Something curious happened when I tried to potty train my two-year-old recently. To begin with, he was very keen on the idea. I’d read that the trick was to reward him with a chocolate button every time he used the potty, and for the first day or two it went like a breeze – until he cottoned on that the buttons were basically a bribe, and began to smell a rat. By day three he refused point-blank to go anywhere near the potty, and invoking the chocolate button prize only seemed to make him all the more implacable. Even to a toddler’s mind, the logic of the transaction was evidently clear – if he had to be bribed, then the potty couldn’t be a good idea – and within a week he had grown so suspicious and upset that we had to abandon the whole enterprise.
It’s a pity I hadn’t read What Money Can’t Buy before embarking, because the folly of the chocolate button policy lies at the heart of Michael Sandel‘s new book. “We live at a time when almost everything can be bought and sold,” the Harvard philosopher writes. “We have drifted from having a market economy, to being a market society,” in which the solution to all manner of social and civic challenges is not a moral debate but the law of the market, on the assumption that cash incentives are always the appropriate mechanism by which good choices are made. Every application of human activity is priced and commodified, and all value judgments are replaced by the simple question: “How much?”
Sandel leads us through a dizzying array of examples, from schools paying children to read – $2 (£1.20) a book in Dallas – to commuters buying the right to drive solo in car pool lanes ($10 in many US cities), to lobbyists in Washington paying line-standers to hold their place in the queue for Congressional hearings; in effect, queue-jumping members of the public. Drug addicts in North Carolina can be paid $300 to be sterilised, immigrants can buy a green card for $500,000, best man’s speeches are for sale on the internet, and even body parts are openly traded in a financial market for kidneys, blood and surrogate wombs. Even the space on your forehead can be up for sale. Air New Zealand has paid people to shave their heads and walk around wearing temporary tattoos advertising the airline.
According to the logic of the market, the matter of whether these transactions are right or wrong is literally meaningless. They simply represent efficient arrangements, incentivising desirable behaviour and “improving social utility by making underpriced goods available to those most willing to pay for them”. To Sandel, however, the two important questions we should be asking in every instance are: Is it fair to buy and sell this activity or product? And does doing so degrade it? Almost invariably, his answers are no, and yes.
Sandel, 59, has been teaching political philosophy at Harvard for more than 30 years, and is often described as a rock star professor, such is the excitement his lectures command. In person there is nothing terribly rock star about him; he grew up in a middle-class Jewish family in Minneapolis, studied for his doctorate at Balliol college in Oxford as a Rhodes Scholar, and has been married for decades to a social scientist with whom he has two adult sons. His career, on the other hand, is stratospheric.
Sandel’s justice course is said to be the single most popular university class on the planet, taken by more than 15,000 students to date and televised for a worldwide audience that runs into millions. His 2009 book Justice, based upon the course, became a global bestseller, sparking a craze for moral philosophy in Japan and earning him the accolade “most influential foreign figure” from China Newsweek. If you heard a series of his lectures broadcast on Radio 4 in the spring you would have glimpsed a flavour of his wonderfully discursive approach to lecturing, which is not unlike an Oxbridge tutorial, only conducted with an auditorium full of students, whom he invites to think aloud.
In keeping with his rock star status, Sandel is currently embarked upon a mammoth world tour to promote his new book, and when we meet in London he has almost lost his voice. His next sleep, he croaks, half smiling, isn’t scheduled for another fortnight, and he looks quite weak with jetlag. Understandably, then, he isn’t quite as commanding as I had expected. But although I found his book fascinating – and in parts both confronting and deeply moving – in truth, until the very last pages I didn’t find it quite as persuasive as I had hoped.
This may, as we’ll come on to, have something to do with the fact that its central argument is harder to make in the US than it would be here. “It is a harder sell in America than in Europe,” he agrees. “It cuts against the grain in America.” This is truer today than ever before, he adds, for since he began teaching Sandel has observed in his students “a gradual shift over time, from the 80s to the present, in the direction of individualistic free-market assumptions”. The book’s rather detached, dispassionate line of inquiry into each instance of marketisation – is it fair, and does it degrade? – was devised as a deliberate strategy to “win over the very pro-market American audience” – and it certainly makes for a coolly elegant read, forgoing rhetoric for forensic examination in order to engage with free market economics in terms the discipline understands. But I’m just not entirely sure it works.
If, like me, you share Sandel’s view that moral values should not be replaced by market prices, the interesting way to read What Money Can’t Buy is through the eyes of a pro-market fundamentalist who regards such a notion as sentimental nonsense. Does he win you over then?
He certainly provides some fascinating examples of the market failing to do a better job than social norms or civic values, when it comes to making us do the right thing. For example, economists carried out a survey of villagers in Switzerland to see if they would accept a nuclear waste site in their community. While the site was obviously unwelcome, the villagers recognised its importance to their country, and voted 51% in favour. The economists then asked how they would vote if the government compensated them for accepting the site with an annual payment. Support promptly dropped to 25%. It was the potty-and-chocolate-buttons syndrome all over again. Likewise, a study comparing the British practice of blood donation with the American system whereby the poor can sell their blood found the voluntary approach worked far more effectively. Once again, civic duty turned out to be more powerful than money.
However, a true believer in the law of the market would surely argue that all this proves is that sometimes a particular marketisation device doesn’t work. For them it remains not a moral debate but simply one of efficacy. Sandel writes about the wrongness of a medical system in which the rich can pay for “concierge doctors” who will prioritise wealthy patients – but to anyone who believes in markets, Sandel’s objection would surely cut little ice. They would say it’s a question of whether or not the system is fulfilling its purpose. If the primary purpose of a particular hospital is to save lives, then if it treats a millionaire’s bruised toe while a poorer patient dies of a heart attack in the waiting room, the marketisation has clearly not worked. But if the function of the hospital is to maximise profits, then treating the millionaire’s sore toe first makes perfect sense, doesn’t it?
“I suspect that you have – we have – a certain idea of what a hospital is for, such that a purely profit-driven one misses the mark; it’s deficient in some way; it falls short of what hospitals are properly for. You would say, wouldn’t you, that that hospital – that market-driven one – is not a proper hospital. They’ve misidentified, really, what a hospital is for. Just as if they were a school that said: ‘Our purpose isn’t, really, primarily, to educate students, but to maximise revenue – and we maximise revenue by offering certain credentials, and so on,’ you’d say: ‘Well, that’s not a proper school; they’re deficient in some way.’”
I would, I agree. But a rabid rightwinger wouldn’t. They would say the profit motive is in itself blameless, and pursuing it by mending people’s bodies or expanding their minds is no different to making motor cars, as long as it works.
“My point is that the debate, or the argument, with someone who held that view of the purpose of the hospital would be a moral argument about how properly to understand the purpose of a hospital or a school. And, yes, there would be disagreement – but that disagreement, about purpose, would be, at the same time, a moral disagreement. I’d say ‘moral disagreement’, because it’s not just an empirical question: How did this hospital define its mission? It’s: What are hospitals properly for? What is a good hospital?”
I don’t think that would convince a hardliner at all. Similarly, I imagine a hardline rightwinger might read Sandel’s chapter about the practice in the US of corporations taking life insurance policies out on their staff, often unbeknown to the employees, and think: what’s the problem? Sandel writes about the “moral tawdriness” of companies having a financial interest in the death of an employee, but as he doesn’t suggest it would tempt them to start killing their staff, these policies would strike many on the right as a rational financial investment.
At this point Sandel begins to peer at me across the table with an expression of mild disgust and disbelief. Is this woman really, I think I can see him wondering, from the Guardian? So I explain hastily that I tried very hard to read his book wearing Thatcherite glasses.
“You tried a bit too hard,” he says wryly. “You shouldn’t have tried so hard. You should have gone with the flow a bit more.” Which feels like a disappointing answer.
The irony is that I think Sandel would have written a more powerful book had he not tried to argue the case on free-market economists’ own dry, dispassionate terms. It is, as he rightly points out, the language in which most modern political debate is conducted: “Between those who favour unfettered markets and those who maintain that market choices are free only when they’re made on a level playing field.” But it feels as if by engaging on their terms, he’s forcing himself to make an argument with one hand tied behind his back. Only in the final chapter does he throw caution to the wind, and make the case in the language of poetry.
“Consider the language employed by the critics of commercialisation,” he writes. “‘Debasement’, ‘defilement’, ‘coarsening’, ‘pollution’, the loss of the ‘sacred’. This is a spiritually charged language that gestures toward higher ways of living and being.” And it works, for the book suddenly makes sense to me. His closing elegy to what is lost by a society that surrenders all decisions to the market almost moved me to tears.
“Does that mean I should have just started and ended with the poetry, and forgotten about the argumentative and analytical part?” he asks. “I want to address people who are coming to this from different ideological directions.” But funnily enough, I think the poetry might well do a better job of persuading those very sceptics he’s trying to convert.
