Here’s a good, righteous, scornful essay by Thomas Frank on what it takes to make it as a member of the Washington-NY-Wall-Street elite today. There are no consequences for being wrong, as long as you were wrong in a way that suits the prejudices of the elites. There is no bonus for being right, if your correct call was not one that flattered the views of the elites. Excerpts:
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 fatuousness.
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.
What I didn’t understand was that these were moral failures, mistakes that were hardwired 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 fu*k things up again.
Read the whole thing. What’s so interesting about it is not that it’s a rant against the failure of those who were so very wrong to be held to account for their mistakes. No, what’s so interesting is how this lack of accountability is built into the system. The market, so to speak, cannot work, because there is little or no moral hazard. You can be very wrong about very big things, and nothing will happen to you as a result. Frank says it’s all about money, and about how you get to be an “expert” not by being right, but by being well-connected, and by holding and expounding opinions that suit those with money and connections. The gist:
Another way of putting this idea might be to say that the individuals who got things wrong—the ones who saw few problems in financial deregulation, anyone who thought derivatives eliminated risk, anyone who counted on markets to police themselves—were “one of us.” There can be no consequences for them because they merely expressed the consensus views of the time. Like John Maynard Keynes’s “sound banker,” they might have failed, but they failed in the same way that the rest of “us” failed. To hold them accountable for what they said and did would expose the rest of “us” to such judgment as well. And obviously that can’t happen.
Isn’t that how nearly all our elite institutions work? Isn’t that why not a single Roman Catholic bishop — save, arguably, Boston’s Cardinal Law — lost his post as a result of the abuse scandal? United we stand, or divided we hang.
Frank’s observations seem to argue that there are two ways to go in this world: you can choose to have integrity, but relatively little money or influence; or you can choose to have money and influence, but at the cost of your integrity. Maybe it has always been that way. But look, here is what’s most interesting to me about this dynamic. I could be wrong, but I don’t believe that most of the people who represent the elite consensus opinion are consciously aware that their opinions are so determined by what their fellows think about things. It is damned difficult to be a truly independent thinker, and to account for the biases of your information environment, which includes all your social and professional cues. How’s that saying go? “Do not count on a man to see something when his livelihood depends on his not seeing it”? Something like that. I think many of us must imagine these people sitting in their Ivory Towers of government, academia, media, banking, etc., and making decisions they consciously know are wrong, or corrupted. Maybe some do, but the key point here is that many, even most, of them don’t realize at the time how social, emotional, and psychological factors corrupt their own judgment. And if there is no serious reckoning for grave failure, there is no incentive for decision-makers to seriously question their own biases when they’re making these decisions. If you’re a made man, there will always be a bailout, a golden parachute.