Ross Douthat says that yes, in some sense all of us are to blame for having gotten our collective ox in the ditch in this economy, but says that the American elite leadership class -- especially financial elites -- bears a disproportionate share of the burden. Excerpt:
So yes, the mistakes made at the top of the American economic and political pyramid might have been the same kind of mistakes made by people in the middle and the bottom, and might have been motivated by the same logic, and the same psychology. But they were made by people who had a far, far larger responsibility than the average American to be careful, and risk-averse and, dare one say it, wise ... by people who, for the most part, came from the upper rungs of the meritocracy, with advantages arguably unparalleled in the history of the world ... and thus by people whose risk-taking mistakes were worse than those made by the average homeowner or investor, because it should have been their business to be safer.I don't often plug my first book, Privilege, but I think it's worth mentioning here because when you read about how the American leadership class acquitted itself at Citibank, or on Wall Street in general, I think you can see the dark side of meritocracy at work - the same dark side that shadows an instititution like Harvard, where a job in investment banking became, for a time, the summum bonum of meritocratic life. The mistakes that our elites made, and that led us to this pass, have their roots in flaws common to all elites, in all times and places - hubris, arrogance, insulation from the costs of their decisions, and so forth. But they also have their roots in flaws that I think are somewhat more particular to this elite, and this time and place. Flaws like an overweening faith in technology's capacity to master contingency, a widespread assumption that the future doesn't have much to learn from the past, and above all a peculiar combination of smartest-guys-in-the-room entitlement (don't worry, we deserve to be moving millions of dollars around on the basis of totally speculative models, because we got really high SAT scores) and ferocious, grasping competitiveness (because making ten million dollars isn't enough if somebody else from your Ivy League class is making more!).
Please read the whole thing, because what Ross is saying is something that has become more apparent to me the older I've gotten, and the more I've thought about the way we live now. It's what separates my kind of conservative from the contemporary conservative mainstream. Most conservatives today, it seems to me, have no real connection to the past, or appreciation of its lessons. Nor do they believe that a serious respect for limits built into nature (human nature and the natural world) should guilde our actions. Some do, of course, but most don't. That makes them ... American.
Here's what I mean:
Sometimes readers write to ask why I seem so down on conservatives all the time, way more than on liberals. The answer is that as a general matter, I don't have high expectations of liberals, or to be precise, liberalism. They're wrong, but at least I find them reasonably consistent. To be a modern liberal is to be committed to the philosophical position that the past has nothing to do with us today (except, of course, when the past is a useful rhetorical device to deploy in advancing egalitarian goals, such as racial quotas). What I don't understand is conservatives who claim the name but whose actual beliefs are really a somewhat restrained form of liberalism. It's not that they stand athwart history yelling, "Stop!"; it's that they stand athwart history yelling, "Slow down!" Of course, Ross seems to have seen that too, in his withering TAC piece about the meaning of left and right today. Excerpt:
This unexpected triumph has meant that many people who became accustomed to calling themselves "conservatives" when the conquest of nature seemed to require socialism or Communism are back on board the Baconian train, racing happily down a different track into the brave new future. These are the people who insist that conservatism ought to mean "freedom from government interference" and nothing more -- the Grover Norquists of the world, for instance, or the Arnold Schwarzeneggers. In fact, they are ex-conservatives, because they are no longer sufficiently uncomfortable with the trajectory of modernity to be counted among its critics. They were unwilling to give up freedom for the sake of progress, but they're happy to give up virtue.The picture is further complicated by the fact that because conservatism only really exists to say "no" to whatever liberalism asks for next, it fights nearly all its battles on its enemy's terrain and rarely comes close to articulating a coherent set of values of its own. Liberalism has science and progress to pursue -- and ultimately immortality, the real goal but also the one that rarely dares to speak its name -- whereas conservatives have ... well, a host of goals most of them in tension with one another. ... Liberals, on the other hand, dream the same dream and envision the same destination, even if they disagree on exactly how to get there. It's the dream of Thomas Friedman as well as Karl Marx, as old as Babel and as young as the South Korean cloners. It whispered to us in Eden, and it whispers to us now: Ye shall be as gods. And no conservative dream, in the 400 years from Francis Bacon until now, has proven strong enough to stand in its way.
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And, of course, we are to assume that dear Ross is not one of those elites. Because he is Conservative.
Re: To be a conservative, as your repetitive citation of that Douthat bit shows, involves being willfully attached to principles of Creationism at most or all levels.
Al Christians (and Muslims and Jews and Sikhs and Hindus...) are creationists in some fasion. That does not mean that all Christians are literal Young Earth creationists or must reject scientific (as opposed to metaphysical) Darwinism. The major churches have made their peace with modern science. The American evangelical churches ought do likewise. The Bible was written not to tell us how we got here, but where we ought go from here.
Re: maryQ "And, of course, we are to assume that dear Ross is not one of those elites. Because he is Conservative."
No, Ross admits his Harvard leg up and that he does not deserve the deference his Ivy League degree provides him. It's his awareness of that fact that makes him unique. Being a conservative has nothing to do with it.
Unlike the Investment Banker wannabees tumbling headfirst into unemployment and out of Harvard and Wharton who having thought they walked on water may quickly drown in the sea of pedestrian non-utility.
I keep hearing all this about conservative philosophy, and then I look around at the actual issues that the left and the right disagree on and I wonder how this 'philosophy' leads to the logical viewpoint of the right on these issues. (And I hear crazy interpretations of liberal and progressive philosophy, but as I actually understand those, I don't worry about what sort of odd spin you've put on them.)
