Tuesday, January 25, 2011

Wall Street Values or American Values

Both films have just been nominated for Best Picture Oscars. I have not seen either of them. That tells you more about my movie-going habits than about the value of the films.

Last Sunday Frank Rich opined about how “True Grit” and “The Social Network” depicted two different sets of values and thus, two different Americas. Link here.

Some will find it strange, but I think that Rich was correct to see “The Social Network” as a reflection of the world that brought us the financial crisis and “True Grit” as an exemplar of a lost America that values loyalty, perseverance, and honor.

From having once been a dogged defender of the counterculture, Frank Rich has lately been turning toward a better set of cultural values.

I have mentioned his pivot before, and I think it is important to recognize it.

I have not been an admirer of Frank Rich-- though I have always recognized that he writes well-- but when a Times columnist takes up themes that have usually belonged to those on the other side of the culture wars, we should take notice.

Rich argues that the values of frontier justice and loyalty that define “True Grit” are a welcome respite from the Wall Street values that have nearly led the nation to financial rack and ruin.

In his words: “That kind of legal and moral cost-accounting seems as distant as a tintype now. The new 'True Grit' lands in an America that’s still not recovered from a crash where many of the reckless perpetrators of economic mayhem deflected any accountability and merely moved on to the next bubble, gamble or ethically dubious backroom deal. When Americans think of the law these days, they often think of a system that can easily be gamed by the rich and the powerful, starting with those who pillaged Lehman Brothers, A.I.G. and Citigroup and left taxpayers, shareholders and pensioners in the dust. A virtuous soul like Mattie would be crushed in a contemporary gold rush even if (or especially if) she fought back with the kind of civil action so prized by the 19th-century Mattie.”

It almost makes you think that Frank Rich is joining the Tea Party.

Keep in mind, as we rarely do, that the people who were running the financial system into the ground were for the most part Ivy League educated Democrats.

The heads of Fannie Mae and Freddie Mac, the heads of Citigroup and most Wall Street investment banks, the chairman of the New York Fed… all of them were Democrats.

Let us not forget the congerie of white shoe lawyers, government regulators, private auditors, and media enablers. Given that they were mostly living in Manhattan and Washington, D. C., and mostly over-educated, nearly all of them were Ivy League educated Democrats.

Wall Street money flowed like water into the campaign coffers of Barack Obama and Hillary Clinton. A few dollars were offered to Republicans in the last presidential cycle, but most of the Goldman Sachs money went to Democrats.

Today, Wall Street has been disgruntled with Obama, but the administration is doing its darndest to kiss and make up.

And they may well succeed. Unless the bankers and lawyers begin to understand that they were duped by Obama the last time, they will set themselves up to be duped again.

As I said yesterday, shame on them.

Frank Rich is right to see Wall Street, whether bankers, lawyers, or regulators, as a world where loyalty counted for nothing and where predatory capitalism was the rage.

He is also correct to argue that Wall Street became more like what we think of as the primitive Wild West than the world of “True Grit.”

Wall Street became more of a free-for-all, dog-eat-dog world than the one inhabited by Rooster Cogburn.

But if Wall Street did not become a Wild West show by emulating traditional, American frontier values… where did it go to school to learn these things? It didn‘t learn them from the Tea Party.

As I suggested above, Wall Street’s Masters of the Universe honed their skills and learned their values in the Ivy League.

In truth, and it is not a secret, Ivy League professors have, for quite some time now, been implacable foes of capitalism. Most of them think that the Democratic party is a right wing organization.

More important is the way they teach capitalism, not so much within economics departments, which are often fair and balanced, but within the Humanities.

There, critical theorists portray capitalism as a predatory, oppressive system that sucks the lifeblood out of the economy to line the pockets of the capitalists themselves.

Call it vampire capitalism, if you like, but when the products of these universities alight on Wall Street, they play the game the way they have been taught.

As they do so, they manipulate the system for their advantage. Protected by the endless machinations of government and the legal profession, they usually escape justice.

As Rich puts it: “When Americans think of the law these days, they often think of a system that can easily be gamed by the rich and the powerful, starting with those who pillaged Lehman Brothers, A.I.G. and Citigroup and left taxpayers, shareholders and pensioners in the dust.