A fascinating question he addresses is why the financial crisis appears to have scarcely put a dent in public faith in market solutions. “One would have thought that this would be an occasion for critical reflection on the role of markets in our lives. I think the persistent hold of markets and market values – even in the face of the financial crisis – suggests that the source of that faith runs very deep; deeper than the conviction that markets deliver the goods. I don’t think that’s the most powerful allure of markets. One of the appeals of markets, as a public philosophy, is they seem to spare us the need to engage in public arguments about the meaning of goods. So markets seem to enable us to be non-judgmental about values. But I think that’s a mistake.”
Putting a price on a flat-screen TV or a toaster is, he says, quite sensible. “But how to value pregnancy, procreation, our bodies, human dignity, the value and meaning of teaching and learning – we do need to reason about the value of goods. The markets give us no framework for having that conversation. And we’re tempted to avoid that conversation, because we know we will disagree about how to value bodies, or pregnancy, or sex, or education, or military service; we know we will disagree. So letting markets decide seems to be a non-judgmental, neutral way. And that’s the deepest part of the allure; that it seems to provide a value-neutral, non-judgmental way of determining the value of all goods. But the folly of that promise is – though it may be true enough for toasters and flat-screen televisions – it’s not true for kidneys.”
Sandel makes the illuminating observation that what he calls the “market triumphalism” in western politics over the past 30 years has coincided with a “moral vacancy” at the heart of public discourse, which has been reduced in the media to meaningless shouting matches on cable TV – what might be called the Foxification of debate – and among elected politicians to disagreements so technocratic and timid that citizens despair of politics ever addressing the questions that matter most.
“There is an internal connection between the two, and the internal connection has to do with this flight from judgment in public discourse, or the aspiration to value neutrality in public discourse. And it’s connected to the way economics has cast itself as a value-neutral science when, in fact, it should probably be seen – as it once was – as a branch of moral and political philosophy.”
Sandel’s popularity would certainly indicate a public appetite for something more robust and enriching. I ask if he thinks academia could do with a few more professors with rock star status and he pauses for a polite while before smiling. “That’s a question I would rather have you answer than me, I would say.” That someone as unflashy and mild-mannered as Sandel can command more attention in the US than even a rightwing poster boy academic such as Niall Ferguson must, I would say, be some grounds for optimism. On a purely personal level, I ask, is there any downside to engaging with the world through the eyes of moral philosophy, rather than simple market logic?
“None but the burden of reflection and moral seriousness.”
sexta-feira, 15 de junho de 2012
quinta-feira, 7 de junho de 2012
Why Elites fail
Do The Nation 07/06/2012
This article is adapted from Twilight of the Elites: America After Meritocracy, © 2012 by Christopher Hayes and published by Crown Publishers, a division of Random House Inc.
In 1990, at the age of 11, I stood in a line of sixth graders outside an imposing converted armory on Manhattan’s Upper East Side, nervously anticipating a test that would change my life. I was hoping to gain entrance to Hunter College High School, a public magnet school that runs from grades seven through twelve and admits students from all five boroughs. Each year, between 3,000 and 4,000 students citywide score high enough on their fifth-grade standardized tests to qualify to take Hunter’s entrance exam in the sixth grade; ultimately, only 185 will be offered admission. (About forty-five students, all from Manhattan, test into Hunter Elementary School in the first grade and automatically gain entrance to the high school.)
I was one of the lucky ones who made it through, and my experience there transformed me. It was at Hunter that I absorbed the open-minded, self-assured cosmopolitanism that is the guiding ethos of the current American ruling class. What animates the school is a collective delight in the talent and energy of its students and a general feeling of earned superiority. In 1982 a Hunter alumnus profiled the school in a New York magazine article called “The Joyful Elite” and identified its “most singular trait” as the “exuberantly smug loyalty of its students.”
That loyalty emanates from the deeply held conviction that Hunter embodies the meritocratic ideal as much as any institution in the country. Unlike elite colleges, which use all kinds of subjective measures—recommendations, résumés, writing samples, parental legacies and interviews—in deciding who gains admittance, entrance to Hunter rests on a single “objective” measure: one three-hour test. If you clear the bar, you’re in; if not, you’re out. There are no legacy admissions, and there are no strings to pull for the well-connected. If Michael Bloomberg’s daughter took the test and didn’t pass, she wouldn’t get in. There are only a handful of institutions left in the country about which this can be said.
Because it is public and free, the school pulls kids from all over the city, many of whom are first-generation Americans, the children of immigrant strivers from Korea, Russia and Pakistan. Half the students have at least one parent born outside the United States. For all these reasons Hunter is, in its own imagination, a place where anyone with drive and brains can be catapulted from the anonymity of working-class outer-borough neighborhoods to the inner sanctum of the American elite. “I came from a family where nobody went to college. We lived up in Washington Heights. We had no money,” says Jennifer Raab, who as president of CUNY’s Hunter College oversees the high school as well. “It was incredibly empowering.” When she surveys the student body, “it gets me very sappy about the American dream. It really can come true. These kids are getting an education that is unparalleled, and it’s not about where they come from or who they are.”
But the problem with my alma mater is that over time, the mechanisms of meritocracy have broken down. In 1995, when I was a student at Hunter, the student body was 12 percent black and 6 percent Hispanic. Not coincidentally, there was no test-prep industry for the Hunter entrance exam. That’s no longer the case. Now, so-called cram schools like Elite Academy in Queens can charge thousands of dollars for after-school and weekend courses where sixth graders memorize vocabulary words and learn advanced math. Meanwhile, in the wealthier precincts of Manhattan, parents can hire $90-an-hour private tutors for one-on-one sessions with their children.
By 2009, Hunter’s demographics were radically different—just 3 percent black and 1 percent Hispanic, according to the New York Times. With the rise of a sophisticated and expensive test-preparation industry, the means of selecting entrants to Hunter has grown less independent of the social and economic hierarchies in New York at large. The pyramid of merit has come to mirror the pyramid of wealth and cultural capital.
How and why does this happen? I think the best answer comes from the work of a social theorist named Robert Michels, who was occupied with a somewhat parallel problem in the early years of the last century. Born to a wealthy German family, Michels came to adopt the radical socialist politics then sweeping through much of Europe. At first, he joined the Social Democratic Party, but he ultimately came to view it as too bureaucratic to achieve its stated aims. “Our workers’ organization has become an end in itself,” Michels declared, “a machine which is perfected for its own sake and not for the tasks which it could have performed.”
Michels then drifted toward the syndicalists, who eschewed parliamentary elections in favor of mass labor solidarity, general strikes and resistance to the dictatorship of the kaiser. But even among the more militant factions of the German left, Michels encountered the same bureaucratic pathologies that had soured him on the SDP. In his classic book Political Parties, he wondered why the parties of the left, so ideologically committed to democracy and participation, were as oligarchic in their functioning as the self-consciously elitist and aristocratic parties of the right.
Michels’s grim conclusion was that it was impossible for any party, no matter its belief system, to bring about democracy in practice. Oligarchy was inevitable. For any kind of institution with a democratic base to consolidate the legitimacy it needs to exist, it must have an organization that delegates tasks. The rank and file will not have the time, energy, wherewithal or inclination to participate in the many, often minute decisions necessary to keep the institution functioning. In fact, effectiveness, Michels argues convincingly, requires that these tasks be delegated to a small group of people with enough power to make decisions of consequence for the entire membership. Over time, this bureaucracy becomes a kind of permanent, full-time cadre of leadership. “Without wishing it,” Michels says, there grows up a great “gulf which divides the leaders from the masses.” The leaders now control the tools with which to manipulate the opinion of the masses and subvert the organization’s democratic process. “Thus the leaders, who were at first no more than the executive organs of the collective, will soon emancipate themselves from the mass and become independent of its control.”
All this flows inexorably from the nature of organization itself, Michels concludes, and he calls it “The Iron Law of Oligarchy”: “It is organization which gives birth to the dominion of the elected over the electors, of the mandataries over the mandators, of the delegates over the delegators. Who says organization says oligarchy.”
* * *
The dynamic Michels identifies applies, in an analogous way, to our own cherished system of meritocracy. In order for it to live up to its ideals, a meritocracy must comply with two principles. The first is the Principle of Difference, which holds that there is vast differentiation among people in their ability and that we should embrace this natural hierarchy and set ourselves the challenge of matching the hardest-working and most talented to the most difficult, important and remunerative tasks.
The second is the Principle of Mobility. Over time, there must be some continuous, competitive selection process that ensures performance is rewarded and failure punished. That is, the delegation of duties cannot simply be made once and then fixed in place over a career or between generations. People must be able to rise and fall along with their accomplishments and failures. When a slugger loses his swing, he should be benched; when a trader loses money, his bonus should be cut. At the broader social level, we hope that the talented children of the poor will ascend to positions of power and prestige while the mediocre sons of the wealthy will not be charged with life-and-death decisions. Over time, in other words, society will have mechanisms that act as a sort of pump, constantly ensuring that the talented and hard-working are propelled upward, while the mediocre trickle downward.
