Monday, February 1, 2010

Tolerating Criminality in the Rich? Bad Idea

Above the law?

“I don’t hate these guys because they’re rich and went to fancy private schools. Hell, I’m rich and went to a fancy private school. I look at these people as my cultural peers and what angers me about them is that, with many coming from backgrounds similar to mine, these guys chose to go into a life of crime and did so in a way that is going to fuck things up for everyone, rich and poor, for a generation.”

Matt Taibbi Jan 27, 2010

Populism: Just Like Racism!

It’s easy to see why politicians would be drawn to the populist pose. First, it makes everything so simple. The economic crisis was caused by a complex web of factors, including global imbalances caused by the rise of China. But with the populist narrative, you can just blame Goldman Sachs.

Normally one would have to be in the grip of a narcissistic psychosis to think that a columnist for the New York Times has written an article for your personal benefit. But after his latest article in the Times, in which he compares the “populism” of people who “blame Goldman Sachs” with exactly the sort of racist elitism I ripped him for last week, I think David Brooks might be trying to talk to me.

I think that’s at least part of what’s going on in his latest column, which is odd. If I were in his position, I probably would have punched me in the nose for the shot I took at him last week, but the response of David Brooks to being called out as a racist weenie is to write a passionate defense of the rich, one that includes the admonition that while blaming the wealthy is easy and feels fun, truly wise men should “tolerate the excesses of traders.”

I don’t want to get into the position of fixating on one guy for personal reasons. Obviously I’ve done too much of that with Brooks already, and I absolutely promise to give that part of it a rest for a good long while after this.

But leaving aside any discussion of Brooks the human being, this latest column of his is something that has to be discussed. The propagandistic argument he makes about the dangers of “populism”  is spelled out here as clearly as you’ll ever see it expressed in print, and this exact thing is a key reason why so much of the corruption that went on on Wall Street in the past few decades was allowed to spread unchecked.

That’s because this argument is tacitly accepted by almost everyone in our business, and most particularly is internalized in the thinking of most newspaper editors and TV news producers, who over time develop an ingrained habitual fear of publishing material that seems hysterical or angry.

This certainly has an effect on the content of news reporting, but perhaps even more importantly, it impacts the tone of news coverage, where outrages are covered without outrage, and stories that are not particularly “balanced” in reality — stories that for instance are quite plainly about one group of people screwing another group of people — become transformed into cool, “objective” news stories in which both the plainly bogus version of events and the real and infuriating version are given equal weight.

Brooks lays out the crux of his case his case in his first three grafs of his article:

Politics, some believe, is the organization of hatreds.

The people who try to divide society on the basis of ethnicity we call racists. The people who try to divide it on the basis of religion we call sectarians. The people who try to divide it on the basis of social class we call either populists or elitists.

These two attitudes — populism and elitism — seem different, but they’re really mirror images of one another. They both assume a country fundamentally divided. They both describe politics as a class struggle between the enlightened and the corrupt, the pure and the betrayers.

Both attitudes will always be with us, but these days populism is in vogue. The Republicans have their populists. Sarah Palin has been known to divide the country between the real Americans and the cultural elites. And the Democrats have their populists. Since the defeat in Massachusetts, many Democrats have apparently decided that their party has to mimic the rhetoric of John Edwards’s presidential campaign. They’ve taken to dividing the country into two supposedly separate groups — real Americans who live on Main Street and the insidious interests of Wall Street.

Now, there’s bullshit all up and down this lede. The first lie he tells involves describing everyone who is a critic of Wall Street as a populist. It’s sort of a syllogism he’s getting into here:

All people who criticize Wall Street are populists.

All populists think of themselves as enlightened and pure, and are primarily interested in dividing society, the same way racists do.

Therefore, all people who criticize Wall Street are primarily interested in dividing society, just like racists.

This is obnoxious on so many levels it’s almost difficult to know where to start. As for the populism label, let me quote the Alison Porchnik character from Annie Hall (Woody’s first wife, in the movie): “I love being reduced to a cultural stereotype.”

Brooks here is trying to say that by criticizing, say, Goldman Sachs for mass thievery — criticizing a bank for selling billions of dollars worth of worthless subprime mortgage-backed securities mismarked as investment grade deals, for getting the taxpayer to pay them 100 cents on the dollar for their billions in crap investments with AIG, for forcing hundreds of millions of people to pay inflated gas and food prices when they manipulated the commodities market and helped  push oil to a preposterous $149 a barrel, and for paying massive bonuses after receiving billions upon billions in public support even beyond the TARP — that in criticizing the bank for doing these things, people like me are primarily interested in being divisive and “organizing hatreds.”

