How Fox News Created a New Culture of Idiots
Continued from previous page
To continue with basic truths: with the United States, where the crisis first broke, as an example, the economy saw its greatest rise in general prosperity during the “boring” postwar years, before financial “innovation,” when the “best and brightest” did other things, largely of a scientific or engineering nature.
A key cause of the recent crisis (among many causes) was that, through mathematically sophisticated “innovation,” firms and traders were allowed to take on far too much risk. Once it became clear that the prices of fiercely complex financial instruments had little connection with the real value of real assets (e.g., homes), the whole system unraveled. The markets have continued to function only because large firms were bailed out by governments, with taxpayers picking up the tab. With little choice in the moment of crisis, society in effect assumes the risk so that firms and traders can continue to reap huge rewards.
We consider how this might reflect a larger culture of entitlement in chapter 7. For now, let us focus on particular people and, in particular, an unusually candid conversation among two bankers and two journalists in a Wall Street bar. The journalists are suggesting that the bankers should be grateful to society that it bailed out their industry and saved their jobs. The bankers disagree, arguing that their jobs are to their own credit and, in particular, their smartness.
Jane Feltes: You think you got to keep your job because you’re smart? You got to keep your job because you guys got bailed out. You guys got bailed—
Bar Patron 2: No, no, no, no, no. That’s not what happened with my job. I mean, survival of the fittest.
Bar Patron 1: Because I’m smarter than the average person.
Davidson: And even if the government bails out your industry that failed, you still say it’s because you’re smarter.
Bar Patron 1: No. The government bailing out an industry was out of necessity for whatever the situation was. The fact that I benefited from that is because I’m smart. I took advantage of a situation. Ninety-five percent of the population doesn’t have that common sense. The only reason I’ve been doing this for so long is because I must be smarter than the next guy.
Bar Patron 1 credits his job entirely to his own talent. Notice that he does not deny the plain fact that society has just bailed out the whole industry, saving many “smart” people from together wrecking the whole system. What he claims is that this plain fact is nevertheless wholly irrelevant to what bankers are due. The feeling seems to be widely shared in the industry. Bankers feel very sure of their entitlement to enormous benefits, and therefore feel mystified and even victimized by the suggestion that they are overpaid. Indeed, in interviews with bankers about the Occupy Wall Street protesters, bankers privately say that their critics lack an appropriate sense of gratitude.
To say that this point of view is a massive delusion is of course to assume that there are good reasons, available to all, for taking the facts of the matter to be otherwise. There are many widely cited reasons for this. There is, for example, the sheer enormity of social costs of the crisis: by some estimates, enough to put the banking industry out of business if it was actually asked to pay for the damage done. There is the implicit government subsidy, which allows “too big to fail” banks to take ever-greater risks, knowing that they’ll be bailed out if things go too far south, allowing bankers to take huge profits while taxpayers assume the risks. And, if nothing else, there is the fact that the run-up to the recent crisis involved fraud on a massive scale, which has largely been left unpunished, with profits intact. With some exceptions, few have paid for breaking the law.