But this ideal, appealing as it may be, runs up against the reality of what I’ll call the Iron Law of Meritocracy. The Iron Law of Meritocracy states that eventually the inequality produced by a meritocratic system will grow large enough to subvert the mechanisms of mobility. Unequal outcomes make equal opportunity impossible. The Principle of Difference will come to overwhelm the Principle of Mobility. Those who are able to climb up the ladder will find ways to pull it up after them, or to selectively lower it down to allow their friends, allies and kin to scramble up. In other words: “Who says meritocracy says oligarchy.”
Consider, for example, the next “meritocracy” that graduates of Hunter encounter. American universities are the central institution of the modern meritocracy, and yet, as Daniel Golden documents in his devastating book The Price of Admission, atop the ostensibly meritocratic architecture of SATs and high school grades is built an entire tower of preference and subsidy for the privileged:
A pure functioning meritocracy would produce a society with growing inequality, but that inequality would come along with a correlated increase in social mobility. As the educational system and business world got better and better at finding inherent merit wherever it lay, you would see the bright kids of the poor boosted to the upper echelons of society, with the untalented progeny of the best and brightest relegated to the bottom of the social pyramid where they belong.
But the Iron Law of Meritocracy makes a different prediction: that societies ordered around the meritocratic ideal will produce inequality without the attendant mobility. Indeed, over time, a society will become more unequal and less mobile as those who ascend its heights create means of preserving and defending their privilege and find ways to pass it on across generations. And this, as it turns out, is a pretty spot-on description of the trajectory of the American economy since the mid-1970s.
* * *
The sharp, continuous rise in inequality is one of the most studied and acknowledged features of the American political economy in the post-Carter age. Paul Krugman calls it “The Great Divergence,” and the economist Emmanuel Saez, who has done the most pioneering work on measuring the phenomenon, has written: “The top 1% income share has increased dramatically in recent decades and reached levels which had not been seen…since before the Great Depression.”
One of the most distinctive aspects of the rise in American inequality over the past three decades is just how concentrated the gains are at the very top. The farther up the income scale you go, the better people are doing: the top 10 percent have done well, but they’ve been outpaced by the top 1 percent, who in turn have seen slower gains than the top 0.1 percent, all of whom have been beaten by the top 0.01 percent. Adjusted for inflation, the top 0.1 percent saw their average annual income rise from just over $1 million in 1974 to $7.1 million in 2007. And things were even better for the top 0.01 percent, who saw their average annual income explode from less than $4 million to $35 million, nearly a ninefold increase.
It is not simply that the rich are getting richer, though that’s certainly true. It is that a smaller and smaller group of über-rich are able to capture a larger and larger share of the fruits of the economy. America now features more inequality than any other industrialized democracy. In its peer group are countries like Argentina and other Latin American nations that once stood as iconic examples of the ways in which the absence of a large middle class presented a roadblock to development and good governance.
So: income inequality has been growing. What about mobility? While it’s much harder to measure, there’s a growing body of evidence that, at the same time income inequality has been growing at an unprecedented rate, social mobility has been declining. In a 2012 speech, Alan Krueger, chair of President Obama’s Council of Economic Advisers, coined the term “The Gatsby Curve” to refer to a chart showing that over the past three decades, “as inequality has increased…year-to-year or generation-to-generation economic mobility has decreased.”
The most comprehensive attempt at divining the long-term trends in social mobility over several generations is presented in “Intergenerational Economic Mobility in the US, 1940 to 2000,” a complex paper by economists Daniel Aaronson and Bhashkar Mazumder of the Federal Reserve Bank of Chicago. After a series of maneuvers that qualify as statistical pyrotechnics, they conclude that “mobility increased from 1950 to 1980 but has declined sharply since 1980. The recent decline in mobility is only partially explained by education.”
Another pair of economists, from the Boston Federal Reserve, analyzed household income data to measure mobility over a period of three decades rather than intergenerational mobility. They found that in the 1970s, 36 percent of families stayed in the same income decile; in the 1980s, that figure was 37 percent; and in the 1990s, it was 40 percent. In other words, over time, a larger share of families were staying within their class through the duration of their lives.
This is evidence that the Iron Law of Meritocracy is, in fact, exerting itself on our social order. And we might ask what a society that has been corrupted entirely by the Iron Law of Meritocracy would look like. It would be a society with extremely high and rising inequality yet little circulation of elites. A society in which the pillar institutions were populated and presided over by a group of hyper-educated, ambitious overachievers who enjoyed tremendous monetary rewards as well as unparalleled political power and prestige, and yet who managed to insulate themselves from sanction, competition and accountability; a group of people who could more or less rest assured that now that they have achieved their status, now that they have scaled to the top of the pyramid, they, their peers and their progeny will stay there.
Such a ruling class would have all the competitive ferocity inculcated by the ceaseless jockeying within the institutions that produce meritocratic elites, but face no actual sanctions for failing at their duties or succumbing to the temptations of corruption. It would reflexively protect its worst members; it would operate with a wide gulf between performance and reward; and it would be shot through with corruption, rule-breaking and self-dealing, as those on top pursued the outsized rewards promised for superstars. In the same way the bailouts combined the worst aspects of capitalism and socialism, such a social order would fuse the worst aspects of meritocracy and bureaucracy.
It would, in other words, look a lot like the American elite in the first years of the twenty-first century.
* * *
Of all the status obsessions that preoccupy our elites, none is quite so prominent as the obsession with smartness. Intelligence is the core value of the meritocracy, one that stretches back to the early years of standardized testing, when the modern-day SAT descended from early IQ tests. To call a member of the elite “brilliant” is to pay that person the highest compliment.
Intelligence is a vitally necessary characteristic for those with powerful positions. But it isn’t just a celebration of smartness that characterizes the culture of meritocracy. It’s something more pernicious: a Cult of Smartness in which intelligence is the chief virtue, along with a conviction that smartness is rankable and that the hierarchy of intelligence, like the hierarchy of wealth, never plateaus. In a society as stratified as our own, this is a seductive conclusion to reach. Since there are people who make $500,000, $5 million and $5 billion all within the same elite, perhaps there are leaps equal to such orders of magnitude in cognitive ability as well.
In Liquidated: An Ethnography of Wall Street, anthropologist Karen Ho shows how the obsession with smartness produces “a meritocratic feedback loop,” in which bankers’ growing influence itself becomes further evidence that they are, in fact, “the smartest.” According to one Morgan Stanley analyst Ho interviewed, those being recruited by the firm “are typically told they will be working with ‘the brightest people in the world. These are the greatest minds of the century.’” Robert Hopkins, a vice president of mergers and acquisitions at Lehman Brothers, tells her of those who inhabit Wall Street: “We are talking about the smartest people in the world. We are! They are the smartest people in the world.”
And just as one would suspect, given the fractal nature of inequality at the top, hovering above those who work at big Wall Street firms is an entire world of hedge-fund hotshots, who see themselves as far smarter than the grunts on Wall Street. “There’s 100 percent no question that most people on Wall Street, even if they have nice credentials, are generally developmentally disabled,” a hedge-fund analyst I’ll call Eli told me, only somewhat jokingly, one night over dinner. Hedge funds, according to Eli and his colleagues, are the real deal; the innermost of inner rings. “I was surrounded my whole life by people who took intelligence very seriously,” Eli told me. “I went to good schools, I worked at places surrounded by smart people. And until now I’ve never been at a place that prides itself on having the smartest people and where it’s actually true.”
That confidence, of course, projects outward, and from it emanates the authority that the financial sector as a whole enjoyed (and in certain circles still enjoys). “At the end of the day,” Eli says with a laugh, “America does what Wall Street tells it to do. And whether that’s because Wall Street knows best, whether Wall Street is intelligently self-dealing, or whether it has no idea and talks out of its ass, that is the culture in America.”
This is the Cult of Smartness at its most pernicious: listen to Wall Street—they’ve got the smartest minds on the planet.
While smartness is necessary for competent elites, it is far from sufficient: wisdom, judgment, empathy and ethical rigor are all as important, even if those traits are far less valued. Indeed, extreme intelligence without these qualities can be extremely destructive. But empathy does not impress the same way smartness does. Smartness dazzles and mesmerizes. More important, it intimidates. When a group of powerful people get together to make a group decision, conflict and argumentation ensue, and more often than not the decision that emerges is that which is articulated most forcefully by those parties perceived to be the “smartest.”
It is under these conditions that destructive intelligence flourishes. Behind many of the Bush administration’s most disastrous and destructive decisions was one man: David Addington, counsel and then chief of staff to Dick Cheney. Addington was called “Cheney’s Cheney” and “the most powerful man you’ve never heard of.” A former Bush White House lawyer told The New Yorker’s Jane Mayer that the administration’s legal framework for the “war on terror”—from indefinite detention, to torture, to rejection of the 1949 Geneva Accords, to denial of habeas corpus—was “all Addington.”
Addington’s defining trait, as portrayed in numerous profiles, is his hard-edged, ideologically focused intelligence. “The boy seemed terribly, terribly bright,” Addington’s high school history teacher told Mayer. “He was scornful of anyone who said anything that was naïve, or less than bright. His sneers were almost palpable.” A US News and World Report profile of Addington observed that “his capacity to absorb complex information is legendary.” Co-workers referred to him as “extremely smart” and “sublimely brilliant.”