He is also saying that by making these criticisms, people like me are by implication making statements about our own moral purity and enlightenment relative to others. He goes on:

It’s easy to see why politicians would be drawn to the populist pose. First, it makes everything so simple. The economic crisis was caused by a complex web of factors, including global imbalances caused by the rise of China. But with the populist narrative, you can just blame Goldman Sachs.

Second, it absolves voters of responsibility for their problems. Over the past few years, many investment bankers behaved like idiots, but so did average Americans, racking up unprecedented levels of personal debt. With the populist narrative, you can accuse the former and absolve the latter.

Stuff like this makes me want to scream. If I’m writing about a bank that took a half-billion worth of mortgages where the average amount of equity in the home was less than 1%, and where 58% of the mortgages had no documentation, and then sold those mortgage-backed securities as investment-grade opportunities to pensions and other suckers — and then bet against the same kind of stuff they were enthusiastically selling to other people — is Brooks seriously suggesting that I also have to point out that the Chinese economy was doing well at the time?

Yeah, okay, the rise of China is a factor in the overall decline of the American economy, but it has nothing to do with the Goldman story, which is a specific crime story about a specific bank. If I’m writing about a gang of car thieves, what, we’re supposed to also mention that the endive crop was weak in that part of the country that year? What the fuck? And this whole business about how criticizing Goldman absolves voters — Jesus, how primitive can you get? Using that logic, criticizing anyone for anything is invalid:

ME: Well, Ike Turner was sort of a dick because he used to get high and punch his wife in the face all the time…

BROOKS: But it’s so easy to say that.

ME: It’s easy to say that a guy who punches his wife in the face is a jerk? (Scratching head) Well… I guess you’re right about that. Would you like me to say it while juggling three chainsaws? Would it be harder to say then, and would you have less of a problem with it?

BROOKS: But by criticizing Ike Turner, you’re absolving all the people who do other bad things. Like purse-snatchers in Central Park, and those kids who keyed my Lexus, and all those baseball players who took steroids! Rafael Palmeiro lied to congress! What about them?

ME: Dude, are you okay? Your pupils look dilated.

BROOKS: You’re absolving Mark McGwire! The single-season home run record is a fraud!

ME: (backing away slowly toward the door) Okay, yeah, sure. Listen, I’ll catch up with you later, okay? I’ve got to return some videotapes.

And so on. The entire argument is literally this nonsensical. If Brooks disagrees with criticism of banks like Goldman, he has a fantastic platform to point out where those criticisms are incorrect. The best platform there is, in fact. But not only does he not go in that direction, he does just the opposite — he concedes that these criticisms are basically true, and chooses instead to argue against the wisdom of making those criticisms, apparently because “bashing the rich” will make them less inclined to “channel opportunity to new groups.” The emphasis in this next excerpt is mine:

So it’s easy to see the seductiveness of populism. Nonetheless, it nearly always fails. The history of populism, going back to William Jennings Bryan, is generally a history of defeat.

That’s because voters aren’t as stupid as the populists imagine. Voters are capable of holding two ideas in their heads at one time: First, that the rich and the powerful do rig the game in their own favor; and second, that simply bashing the rich and the powerful will still not solve the country’s problems.

Political populists never get that second point. They can’t seem to grasp that a politics based on punishing the elites won’t produce a better-educated work force, more investment, more innovation or any of the other things required for progress and growth.

In fact, this country was built by anti-populists. It was built by people like Alexander Hamilton and Abraham Lincoln who rejected the idea that the national economy is fundamentally divided along class lines. They rejected the zero-sum mentality that is at the heart of populism, the belief that economics is a struggle over finite spoils. Instead, they believed in a united national economy — one interlocking system of labor, trade and investment.

Hamilton championed capital markets and Lincoln championed banks, not because they loved traders and bankers. They did it because they knew a vibrant capitalist economy would maximize opportunity for poor boys like themselves. They were willing to tolerate the excesses of traders because they understood that no institution is more likely to channel opportunity to new groups and new people than vigorous financial markets.

What’s so ironic about this is that Brooks, in arguing against class warfare, and trying to present himself as someone who is above making class distinctions, is making an argument based entirely on the notion that there is an lower class and an upper class and that the one should go easy on the other because the best hope for collective prosperity is the rich creating wealth for all. This is the same Randian bullshit that we’ve been hearing from people like Brooks for ages and its entire premise is really revolting and insulting — this idea that the way society works is that the productive ” rich” feed the needy “poor,” and that any attempt by the latter to punish the former for “excesses” might inspire Atlas to Shrug his way out of town and leave the helpless poor on their own to starve.

That’s basically Brooks’s entire argument here. Yes, the rich and powerful do rig the game in their own favor, and yes, they are guilty of “excesses” — but fucking deal with it, if you want to eat.

