Hannah Arendt considered calling her magnum opus Amor Mundi: Love of the World. Instead, she settled upon The Human Condition. What is most difficult, Arendt writes, is to love the world as it is, with all the evil and suffering in it. And yet she came to do just that. Loving the world means neither uncritical acceptance nor contemptuous rejection. Above all it means the unwavering facing up to and comprehension of that which is.
Every Sunday, The Hannah Arendt Center Amor Mundi Weekly Newsletter will offer our favorite essays and blog posts from around the web. These essays will help you comprehend the world. And learn to love it.
Sue Halpern writes that the internet is getting creepy. Beyond smart phones and smart watches, we now also are confronted with smart cars and smart refrigerators. Cars remember where we like to go and can direct us there; they will soon even drive for us. Refrigerators know our favorite milk and our guilty pleasures and can order them to be delivered before we realize we need them. All these smart appliances are wired, connecting us and the immense and revelatory data of our lives to the world of commerce and security. Companies can, of course, pay for that data and subtly or not suggest new products. And the government, or others, can hack into the streams of data we trail behind us to know where we've been, what we're doing, and even what we want. Halpern cites Jeremy Rifkin, an evangelist of the coming internet of things, who is clear that in this new age, there will be no privacy: "Connecting everyone and everything in a neural network brings the human race out of the age of privacy, a defining characteristic of modernity, and into the era of transparency." For Rifkin, we should have no qualms about trading privacy for a coming age of unparalleled convenience and security. The more information about ourselves we offer up to the internet of things, the more benefits we will receive. As Halpern argues this week in the NY Review of Books, "These trade-offs will only increase as the quotidian becomes digitized, leaving fewer and fewer opportunities to opt out. It's one thing to edit the self that is broadcast on Facebook and Twitter, but the Internet of Things, which knows our viewing habits, grooming rituals, medical histories, and more, allows no such interventions-unless it is our behaviors and curiosities and idiosyncracies themselves that end up on the cutting room floor." We are entering a world in which we need to rethink what it means to be private in a world when we are so connected to the internet of things that the internet-and those who can mine it-knows more about ourselves than we do.
Linda Holmes talks up the pleasure of being alone and asks how, if at all, we can truly be by and with ourselves: "We have a certain cultural mistrust of solitude, I think. It is for weirdos and lost souls, spinsters and misfits. But in truth, I can't tell you what a luxury I think it is to be entitled to it. Most of the time, I want good company, like most people do. But the experience of earned, voluntary aloneness is, among other things, instructive. I don't think you can really understand how accustomed you are to being scheduled and operating off an internal to-do list at almost all times until you think to yourself, 'My goal will be to get to Providence by 4,' and then you think, 'Why is there a goal?' And then it begins to make you internally rebellious: What if I drove with no goal? What if I had nowhere to be all day until it was time to sleep and I discussed with no one where to stop and take a picture, where to have lunch, what shop to go in, or which way to turn on the trail? What would I do if I could do anything - in this micro-environment, in this moment, at the point of this particular pause, what is my wish?"
