"The Classic Function of Wall Street"

A Daily Dish reader wrote that "the financial masters of the universe  [...] truly believe that [...] the work they do is absolutely integral to a well-functioning capitalistic society." John Bogle describes such work as "the classic function of Wall Street" in noting how little of it firms still do:

The classic function of Wall Street is to direct capital to its highest and best uses. Well, let’s look at that. Last year [2011], Wall Street directed about $200 billion in capital to IPOs and other long- term investments. But Wall Street was also an intermediary for $40 trillion worth of trading volume. So only one-half of 1 percent of what Wall Street does is capital formation. Most of the rest is short-term speculation. 

Wall Street has become a casino. I once asked a former Wall Street tax attorney why he thought this had happened and he pointed to the earnings incentives: performance is evaluated on a quarterly basis so it suits a financier to pursue short term gains rather than the sort of long-term growth that isn't really noticeable in three month windows.  

Jazz and reason

Jazz improvisation has logic to it: musicians improvise within chords, chords have logical relationships.

Reason is, and ought to be, the slave of the passions, and can never pretend to any other office than to serve and obey them.

          - David Hume

In what other endeavor is this so purely realized?

It's done nothing for us now and we didn't need it then

There was information held by the Federal Government about 9/11 before it happened. It just didn't get from where it was (the CIA) in time to be where it needed to be (the FBI).  Bureaucratic factionalism - the eternal cold turf war - was more responsible than a lack of intelligence for the 9/11 attacks. 

Turf was created when the NSA added divisions to collect telephone metadata. As people were moved and employees were added, interests were created in maintaining a self-perpetuating system that has no purpose other than to sustain itself. As a rule, bureaucrats defend their turf. 

The NSA program has not stopped terrorist attacks. But the President's address on it today didn't threaten its existence. Turf has been created. We'd be better off addressing the cultures and incentives that create it than making more of it.