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Economics

شركات التكنولوجيا العملاقة تنحرف عن المسار

Nov 24, 2022 Jonathan Levy

شيكاغو ــ كان إفلاس بورصة العملات الرقمية المشفرة FTX، الواقعة الأحدث في تاريخ طويل من الخداع المالي الأميركي، حدثا غير عادي. قال خبير إعادة هيكلة الشركات جون راي الثالث، الذي يشرف الآن على إفلاس FTX، "لم أر طوال حياتي المهنية مثل هذا الفشل التام لضوابط الشركات والغياب الكامل للمعلومات المالية الجديرة بالثقة كما حدث هنا".

كان انهيار بورصة FTX هو الواقعة الأحدث في قطاع انهالت عليه الضربات منذ إبريل/نيسان 2021، عندما انخفضت قيمة العملات الرقمية لأول مرة. بعد أن اقتطعت الأسواق 89 مليار دولار من القيمة السوقية لأسهم شركة ميتا (Meta)، أعلن رئيسها التنفيذي مارك زوكربيرج أنه يعتزم التخلص من 13% من قوة العمل في الشركة (11 ألف شخص). ثم في غضون أيام من استيلاء إيلون ماسك على شركة تويتر، التي اشتراها ــ على سبيل التسلية كما يبدو ــ مقابل 44 مليار دولار، بدأ كثيرون يشعرون بالخوف على مستقبل المنصة.

الواقع أن الأفراد من غريبي الأطوار الذين يمتلكون مليارات الدولارات، ويرغبون في بناء إمبراطوريات من الشركات (بما في ذلك المؤسسات الخيرية)، ليسوا غريبين على الولايات المتحدة. عندما كنت أقرأ عن سام بانكمان فرايد، مؤسس بورصة FTX المكلل بالعار ورئيسها التنفيذي السابق، تذكرت "حروب إيري" (صراع من القرن التاسع عشر بين الممولين الأميركيين للسيطرة على شركة إيري للسكك الحديدية) في أواخر ستينيات القرن التاسع عشر، عندما سعى ممولون من أصحاب الكاريزما، ويتمتعون بالقدرة على الوصول بسهولة إلى مبالغ هائلة من رأس المال والائتمان، إلى بناء أولى شركات الأعمال الكبرى في الولايات المتحدة: السكك الحديدية العابرة للقارات. وقد بنيت السكك الحديدية، ولكن ليس بدون إهدار مالي كبير ومكائد بين الشركات.

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John Handel Nov 28, 2022

Historians often warn of analogizing between the past and present. Essays like this are the reason why. Jonathan Levy argues that the parallels between the corruption of late 19th century railway tycoons and the blowup of Sam Bankman-Fried’s crypto exchange, FTX, “seem clear.” But the only thing this essay makes clear is that the comparison between 19th century railways and cryptocurrency is a deeply misguided one to make.

There are three major points upon which Levy’s comparison falls apart.

The Nature of the Players. Levy depicts the war for control of the Erie railway, fought between Jay Gould, Jim Fisk, and Daniel Drew on one side, and Cornelius Vanderbilt on the other, as ripe with fraud and misdealings. He is, of course, correct on this point. Learning of Vanderbilt’s intended takeover of the railway, Gould, Fisk, and Drew began issuing practically worthless, watered down shares for Vanderbilt to purchase. Levy conveniently ends his retelling of the story with Gould, Fisk, and Drew fleeing the jurisdiction of New York to New Jersey, seemingly safe and having gotten one over on Vanderbilt. But the story doesn’t actually end there. Vanderbilt, the most wealthy man in America at the time, conceded defeat in the fight for control over the railroad, but forced a settlement in which Gould & co. paid him $4.5 million in return for the watered down shares he’d purchased. Vanderbilt’s pride was no doubt bruised, but he was made financially whole.