Attorney General Eric Holder is about to resign. His legacy: after six years as the nation's top law enforcement officer, no one has gone to jail either for breaking American laws against torture or for breaking U.S. laws regarding financial fraud relating to the financial crisis. In a recent speech at NYU, Holder explained why it is that corporate executives are not criminally prosecutable: "Responsibility remains so diffuse, and top executives so insulated, that any misconduct could again be considered more a symptom of the institution's culture than a result of the willful actions of any single individual." As Matt Taibi glosses such doublespeak in Rolling Stone, "In other words, people don't commit crimes, corporate culture commits crimes!" Taibi's moral clarity comes in an article on Alayne Fleischmann: "the central witness in one of the biggest cases of white-collar crime in American history, possessing secrets that JPMorgan Chase CEO Jamie Dimon late last year paid $9 billion (not $13 billion as regularly reported - more on that later) to keep the public from hearing. Back in 2006, as a deal manager at the gigantic bank, Fleischmann first witnessed, then tried to stop, what she describes as 'massive criminal securities fraud' in the bank's mortgage operations. Thanks to a confidentiality agreement, she's kept her mouth shut since then. 'My closest family and friends don't know what I've been living with,' she says. 'Even my brother will only find out for the first time when he sees this interview.'" Fleischmann saw crimes committed, blew the whistle on them, and is angry that these crimes are still not being prosecuted. Her choice to speak now appears to be a brave one: "And now, with Holder about to leave office and his Justice Department reportedly wrapping up its final settlements, the state is effectively putting the finishing touches on what will amount to a sweeping, industrywide effort to bury the facts of a whole generation of Wall Street corruption. 'I could be sued into bankruptcy,' she says. 'I could lose my license to practice law. I could lose everything. But if we don't start speaking up, then this really is all we're going to get: the biggest financial cover-up in history.'"
In a short essay seeking to revive the 20th century American conservative James Burnham, Daniel McCarthy argues that we need to learn from Burnham's combination of unblinkered realism regarding power and insight into the non-ideological managerial elite. He suggests that, as a political culture, there's just one way forward: "What has happened in America since the end of the Cold War, however, is that competition for popular favor has been reduced to a propaganda exercise-employing myths, symbols, and other 'derivatives'-disconnected from policies of material interest to the ruling class. Thus monetary policy, foreign policy, and positions on trade and immigration vary little between Republican and Democratic presidents. This is a terrible situation-if you're not part of the elite. If you are, all the gridlock and venom of our politics is simply irrelevant to the bottom line. For the non-elite, however, insecurity of all kinds continues to rise, as does a sense that the country is being sold out from under you. America's ruling class has bought itself time-for continuing capitalism in an age of worldwide managerial revolution-at the expense of America's middle and working classes. Reform, alas, will not come from 'throw the bums out' populism of either the Tea Party or Occupy Wall Street varieties. It can only come from two directions: the best of the people must grow conscious of how oligarchy operates and why populist leadership is a paradox, and new factions among the elite must be willing to open competition on more serious fronts-campaigning not only on myths and formulas but on the very substance of the managerial revolution."
Charles P. Pierce takes on the myth of American sportsmanship: "Sports today are conducted in a context that makes true sportsmanship - which is nothing more and nothing less than recognizing that your opponent is basically the same common clay deserving of the same respect as you are, not because of talent, but simply because he or she is another human being - almost impossible. Sports today, at almost every level, have arranged themselves in such a way that the athlete is made a commodity. The games are a clash of walking narratives, of competing sales campaigns, of a design competition between marketing techniques and strategies. This has exacerbated the emotional conflict that always has been present when we talk about our athletes - we want ferocious, brain-scrambling passion from them when the ball is in play, and conspicuous public politesse when it is not. If the latter gets tangled up in the former, then we get what seem to be endless arguments about how America is being wussified, and how we have become a soft and passive people, and a lot of rancid talk about people playing in skirts and so on. It's a wonder more athletes don't simply go mad." But if sportsmanship is a no go, what's left? Ultimately, Pierce wonders if it is anything more or less than kindness.
In a conversation with Angela Davis, Toni Morrison gives a short history of the end of goodness: "It wasn't true in literature in the early days. There was always a hero who prevailed. As awful as things could happen in a Dickens novel, it ended up with the survival and triumph of high morality, of people who deserved to triumph. But something happened. Now, I'm not entirely sure about this, but I think it is after World War I with novelists at any rate, and certainly some of the war poets. Perhaps they understood themselves as attacking evil but they ended up theatricalizing it and the good people were fairly stupid or unlucky or what have you. There are references in literature to the silencing of goodness ... I am interested in pulling from the modern canon what I know and what I believe about this adoration and fascination, this compulsion to display evil. Even if there is a mild attempt to say that it is evil, nevertheless, it's hogging the stage in many novels. I think goodness is weak in literature almost like it is in the culture. This is just a general observation."
