In the 12 hapless years of this millennium, we have looked
on as 3 great bubbles have inflated and burst, each with consequences
more dire than the last.
March 28, 2012 |
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The following article is an excerpt of a piece that first appeared in The Baffler. Click here to subscribe to The Baffler
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"The “sound” banker, alas! is not one who sees danger and avoids it,
but one who, when he is ruined, is ruined in a conventional and orthodox
way along with his fellows so that no one can really blame him." —John
In the twelve hapless years of the present millennium, we have looked
on as three great bubbles of consensus vanity have inflated and burst,
each with consequences more dire than the last.
First there was the “New Economy,” a millennial fever dream
predicated on the twin ideas of a people’s stock market and an eternal
silicon prosperity; it collapsed eventually under the weight of its own
Second was the war in Iraq, an endeavor whose launch depended for its
success on the turpitude of virtually every class of elite in
Washington, particularly the tough-minded men of the media; an
enterprise that destroyed the country it aimed to save and that helped
to bankrupt our nation as well.
And then, Wall Street blew up the global economy. Empowered by bank
deregulation and regulatory capture, Wall Street enlisted those
tough-minded men of the media again to sell the world on the idea that
financial innovations were making the global economy more stable by the
minute. Central banks puffed an asset bubble like the world had never
seen before, even if every journalist worth his byline was obliged to
deny its existence until it was too late.
These episodes were costly and even disastrous, and after each one
had run its course and duly exploded, I expected some sort of day of
reckoning for their promoters. And, indeed, the last two disasters
combined to force the Republican Party from its stranglehold on American
government—for a time.
But what rankles now is our failure, after each of these disasters,
to come to terms with how we were played. Each separate catastrophe
should have been followed by a wave of apologies and resignations. Taken
together— and given that a good percentage of the pundit corps signed
on to two or even three of these idiotic storylines—they mandated mass
firings in the newsrooms and op-ed pages of the nation. Quicker than you
could say “Ahmed Chalabi,” an entire generation of newsroom fools
should have lost their jobs.
But that’s not what happened. Plenty of journalists have been pushed
out of late, but the ones responsible for deluding the public are not
among them. Standard & Poor’s first leads the parade of folly
(triple-A’s for everyone!), then decides to downgrade U.S. government
debt, and is taken seriously in both endeavors. And the prospect of Fox
News or CNBC apologizing for their role in puffing war bubbles and
financial bubbles is no better than a punch line: what they do is the
opposite, launching new movements that stamp their crumbled fables
“true” by popular demand.
The real mistake was my own. I believed that our public
intelligentsia had succumbed to an amazing series of cognitive failures;
that time after time they had gotten the facts wrong, ignored the
clanging bullshit detector, made the sort of mistakes that would
disqualify them from publishing in The Baffler, let alone the Washington
What I didn’t understand was that these weren’t cognitive failures at
all; they were moral failures, mistakes that were hard-wired into the
belief systems of the organizations and professions and social classes
in question. As such they were mistakes that— from the point of view of
those organizations or professions or classes—shed no discredit on the
individual chowderheads who made them. Holding them accountable was out
of the question, and it remains off the table today. These people
ignored every flashing red signal, refused to listen to the
whistleblowers, blew off the obvious screaming indicators that something
was going wrong in the boardrooms of the nation, even talked us into an
unnecessary war, for chrissake, and the bailout apparatus still stands
ready should they fuck things up again.
Keep on Dancing Till the World Ends
My aim here isn’t to take some kind of victory lap or to get in the
granite faces of our eternal pundit corps one more time. Nor is it to
blame Republicans for our problems. It is true that, from the scandal of
CEO pay to the scandal of lobotomized regulators, each of the really
monumental mistakes of our time arose from the trademark doctrines of
the political right. And, yes, it was the Bush administration that
muzzled government scientists and declared war on organized intelligence
in a hundred other ways.
But the problem goes far beyond politics. We have become a society
that can’t self-correct, that can’t address its obvious problems,
thatcan’t pull out of its nosedive. And so to our list of disasters let
us add this fourth entry: we have entered an age of folly that—for all
our Facebooking and the twittling tweedle-dee-tweets of the
twitterati—we can’t wake up from.
