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Economic Crisis

Serfin’ USA: The Taxpayer as Ignorant Ingrate

Berkshire Hathaway’s Charlie Munger thinks villagers should thank those who burned their village to save it.

Spend enough time in an English literature program and you’ll come by knowledge too obscure even to make you the star of your local church’s trivia night. You’ll gather facts on authors of every degree of importance, but who these days have experienced a leveling of sorts, enjoying equal esteem among the broad masses of entertainment consumers (which is to say, very little).

One fact I picked up during my graduate-school salad days concerns the English novelist and poet Thomas Hardy. Hardy considered himself an “evolutionary meliorist,” and he attempted to present this philosophical outlook in his fiction and verse.  An evolutionary meliorist adheres to a peculiar doctrine, one which preserves the basic edifice of Christianity but which strips it of its more extravagantly metaphysical ornaments. Call it “Animal Kingdom Come.” The advantageously adapted of the faithful flock — the sheep among the goats — enter what one can only describe as a sort of budget paradise: Environment and genome, having dropped the cudgels after eons of antagonism, eventually achieve homeostasis. Fit creatures frolic in a fitting world become so not through providence but by blind chance, the primum mobile of Darwinian evolution.

Those unfortunate enough to live during the longue durée of the fumbling toward the best possible world have only the Gehenna of annihilation in store for them after a life of vain striving. “The fact is that when you get to the bottom of things … nature is unmoral — & our puny efforts are those of people who try to keep their leaky house dry by wiping off the waterdrops from the ceiling,” Hardy writes in a 1906 letter to one Frederic Harrison. That such a tormentingly indifferent nature could one day phase-transition into Elysium strikes one as implausible (which makes it supremely an article of faith). For everyone living in Hardy’s time, as well as everyone living now, however, this issue remains strictly academic, because, dying with our bodies, we repair nowhere but nowhere. As Hardy puts it in his 1896 poem “In Tenebris”: “Who holds that if way to the Better there be, it exacts / a full look at the Worst.”

If ever there were a novelist who exacted a full look at the worst, it was Thomas Hardy. Hardy is remarkable for his penchant for acute pathos that doesn’t so much descend into bathos as into vivid grotesquerie. Such scenes as that of the man-trap in The Woodlanders and the wife-sale in The Mayor of Casterbridge come to mind. But perhaps the most baroque of all of Hardy’s pitiable mortifications happens in Jude the Obscure. It involves Jude and his cousin/lover Sue’s discovery of the bodies of their three children, all of whom die at the hands of their oldest child, known as Little Father Time — a shocking double murder–suicide, the motive for which was the family’s straitened circumstances, or, as Little Father Time characterizes the matter in his suicide note: “Done because we are too menny.”

The suicide note of Hardy’s Little Father Time fairly captures the essence of an enduring question: Just what, exactly, constitute the duties of the multitudes to the privileged few? Of course, the converse of this question History has already read into the record. The privileged few bind themselves to a noblesse oblige of their own devising; they shine as pale beacons on a shore that recedes ever further into the mists of carry trades, arbitrage, mark-to-model valuations, and naked short selling — will-o-wisps, St. Elmo’s fire, swamp gas lighting many a fool to dusty death. And it may just be that that death is precisely what these modern adepts of esoteric finance believe the rabble owes them for their unexampled excellence — provided there remains rabble enough to wait tables at their West Egg garden parties.

As only people accustomed to leveraging other people’s fortunes to increase their own can, today’s finance oligarchs react with indignation when the little people balk at their raiding public coffers in order to cover their gentleman’s bets.

Finding themselves saddled with dependents not nearly so accommodating as Hardy’s Little Father Time, these modern worthies have set themselves the task of tilting the Pareto distribution even more in their favor. As only people accustomed to leveraging other people’s fortunes to increase their own can, today’s finance oligarchs react with indignation when the little people balk at their raiding the public coffers in order to cover their gentleman’s bets. Rather than grousing and complaining, they retort, the hoi polloi should make a joyful noise, should raise their hands raised to the heavens in thanks for their deliverance from certain catastrophe. Or so thinks Charlie Munger, henchman of the people’s plutocrat, Warren Buffet. In a September 20, 2010 story, Bloomberg bills Munger as “the billionaire vice-chairman of Berkshire Hathaway, Inc.” And, as is so often depressingly the case, with those billions comes a pulpit. Money doesn’t just talk in America, it sermonizes. And the text of its homily is usually its own refulgent glory. Apparently seized by the spirit, Munger recently popped off in a forum at the University of Michigan, having been heard to proclaim the infinite justice of the bailout, the righteousness of those who received it, and the impiety of those who ponied it up.

“You should thank God” for bank bailouts, Munger said in a discussion at the University of Michigan on Sept. 14, according to a video posted on the Internet. “Now, if you talk about bailouts for everybody else, there comes a place where if you just start bailing out all the individuals instead of telling them to adapt, the culture dies.”

