Can 147 people perpetuate economic injustice – and make it even
worse? Can they subvert the workings of democracy, both abroad and here
in the United States? Can 147 people hijack the global economy, plunder
the environment, build a world for themselves that serves the few and
deprives the many?
There must be some
explanation for last week’s economic madness. Take a look:
: The European Union acted destructively – and
self-destructively – when it tried to seize a portion of the insured
savings accounts of the citizens of Cyprus. They were telling anyone
with a savings account in the financially troubled nations of the
Eurozone: Forget your guaranteed deposits. If we need your money in
order to bail out the big banks – banks which have already gambled
recklessly with it – we’ll take it.
That didn’t just create a political firestorm in Cyprus. It
threatened the European Union’s banking system, and perhaps the Union
itself. The fact that the tax on deposits has been partially retracted
doesn’t change the basic question: What were they thinking?
The Grand Bargain
: The President and Congressional
Republicans reportedly moved closer to a deal that would cut Social
Security and Medicare while raising taxes – mostly on the middle class –
without doing more to create jobs. A “Grand Bargain” like that would
run counter to both public opinion and informed economic judgement.
Who would impose more economy-killing austerity when there’s so much
evidence of the harm it does? Why would the White House want to become
the face of a deal to cut Social Security, killing its own party’s
political prospects for a generation?
: Washington reporters once again sought
the opinion of Ex-Wyoming senator Alan Simpson, a vitriolic blowhard
with no discernible knowledge of either economics or social insurance,
and then wrote up his opinions on those topics in flattering pieces like
Derivatives, the Sequel
: Four short years after
too-big-to-fail banks nearly destroyed the world economy, as the nation
continues to suffer the after-effects of the crisis they created, a
Congressional committee moved to undo the already-insufficient
safeguards in the Dodd/Frank law.
Within days of a Senate Report which outlined the mendacity, extreme
risk, and potentiality criminality surrounding JPMorgan Chase’s “London
Whale” fiasco, the House Agriculture Committee
approved new bills that would legalize
trades like the “London Whale.”
Above the Law
: The Attorney General of the United States remained silent as the controversy continued over his recent admission
that banks like Dimon’s were too big to face prosecution. And yet there
were no moves to change either Holder’s policy or the size of these
, the Washington insiders’ tip sheet, ran a piece entitled “Why Washington won’t break up the big banks
: The Senate report also provided evidence that JPMorgan Chase’s CEO, Jamie Dimon, failed to manage his bank’s risk and concealed
information about its losses from regulators. We learned last week that
regulators lowered their rating of Dimon’s bank after chastising the
bank’s leadership for management failures that included inadequate
safeguards against money-laundering, poor risk management, and failure
to separate the banks’ own investments from those of its customers.
Illegalities during Dimon’s tenure as CEO have cost his shareholders
billions in settlements and fines. Poor risk management (and additional
potential illegalities) cost it another $6.2 billion in Whale-related
losses. And yet last week Dimon’s own Board “strongly endorsed
his dual role as CEO and Board Chair, an unusual concentration of power
at what is (by some measurements) the world’s largest bank, and
in a proxy filing
for the “strength and independence” of its oversight, adding: “The Firm
has had strong performance through the cycle since Mr. Dimon became
Chairman and CEO.”
All this, in just seven days. Has the world gone insane? What is everybody thinking?
That’s where the number “147″ comes in.
Anthropologist Robin Dunbar tried to find out how many people the
typical person “really knows.” He compared primate brains to social
groups and published his findings in papers with titles like “Neocortex
size as a constraint on group size in primates.”
Dunbar concluded that the optimum number for a network of human
acquaintances was 147.5, a figure which was then rounded up to 150 and
became known as “Dunbar’s Number.” He found groups of 150-200 in all
sorts of places: Hutterite settlements. Roman army units. Academic
sub-specialties. Dunbar concluded that “there is a cognitive limit to
the number of individuals with whom any one person can maintain stable
Around 150 or 200 people form a human being’s social universe. They shape his or her world view, his or her world.
That means that 147 people can change the course of history. Not necessarily the same
147 people, of course. But the small social groups which surround our world’s leaders have extraordinary power.
Economist Simon Johnson mentioned Dunbar’s Number last week in a column
about incoming Treasury Secretary Jacob Lew and the new SEC chair, Mary
Jo White. “The issue is not so much their track record,” Johnson wrote,
“because neither has worked directly on financial-sector policy issues;
it is much more about whom they know.”
“If most financial experts you know work at, for example, Citigroup,”
added Johnson, “then you are more likely to see the financial world
through their eyes.”
Lew is a former Citigroup executive. That mismanaged megabank is also
the former corporate home of ex-Clinton Treasury Secretary Robert
Rubin, and the current home of Peter Orszag, formerly President Obama’s
OMB Director. For her part, White went from prosecuting criminals to
defending Wall Street bankers. That was also Attorney General Eric
Holder’s profession before he was appointed to his current position.