“While ‘Social Network‘” fictionalizes Mark Zuckerberg, it mines the truth of an era — from the ability of the powerful and privileged to manipulate the system to the collapse of loyalty as a prized American virtue at the top of that economic pyramid.”

Enter the Tea Party…

But Rooster Cogburn does not just embody frontier justice. He also typifies, to paraphrase Rich, the values of prudence, perseverance, modesty, and benevolence.

The Ivy League does not teach these things. It is far more likely to teach that the Protestant work ethic is outmoded, declasse, demode, oppressive and repressive of everything that is valuable… like following your bliss and expressing your deep feelings of greed.

As I suggested, Rich sees Wall Street as more like Harvard than the Wild West. He is performing a very deft rhetorical pirouette here, but he is saying that values that people attack as belonging to the Wild West are not really Wild West-- read that, Tea Party-- values. They are somehow being taught and inculcated in places like Harvard.

In Rich’s words: “While ‘Social Network‘ fictionalizes Mark Zuckerberg, it mines the truth of an era — from the ability of the powerful and privileged to manipulate the system to the collapse of loyalty as a prized American virtue at the top of that economic pyramid.

“In ‘Social Network,’ the landscape is Cambridge, Mass., but we might as well be in the pre-civilized Wild West. Instead of thieves bearing guns, we have thieves bearing depositions. Instead of actual assassinations, we have character assassinations by blog post. In place of an honorable social code, we have a social network presided over by a post-adolescent billionaire whose business card reads ‘I’m CEO ... Bitch!’”

I am amused to see Rich calling Cambridge, Mass. a “pre-civilized” world.

Today, with everyone and his brother is calling for a return to civility, it is useful to understand that Ivy League values, those that favor creativity, spontaneity, impulsiveness, and charisma are promoting a return to barbarism.

For example, you would have difficulty getting through too many Humanities courses without reading Freud’s  "Civilization and its Discontents.” Even though the book has no real interest to mental health practitioners, it still stands tall for being an unabashed attack on human civilization. It’s thesis is that civilization is built on a foundation of repressed libido.

We don't need any more of the kinds of values that are embodied in "The Social Network," Frank Rich says. What we really need is: “an honorable social code.” I couldn’t have said it better myself, even if I have been trying to do so for more than a few years now.

12 comments:

The Ghost said...

I would point out that part way thru the original True Grit Rooster Cogburn admitted to Mattie that earlier in his life he had "liberated" some large sums of money from paymasters and banks to establish some seed money for setting himself up.

I can't beleive that Mr. Rich has ever actually worked on "Wall Street". Becasue if you did you would not so easily paint all of the denizens of Wall Street with such a wide and wet brush of ethical shortcomings.

I'm sorry but what industry have you worked in that did not include cheats, thevies and morally bankrupt individuals ?

This wailing about "Wall Street" ethics is just a fact deficient screed against the crisis while trying to scapegoat somebody, anybody for it.

What some call Wall Street Greed is simply the icing on the cake of Main Street Greed. Who do you think took out all of those subprime loans for houses they couldn't afford ? It wasn't Wall Street bankers or traders.

Does Mr. Rich even know what finacial instruments brought down Lehman Brothers which precipitaed much of the crisis ? Well, it wasn't Mortgage Backed securities or derivatives based on anything to do with housing.

I have worked for or with "Wall Street" firms since 1985 after leaving the US Navy as an officer and am a 1980 graduate of USNA and I can tell you that I would put the real ethics and morals of the workers on Wall Street up against any industry or profession for comparison.

This is simply the demonizing of capitalists for the benefit of socialists.

Stuart Schneiderman said...

Actually, I did change some of the focus here. I did mention that the crisis seemed to have been caused by a nexus of bankers, lawyers, bureaucrats, regulators, and media enablers. To say nothing of Fannie Mae and Freddie Mac.

I have also been led to understand that the losses of the banks and the agencies have effectively been socialized?

And I had also understood that the banks the went down did so because they took out 30-1 leverage, or something like it, on mortgage backed securities. Add in the Credit default swaps that were written against these mortgages and you had a formula for disaster.

I do not know about Frank Rich, but that is the way it was all explained to me. It does not place all of the blame with the bankers... but it required the collusion of the others I mentioned.