The Erie War was fundamentally a power struggle between a handful of the wealthiest men in America, in which the loser (Vanderbilt) recouped nearly all of his actual financial losses. To analogize this to Bankman-Fried using the deposits of his exchange’s customers to pay off the losses incurred by his personal hedge fund is to miss the point entirely. Bankman-Fried saw billions of his own personal wealth evaporate overnight while his thousands of customers will recuperate only pennies on the dollar of their deposits at best. The Erie War was a battle of financial titans who resorted to dirty tricks to one-up each other. The FTX blowup was blatant fraud perpetrated against thousands of unsuspecting smaller investors who will never be made whole again.

The systemic importance of crypto. Levy ends his historical example by noting the two great financial crises of the railroad age: 1873 and 1893. Once again, this is both historically disingenuous, and a poor parallel to the present. While over-speculation in railways certainly contributed to both the panics of 1873 and 1893, neither crisis was caused by over-speculation in railways alone. Droughts and bad harvests, bank-runs on critical financial institutions in Europe, and the monetary policies of states abroad, all contributed to the great panics of the 19th century. Over-speculation in railways may have been a symptom of the financially irresponsible times, but it was not itself the causal engine of these major financial crises.

To equate these panics with crypto is, again, to entirely miss the point. Both panics were catastrophic. The panic 1873 plunged the global economy into a years long recession. Meanwhile, the collapse of crypto has had a negligible effect on the rest of the financial system and the global economy. Crypto is a monopoly game, played with monopoly money, that has hurt the individuals who were convinced to buy into the game with actual money, but has not had systemic effects on the global economy as such.

Crypto isn’t a real asset. This is the most important point that Levy’s comparison problematically overlooks. Was there fraud and corruption in late 19th century railways? Certainly! Did many railway investments go bad and become unprofitable? Yes! But, did railways meaningfully contribute to the economic growth of the United States and serve key social and economic functions? Yes.

The various Railway Bubbles of the 19th century, in both the United States and other countries like Great Britain, were what William Janeway has called “productive bubbles.” Over-speculation in railways enabled many unprofitable railway companies to be born, to lay track, build engines, and begin services. When the bubble burst, companies failed, and investors lost money. But the railway companies that survived (often run by Gilded Age Tycoons like Gould or Vanderbilt) could purchase those that had failed and incorporate their tracks into a larger, existing network. The Erie Railway, for instance, continued to run until the 1950s when it merged with another company. Remnants of its track are still operated by the Norfolk Southern Railway, a class 1 freight railroad.

When the crypto bubble burst, there was nothing similar to recuperate. The “assets” on FTX’s balance sheet were primarily crypto-currencies the company had issued itself. The ostensible value of the coins as marked in the balance sheet was nothing close to what they were actually worth in the market. That is because they were self-referential pieces of monopoly money that had no value or function beyond being a speculative asset within the crypto-currency ecosystem. As Bankman-Fried himself admitted on a now infamous episode of Odd Lots, crypto was nothing more than a ponzi scheme that relied on dumb money continuing to come in, so that the “smart money” could pay themselves out. When interest rates rose and smaller investors did not have the same incentives to invest in crypto, the con played itself out and the “smart money” like Bankman-Fried, was made to look stupid.

Even as corrupt and occasionally fraudulent as 19th century railways were, they still had real economic value. Crypto does not.

This leads me to my final point: Levy’s confusing assertion that the blowup of FTX should lead us to reconsider the regulatory principle of “public utility.” While he admits that “it is not clear that cryptocurrency offers any essential public service,” he parrots Massimo Amato and Luca Fantacci by arguing that crypto has nevertheless posed the “right question” about how we regulate the financial system. It is never stated by Levy what that question actually is.

As Stephen Cecchetti and Kim Schoenhotlz have argued, the regulatory lesson to take from crypto currency is that there isn’t one. As a fundamentally useless “asset,” endowing crypto with regulatory legitimacy can only be a mistake. “The overriding goal of policymakers should be to keep crypto systemically irrelevant. The best way to do this is let it implode under the pressure of its unsafe and unsound business practices.” Far better to let crypto burn on the outside, than make any moves that would further connect it to the global financial system.

It is unfortunate that a historian as erudite and renowned as Levy would make these fundamental mistakes of both historical interpretation and policy prescription. But his essay at least will serve as a helpful reminder about the ease with which misleading historical analogies may be abused.
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