And the really funny thing about Brooks’s take on populists… I mean, I’m a member of the same Yuppie upper class that Brooks belongs to. I can’t speak for the other “populists” that Brooks might be referring to, but in my case for sure, my attitude toward the likes of Lloyd Blankfein and Hank Paulson has nothing to do with class anger.

I don’t hate these guys because they’re rich and went to fancy private schools. Hell, I’m rich and went to a fancy private school. I look at these people as my cultural peers and what angers me about them is that, with many coming from backgrounds similar to mine, these guys chose to go into a life of crime and did so in a way that is going to fuck things up for everyone, rich and poor, for a generation.

Their decision to rig the markets for their own benefit is going to cause other countries to completely lose confidence in the American economy, it will impact the dollar, and ultimately will make all of us involuntary debtors to whichever state we end up having to borrow from to bail these crimes out.

And from my perspective, what makes these guys more compelling as a journalistic subject than, say, the individual homeowner who took on too much debt is a thing that has nothing to do with class, not directly, anyway. It’s that their “excesses” exist in a nexus of political and economic connections that makes them very difficult to police.

We have at least some way of dealing with the average guy who doesn’t pay his debts — in fact our government has shown remarkable efficiency in passing laws like the bankruptcy bill that attack that particular problem, and of course certain banks always have the option of not lending that money (and I won’t even get into the many different ways that the banks themselves bear responsibility for all the easy credit that was handed out in recent years).

But the kinds of things that went on at Goldman and other investment banks, in many cases there are not even laws on the books to deal with these things. In some cases what we’re talking about is the highly complicated merger of crime and policy, of stealing and government, which is both fascinating from a journalistic point of view and ought to be terrifying from the point of view of any citizen, rich or poor.

And even if I were to accept the Brooksian view of an upper class that must be looked to to fix things and take care of the lower classes and create the needed wealth to help us escape our economic crisis, the whole point is that this upper class he is talking about has abdicated that very responsibility — and, perhaps having reached the cynical conclusion that our society is not worth saving, has taken on a new mission that involves not creating wealth for all but simply absconding with whatever wealth is remaining.

It’s not pessimism or “combative divisiveness” to talk about these problems and insist that they get fixed. On the contrary, it’s a very positive view of what citizenship is to believe that everyone has a real role in fixing his country’s problems, and that when we identify problems, we should try to do something about them because we might actually succeed.

On the other hand, telling oneself that when powerful people “rig the game” one should just tolerate it, because one’s best hope for seeing the situation fixed rests in hoping those same powerful people fix it themselves — I would describe that as pessimism, or something worse than pessimism. The whole point of America is that we are all supposed to be our own masters, never viewing anyone as being by birth or situation inherently better or more capable than ourselves, and so the notion of relying upon some nebulous class of investment bankers to “channel opportunity” from on high strikes me as being un-American.

And besides, the fact that a lot of these guys have made a lot of money recently doesn’t make them “upper class.” They’re the same assholes we all were in high school and college, except that they made some very particular moral choices in adulthood, and became criminals, and have now arranged things so that they’re going to be tough as hell to catch. And when they fall, which a lot of them will… I mean a lot of these guys are ten seconds from losing it all and spending the next ten years working the laundry room at Danbury or pushing shopping carts under the FDR expressway. And they know it. These people aren’t the nobility. They’re people just like us, only stupider and less ashamed of themselves.

That’s not a class story. It’s a crime story, and it doesn’t have a damn thing to do with China.


  1. boomerangcomesbackFebruary 1, 2010 at 2:21 PM

    The Lord says, "Vengeance is mine", and that is fine. And I ain't a gonna argue with Him a bit.

    However, I can take solace and some satisfaction in that "karma" might get up to speed slowly, but when when it gets rolling, it catches up in a hurry, and can and will steamroll right over the non-believers.

  2. If we take the Media circus and dysfuntional population out of the equation we have a Mafia and a bunch of Irish cops.

    The real gangsters are the judical system and the enablers in Congress. I can expect the Wallstreet/Corporates to act like Capones.

    Elites are as dysfunctional as the plebes they rape.
    I just think the playing field ought to be level on crime and not to the highest bidder.

    I'm happy to be a populist and OK with elites. I just don't want them making policy or laws.

  3. Nice article. Valid. But -

    "punishing the elites won’t produce a better-educated work force, more investment, more innovation or any of the other things required for progress and growth."

    Think again. Bash the Rothschilds-Rocjefellers hard enough, and see the difference it will make.

  4. I found the article in need of an was hard sometimes to determine if he was quoting a position by the elite-excusers, or making a statement himself.

    Since Taibbi clearly describes most of these activities as criminal, punishment certainly seems in order.