That did not feel very prudent to me at the time. And I know many bankers who did not think it prudent either.

Anyway, I and a lot of other people would appreciate it if you would explain to us what brought about the crisis if it was not the Ivy League educated Democrats who ran all of these operations and who are currently hard at work blaming it all on the Bush administration.

David said...

I don't know any of the Facebook principals, but I do know quite a few venture founders/CEOs and venture capitalists, and the group includes many high-integrity individuals.

As a general matter, I do think the emphasis on educational credentials (especially Ivy League credentials and advanced degrees) and on theoretical knowledge rather than experience has contributed to the problem in a big way. MBAs with IQs of 130, advised by PhDs with IQs of 145, made mistakes that would not have been made by old-line loan officers with IQs of 115.

The thing that is going to make it very difficult for us to ever get out of economic stagnation is the increasing nexus between economic success and political power. We are in grave danger of creating a situation in which it can truly be said that "All business is just dirty politics and all politics is just dirty business." See my post the accidental eloquence of mrs rearden.

Anonymous said...

TO: All
RE: So....

....Frank Rich wants an 'honorable social code', eh?

I know of one that is millennia old. And I'll bet dollars to donuts that if you mention it to him, he'll shrink back like a vampire confronted with a crucifix.

Regards,

Chuck(le)
P.S. If we did a root-cause analysis of this mess, we'd find the real source of all our problems. But people wouldn't want to hear it. And we were warned about this....long ago....

Retriever said...

Well, Stuart, my objection to your review is simply that Zuckerman in no way represents the Ivy League. He's just a particularly loathsome type, and perhaps the most succesful one recently. But dismissing the Ivy League because of him is like saying that Princeton is dreadful because that creepy MO went there.

I reviewed the Social Network as well,http://artemisretriever.blogspot.com/2011/01/social-network.html mostly just disgusted by the picture it painted of Harvard, my alma mater. Naive as it may sound, I went there in pursuit of knowledge, with no interest in making money or wielding great power or influence. I took the motto seriously "Veritas". My family have gone there since it was founded (New England WASPs), and have kept out of the limelight, serving as academics, ministers, businessmen, doctors,inventors, in the service in wartime, writers, farmers, etc. My kids don't go there: one too young, one at Princeton, another at our state college. We were appalled by the anti-military and PC bias of Harvard when we were visiting. But the picture in the Social Network was painful for someone like myself to watch as there were still admirable people, devoted scholars and students who were gentlemen at Harvard when I went there (I married one, tho I didn't meet him til 9 years later!).

I also have to somewhat agree with David that tho there have been flagrant examples of corruption on Wall St., I know plenty of highly ethical people who have worked there (my spouse amongst them, in former years, tho he is disillusioned with much going on there now).

I don't mean to sound sharp, tho, as your comparison is an interesting one. It is simply that those of us Harvard grads who are patriotic Americans are not all greedy plutocrats, do not all live off the sufferings and exploitation of others' weakneses, and many of us have quite humdrum middle class lives. Many of us are frugal New Englanders who live in extremely modest houses, just spend far more on books and our hobbies perhaps than most.

Anonymous said...

Ugh... Frank Rich....

His picture, next to his by-line, looks like a coprophagic worm. He truly looks like something that would crawl out from under a rock. Blecch.

True Grit is the last movie in the world that needed to be remade. C'mon, The Duke....

They might as well remake "Treasure of the Sierra Madres" where Fred C. Dobbs steals the money and gives it to the poor.

--Gray

wv: Wallodi. Where my Magyar Wampyr ancestors came from.

Stuart Schneiderman said...

Of course, I did not in any way mean to malign everyone who has gone to an Ivy League school-- I went to Brown.

I'm a bit surprised at the reaction because the nation has spent the past couple of years debating whether the citizens or the educated elites should be making the decisions. And today's educated elites, the kind who go to Ivy League colleges, do not just think that they should be deciding, but they are making decisions as a function of their having been indoctrinated in political correctness.

To me it is worth considering the role of political correctness in the financial crisis. The people who run the government institutions, the financial institutions, the media and the legal profession were steeped in political correctness. Doesn't it make sense to see their actions as having in some way been influenced by what they learned in college? Doesn't it make some sense to point out that many of them are Democrats...

