A quote from someone attending a Romney fundraiser in the Hamptons last week is still rattling around in my mind:
It’s not helping the economy to pit the people who are the engine of the economy against the people who rely on that engine.
The guy goes on to explain that Wall Street backed Obama in 2008 and now is switching sides in reaction to Obama’s rhetoric and policies. Surely he’s right about Wall Street’s shift in affection. What is striking is his belief, forthrightly expressed and no doubt deeply felt, that Wall Streeters are the “engine” of the American economy.
Yesterday, the Times told this story, about a scientist couple from Boston who were among the pioneers of speech-recognition software. After decades of work and building a successful company, they were ready to sell their life’s work to a larger entity. They contracted Goldman Sachs to help them sort through the complications of a finding a suitable buyer. To make a long story short, for a $5 million fee, Goldman set them up with a Belgian firm, which took over the company in exchange for stock. Three months later, the Belgian company went bankrupt–it had apparently inflated its stock price with fraudulent earnings. Goldman, for its $ 5 million fee, did zero due diligence. The couple which had developed the speech-recognition software lost everything. A Goldman banker quoted in the story said Goldman did a “great job” and “we guided them to a completed transaction.” Apparently the case will go to court in November.
The tale seems so emblematic of the current age: the investment bankers reap large profits regardless of the impact of their work. They have the money to give generously to political candidates who represent their interests, and to cap it off, the chutzpah to proclaim themselves “the engine” of the American economy. Romney surely had that image of himself while a corporate raider at Bain, even as the main thrust of his work was stripping the assets of companies for the benefits of his partners.
I remember a time when financiers who talked about themselves in such language would have been laughed at — yes, even in the Hamptons. There was a Wall Street, and people who worked there made good money. But Americans’ admiration went to the people who actually created tangible goods or developed innovative products. Talent, drive, dedication were admired, and there was no big brief for a leveling equality. No one thought that Henry Ford (before my time, actually) contributed no more to the common good than the average assembly line worker. But neither did anyone believe in the absurdity that financiers –the lubricants perhaps of a successful economy–were synonymous with the engine itself.