These are the people who surround our President, our Senators, our
Representatives. They talk to them every day. They say, This is how the
world works. They say, Everybody
knows these things.
Their European counterparts saw the effects of austerity on the
economies of their Union: Unemployment up. Gross domestic product down.
Even the deficits, which austerity was meant to reduce, have been rising
as the result of these unwise cuts.
But, they say, we know
Angela Merkel. We know George Osborne
and Christine Lagarde. We trust their judgement. How did the predictably
disastrous plan to tax guaranteed savings accounts in Cyprus get
approved? It’s not hard to imagine: “Everybody we know” thought it was a
That’s how it works here in the US, too. Larry Summers, Alan
Greenspan and Robert Rubin were spectacularly wrong about everything:
deregulation, the housing bubble, government spending, everything. But we know them.
Nobel Prize-winning economists like Paul Krugman and Joseph Stiglitz keep explaining why more stimulus spending is needed. But we don’t know them –
not the way we know Larry, Alan, and Bob. Same for Simon Johnson, or
William K. Black Jr., or Robert Johnson, or any of the other economists
we don’t know very well.
And when we don’t know someone very well, their criticisms make us uncomfortable.
Bill Clinton’s “Third Way” triangulation led to welfare “reform”
that’s proven disastrous. His Wall Street deregulation ruined the
economy, and his brand of old-fashioned pseudo-centrism is out of touch
with today’s political and economic realities. But we know
Bill Clinton doesn’t make us uncomfortable at all.
Investigate Jamie Dimon, or Lloyd Blankfein, or Robert Rubin? But
they were our clients, and will be again once we leave government.
Investigate them? We know
Dimon’s Board of Directors
is a case study in Dunbar’s Number. It includes Honeywell CEO David
Cote, who was a member of the Simpson Bowles Commission. There’s a
retired senior executive with another big defense contractor, Boeing.
Together with Dimon, that makes three CEOs who earn their money from
The CEO of Comcast is on Dimon’s Board, too. (The media’s leaders are
always among the 147.) One seat belongs to the head of one of the
accounting groups that overlooked massive bank fraud when signing off on
their annual statements. Another belongs to the former CEO of Exxon
The “147″ run companies. They also hold fundraisers for politicians – in both parties.
When Senator Obama became President Obama, during the gravest
unemployment crisis since the Great Depression, one of his first acts
was to create a “Deficit Commission” instead of a “Jobs Commission.”
Why? Because “147 people” thought that was the right priority. Then he
appointed the dyspeptic, unlikable, and uninformed Sen. Simpson to
You see, the “147 people” in Washington’s political and media circles like
Alan Simpson. To them he’s not an embarrassment to his President, a
paid pitchman for billionaire Pete Peterson’s anti-Social Security
jihad. (We know
Pete!) To them Simpson’s not an ill-informed
and misogynistic bully who taunts women with comments about “310 million
tits.” To them he’s Al.
him. They say he’s a lot of fun when you get to know him.
They really say that.
Then there are the news anchors and journalists who say things like this: Everybody
knows that we need to cut Social Security. Everybody
knows the deficit is our most urgent problem.
Everybody knew that Saddam had weapons of mass destruction, too.
understands that the right-wing, anti-government
Simpson Bowles plan represents the “political center,” although it’s far
to the right of public opinion – even of Republican
or Tea Party
voters’ opinion – on issues that range from job creation to increasing Social Security benefits.
You can’t fit millions of frustrated voters into a social group of 147 people.
When Teddy Roosevelt became President, J.P. Morgan (the person, not
the bank) suggested he “send your man to my man and they can fix it up.”
He was shocked that the new President chose instead to operate outside
the Circle in order to create real change. And when Franklin D.
Roosevelt became President he brought in new faces, new voices, new
ideas. He broke the social circle that had paralyzed government and the
But the circle of right-wing Republicans and corporatist Clintonite
Democrats is still intact. That means Barack Obama, Nancy Pelosi and
other Democratic leaders will keep on promoting the right-wing agenda
known as Simpson Bowles until their party loses all its political power
at the polls.
It also means that Republican extremism will still be reported with
straight-faced gravity.Congressional committees will keep deregulating
big banks, the Justice Department will avoid prosecuting them, and their
Boards of Directors will keep rewarding their executives. They’ll all
keep doing exactly what they’re doing – until the economy blows up
again, perhaps with far worse consequences than the last time.
And when the next crisis comes, “147 people” will react to it exactly
the same way they reacted to the last one. You can almost hear them
now, can’t you? You can’t blame us, they’ll say. Nobody could’ve seen
this coming. How do we know that?
Because we asked everybody we know.
© 2013 Campaign for America's Future
Richard (RJ) Eskow is a well-known blogger and writer, a former
Wall Street executive, an experienced consultant, and a former musician.
He has experience in health insurance and economics, occupational
health, benefits, risk management, finance, and information technology.
Richard has consulting experience in the US and over 20 countries.
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