If I had said that there was a culture war between Tea Party patriots like Sarah Palin and Harvard elitists like Barack Obama and his cronies, and that a Frank Rich had declared himself to favor the Palin perspective, you would probably be surprised, incredulous, and somewhat pleased. You might even want to encourage him.

That's pretty much what I tried to say. When we were all criticizing the Obama administration for being elitist and for relying on people with credentials and for not trusting the good judgment of the American people, most people seemed to feel that that was a valid point.

If Rich were a politician, I would say about him what I said about Obama a couple of days ago... it is not a good idea to trust such a radical conversion.

Yet, when a prominent defender of the counterculture, a man who has attacked 50s values and even Tea Party values, seems to be moving in a more congenial direction, I think that the rest of us should accept it... because it is going to exercise a certain amount of cultural influence.

No, I do not think that Frank Rich will become a Tea Party activist, but I am trying to track a culture shift through some seemingly imperceptible movements in opinion leaders.

David said...

"Wall Street" is the easiest target in the world. I suspect that if an Ivy League graduate goes to work for a "nonprofit," pushing for regulations that make it much harder for people to start new enterprises...or a law firm, profiting from litigation that destroys businesses...Frank Rich would view this as a noble action in the spirit of Rooster Cogburn.

Stuart Schneiderman said...

I think you're right, David. In all likelihood Rich would cheer on people who made it their business to regulate business.

And yet, what do you make of his line about "thieves with depositions?" Doesn't that suggest a critique of the negative role lawyers play in business and the sense that they are not enforcing the rule of law as much as getting their take.

I don't know that this would make Rich a supporter of tort reform, but I certainly think that someone who supports tort reform would describe the trial lawyers bar as "thieves with depositions."

Retriever said...

The issue on Wall St is not political correctness except to the degree the dishonest don it to suck up to the current Administration. Their wives may be limousine liberals (I live in a suburb full of them).

There has been theft qnd corruption on a grand scale, but it's not fair to dismiss all Wall Streeters.

But stories like this don't help:
http://m.theatlantic.com/business/archive/2011/01/e-mails-show-bear-stearns-cheated-clients-out-of-billions/70128/

My family used to say with surprise "But he's honest" when they met my spouse, because of the scum in the news about Wall St. I'd argue that the same hatred of Harvard grads stems from the obnoxious behavior of the most visible ones.

Pls excuse any cellphone typos (snowstorm here)

Stuart Schneiderman said...

I hope I didn't suggest that everyone on Wall Street was living by the wrong values. Clearly, some are, or I should say, enough are in order to have created some very large problems. The story you link from the Atlantic is frightening, because it does seem to represent some level of systematic fraud.

Thanks for pointing out that many of the wives of Wall Street's elites are limousine liberals. Are the people who are gaming the financial system and cheating investors, as the Atlantic piece explains, really capitalists? Are they really upholding the ethical standards that defined Wall Street or are they an aberration created by an educational establishment that never really understood or respected Wall Street?

Mike C said...

Stuart,

Good post. You are the on the right track here. I don't have the time to write an exposition here, but bottom line the banksters/financial elite own the system.

Hank Paulson. Former Secretary of the Treasury and architect of the bailout. He was a former Goldmans Sach CEO.

AIG which required a government bailout to "save the system". They needed the bailout to make good on derivatives obligations. Guess who the counterparty was? Goldman Sachs. Essentially, taxpayer money was funneled to Goldman Sachs so they wouldn't have to eat the loss.

I could go on an on an on and on. There is a movie I am looking forward to seeing, Inside Job

http://www.imdb.com/title/tt1645089/

I am not 100% sure on this, but I've read and heard that certain interests were instrumental in keeping this from being shown in the theaters on a widespread basis. Ignorance is bliss. It is in the interests of the banksters and financial elite to keep the masses dumb and ignorant.

Here are a couple of good blogs that get into this:

http://www.ritholtz.com/blog/2011/01/fcic-what-caused-the-financial-crisis/

http://jessescrossroadscafe.blogspot.com/2011/01/one-reaction-to-obama-state-of-union.html

I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.

Thomas Jefferson, (Attributed)
3rd president of US (1743 - 1826)