Wednesday, June 23, 2010

Cowboys and Tea Parties

Americans worship the individual. The ideal of the self-sufficient man is embodied in Westerns. In countless films a lone cowboy rides into town to save the townspeople from some menace. Once the job is done, the cowboy then rides back out into the wilderness alone. He has only disdain for the townspeople’s rules and social order.

It occurred to me one day that we should instead revere the townspeople who did the hard work of building a functional society out on the frontier. They figured out how to work together, how to build schools and roads, and how to govern themselves. Being an individual is easy. Building a community is hard.

Modern America is a long way from the frontier, yet many Americans still hold the image of themselves as that lone cowboy, not dependent upon the social order.

Societies exist on a continuum between extreme collectivism and extreme individualism. China is an example of the former, and the U.S. is an example of the latter. Other countries such as European nations and Canada exist somewhere in between those two extremes. They have a much stronger sense of the society-as-a-whole, an entity that is greater than just the sum of its parts.

This worship of the individual is why we don’t have universal health care and all the other social safety nets common in other developed countries. Most Americans think people should be responsible for themselves, not dependent upon the government to help them out.

Last week there was a very interesting blog post in the New York Times by J.M. Bernstein, University Distinguished Professor of Philosophy at the New School for Social Research, “The Very Angry Tea Party.”

My hypothesis is that what all the events precipitating the Tea Party movement share is that they demonstrated, emphatically and unconditionally, the depths of the absolute dependence of us all on government action, and in so doing they undermined the deeply held fiction of individual autonomy and self-sufficiency that are intrinsic parts of Americans’ collective self-understanding.

The implicit bargain that many Americans struck with the state institutions supporting modern life is that they would be politically acceptable only to the degree to which they remained invisible, and that for all intents and purposes each citizen could continue to believe that she was sovereign over her life; she would, of course, pay taxes, use the roads and schools, receive Medicare and Social Security, but only so long as these could be perceived not as radical dependencies, but simply as the conditions for leading an autonomous and self-sufficient life. Recent events have left that bargain in tatters.

…Tea Party anger is, at bottom, metaphysical, not political: what has been undone by the economic crisis is the belief that each individual is metaphysically self-sufficient, that one’s very standing and being as a rational agent owes nothing to other individuals or institutions.

…This is the rage and anger I hear in the Tea Party movement; it is the sound of jilted lovers furious that the other — the anonymous blob called simply “government” — has suddenly let them down, suddenly made clear that they are dependent and limited beings, suddenly revealed them as vulnerable. And just as in love, the one-sided reminder of dependence is experienced as an injury. All the rhetoric of self-sufficiency, all the grand talk of wanting to be left alone is just the hollow insistence of the bereft lover that she can and will survive without her beloved. However, in political life, unlike love, there are no second marriages; we have only the one partner, and although we can rework our relationship, nothing can remove the actuality of dependence.

In politics, the idea of divorce is the idea of revolution. The Tea Party rhetoric of taking back the country is no accident: since they repudiate the conditions of dependency that have made their and our lives possible, they can only imagine freedom as a new beginning, starting from scratch. About this imaginary, Mark Lilla was right: it corresponds to no political vision, no political reality. The great and inspiring metaphysical fantasy of independence and freedom is simply a fantasy of destruction.

Monday, June 14, 2010

Socialized Risk, Privatized Reward

William Cohan, in his New York Times blog makes the same connection I did in my blog entry "Time For a Progressive Leader" below, and in particular the destructive effects of the structure of corporations. No personal liability, no concerns: "The problem is that the corporate veil protects the decision makers from the consequences of their decisions and, accordingly, they are encouraged to take asymmetrical risks — huge paydays for them if everything works out; huge consequences for us if they don’t."

What these two disasters — one financial, the other environmental — prove beyond a shadow of a doubt is that the right incentives no longer exist to get corporate executives to do what they should want to do, and what they must do, to prevent such calamities from happening. The “corporation,” as a legal entity, is very good at attracting capital, providing jobs, maintaining a focus on profitability, creating wealth for the people who work there (especially at the top). It is also very good at shielding executives and boards of directors from liability for their poor own decision-making.

What these two crises reveal is that some corporations and their leaders aren’t very good at making decisions that take full account of the risks they and their companies are taking. It is a truism that human beings do what they are rewarded to do. But the corporate structure these days rewards bad behavior. The problem is that the corporate veil protects the decision makers from the consequences of their decisions and, accordingly, they are encouraged to take asymmetrical risks — huge paydays for them if everything works out; huge consequences for us if they don’t. As Senator Christopher Dodd correctly said in April 2008, during the first Senate hearing about the unfolding financial crisis, “We’ve socialized risk and we’ve privatized reward.”

