Jon Stewart and personal responsibility

With all the ranting going on everywhere these days, I feel entitled to indulge in a rant of my own. My beef is with people who are unwilling to take responsibility for their actions. I will use as an example Jon Stewart’s public flogging of Jim Cramer about a month ago. Stewart is in the habit of engaging in serious discussions while hiding behind the cover of being a comedian. It would be just as ineffective if someone serious, such as Larry Summers or Alan Greenspan, were doing stand-up comedy while regularly reminding the audience that he is an economist and should therefore not be expected to be funny.

First of all, the notion that the financial media could somehow have saved people from big investment losses in this bear market is ridiculous. Let’s say Jim Cramer and his colleagues had been more prescient and warned retail investors about the fragile balance sheets of financial institution and impending market collapse – all that would have accomplished is to speed up the decline. Someone is inevitably left holding the bag. Besides, if Cramer’s crazy antics are not disclaimer enough about the seriousness of his show, I don’t know what would be.

Who is to blame?

But what I took the greatest issue with was the notion that somehow Jim Cramer or the financial media is responsible for people’s retirement savings. Stewart brought his 75 year-old mother into the discussion and said that she had bought into the idea of long-term investing, suggesting it was obviously a bad idea. As I don’t know much about Stewart’s mother’s situation, I will use an average 75 year-old as an example instead. This person might be expected to have started saving in the early 1960s when the S&P 500 index was around 60. The individual would have enjoyed an enormous bull market in the 1980s and 90s. With age, exposure to equities would be gradually reduced and retirement at age 65 would have come at a good time in 1999 – almost at the very top of the market. What better time to start drawing down on one’s savings? What is more, a person of that age has lived through another sharp bear market (’73-’74) and does not need to be an expert in financial market history to know that occasionally stock prices fall a lot. To make such a person look like a victim suggests that stock markets should be able to give predictable 10-15% returns, a dangerous idea in itself. The alternative is simply that the person did not save enough for retirement.

That is not to say that I am blind to the flaws of the financial industry. It has been an unnecessarily self-serving industry in recent decades, where an army of people has reaped rewards out of proportion with their talents, contribution to society or personal risks taken. That problem appears to be taking care of itself very rapidly, however. For those interested in a good critique of the financial industry and modern business ethos in general, I recommend John C. Bogle’s recent book “Enough.”

It was lack of personal responsibility that got us into the mess we are in; let’s not make matters worse by continuing that trend.