What emerges in these accounts is a figure who used his dazzling recall, razor-sharp logical ability and copious knowledge to implacably push administration policy in a rogue direction. Because he knew the law so well, he was able to make legal arguments that, executed by anyone else, would have been regarded as insane. He would edit briefs so that they always reflected a maximalist interpretation of presidential power, and his sheer ferocity and analytic horsepower enabled him to steamroll anyone who raised objections. Pentagon lawyer Richard Schiffrin described Addington’s posture in a meeting just after 9/11 to Mayer this way: “He’d sit, listen, and then say, ‘No, that’s not right.’… He didn’t recognize the wisdom of the other lawyers. He was always right. He didn’t listen. He knew the answers.”
This is a potent articulation of the dark emotional roots of the Cult of Smartness: the desire to differentiate and dominate that the meritocracy encourages. Ironically, in seeking to stand apart, the Cult of Smartness can kill independent thought by subtly training people to defer to others whom one should “take seriously.”
* * *
But fractal inequality doesn’t just produce errors of judgment like those we saw during the run-up to Iraq; it also creates a system of incentives that produces an insidious form of corruption. This corruption isn’t the obvious quid pro quo of the Gilded Age—there are precious few cases of politicians taking satchels of cash in exchange for votes. What’s far more common is what Harvard Law professor Lawrence Lessig calls “institutional corruption,” in which an institution develops an “improper dependency,” one that “conflicts with the dependence intended.”
This kind of corruption is everywhere you look. Consider a doctor who receives gifts and honorariums from a prescription drug company. The doctor insists plausibly that this has no effect on his medical decisions, which remain independent and guided by his training, instincts and the best available data. And he is not lying or being disingenuous when he says this: he absolutely believes it to be the case. But we know from a series of studies that there is a strong correlation between gifts from pharmaceutical companies and doctors’ willingness to prescribe their drugs.
This basic dynamic infects some of our most important institutions. Key to facilitating both the monumental housing bubble and its collapse was the ratings agencies’ habit of giving even extremely leveraged, toxic securities a triple-A rating. The institutional purpose of the rating agencies (and their market purpose as well) is to add value for investors by using their expertise to make judgments about the creditworthiness of securities. Originally, the agencies made their money from the investors themselves, who paid subscription fees in exchange for access to their ratings. But over time the largest agencies shifted to a model in which the banks and financial entities issuing the securities would pay the agencies for a rating. Obviously, these new clients wanted the highest rating possible and often would bring pressure to bear on the agencies to make sure they secured the needed triple A. And so the ratings agencies developed an improper dependence on their clients, one that pulled them away from fulfilling their original institutional purpose of serving investors. They became corrupt, and the result was trillions of dollars in supposedly triple-A securities that became worthless once the housing bubble burst.
We see a similar destructive example of this dynamic at work in two groups we entrusted to guard the public interest when it comes to the economy: federal regulators and elite economists. In a paper about the financial crisis, Rob Johnson and Thomas Ferguson tracked the salary trends for those working in finance and those in the federal agencies tasked with regulating them and found a striking divergence between the two. The authors note:
What we are left with is the confusion that arises from an ambiguity of roles: are our regulators attempting to rein in the excesses of those they regulate, or are they auditioning for a lucrative future job? Are economists who publish papers praising financial deregulation giving us an honest assessment of the facts and trends, or courting extremely lucrative consulting fees from banks?
In her book Shadow Elite, about the new global ruling class, Janine Wedel recalls visiting Eastern Europe after the fall of the Berlin Wall and finding the elites she met there—those at the center of building the new capitalist societies—toting an array of business cards that represented their various roles: one for their job as a member of parliament, another for the start-up business they were running (which was making its money off government contracts), and yet another for the NGO on the board of which they sat. Wedel writes that those “who adapted to the new environment with the most agility and creativity, who tried out novel ways of operating and got away with them, and sometimes were the most ethically challenged, were most rewarded with influence.”
This has an eerie resonance with our predicament. We can never be sure just which other business cards are in the pocket of the pundit, politician or professor. We can’t be sure, in short, just who our elites are working for.
But we suspect it is not us.
Editor's Note: Always wanted to pick Chris’s brain? Readers are invited to submit their most incisive questions on this article and his book in the comment section below or to email them to comments@thenation.com. Our editor and publisher, Katrina vanden Heuvel, will ask a few of the best when she joins Chris at The New School on Thursday, June 14th for a conversation on the new American elite and how we can bring about change. We’ll post a live stream of the event and, of course, readers in New York are encouraged to join us!
This article is adapted from Twilight of the Elites: America After Meritocracy, © 2012 by Christopher Hayes and published by Crown Publishers, a division of Random House Inc.
In 1990, at the age of 11, I stood in a line of sixth graders outside an imposing converted armory on Manhattan’s Upper East Side, nervously anticipating a test that would change my life. I was hoping to gain entrance to Hunter College High School, a public magnet school that runs from grades seven through twelve and admits students from all five boroughs. Each year, between 3,000 and 4,000 students citywide score high enough on their fifth-grade standardized tests to qualify to take Hunter’s entrance exam in the sixth grade; ultimately, only 185 will be offered admission. (About forty-five students, all from Manhattan, test into Hunter Elementary School in the first grade and automatically gain entrance to the high school.)
About the Author
Christopher Hayes
Christopher Hayes is Editor at Large of The Nation and host of Up w/ Chris Hayes on MSNBC...
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Why doesn’t the United States seem to be capturing anyone anymore?
We have a society that on the one hand has become comfortable with war, and on the other hand wants to distance itself from it as much as possible.
That loyalty emanates from the deeply held conviction that Hunter embodies the meritocratic ideal as much as any institution in the country. Unlike elite colleges, which use all kinds of subjective measures—recommendations, résumés, writing samples, parental legacies and interviews—in deciding who gains admittance, entrance to Hunter rests on a single “objective” measure: one three-hour test. If you clear the bar, you’re in; if not, you’re out. There are no legacy admissions, and there are no strings to pull for the well-connected. If Michael Bloomberg’s daughter took the test and didn’t pass, she wouldn’t get in. There are only a handful of institutions left in the country about which this can be said.
Because it is public and free, the school pulls kids from all over the city, many of whom are first-generation Americans, the children of immigrant strivers from Korea, Russia and Pakistan. Half the students have at least one parent born outside the United States. For all these reasons Hunter is, in its own imagination, a place where anyone with drive and brains can be catapulted from the anonymity of working-class outer-borough neighborhoods to the inner sanctum of the American elite. “I came from a family where nobody went to college. We lived up in Washington Heights. We had no money,” says Jennifer Raab, who as president of CUNY’s Hunter College oversees the high school as well. “It was incredibly empowering.” When she surveys the student body, “it gets me very sappy about the American dream. It really can come true. These kids are getting an education that is unparalleled, and it’s not about where they come from or who they are.”
But the problem with my alma mater is that over time, the mechanisms of meritocracy have broken down. In 1995, when I was a student at Hunter, the student body was 12 percent black and 6 percent Hispanic. Not coincidentally, there was no test-prep industry for the Hunter entrance exam. That’s no longer the case. Now, so-called cram schools like Elite Academy in Queens can charge thousands of dollars for after-school and weekend courses where sixth graders memorize vocabulary words and learn advanced math. Meanwhile, in the wealthier precincts of Manhattan, parents can hire $90-an-hour private tutors for one-on-one sessions with their children.
By 2009, Hunter’s demographics were radically different—just 3 percent black and 1 percent Hispanic, according to the New York Times. With the rise of a sophisticated and expensive test-preparation industry, the means of selecting entrants to Hunter has grown less independent of the social and economic hierarchies in New York at large. The pyramid of merit has come to mirror the pyramid of wealth and cultural capital.
How and why does this happen? I think the best answer comes from the work of a social theorist named Robert Michels, who was occupied with a somewhat parallel problem in the early years of the last century. Born to a wealthy German family, Michels came to adopt the radical socialist politics then sweeping through much of Europe. At first, he joined the Social Democratic Party, but he ultimately came to view it as too bureaucratic to achieve its stated aims. “Our workers’ organization has become an end in itself,” Michels declared, “a machine which is perfected for its own sake and not for the tasks which it could have performed.”
Michels then drifted toward the syndicalists, who eschewed parliamentary elections in favor of mass labor solidarity, general strikes and resistance to the dictatorship of the kaiser. But even among the more militant factions of the German left, Michels encountered the same bureaucratic pathologies that had soured him on the SDP. In his classic book Political Parties, he wondered why the parties of the left, so ideologically committed to democracy and participation, were as oligarchic in their functioning as the self-consciously elitist and aristocratic parties of the right.