All too often the right seems to object to progressive things on the grounds they won't work. (Note here I'm mainly talking about the economic right vs. progressives, not the social right vs. liberals, which is a whole nother topic.)
Sometimes this is correct, for example, the great failure of Prohibition, which worked in what it was intending to do, but was an abject failure due to the unintended and unforeseen consequences. (Believe it or not, it was essentially to stop spousal abuse and other behaviors associated with 'drunkenness', and it mostly did. Although it started women and children drinking to a much greater extent, plus added violence. Laws actually against those behaviors, and societal changes, and liberalization of divorce laws and ability of women to survive on their own, mostly solved that problem.)
A current example would be government-paid health care. Now, health care might, indeed, be worse were the government to pay for it. But that's not a philosophical objection to health care. This is because, at some point, conservatives started thinking 'anti-government spending' was some sort of philosophy.
But as few voter actually think that way, and are perfectly willing to spend tax money on useful things, conservatives were forced to preemptively declare any government spending a failure to head it off at the pass. Because who wants to fund a failure?
This has resulted in a whole host of issues, such as mass transit, government-paid health care, homeless shelters, etc, as being rejected not for philosophical reasons, but because they are 'failures', despite other countries apparently doing fine with them. (Which is looking increasingly silly, BTW.)
You want to look at the economic right's failure, that's the cause of it, right there. For much too long you guys have been claiming not that progressivism is wrong, or a bad idea, or whatever, but simply that it fails.
In every debt here about health care, I spend hours trying to convince people of the obvious fact that, despite the flaws in any socialized system, they are all better than the US's actively-hostile-to-health-care health insurance system. The right has internalized this 'failure' concept so much that there is literally no other objection except the rather weak 'But people might abuse it' concept.
Whether something works or fails is not philosophical. It is not even debatable. It is an objective fact. At some point, all progressive proposals will be tried. Either they will fail, at which point progressives themselves will stop trying them so any objections to them is silly, or they will succeed, and the right will be standing there looking like fools for claiming they couldn't obviously work.
On social issues vs. liberals, at least, the right is willing to invent reasons why what the liberals are trying is wrong, regardless of whether or not it will 'work'. (It would be rather hard to argue that gay marriage would actually fail to work. Maybe there'd be some sort of critical failure in having two maids of honor and no best man, cause no one would have the wedding rings. Heh.)
I have some liberal leanings and think the following statement is over generalizing, "a modern liberal is to be committed to the philosophical position that the past has nothing to do with us today."
I have not had time to study the difference in all the labels, conservative, contemporary conservative mainstream, and the stupid liberal. I am not an economist or an Ivy League graduate, but I cannot understand how any of the stereotyped groups would think it was a good idea to allow unregulated gambling that is worth several times more than the gross national product. I see it as stupid. It demonstrates a complete lack of understanding the past; where there is money there is greed and fraud.
Making money by gambling - someone has to lose. Credit default swaps (CDS) have gone from nothing into a $54.6 trillion market in a decade. Some people think the CDS market could be over $100 trillion because no one has a record for the unregulated CDSs.
The so-called brilliant people, such as Greenspan (R), Phil Gramm (R), Larry Summers, the SEC head, and more were very deliberate in their efforts to ensure CDSs would not be regulated by anyone, including states. Greenspan, Summers, and Rubin smeared the CFTC head for wanting to regulate CDSs.
Do a search on Michael Greenberger, a law professor at the University of Maryland and a former director of trading and markets for the Commodities Futures Trading Commission to get a better understanding of the history. He was working at CFTC when the fight over regulating CDSs began. Greenberger is also good at explaining things.
Jon Stewart's Take (a little crude)
Wall Street lost $7 trillion without selling anything -- at least when Detroit loses money, we get cars.
http://tinyurl.com/5kwqhj
Fortune Magazine - good article
"It's sort of like I think you're a bad driver and you're going to crash your car," says Greenberger, formerly of the CFTC. "So I go to an insurance company and get collision insurance on your car because I think it'll crash and I'll collect on it." That's precisely what the biggest winners in the subprime debacle did. Hedge fund star John Paulson of Paulson & Co., for example, made $15 billion in 2007, largely by using CDS to bet that other investors' subprime mortgage bonds would default.
So what started out as a vehicle for hedging ended up giving investors a cheap, easy way to wager on almost any event in the credit markets. In effect, credit default swaps became the world's largest casino. As Christopher Whalen, a managing director of Institutional Risk Analytics, observes, "To be generous, you could call it an unregulated, uncapitalized insurance market. But really, you would call it a gaming contract."
There is at least one key difference between casino gambling and CDS trading: Gambling has strict government regulation. The federal government has long shied away from any oversight of CDS. The CFTC floated the idea of taking an oversight role in the late '90s, only to find itself opposed by Federal Reserve chairman Alan Greenspan and others. … In 2003 Warren Buffett famously called derivatives "financial weapons of mass destruction."
THERE'S ANOTHER BIG difference between trading CDS and casino gambling. When you put $10 on black 22, you're pretty sure the casino will pay off if you win. The CDS market offers no such assurance.
In many cases, you don't even know who has the other side of your bet. Parties to the contract can, and do, transfer their side of the contract to third parties. Investment firms assert that transfers are well documented (a claim that, like most in the world of CDS, is impossible to verify). But even if that's true, you're still left with the fact that a given company's risks are being dispersed in ways that they may not know about and can't control.
http://tinyurl.com/4j9q7o
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