Populist anger justified — again

UPDATE AT THE BOTTOM OF THE PAGE!!!

I know the readers of Cultural Capitol are probably sick of hearing me rant on this subject, and for your sake this will be my last post on the topic. The Editor has counseled moderation, and I know in my heart of hearts he’s right. But I can’t leave it without saying just this one more thing about the “popular” reaction to A. I. G.’s bonuses.

The A. I. G. bonuses have illuminated the populist fissure in both the Republican and the Democratic parties, but many people just can’t see it. Why? Our political sensibilities, when they work best, are about feelings. That is a good thing. The world is too complex to sort out every detail using rational cost-benefit analysis. That’s a part of our brain that takes very small problems and breaks them up into even smaller parts before making a decision. It’s fine for determining which on-sale item at the store is best to buy, but it fails miserably when we are confronted with human situations of massive complexity — like politics. In very complex situations we rely on our intuition — our emotions as they have been trained since birth — to tell us what to do. (This isn’t a ground breaking idea — it’s Malcolm Gladwell’s thesis in Blink.)

Passionate emotions have never had a very good reputation, especially after the scientific revolution. Emotion in the modern era has come to mean the opposite of intelligence or thought. Folks on the right claim to be clear-sighted because their eyes aren’t clouded by bleeding heart sympathies, and folks on the left think all folks on the right speak in tongues, handle snakes, think the earth is four thousand years old, and revel in the Old Testament vindictiveness of the Ann Coulter, Bill O’Reilley, and Rush Limbaugh crowd. I submit, however, that emotions are vital to a healthy society and its political processes. Rather than suppress emotion in our political process we must learn how to cultivate the right emotions, and we must learn how to use them at the right times. Like the good book says, “To every thing there is a season, and a time to every purpose under heaven.” Sometimes mercy is a virtue, and sometimes wrath is a virtue. Sometimes it is wise to be cool and collected; sometimes you need to be bold and strident.

American conservatives used to think this. Until six months ago their mantra was “be bold; stick to your guns.” Their ideological and electoral success was based on their ability to tap into the motivating emotions of their supporters. Limbaughs and O’Reilleys appealed to their listeners’ sense of justice and fair play, no matter how that was warped to selfish ends. Liberals wanted to repeat that success with Obama’s uplifting message “yes we can!” and it was appropriate to the time. I have admired Obama’s cool before. As a management style its a good idea — as  long as you have bulldogs working under you who know when to rip into their opponents without mercy. Unfortunately for the President, Tim Geithner is not that man. If he were, this A. I. G. fiasco would never have happened.

And let’s face it, these bankers are the opponents of democracy and proponents of plutocracy. They firmly believe in one dollar one vote (and you know what that means to those of us with less than a million dollars). Geithner is a money man, just like Hank Paulson and Edward Liddy. The fact that Geithner as head of the NY Fed sat down with Paulson and the CEO of Goldman Sachs last year and negotiated all this bailout business should be glaring proof that his interest is and always has been to protect the banks and bankers, and not to make banking fair. It is the entire banking culture that is corrupt and must be overhauled. It is not the work of a few bad apples, as most of the apologists wish it were. It is a culture that has been cultivated in its present form for nearly 30 years. This culture says that markets are endowed with god-like omniscience, that any government intervention is sacrilege, and that the priests of Capital must not be discouraged from their holy task of making us rich. Sadly for them, the market is a human creation, and no more or less above reproach than government or religion.

It is richly ironic that the same liberals who decried Abu Ghraib and the Republican culture of corruption would use the same inadequate excuse to let Obama and Geithner off the hook. As I said in my last post, it doesn’t matter if you were a banker or insurance broker with the best intentions and a spotless record. You worked in a culture that said it does not matter if someone gets hurt as long as a profit has been made. You benefited collaterally from that culture, even if you weren’t directly responsible for it. You are guilty for not cultivating a moral counter to that disaster waiting to happen. If you had, then maybe banks would be self-regulating. But you didn’t, and now it’s time for a correction. The innocent must be punished with the guilty until no banker will ever think it’s OK to redecorate their offices after taking a bailout.

So urbane letter writers to the Times, Joe Nocera, and the poor, put upon bankers can stick their blandishments and appeals to reason where the sun don’t shine. The time to let capital work its magic is over. The credit they destroyed is much more profound than the numbers on their balance sheets. To restore their credit — the faith of the public on which their riches were built — they must wear sackcloth and cover their head with ashes. As Charles Blow said in his Op-Ed, this is the necessary emotional catharsis that must happen before we trust the bankers again. There will be a necessary recalibration of our emotional intelligence. People will train their emotions to be sensitive to others’ needs instead of their own profit motive. And that will be a good thing.

UPDATE!!!

Isn’t this what I just said?

We must learn the painful lessons of A.I.G. and create laws, put in place procedures, and hire people who can clean up massive financial messes. The magic of the market will likely not get us out of this morass; we need a new Resolution Trust Corporation-type structure and we need it fast.

No, what I said was “The time to let capital work its magic is over. The credit they destroyed is much more profound than the numbers on their balance sheets. To restore their credit — the faith of the public on which their riches were built — they must wear sackcloth and cover their head with ashes.” The difference is Mr. Johnson is more polite than I am. But take a second to parse his statement. The “painful lessons of A.I.G.” are that bankers, if someone is not lookng over their shoulder, will make bad bets with other people’s (i.e. YOUR) money. When he says we have to “create laws, put in place procedures, and hire people who can clean up massive financial messes” he is saying the government — an institution given power of coersion by “the people” needs to do its job and force bankers to take their medicine. That means criminal prosecution of the fraudulent and dispossession of those investors who colluded in the stupidity without malice of forethought.