Besides, the reign of corruption has taken plenty of right-wing
scalps, too. In fact, one of the most interesting comments on the
machinery that is making us stupid came from the libertarian Doug Bandow
of the Cato Institute, after he had temporarily lost his job (he got it
back a little while later, don’t worry) for puffing clients of Jack
Abramoff in exchange for the lobbyist’s largesse. But what was the big
deal? fumed Bandow in a 2006 cri de coeur called “The Lesson Jack
Abramoff Taught Me.” Living in Washington was expensive; and besides,
everyone was basically on the take:
supposedly “objective” thinkers and “independent” scholar/experts these
days have blogs or consulting gigs, or they are starting nonprofit
Centers for the Study of... Who funds their books, speeches or other
endeavors? Often it’s those with an interest in the outcome of a related
debate. The number of folks underwriting the pursuit of pure knowledge
can be counted on one hand, if not one finger.
Bandow had been caught, yes, but he wasn’t the only culprit, he
insisted—with some accuracy. All opinions are paid for. Everything
written in this city—everything in this land that is thought and tweeted
and toasted with a hip hip hooray . . . is Abramoffed. We are all
slaves to the market; there is no way to stand outside that condition.
I can remember the contempt I felt when I read Bandow’s essay, back
in 2006. Of course there was a place where ideas weren’t simply for
sale, I thought: the professions. Ethical standards kept professionals
independent of their clients’ gross pecuniary interests.
These days, though, I’m not so sure. Money has transformed every
watchdog, every independent authority. Medical doctors are increasingly
gulled by the lobbying of pharmaceutical salesmen. Accountants were no
match for Enron. Corporate boards are rubber stamps. Hospitals break
unions, and, with an eye toward future donations, electronically single
out rich patients for more luxurious treatment.
And consider the university, the mothership of the professions.
For-profit higher education is today a booming industry, feeding on the
student loans handed out to the desperate. Even the traditional academy,
where free inquiry nominally lives, has become a profit center, a place
where exorbitant tuition somehow bypasses the adjuncts who do the
teaching but makes for lavish executive salaries; where economists pull
in fantastic sums for “consulting”; and where the prospect of launching
the next hot Internet startup is a gamble that it is worth bending any
rule to take.
Another thing Doug Bandow got right was one of the basic reasons for
all this: for most Americans, the building blocks of middle-class
life—four years at a good college, for example—are growing ever more
expensive and out of reach. For other people and other entities, though,
they grow relatively cheaper; they are baubles to be handed out as
necessity requires. The result is exactly what our nineteenth-century
ancestors would have expected. Think of Jack Grubman, the superstar
stock analyst of the nineties, who famously upgraded AT&T’s shares
in exchange for getting his children into a ferociously competitive preschool.
the congressional aides on Capitol Hill, surrounded by the inaccessible
luxuries of Washington, D.C., who would do nearly anything for a
lobbyist in exchange for a shot at a future job on said lobbyist’s
staff. Or the actual members of Congress who sold their votes in
exchange for little bits of sushi or a blowout party in Hawaii or good
seats at sporting events.
And as we serve money, we find that money wants the same thing from
us: to push everyone it beguiles in the same direction. Money never
seems to be interested in strengthening regulatory agencies, for
example, but always in subverting them, in making them miss the danger
signs in coal mines and in derivatives trading and in deep-sea oil
wells. You can have a shot at being part of the 1 percent, money tells
us, only if you are first committed to making the 1 percent stronger, to
defending their piles in some new and imaginative way, to rationalizing
and burnishing their glory, to exempting them from regulation or
taxation, to bowing down as they pass, and to believing in your heart
that their touch will heal scrofula.
So money gives us not only the bond-rating scandal of 2008, in which
trash investments were labeled super-wholesome so that the rating agency
in question could win more business from the manufacturers of said
trash; and not only the Enron scandal of 2001, in which head-spinning
conflicts of interest were over- looked by Enron’s accountants in order
to preserve the nice ka-ching those conflicts delivered to everyone
involved; but also the analyst scandal of 2002, in which Wall Street
insiders pushed certain corporate securities on their sappy
middle-American clients in order to win those corporations’ business—and
then while it is corrupting all the watchmen, money also dashes off an
enormous body of literature assuring those sappy middle Americans that
they are in fact financial geniuses who can outsmart any possible
combination of Wall Street insiders, because together the saps reflect
the wisdom of markets or some other such reassuring bullshit. And all of
it— the airy populism of the market and its simultaneous complete
negation by reality—is as determined by the current distribution of
wealth as gravity is by the mass of the planet. Both of them will
continue indefinitely regardless of the constant violence the one does
to the other simply because that’s the way money wants it, and every
dollar in the nation will strain at its leash to ensure that financial
naïveté persists on into infinity in complete ignorance of financial
Thomas Frank is the founding editor of The Baffler and the author of Pity the Billionaire. To read the complete piece, visit The Baffler’s website, or go ahead and subscribe to The Baffler, by clicking here.
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