Michels’s grim conclusion was that it was impossible for any party, no matter its belief system, to bring about democracy in practice. Oligarchy was inevitable. For any kind of institution with a democratic base to consolidate the legitimacy it needs to exist, it must have an organization that delegates tasks. The rank and file will not have the time, energy, wherewithal or inclination to participate in the many, often minute decisions necessary to keep the institution functioning. In fact, effectiveness, Michels argues convincingly, requires that these tasks be delegated to a small group of people with enough power to make decisions of consequence for the entire membership. Over time, this bureaucracy becomes a kind of permanent, full-time cadre of leadership. “Without wishing it,” Michels says, there grows up a great “gulf which divides the leaders from the masses.” The leaders now control the tools with which to manipulate the opinion of the masses and subvert the organization’s democratic process. “Thus the leaders, who were at first no more than the executive organs of the collective, will soon emancipate themselves from the mass and become independent of its control.”
All this flows inexorably from the nature of organization itself, Michels concludes, and he calls it “The Iron Law of Oligarchy”: “It is organization which gives birth to the dominion of the elected over the electors, of the mandataries over the mandators, of the delegates over the delegators. Who says organization says oligarchy.”
* * *
The dynamic Michels identifies applies, in an analogous way, to our own cherished system of meritocracy. In order for it to live up to its ideals, a meritocracy must comply with two principles. The first is the Principle of Difference, which holds that there is vast differentiation among people in their ability and that we should embrace this natural hierarchy and set ourselves the challenge of matching the hardest-working and most talented to the most difficult, important and remunerative tasks.
The second is the Principle of Mobility. Over time, there must be some continuous, competitive selection process that ensures performance is rewarded and failure punished. That is, the delegation of duties cannot simply be made once and then fixed in place over a career or between generations. People must be able to rise and fall along with their accomplishments and failures. When a slugger loses his swing, he should be benched; when a trader loses money, his bonus should be cut. At the broader social level, we hope that the talented children of the poor will ascend to positions of power and prestige while the mediocre sons of the wealthy will not be charged with life-and-death decisions. Over time, in other words, society will have mechanisms that act as a sort of pump, constantly ensuring that the talented and hard-working are propelled upward, while the mediocre trickle downward.
But this ideal, appealing as it may be, runs up against the reality of what I’ll call the Iron Law of Meritocracy. The Iron Law of Meritocracy states that eventually the inequality produced by a meritocratic system will grow large enough to subvert the mechanisms of mobility. Unequal outcomes make equal opportunity impossible. The Principle of Difference will come to overwhelm the Principle of Mobility. Those who are able to climb up the ladder will find ways to pull it up after them, or to selectively lower it down to allow their friends, allies and kin to scramble up. In other words: “Who says meritocracy says oligarchy.”
Consider, for example, the next “meritocracy” that graduates of Hunter encounter. American universities are the central institution of the modern meritocracy, and yet, as Daniel Golden documents in his devastating book The Price of Admission, atop the ostensibly meritocratic architecture of SATs and high school grades is built an entire tower of preference and subsidy for the privileged:
At least one third of the students at elite universities, and at least half at liberal arts colleges, are flagged for preferential treatment in the admissions process. While minorities make up 10 to 15 percent of a typical student body, affluent whites dominate other preferred groups: recruited athletes (10 to 25 percent of students); alumni children, also known as “legacies” (10 to 25 percent); development cases (2 to 5 percent); children of celebrities and politicians (1 to 2 percent); and children of faculty members (1 to 3 percent).This doesn’t even count the advantages that wealthy children have in terms of private tutors, test prep, and access to expensive private high schools and college counselors. All together, this layered system of preferences for the children of the privileged amounts to, in Golden’s words, “affirmative action for rich white people.” It is not so much the meritocracy as idealized and celebrated but rather the ancient practice of “elites mastering the art of perpetuating themselves.”
A pure functioning meritocracy would produce a society with growing inequality, but that inequality would come along with a correlated increase in social mobility. As the educational system and business world got better and better at finding inherent merit wherever it lay, you would see the bright kids of the poor boosted to the upper echelons of society, with the untalented progeny of the best and brightest relegated to the bottom of the social pyramid where they belong.
But the Iron Law of Meritocracy makes a different prediction: that societies ordered around the meritocratic ideal will produce inequality without the attendant mobility. Indeed, over time, a society will become more unequal and less mobile as those who ascend its heights create means of preserving and defending their privilege and find ways to pass it on across generations. And this, as it turns out, is a pretty spot-on description of the trajectory of the American economy since the mid-1970s.
* * *
The sharp, continuous rise in inequality is one of the most studied and acknowledged features of the American political economy in the post-Carter age. Paul Krugman calls it “The Great Divergence,” and the economist Emmanuel Saez, who has done the most pioneering work on measuring the phenomenon, has written: “The top 1% income share has increased dramatically in recent decades and reached levels which had not been seen…since before the Great Depression.”
One of the most distinctive aspects of the rise in American inequality over the past three decades is just how concentrated the gains are at the very top. The farther up the income scale you go, the better people are doing: the top 10 percent have done well, but they’ve been outpaced by the top 1 percent, who in turn have seen slower gains than the top 0.1 percent, all of whom have been beaten by the top 0.01 percent. Adjusted for inflation, the top 0.1 percent saw their average annual income rise from just over $1 million in 1974 to $7.1 million in 2007. And things were even better for the top 0.01 percent, who saw their average annual income explode from less than $4 million to $35 million, nearly a ninefold increase.
It is not simply that the rich are getting richer, though that’s certainly true. It is that a smaller and smaller group of über-rich are able to capture a larger and larger share of the fruits of the economy. America now features more inequality than any other industrialized democracy. In its peer group are countries like Argentina and other Latin American nations that once stood as iconic examples of the ways in which the absence of a large middle class presented a roadblock to development and good governance.
So: income inequality has been growing. What about mobility? While it’s much harder to measure, there’s a growing body of evidence that, at the same time income inequality has been growing at an unprecedented rate, social mobility has been declining. In a 2012 speech, Alan Krueger, chair of President Obama’s Council of Economic Advisers, coined the term “The Gatsby Curve” to refer to a chart showing that over the past three decades, “as inequality has increased…year-to-year or generation-to-generation economic mobility has decreased.”
The most comprehensive attempt at divining the long-term trends in social mobility over several generations is presented in “Intergenerational Economic Mobility in the US, 1940 to 2000,” a complex paper by economists Daniel Aaronson and Bhashkar Mazumder of the Federal Reserve Bank of Chicago. After a series of maneuvers that qualify as statistical pyrotechnics, they conclude that “mobility increased from 1950 to 1980 but has declined sharply since 1980. The recent decline in mobility is only partially explained by education.”
Another pair of economists, from the Boston Federal Reserve, analyzed household income data to measure mobility over a period of three decades rather than intergenerational mobility. They found that in the 1970s, 36 percent of families stayed in the same income decile; in the 1980s, that figure was 37 percent; and in the 1990s, it was 40 percent. In other words, over time, a larger share of families were staying within their class through the duration of their lives.
This is evidence that the Iron Law of Meritocracy is, in fact, exerting itself on our social order. And we might ask what a society that has been corrupted entirely by the Iron Law of Meritocracy would look like. It would be a society with extremely high and rising inequality yet little circulation of elites. A society in which the pillar institutions were populated and presided over by a group of hyper-educated, ambitious overachievers who enjoyed tremendous monetary rewards as well as unparalleled political power and prestige, and yet who managed to insulate themselves from sanction, competition and accountability; a group of people who could more or less rest assured that now that they have achieved their status, now that they have scaled to the top of the pyramid, they, their peers and their progeny will stay there.
Such a ruling class would have all the competitive ferocity inculcated by the ceaseless jockeying within the institutions that produce meritocratic elites, but face no actual sanctions for failing at their duties or succumbing to the temptations of corruption. It would reflexively protect its worst members; it would operate with a wide gulf between performance and reward; and it would be shot through with corruption, rule-breaking and self-dealing, as those on top pursued the outsized rewards promised for superstars. In the same way the bailouts combined the worst aspects of capitalism and socialism, such a social order would fuse the worst aspects of meritocracy and bureaucracy.
It would, in other words, look a lot like the American elite in the first years of the twenty-first century.
* * *
Of all the status obsessions that preoccupy our elites, none is quite so prominent as the obsession with smartness. Intelligence is the core value of the meritocracy, one that stretches back to the early years of standardized testing, when the modern-day SAT descended from early IQ tests. To call a member of the elite “brilliant” is to pay that person the highest compliment.
Intelligence is a vitally necessary characteristic for those with powerful positions. But it isn’t just a celebration of smartness that characterizes the culture of meritocracy. It’s something more pernicious: a Cult of Smartness in which intelligence is the chief virtue, along with a conviction that smartness is rankable and that the hierarchy of intelligence, like the hierarchy of wealth, never plateaus. In a society as stratified as our own, this is a seductive conclusion to reach. Since there are people who make $500,000, $5 million and $5 billion all within the same elite, perhaps there are leaps equal to such orders of magnitude in cognitive ability as well.
In Liquidated: An Ethnography of Wall Street, anthropologist Karen Ho shows how the obsession with smartness produces “a meritocratic feedback loop,” in which bankers’ growing influence itself becomes further evidence that they are, in fact, “the smartest.” According to one Morgan Stanley analyst Ho interviewed, those being recruited by the firm “are typically told they will be working with ‘the brightest people in the world. These are the greatest minds of the century.’” Robert Hopkins, a vice president of mergers and acquisitions at Lehman Brothers, tells her of those who inhabit Wall Street: “We are talking about the smartest people in the world. We are! They are the smartest people in the world.”