Arendt and the Question of Positive Freedom
Tuesday, November 18, 2014
The Hannah Arendt Center, 12:30 pm - 2:00 pm
This week on the Blog, Jeffrey Champlin reflects on Arendt's understanding of violence and the origins of power in the Quote of the Week. John Stuart Mill provides this week's Thoughts on Thinking. In our Video Archives, we look back on a 2010 Lunchtime Talk with Ursula Ludz, a former visiting scholar of the Hannah Arendt Center. And we appreciate a copy of Publii Virgilii Maronis Opera in our Library feature.
What a week it has been in the world of corporate criminality and governmental spinelessness!
On Monday, the British Bank HSBC agreed to pay a fine for $1.92 billion for repeated and systematic violations of two U.S. laws to prevent money laundering. The bank transferred hundreds of billions of dollars for its clients, likely enabling crimes ranging from tax evasion to terrorism. Once again, no one will be indicted, let alone found guilty. The reason: concern that criminal charges would hurt the bank’s business and, because it is so big, destabilize the financial system. The story is too familiar: A bank that is too big to fail gets away with criminal activity with simply a fine. While $2 billions sounds big, it is less than one quarter’s profit for HSBC. Oh, and the banks said it was sorry, sort of: “We accept responsibility for our past mistakes,’’ HSBC’s chief executive said in the statement. Mistakes are not crimes.
Meanwhile, on Tuesday in London, British authorities did make some arrests, something U.S. authorities still seem unwilling or unable to do.
In a predawn raid, police took three men into custody at their homes on the outskirts of London. One of the men is Thomas Hayes, 33, a former trader at UBS and Citigroup, according to people briefed on the matter who spoke on condition of anonymity. The other two men arrested worked for the British brokerage firm R P Martin, said another person briefed on the matter.
These arrests come in the LIBOR rate-fixing scandal, one of the biggest financial scandals ever uncovered. By colluding to fix interest rates that banks use to lend to other banks, banks ensured that they would make more money on their own student loans, mortgages, and municipal financings and consumer loans. The suits by injured parties will be keeping lawyers well paid for a decade.
On Wednesday, Bill Hwang, a high-flying hedge fund Director, pled guilty of wire fraud on behalf of his now defunct hedge fund Tiger Asia and admitted to improper trading by the firm. But Hwang himself walked out of court an innocent man, as the NY Times reports:
Federal prosecutors did not bring charges against Mr. Hwang himself. But he and his head trader, Ray Park, settled a parallel lawsuit brought against them by the Securities and Exchange Commission. Mr. Hwang and his fund will pay $44 million in fines, and he agreed to a five-year ban from the securities industry.
Once again, no one in the United States is being indicted or going to jail. And yet the federal prosecutor claimed victory for the investing public, seemingly unworried about the law-abiding public:
This criminal activity by a hedge fund operator, one of the biggest in the world, is unacceptable,” Paul J. Fishman, the United States attorney in New Jersey, said in a statement. “The investing public must be reassured that they are investing in markets that are operated fairly.
Also on Wednesday Deutsche Bank, the largest German banking behemoth, announced that its offices were raided by German investigators as part of an investigation into tax evasion by two of its top executives. Deutsche Bank has many problems, including a continued investigation to its role in the LIBOR rate fixing scandal that has already claimed settlements from Barclays in England and UBS in Switzerland (see Tuesday and Thursday).
On Thursday, the Swiss financial giant UBS announced that it was close to agreeing upon a $1 billion settlement with regulators in the U.S., Britain, Switzerland and Canada around the LIBOR rate fixing scandal (see Tuesday above).
