ago:
It turns out that my crucial mistake was believing that the brokers and wealth managers and cable-television oracles who make up the financial-services industrial complex actually had my best interests at heart. Or so say the extremely smart—and wealthy—people I asked to help me figure a way out of my paralysis. One of these people was Robert Soros, the deputy chairman of the fund started by his father, George. I went to see him at his office, where he spent two hours performing an autopsy on my assumptions.
“You think a brokerage should be a place you go to pay commissions for fair and unbiased advice, right?” he asked.
“Yes,” I said.
“It’s not. It never has been.” He then cited another saying of Buffett’s: “‘Wall Street is a place where whatever can be sold will be sold.’ You are the consumer of their dreck. What they can sell to you, they will sell to you.”
“But they told us—”
“They lied.”
He went on: “You should be disheartened and disappointed. But don’t kid yourself. You’re a naive capitalist. They were never your advisers. Do not for a moment think that a brokerage firm is your friend.”
“So who’s my friend?”
“You don’t have one. This is the market.”
Now, I’m a fairly free-market-friendly sort of guy, in this sense: if we draw a line with pure socialism—total state control of economic activity—at one end, and pure capitalism—total absence of state control of economic activity—at the other, I would put myself closer to the capitalist end than the socialist. This is because I think a fair amount of liberty is not only a good thing in itself but also more likely to produce good results than state control.
But there has been a lot of nonsense written about capitalism in the past quarter-century or so in which the market has been construed as a sort of systematized benevolence, in which people engage in buying and selling as a means of creating and spreading wealth and furthering the greater good. It simply isn’t that, and I’ve often wondered if people who speak of it that way have ever been involved in an actual business. It’s people engaged in buying and selling things for the purpose of making a profit. That’s all it is, in itself; the greater good of general prosperity, if it happens, is a side effect, just as entertainment is a side effect of a football game from the point of view of the players. And that’s fine, as long as everyone understands the nature and rules of the game.
When a football team goes up against an opponent, it intends to win. No one expects it to refrain from scoring out of kindness to the other team. On the other hand, though, everyone does expect it to refrain from cheating. And the market is no more self-governing than a football game.
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