And just as one would suspect, given the fractal nature of inequality at the top, hovering above those who work at big Wall Street firms is an entire world of hedge-fund hotshots, who see themselves as far smarter than the grunts on Wall Street. “There’s 100 percent no question that most people on Wall Street, even if they have nice credentials, are generally developmentally disabled,” a hedge-fund analyst I’ll call Eli told me, only somewhat jokingly, one night over dinner. Hedge funds, according to Eli and his colleagues, are the real deal; the innermost of inner rings. “I was surrounded my whole life by people who took intelligence very seriously,” Eli told me. “I went to good schools, I worked at places surrounded by smart people. And until now I’ve never been at a place that prides itself on having the smartest people and where it’s actually true.”
That confidence, of course, projects outward, and from it emanates the authority that the financial sector as a whole enjoyed (and in certain circles still enjoys). “At the end of the day,” Eli says with a laugh, “America does what Wall Street tells it to do. And whether that’s because Wall Street knows best, whether Wall Street is intelligently self-dealing, or whether it has no idea and talks out of its ass, that is the culture in America.”
This is the Cult of Smartness at its most pernicious: listen to Wall Street—they’ve got the smartest minds on the planet.
While smartness is necessary for competent elites, it is far from sufficient: wisdom, judgment, empathy and ethical rigor are all as important, even if those traits are far less valued. Indeed, extreme intelligence without these qualities can be extremely destructive. But empathy does not impress the same way smartness does. Smartness dazzles and mesmerizes. More important, it intimidates. When a group of powerful people get together to make a group decision, conflict and argumentation ensue, and more often than not the decision that emerges is that which is articulated most forcefully by those parties perceived to be the “smartest.”
It is under these conditions that destructive intelligence flourishes. Behind many of the Bush administration’s most disastrous and destructive decisions was one man: David Addington, counsel and then chief of staff to Dick Cheney. Addington was called “Cheney’s Cheney” and “the most powerful man you’ve never heard of.” A former Bush White House lawyer told The New Yorker’s Jane Mayer that the administration’s legal framework for the “war on terror”—from indefinite detention, to torture, to rejection of the 1949 Geneva Accords, to denial of habeas corpus—was “all Addington.”
Addington’s defining trait, as portrayed in numerous profiles, is his hard-edged, ideologically focused intelligence. “The boy seemed terribly, terribly bright,” Addington’s high school history teacher told Mayer. “He was scornful of anyone who said anything that was naïve, or less than bright. His sneers were almost palpable.” A US News and World Report profile of Addington observed that “his capacity to absorb complex information is legendary.” Co-workers referred to him as “extremely smart” and “sublimely brilliant.”
What emerges in these accounts is a figure who used his dazzling recall, razor-sharp logical ability and copious knowledge to implacably push administration policy in a rogue direction. Because he knew the law so well, he was able to make legal arguments that, executed by anyone else, would have been regarded as insane. He would edit briefs so that they always reflected a maximalist interpretation of presidential power, and his sheer ferocity and analytic horsepower enabled him to steamroll anyone who raised objections. Pentagon lawyer Richard Schiffrin described Addington’s posture in a meeting just after 9/11 to Mayer this way: “He’d sit, listen, and then say, ‘No, that’s not right.’… He didn’t recognize the wisdom of the other lawyers. He was always right. He didn’t listen. He knew the answers.”
This is a potent articulation of the dark emotional roots of the Cult of Smartness: the desire to differentiate and dominate that the meritocracy encourages. Ironically, in seeking to stand apart, the Cult of Smartness can kill independent thought by subtly training people to defer to others whom one should “take seriously.”
* * *
But fractal inequality doesn’t just produce errors of judgment like those we saw during the run-up to Iraq; it also creates a system of incentives that produces an insidious form of corruption. This corruption isn’t the obvious quid pro quo of the Gilded Age—there are precious few cases of politicians taking satchels of cash in exchange for votes. What’s far more common is what Harvard Law professor Lawrence Lessig calls “institutional corruption,” in which an institution develops an “improper dependency,” one that “conflicts with the dependence intended.”
This kind of corruption is everywhere you look. Consider a doctor who receives gifts and honorariums from a prescription drug company. The doctor insists plausibly that this has no effect on his medical decisions, which remain independent and guided by his training, instincts and the best available data. And he is not lying or being disingenuous when he says this: he absolutely believes it to be the case. But we know from a series of studies that there is a strong correlation between gifts from pharmaceutical companies and doctors’ willingness to prescribe their drugs.
This basic dynamic infects some of our most important institutions. Key to facilitating both the monumental housing bubble and its collapse was the ratings agencies’ habit of giving even extremely leveraged, toxic securities a triple-A rating. The institutional purpose of the rating agencies (and their market purpose as well) is to add value for investors by using their expertise to make judgments about the creditworthiness of securities. Originally, the agencies made their money from the investors themselves, who paid subscription fees in exchange for access to their ratings. But over time the largest agencies shifted to a model in which the banks and financial entities issuing the securities would pay the agencies for a rating. Obviously, these new clients wanted the highest rating possible and often would bring pressure to bear on the agencies to make sure they secured the needed triple A. And so the ratings agencies developed an improper dependence on their clients, one that pulled them away from fulfilling their original institutional purpose of serving investors. They became corrupt, and the result was trillions of dollars in supposedly triple-A securities that became worthless once the housing bubble burst.
We see a similar destructive example of this dynamic at work in two groups we entrusted to guard the public interest when it comes to the economy: federal regulators and elite economists. In a paper about the financial crisis, Rob Johnson and Thomas Ferguson tracked the salary trends for those working in finance and those in the federal agencies tasked with regulating them and found a striking divergence between the two. The authors note:
At some point after incomes in the financial sector took off, lifetime earnings of the regulated far outstripped what any regulator could ever hope to earn. Rising economic inequality was translating into a crippling institutional weakness in regulatory structure. Not surprisingly, as one former member of a U.S. regulatory agency expressed it to us, regulatory agencies turned into barely disguised employment agencies, as staff increasingly focused on making themselves attractive hires to the firms they were supposed to be regulating.In his film Inside Job, Charles Ferguson documents the insidious ways in which consulting fees and moonlighting gigs with financial companies created systematic conflicts of interest for some of the nation’s most prominent economists. Ferguson’s film parades through a number of the most admired names in the field, from Larry Summers to Martin Feldstein to Frederic Mishkin, who all had lucrative sidelines working for business interests with stakes in their academic work. Mishkin even took $124,000 from the Iceland Chamber of Commerce to write a paper endorsing the country’s economic model, just a few years before it collapsed.
What we are left with is the confusion that arises from an ambiguity of roles: are our regulators attempting to rein in the excesses of those they regulate, or are they auditioning for a lucrative future job? Are economists who publish papers praising financial deregulation giving us an honest assessment of the facts and trends, or courting extremely lucrative consulting fees from banks?
In her book Shadow Elite, about the new global ruling class, Janine Wedel recalls visiting Eastern Europe after the fall of the Berlin Wall and finding the elites she met there—those at the center of building the new capitalist societies—toting an array of business cards that represented their various roles: one for their job as a member of parliament, another for the start-up business they were running (which was making its money off government contracts), and yet another for the NGO on the board of which they sat. Wedel writes that those “who adapted to the new environment with the most agility and creativity, who tried out novel ways of operating and got away with them, and sometimes were the most ethically challenged, were most rewarded with influence.”
This has an eerie resonance with our predicament. We can never be sure just which other business cards are in the pocket of the pundit, politician or professor. We can’t be sure, in short, just who our elites are working for.
But we suspect it is not us.
Editor's Note: Always wanted to pick Chris’s brain? Readers are invited to submit their most incisive questions on this article and his book in the comment section below or to email them to comments@thenation.com. Our editor and publisher, Katrina vanden Heuvel, will ask a few of the best when she joins Chris at The New School on Thursday, June 14th for a conversation on the new American elite and how we can bring about change. We’ll post a live stream of the event and, of course, readers in New York are encouraged to join us!
segunda-feira, 4 de junho de 2012
"Para las corporaciones de Internet la privacidad no existe, es un derecho obsoleto"
En el MICA, la socióloga marroquí/francesa Divina Frau-Meigs le contó a Ñ digital su experiencia durante la reciente cumbre e-G8, que cruzó a los dueños de las grandes compañías de Internet con dirigentes políticos de las potencias mundiales. La hegemonía de los Estados Unidos en la web, uno de los ejes de la charla.