Unfortunately, the financial reform legislation that Senator Dodd and his colleagues are working so hard on to make law does nothing to change that dynamic. Nowhere in the approximately 1,500 pages of the proposed bill is there anything about making Wall Street executives financially and legally liable for their decisions, as they once were when Wall Street was a series of private partnerships and a partner’s entire net worth was on the line every day. Talk about accountability! But that ethic was lost 40 years ago when Donaldson, Lufkin & Jenrette went public and the rest of Wall Street followed soon thereafter.

As a result, our financial crises come fast and furious these days, since Wall Street bankers and traders get rewarded for selling, and generating revenue, not for worrying about what they create. The time has come for actions to have consequences. You can be sure that if Jimmy Cayne, the former C.E.O. of Bear Stearns, or Dick Fuld, the former C.E.O. of Lehman Brothers, had their entire net-worth on the line every day instead of being able to gamble with the house’s money, they would have been much more focused on the risks their firms were taking.

Monday, June 7, 2010

Time for a Progressive Leader

Last Thursday I watched Rachel Maddow’s show (she has gotten more serious and watchable lately). She has been doing some interesting and detailed coverage of the BP oil spill diaster. This night she commented how the 1989 Valdez accident didn’t break ExxonMobil—in fact in 2009 Exxon was the most profitable company ever. In 2009 the 5 most profitable countries in the world were all oil companies.

Eighteen months after the disaster the financial industry created they are back to staggeringly huge profits and bonuses.

Just as the bankers cared nothing about ordinary people and their retirement accounts and mortgages, thinking only of their profits, so the oil companies care nothing about safety or the environment but only about their profits.

Is this a connection that could be made in people’s minds, of the unthinking impersonal nature of the corporate business model that is incredibly destructive? This seems to me a perfect time for a progressive leader to emerge who could speak of a new way, a new model that has humanity as its central focus, not profit. Why are all the loudest voices the regressive teapartiers?
The next day (6/4/10) I read Tom Toles' blog and he made the same connection:
So Eric Holder has announced both civil and CRIMINAL investigations regarding the oil spill. They'll be looking into FALSE STATEMENTS! CONSPIRACY! These things are apparently ILLEGAL NOW! Criminally so! So if you are picturing a crazed cartoonist perched atop a bookshelf (and you should be) ready to pounce on why these same things are “perfectly legal” when done by the financial sector, well here I go.

The pipeline of crude that Wall Street built ran right through America’s family room. Newly jobless mom and dad staggered out, covered in goo, just in time to watch their house slide into foreclosure. The wizards of finance didn’t even have the wherewithal to try a top kill or a junk shot or siphon hose or robot sub. THEIR top hats came off their heads and were held out directly to the government. But haven’t they paid their debt back? AS IF! Oil companies are expected to CLEAN UP and PAY DAMAGES. How many jobs were lost in the financial meltdown? Businesses ruined? Families devastated? Oh, but profits are BACK at the BANKS! Time for some BONUSES!

Don’t TELL me no laws were broken. I say it’s time for some prosecutorial work that is one-tenth as creative as the financial instruments the wizards devised.
Frank Rich made the same connection in his New York Times column a couple of days later, “Don’t Get Mad, Mr. President. Get Even.”
Americans are still seething at the bonus-grabbing titans of the bubble and at the public and private institutions that failed to police them. But rather than embrace a unifying vision that could ignite his presidency, Obama shies away from connecting the dots as forcefully and relentlessly as the facts and Americans’ anger demand.

BP’s recklessness is just the latest variation on a story we know by heart. The company’s heedless disregard of risk and lack of safeguards at Deepwater Horizon are all too reminiscent of the failures at Lehman Brothers, Citigroup and A.I.G., where the richly rewarded top executives often didn’t even understand the toxic financial products that would pollute and nearly topple the nation’s economy. BP’s reliance on bought-off politicians and lax, industry-captured regulators at the M.M.S. mirrors Wall Street’s cozy relationship with its indulgent overseers at the S.E.C., Federal Reserve and New York Fed — not to mention Massey Energy’s dependence on somnolent supervision from the Mine Safety and Health Administration.

Given Toyota’s recent game of Russian roulette with Americans’ safety and Anthem Blue Cross’s unconscionable insurance-rate increases in California, Obama shouldn’t have any problem riveting the country’s attention to this sorry saga. He has the field to himself, thanks to a political opposition whose hottest new star, Rand Paul, and most beloved gulf-state governor, Haley Barbour of Mississippi, both leapt to BP’s defense right after the rig exploded…

This all adds up to a Teddy Roosevelt pivot-point for Obama, who shares many of that president’s moral and intellectual convictions. But Obama can’t embrace his inner T.R. as long as he’s too in thrall to the supposed wisdom of the nation’s meritocracy, too willing to settle for incremental pragmatism as a goal, and too inhibited by the fine points of Washington policy debates to embrace bold words and bold action. If he is to wield the big stick of reform against BP and the other powerful interests that have ripped us off, he will have to tell the big story with no holds barred.
Obama is never going to make that pivot point. We need someone else to be that progressive leader.