Of course, the bailout blessed earned fat bonuses, while the bailout blasted garnered only destitution or dislocation — evidence enough that grace abounds for the chiefest of sinners if only he keep to the gospel of free-market capitalism. To this second and vastly larger contingent Munger could only say, “suck it in and cope.” Whether Munger means “suck it up” when he says “suck it in” (Sucking in generally applies to beer guts, while sucking up generally applies to unfortunate circumstance.) is really just a matter of semantics, because the fact remains that whether it’s in or up, Munger is telling the recession’s many, many casualties to suck it.

The burden of empire: finance oligarchs save the riff raff from themselves.

Munger seasons his homily with a little  ole-time fire and brimstone, lest the lesson be lost on wayward Ninevites.

“Hit the economy with enough misery and enough disruption, destroy the currency, and God knows what happens,” Munger said. “So I think when you have troubles like that you shouldn’t be bitching about a little bailout. You should have been thinking it should have been bigger.”

The apocalyptic sequelae of a financial collapse, as Munger depicts, do strike one as gruesome. I can’t help but be reminded, however, of that line from scripture, “My people perish for want of knowledge.” Munger treats a problem visited upon the economy by greedy wheeler-dealers as simply a problem springing from that same inscrutable nature which Hardy chides in his prose and verse. It should not go unremarked that indeed the economy was hit with misery and disruption enough — enough, perhaps, to destroy the currency and God knows what else — but only certain people did this hitting.

To participate in today’s financialized global economy is to commit collective murder.

When the crisis first struck, blame aplenty made the rounds. People of means incommensurate to their ambition who got into mortgages they couldn’t afford, lenders who confronted incentives configured in such a way that truth became inconvenient, whiz-kid number crunchers whose sure-fire means of distributing (and, one supposes, dissipating) risk turned out not only to defy reality but to see itself defied by reality — the culprits are by now legion. One wonders, though, whether culpability legitimately extends to the vast number of working stiffs who just wanted to lay something by for retirement, for Junior’s education, for grand- or great-grandchildren. Oligarchs like Munger would like to convince everyone that, yes, blame falls on them, too. If Munger is right, then there’s little anyone can do but contemplate the sad fact that guilt by association has become an existential proposition worthy of Camus. To participate in today’s financialized global economy is to commit collective murder. Call it our Hi-Fi(nance) suicide.

Fortunate for the Lumpenproletariat that someone like Munger — for whom moral hazard is as of much consequence as a water hazard (a blemish on an otherwise idyllic day at the country club, but little more) — arrives just in time to slap the gun from its hand. Ever willing to administer the strong medicine necessary to keep dividends healthy, Munger, repeating the theme of which he’s fond, unreservedly points out, “There’s danger in just shoveling out money to people who say, ‘My life is a little harder than it used to be. . . .  At a certain place you’ve got to say to the people, ‘Suck it in and cope, buddy. Suck it in and cope.’”

And so the people suck and cope, even though coping has long since begun to suck. And if all this sucking and coping should carry off not a few of them, then all the better. After all, only an iron axiom is to blame for their demise, an axiom Hardy’s Little Father Time came to understand at a tender age. “The bourgeoisie swings wildly between a Malthusianism that aims a preserving the status quo just as it is, and the furthering of technological innovation,” Henri Lefebvre writes in The Sociology of Marx. “Malthusianism is its ideology in periods of depression, of retreat, when it is on the defensive. Technological snobbery becomes its ideology in periods of expansion, animation, prosperity. Both ideologies reflect the current level of the productive forces.” With most industry having left the United States, with official unemployment hovering at just under ten percent, and with financial-paper shuffling comprising a large portion of the country’s gross domestic product, the productive forces appear themselves productive of a Malthusianism of unprecedented ferocity. Munger’s words might come across as insensitive, unsympathetic, or even uninformed. Rest assured, however, that he does not speak them glibly. More than his ideology, they represent his creed. One can only pray, then, for a speedy return of a period of expansion, when the coolly analytic bloodlust of the oligarchs will once again transition to snobbery borne of the technology of statistical arbitrage and synthetic collateralized debt obligations.

Anton would love to hear from you. Drop him a line at generationbubble [at] gmail [dot] com.

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Discussion

One Response to “Serfin’ USA: The Taxpayer as Ignorant Ingrate”

  1. Enjoyable read! Sadly most taxpayers truly are ignorant ingrates as many will believe what the rich say. Look at billboards of america, I have a military buddy who supports them. Even though he is a poor redneck from Georgia, he is fooled by their clever words. Too many americans are the same, fooled by the rich to support their agendas. Lowering taxes sound great, but its not low and middle class taxes that are targeted, its the wealthy!

    Posted by saul | September 23, 2010, 6:48 pm

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Anton Steinpilz

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