POR Victoria Real
DE Ñ Revista de Cultura, Clarin, BA
ALTERNATIVA. "Si los países hispanoablantes se unieran, generarían ... Invitada por la embajada de Francia junto con la Fundación Telefónica y el Mercado de las Industrias Culturales (MICA) que acaba de finalizar en Buenos Aires, Divina Frau Meigs, socióloga especialista en medios de comunicación, tecnología y comunicación, y asesora de la Unesco, ofreció un par de conferencias sobre "Internet, la innovación, la educación y la diversidad cultural" ¿Qué oportunidades ofrece Internet en materia de producción, difusión cultural e inteligencia colectiva?¿Es posible romper la hegemonía estadounidense en la web? Estas preguntas fueron contestadas por la especialista, quien además analizó las posibilidades de la educación como herramienta para romper la hegemonía cultural estadounidense, de poner en perspectiva la experiencia europea, junto con la experiencia de quienes se incorporan a la producción de contenidos culturales de masa, como Brasil y Medio Oriente y la de los países del Cono Sur, frente a la hegemonía norteamericana
- En términos prácticos, ¿qué significa el concepto de diversidad cultural como derecho?
El derecho a la diversidad cultural es un derecho de protección y de promoción que en 2007 se incorporó a la declaración de los Derechos Humanos. En este momento en las redes no hay protección de la diversidad cultural. Existe la promoción de la expresión bajo todas sus formas, como los chats, los foros, los blogs y los avatares. Y muchos jóvenes usuarios tienen la impresión de que todo esto es libre y gratuito. La realidad es que la web está financiada por la televisión y los estudios de Hollywood, que yo llamo Hollyweb porque ahora sus productos están en Internet. Estas corporaciones son monopólicas y se rigen por el derecho de propiedad que existe en California, Estados Unidos. Si estas cyberempresas deciden utilizar los contenidos que ponen los usuarios en sus plataformas para hacer dinero, pueden hacerlo, ya que la ley de California lo permite.
-A fines de mayo en París se realizó la primera reunión del "eG8", donde las mega corporaciones expresaron sus proyectos para la web. Esos proyectos fueron presentados en la reunión de los ocho países más poderosos del planeta. ¿Cómo ven el futuro de Internet las corporaciones?
Fui invitada al "eG8", un encuentro al que concurrieron todos los multimillonarios recientes, dueños de las plataformas que manejan la web como Google y Facebook, entre otros. Ellos llevaron un mensaje muy claro hacia los gobiernos que conforman el G8. Ese mensaje fue que la privacidad no existe, que es un derecho obsoleto. También recalcaron que las formas de expresión que están en sus plataformas son de su propiedad y las pueden comercializar. Todo esto apunta a que están creando una nueva economía de la web, en la que van a explotar los contenidos que no provengan de formatos clásicos que ya tienen los derechos reservados. Es decir que van a explotar las nuevas formas de expresión donde la gente habla de su vida cotidiana o sobre sus amigos, y que para ellos son bienes relacionales. Las grandes empresas quieren transformar esos bienes en industriales y culturales para ganar dinero.
¿Los Estados no deberían proteger el derecho de propiedad intelectual y privacidad de sus ciudadanos frente a las empresas?
El Estado tiene un rol muy importante en la regulación de los medios y debe replantearse el vacío legal que existe en Internet. En el reciente G8, los Estados más poderosos hablaron de recuperar soberanía frente a las grandes compañías, ya que en el único lugar donde pagan impuestos por sus ganancias es en California. Pero las empresas operan en todo el mundo y deberían pagar impuestos a cada país. Lo importante ahora es que los Estados legislen para que las expresiones que circulan en la web, como un chat, un foro, o un blog pertenezcan al que lo ha producido, al creador, y no sólo a la plataforma que ha prestado los medios de producción.
¿Existen posibles resistencias al modelo hegemónico de contenidos estadounidenses que hoy lidera Internet?
Estudios recientes muestran que los flujos de tráfico en Internet son asimétricos. Hay mucho contenido y trafico desde los Estados Unidos, luego hay tráfico de Europa y el resto del mundo está muy por debajo. Hay que buscar reorganizar los flujos de manera más equilibrada. Eso sería posible si se desarrollan políticas culturales transfronterizas. Por ejemplo, si los países de habla hispana de Latinoamérica se unieran con España, sumarían millones de usuarios y así se podría generar un flujo de sus contenidos culturales totalmente diferente. Si se generan políticas regionales y las regiones luego se unen porque sostienen los mismos derechos, estoy segura de que las empresas estadounidenses renegociarían sus contratos.
Otra forma de romper con la hegemonía es educar a los niños y jóvenes para que entiendan que las redes sociales producen cultura. Si ellos pueden formarse con productos culturales diferentes y pluralistas, poco a poco van a convertirse en usuarios con sentido crítico. Para esto hay que formar primero a los docentes en los nuevos medios, para que ayuden a los niños y adolescentes a poder manejarlos desde otra visión.
¿Por qué cree usted que los productos culturales estadounidenses tiene tanto éxito entre los más jóvenes?
Porque son contenidos positivos, están basados en el presente, en lo cotidiano y se proyectan al futuro. Hacen foco en la promesa, y por eso son tan atractivos para los jóvenes. En cambio mucho de los contenidos que se realizan en Francia o en la Argentina se basan en la historia, en el patrimonio y no generan promesas. Cuentan el pasado, o a veces omiten el pasado importante como los crímenes. Hay que fomentar la necesidad de los jóvenes de querer comprender el mundo a través de los medios, poder expresarse en ellos y proyectarse. Todo eso les generará autoestima y orgullo por su identidad para presentarse en las redes sociales.
¿Cómo ve el programa Conectar Igualdad que lleva adelante el Gobierno, que reparte 3 millones de netbooks a estudiantes secundarios y a alumnos de institutos de formación docente?
El problema que veo en el plan que implementó el Gobierno es que fue una decisión tomada por ellos, y no surgió de un pedido hecho específicamente por la comunidad escolar. Me preocupa cómo se va a hacer la apropiación de esta tecnología. Creo que se deben generar proyectos dentro de cada escuela y de cada grupo que tengan un valor añadido para los usuarios. Si los alumnos no pueden aprender nada nuevo, no les va a interesar y esto va a fracasar. La clave es apostar a formar a los docentes para que puedan manejar los nuevos medios y que puedan transmitirles a sus alumnos contenidos dentro de la diversidad cultural. En los Estados Unidos existe un fondo público proveniente de un impuesto a las ganancias que deben pagar todas las empresas de comunicaciones. Este fondo no lo reparte el gobierno directamente, sino que las escuelas y universidades arman un proyecto con su municipalidad y lo presentan a este fondo para ser evaluado. Es un modelo de encuentro entre la financiación pública y una necesidad real de la gente, que aprovechará la inversión y no abandonará el proyecto.
Frau-Meigs básico:
Nació el 9 de junio de 1959 en Casablanca, Marruecos. Es profesora de Estudios Americanos y Sociología de los Medios de Comunicación en la Universidad Sorbonne Nouvelle de Francia. Ha publicado extensamente en las áreas de contenido de medios de comunicación, las tecnologías y las subculturas de la pantalla. Realizó trabajos para la UNESCO, el Consejo de Europa y la Universidad de la Sorbonne Nouvelle. Fue vicepresidenta de la Asociación Internacional de Estudios en Comunicación Social (IAMCR/AIECS, 2002-08) y de Asuntos Internacionales de la Société Française des Sciences de l'Information et de la Communication (SFSIC, 1993-96). En 2006 le concedieron "L'Étoile d'Or" de Internet en homenaje a su trabajo sobre las nuevas tecnologías de la información. Sus trabajos se pueden consultar en medias-matrices.net
- En términos prácticos, ¿qué significa el concepto de diversidad cultural como derecho?
El derecho a la diversidad cultural es un derecho de protección y de promoción que en 2007 se incorporó a la declaración de los Derechos Humanos. En este momento en las redes no hay protección de la diversidad cultural. Existe la promoción de la expresión bajo todas sus formas, como los chats, los foros, los blogs y los avatares. Y muchos jóvenes usuarios tienen la impresión de que todo esto es libre y gratuito. La realidad es que la web está financiada por la televisión y los estudios de Hollywood, que yo llamo Hollyweb porque ahora sus productos están en Internet. Estas corporaciones son monopólicas y se rigen por el derecho de propiedad que existe en California, Estados Unidos. Si estas cyberempresas deciden utilizar los contenidos que ponen los usuarios en sus plataformas para hacer dinero, pueden hacerlo, ya que la ley de California lo permite.
-A fines de mayo en París se realizó la primera reunión del "eG8", donde las mega corporaciones expresaron sus proyectos para la web. Esos proyectos fueron presentados en la reunión de los ocho países más poderosos del planeta. ¿Cómo ven el futuro de Internet las corporaciones?
Fui invitada al "eG8", un encuentro al que concurrieron todos los multimillonarios recientes, dueños de las plataformas que manejan la web como Google y Facebook, entre otros. Ellos llevaron un mensaje muy claro hacia los gobiernos que conforman el G8. Ese mensaje fue que la privacidad no existe, que es un derecho obsoleto. También recalcaron que las formas de expresión que están en sus plataformas son de su propiedad y las pueden comercializar. Todo esto apunta a que están creando una nueva economía de la web, en la que van a explotar los contenidos que no provengan de formatos clásicos que ya tienen los derechos reservados. Es decir que van a explotar las nuevas formas de expresión donde la gente habla de su vida cotidiana o sobre sus amigos, y que para ellos son bienes relacionales. Las grandes empresas quieren transformar esos bienes en industriales y culturales para ganar dinero.
