Bad news for Fidelity analysts?

A swarm of robots from the open-source micro-robotic project.

Adapted from an item in Robert Whitcomb's "Digital Diary'' column in GoLocal24.com.

The longest golden age on Wall Street –which began in the 1980s with Reagan era deregulation and tax changes – may be closing for many financial-industry denizens.

As with other industries,  computers and automation will wipe out many very high-paying jobs.  Consider BlackRock Inc., the world’s largest asset manager. It’s shifting resources away from human stock pickers running funds and charging big fees to lower-cost quantitative stock funds run, in effect, by robots. These analyze data and automatically make predictions and adjust investments accordingly.

While some “actively managed’’ (by real humans) investment funds have done well, in general, “passive investments’’ – e.g., money in index funds that reflect the performance of the stock and bond markets as a whole or industry sectors of them – have generally done better and with lower fees.

What this means is that there will be fewer jobs for stock analysts, stockbrokers and so on. This will slam New York City and its suburbs particularly hard after decades of vast wealth accruing to people on Wall Street. Employment in the financial districts of Boston and some other big U.S. cities will also take a hit.  Consider such big Boston financial-services firms as Fidelity and State Street. Of course, the senior executives of the likes of BlackRock, etc., will continue to make a mint.

This recalls the hollowing out of parts of some other white-collar occupations, such as lawyering, where much of the routine work can now be done by low-paid legal assistants (some working in India) using computers.

Ultimately this computerization may also devastate the tax-prep business; many taxpayers already use such programs as TurboTax. But Congress keeps changing the tax laws in response to lobbying from special-interest groups slows the process. Many of us will continue to need to talk to a human to keep up with the relentless fiddling on Capitol Hill.

It being tax time, I’ll slide in here my annual tribute to the underfunded and understaffed Internal Revenue Service. Taxpayers are always blaming the IRS for their tax problems, including the impossibility of understanding much of the tax-law swamp, which grows every year. But citizens blame the wrong people: It’s Congress, sometimes acting on the recommendation of the president, that has produced our abomination of a tax code as legislators respond to interest groups and overuse the tax code for social, economic and political engineering.  A prime example is how they create ever more tax credits instead of doing things in a straightforward way, such as directly appropriating federal money for desired programs.

Anyway, remember Oliver Wendell Holmes’s famous line: “Taxes are the price we pay for civilization.’’

Robert Whitcomb: Rhode work; profits without prosperity

  Rhode Island Gov. Gina Raimondo is focusing on long-term projects that would help most people in the state, rather than “government by deal’’ wherein powerful groups seek taxpayer help for their special projects.

Improve public education and physical infrastructure and good stuff will follow. After all, Rhode Island already has a highly strategic location, ports, some famed educational and cultural institutions and considerable natural and manmade beauty.

“Our infrastructure is intertwined with economic development,’’ notes Rhode Island Transportation Director Peter Alviti.

So the governor wants commercial truck tolls on many bridges to help pay to fix roads and bridges. The plan is to issue $700 million in state revenue bonds, to be repaid from tolls on big trucks using bridges on Interstate Highways 95, 195 and 295 and state Routes 146, 6 and 10.

That many of Rhode Island’s bridges and roads are falling apart is obvious. Bad roads and bridges of course damage the vehicles driven on them -- a far better reason to avoid the tiny state than new user fees would be. Such disrepair shouts out that the state has been badly run. Bad PR!

That the Ocean State, part of which is an archipelago, ranks last in the nation in overall bridge condition seems suicidal. Big trucks do most of the damage to the state’s bridges and roads, by one estimate 90 percent.

Meanwhile, vehicles are becoming much more energy-efficient, many young people now don’t drive nearly as much as young people did a couple of decades ago and the huge cohort of aging Baby Boomers won’t be driving as much either. This means lower gasoline-tax revenues to pay for infrastructure.

Rhode Island and Connecticut are the only states on the Northeast Corridor between Maryland and Maine with no broad-based commercial truck user fees! Rhode Island does have the Pell Bridge, whose truck tolls help maintain it and the Mt. Hope Bridge. That leaves hundreds of badly maintained bridges. (Connecticut is considering re-imposing tolls; it had them for years for all vehicles on Route 95.)

The governor also wants to boost rail and bus service, including an express bus lane for the Routes 6 and 10 interchange reconstruction, and seeks $400 million in federal funds for public transit. With the GOP Congress, that will be hard, but demographics are on her side.

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Anger grows over many cash-rich companies’ paucity of long-term investment in research, job training and pay raises for employees below the senior-executive level. Rather, increasingly selfish execs and their boards take more and more corporate earnings to buy back company shares to boost their prices to enrich themselves at accelerating rates; much of their compensation is in stock.

Many senior execs are less embarrassed than their predecessors were 50 years ago about paying themselves so much at the expense of other employees and the communities where they do business. That’s one reason for the widening income gap. Some of the here-today-gone-tomorrow execs later repair their PR by creating foundations to give away a bit of the money they have taken. But that doesn’t help those they have blithely laid off and communities they have hollowed out.

Some call this stock-price “manipulation’’ and want to ban it. But this shouldn’t be illegal in a free market, however selfish it may be. Still, out-of-control greed and short-termism are eroding the long-term competitiveness of U.S. companies. Even some on Wall Street are speaking out against it. Lawrence Fink, chairman of BlackRock, the huge asset manager, told the chief executives of the 500 biggest U.S. public companies that this “discouraging underinvesting’’ undermines “long-term growth.’’

Economist William Lazonick calls buybacks "profits without prosperity.’’

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I spend more time these days visiting old sick people, as I prepare to join them myself. I always learn something. Not only do these people tend to be more honest than younger folks because they have little to lose in telling the truth, but they have better stories. And visiting them tends to put one’s own life in clearer perspective, including its brevity.

Robert Whitcomb (rwhitcomb51@gmail.com) oversees New England Diary.