Author Michael Lewis Hits Back at Critics of 'Flash Boys'
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Michael Lewis sits down for lunch at the Claremont Hotel in Oakland, Calif., looking like a man who is well-satisfied with the state of his current affairs. It’s easy to understand why. Lewis has an impressive publishing history, dating back to “Liar’s Poker” in 1989 and including “Moneyball,” “The Blind Side” and “The Big Short.” But right off the bat he tells me that that in its very first week, his new book, “Flash Boys,” has already sold more than 130,000 copies. That’s more than twice the sales, he says, of his previous high mark, “The Big Short.”
It’s the “biggest week in the history of my publishing firm,” he boasts.
Oh, and during that same week the FBI, the New York state attorney general’s office and the U.S. Department of Justice all coincidentally announced investigations into the potential improprieties and fraud associated with the topic of Lewis’ book, “high-frequency trading.” When Michael Lewis appears on “60 Minutes” and declares that the U.S. stock market “is rigged,” people pay attention.
Sure, there’s been a lot of “noise” around “Flash Boys,” a lot of chatter out there on the Internet both from name-brand journalists and people you’ve never heard of, picking nits and ankle-biting. Lewis has been accused of acting as a shill for big investors, of sensationalism, of getting his facts wrong.
“There’s been a lot of people mouthing off without actually thinking about the book,” says Lewis. Yes, he may have gotten a few facts wrong: “It’s impossible to write 100,000 words, and not make mistakes.” Anything substantive will be corrected for the next edition, but none of it, he says — and for a moment his bonhomie becomes icy — “will have any effect on the truth of the overall story, at all.”
You get the sense that as far as Lewis is concerned, the blowback is merely a positive indicator that he has successfully hit a nerve. Lewis went through a similar experience, he says, after the publication of “Moneyball,” a book that seriously upset the sports establishment with its embrace of analytics over old-school scouting.
“Billy Beane” — the general manager of the Oakland A’s and the protagonist of “Moneyball” — “has been laughing on the phone with me about it,” says Lewis. “The journalists are all lining up against ‘Flash Boys’ the way you’d expect given their position in the industry. People in the industry are lining up the way you expect. The level of hostility is very similar with what happened with ‘Moneyball,’ but the noise is 10 times greater, because it’s about Wall Street instead of professional sports.”
Michael Lewis has gone after Wall Street before, of course. “Liar’s Poker” was a delirious romp through the farcical world of Wall Street’s bond traders. “The Big Short” delivered an exquisite postmortem on the subprime mortgage fiasco. But this is different, he says.
“Previously I feel like I punched Wall Street in places where the nerves were insensitive. This time I punched Wall Street in the balls,” he says, grinning. “And then the beast reared up, and the beast went—” and then Lewis makes a sound that sounds vaguely like the squeal of a Tyrannosaurus Rex after having been impaled by a redwood tree.
The bottom line, says Lewis, is that the story he tells in “Flash Boys” threatens to materially impact how Wall Street does business, by constraining the activities of high-frequency traders.
As he explains it, high-frequency traders are taking advantage of superior technology — faster telecommunications infrastructure, smarter computer trading algorithms, physical proximity to the computers that operate stock market exchanges — to insert themselves between buyers and sellers on the market and skim off a piece of the action for themselves. The HFT guys serve no necessary economic function, argues Lewis. They’re parasites who are profiting from a self-administered tax on stock market transactions.