¿Los Estados no deberían proteger el derecho de propiedad intelectual y privacidad de sus ciudadanos frente a las empresas?
El Estado tiene un rol muy importante en la regulación de los medios y debe replantearse el vacío legal que existe en Internet. En el reciente G8, los Estados más poderosos hablaron de recuperar soberanía frente a las grandes compañías, ya que en el único lugar donde pagan impuestos por sus ganancias es en California. Pero las empresas operan en todo el mundo y deberían pagar impuestos a cada país. Lo importante ahora es que los Estados legislen para que las expresiones que circulan en la web, como un chat, un foro, o un blog pertenezcan al que lo ha producido, al creador, y no sólo a la plataforma que ha prestado los medios de producción.
¿Existen posibles resistencias al modelo hegemónico de contenidos estadounidenses que hoy lidera Internet?
Estudios recientes muestran que los flujos de tráfico en Internet son asimétricos. Hay mucho contenido y trafico desde los Estados Unidos, luego hay tráfico de Europa y el resto del mundo está muy por debajo. Hay que buscar reorganizar los flujos de manera más equilibrada. Eso sería posible si se desarrollan políticas culturales transfronterizas. Por ejemplo, si los países de habla hispana de Latinoamérica se unieran con España, sumarían millones de usuarios y así se podría generar un flujo de sus contenidos culturales totalmente diferente. Si se generan políticas regionales y las regiones luego se unen porque sostienen los mismos derechos, estoy segura de que las empresas estadounidenses renegociarían sus contratos.
Otra forma de romper con la hegemonía es educar a los niños y jóvenes para que entiendan que las redes sociales producen cultura. Si ellos pueden formarse con productos culturales diferentes y pluralistas, poco a poco van a convertirse en usuarios con sentido crítico. Para esto hay que formar primero a los docentes en los nuevos medios, para que ayuden a los niños y adolescentes a poder manejarlos desde otra visión.
¿Por qué cree usted que los productos culturales estadounidenses tiene tanto éxito entre los más jóvenes?
Porque son contenidos positivos, están basados en el presente, en lo cotidiano y se proyectan al futuro. Hacen foco en la promesa, y por eso son tan atractivos para los jóvenes. En cambio mucho de los contenidos que se realizan en Francia o en la Argentina se basan en la historia, en el patrimonio y no generan promesas. Cuentan el pasado, o a veces omiten el pasado importante como los crímenes. Hay que fomentar la necesidad de los jóvenes de querer comprender el mundo a través de los medios, poder expresarse en ellos y proyectarse. Todo eso les generará autoestima y orgullo por su identidad para presentarse en las redes sociales.
¿Cómo ve el programa Conectar Igualdad que lleva adelante el Gobierno, que reparte 3 millones de netbooks a estudiantes secundarios y a alumnos de institutos de formación docente?
El problema que veo en el plan que implementó el Gobierno es que fue una decisión tomada por ellos, y no surgió de un pedido hecho específicamente por la comunidad escolar. Me preocupa cómo se va a hacer la apropiación de esta tecnología. Creo que se deben generar proyectos dentro de cada escuela y de cada grupo que tengan un valor añadido para los usuarios. Si los alumnos no pueden aprender nada nuevo, no les va a interesar y esto va a fracasar. La clave es apostar a formar a los docentes para que puedan manejar los nuevos medios y que puedan transmitirles a sus alumnos contenidos dentro de la diversidad cultural. En los Estados Unidos existe un fondo público proveniente de un impuesto a las ganancias que deben pagar todas las empresas de comunicaciones. Este fondo no lo reparte el gobierno directamente, sino que las escuelas y universidades arman un proyecto con su municipalidad y lo presentan a este fondo para ser evaluado. Es un modelo de encuentro entre la financiación pública y una necesidad real de la gente, que aprovechará la inversión y no abandonará el proyecto.
Frau-Meigs básico:
Nació el 9 de junio de 1959 en Casablanca, Marruecos. Es profesora de Estudios Americanos y Sociología de los Medios de Comunicación en la Universidad Sorbonne Nouvelle de Francia. Ha publicado extensamente en las áreas de contenido de medios de comunicación, las tecnologías y las subculturas de la pantalla. Realizó trabajos para la UNESCO, el Consejo de Europa y la Universidad de la Sorbonne Nouvelle. Fue vicepresidenta de la Asociación Internacional de Estudios en Comunicación Social (IAMCR/AIECS, 2002-08) y de Asuntos Internacionales de la Société Française des Sciences de l'Information et de la Communication (SFSIC, 1993-96). En 2006 le concedieron "L'Étoile d'Or" de Internet en homenaje a su trabajo sobre las nuevas tecnologías de la información. Sus trabajos se pueden consultar en medias-matrices.net
domingo, 3 de junho de 2012
Quem é culpado pela tragédia grega
Mohamed El-Erian
Da FSP
Quem é culpado pela tragédia grega?
Os governos gregos, os credores, a Europa e o FMI sairão ilesos, enquanto a população pagará por anos
A Grécia está tomando o caminho seguido por outras economias emergentes devastadas por crises nos últimos 30 anos. De fato, há semelhanças entre esse um dia orgulhoso integrante da zona do euro e a Argentina antes de sua moratória de 2001. Com uma implosão igualmente traumática -econômica, financeira, política e social-, devemos esperar debate acalorado sobre quem é o culpado por agravar o sofrimento imposto a milhões de gregos.
Há quatro suspeitos -todos envolvidos na espetacular expansão que precedeu aquilo que infelizmente virá a se provar uma contração ainda mais espetacular.
Muita gente se apressará a culpar os governos liderados pelos dois partidos que costumavam dominar a política do país, o Nova Democracia, à direita, e o Pasok, à esquerda.
Dispostos a bancar via empréstimos a construção da prosperidade do país, os dois acumularam imensas dívidas e levaram a uma dramática perda de competitividade e de potencial de crescimento.
Depois de aceitar empréstimos excessivos nos anos que se seguiram à adesão grega à zona do euro, em 2001, o Nova Democracia e o Pasok deixaram os cidadãos gregos na berlinda quando ajustes e reformas se tornaram necessários, com a crise financeira mundial de 2008.
Os credores privados não hesitaram em despejar dinheiro na Grécia, mas rejeitaram sua responsabilidade de solucionar os problemas, quando se tornou impossível manter o boom artificial da economia.
Os empréstimos excessivos foram tão grandes que em dado momento reduziram a disparidade de rendimento entre os títulos dos governos alemão e grego a uma diferença absurdamente pequena para dois países que se contrapõem de maneira tão forte em termos de gestão econômica e condições financeiras.
Quando se tornou extremamente claro que a carga da dívida grega havia atingido o patamar da insolvência, os credores optaram por postergar o momento da verdade.
Mas nem o governo grego nem os credores privados do país agiram no vácuo. Os dois receberam cobertura política do esforço de unificação da Europa -uma iniciativa histórica cujo objetivo era garantir o bem-estar do continente por meio de maior integração econômica e política, tendo por base regras confiáveis e instituições efetivas.
E, quanto aos dois quesitos -regras e instituições-, a zona do euro ficou bem aquém do necessário. Recorde que as grandes economias centrais da UE -Alemanha e França- estiveram entre as primeiras a violar as normas orçamentárias estabelecidas quando do lançamento do euro. E as instituições da Europa se provaram impotentes para fiscalizar o cumprimento de suas normas.
A Europa também não reagiu devidamente quando se tornou óbvio que a Grécia começava a oscilar. Os demais governos europeus não chegaram a uma avaliação convergente dos problemas do país.
Por fim, temos o FMI, a instituição encarregada de salvaguardar a estabilidade financeira mundial e fornecer assessoria confiável aos países. Parece que sucumbiu com facilidade excessiva a pressões políticas, tanto no ciclo de expansão quanto no de contração.
Credores, governo grego, Europa e FMI não podem evitar a realidade de que o colapso grego não teria ocorrido se não tivessem sido complacentes durante a expansão e cumprido de forma tão medíocre suas responsabilidades durante a contração. Colaboraram para criar uma sensação de falsa prosperidade, e, quando a virada inevitável chegou, atrapalharam-se. Agora, a esperança é que sejam responsabilizados pelos erros cometidos.
O mais provável é que escapem quase ilesos, especialmente se comparados às verdadeiras vítimas dessa tragédia -a população grega, cuja situação econômica se tornará muito pior, à medida que empregos e economias desaparecem.
E os gregos podem não estar sozinhos. Milhões de outras pessoas podem sofrer danos colaterais, dado o risco de que o contágio financeiro se espalhe a outros países.
Em um mundo mais justo, esses cidadãos vulneráveis teriam direito a confiscar os salários, os privilégios oficiais e as bonificações de que as quatro partes culpadas vêm desfrutando. No mundo real, a situação serve como importante lição para o futuro.
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