While some minor players are being charged, once again there seems to be no interest in holding any major players at the bank responsible. As the NY Times writes,
The Swiss bank has reached a conditional immunity deal with the antitrust arm of the Justice Department, which may protect the bank from criminal prosecution under certain conditions The Justice Department’s criminal division, however, could still take action against the bank. UBS also has said it is working with Canadian antitrust authorities by handing over e-mails and other documents implicating other banks.
Over the weekend, hundreds of demonstrators around England protested against Starbucks for its tax minimization strategy. Starbucks capitulated, in part, agreeing to pay a one-time voluntary tax payment to England, something that sets the dangerous precedent of tax blackmail and does nothing to address the underlying problem. Let’s be clear. Starbucks broke no laws. But it did use creative accounting to minimize its taxes. For example, the profitable Starbucks franchises in England paid large fees to Starbucks’ subsidiary firms in low-tax countries for use of Starbucks branding, logos, and for the use of the firms’ coffee recipes. In effect, Starbucks laundered its corporate profits in high-tax England by transferring its profits to lower-cost jurisdictions. This is legal. The business community mysteriously finds it ethical. The protesters are rightly incensed. The real question is why, after hearing about such shenanigans for years, do legislatures continue to refuse to pass basic legislation making such tax minimization standards illegal.
The big story of the week remains the ever-growing insider-trading scandal that has been revolving around the Greenwich hedge fund SAC Capital run by Steven Cohen. Now 12 employees and alumni of Cohen’s firm have been indicted for insider trading (six while working for SAC and six for misdeeds after they left to start their own firms). Cohen himself has not been accused of wrongdoing, but the latest of his allegedly criminal underlings, Matthew Martoma, was Cohen’s right hand man for two years. And the prosecutors know that SAC sold its large positions in two drug-development companies and then shorted the stocks in those companies based on inside information from a trial of those drugs. And they know that Martoma and Cohen had a 20 minute phone conversation discussing their investment in those companies over the weekend before they sold their shares the following week. There is no clear evidence that Martoma told Cohen about his illegally obtained information. While both men remain innocent until proven guilty, Cohen’s firm SAC Capital is clearly a place that intentionally or not encourages illegal activities. Cohen points to his large compliance office of 30 legal and support officers, but one has to wonder about the priorities at the fund.
Actually, not much wonder is necessary. As Jesse Eisinger writes in an excellent essay in Thursday’s New York Times, few of SAC’s investors seem to care about the apparent ethical culture of laxity that surrounds his firm.
Astonishingly, investors don’t seem to mind terribly. They added as much as $1.6 billion in new capital to SAC’s flagship fund from 2010 to the end of 2011, when the insider trading investigation was in full bloom, according to Absolute Return, an industry trade publication.
At least some big institutions have begun to contemplate thinking about perhaps withdrawing money from Mr. Cohen. Congratulations. What took them so long? Citigroup’s private bank has told its clients not to put in new money, according to Bloomberg. What about getting their clients out? Why hasn’t bank given that advice before this?
The biggest, most sophisticated investors certainly put an enormous amount of pressure on hedge funds. But almost none of it is about ethics and clean culture. It’s about performance. A fund that runs a few ticks lower than its peers for several months running can get put out of business.
Many institutional investors have so perfected the art of looking the other way that they make bystanders on a New York City subway platform look like models of social responsibility.
The operating standard is to allow fund managers — or affiliated businesses or employees — to go as far as they can until the moment they are caught doing something wrong. Through their actions, Citigroup, Blackstone and the others are sending a message that they will forgive rotten ethics for great returns.
Eisinger asks the right question: At what point does “willful blindness turn to complicity”? It is hard to resist that basic conclusion.
While all these scandals were unfolding, I led a discussion on Monday evening about The Intellectual Origins of the Global Financial Crisis at the last great bookstore in New York City, Book Culture, up near Columbia University. We had a standing room only crowd and ran out of chairs (thank you all). The discussion featured excellent panelists, all of whom are contributors to the new book of the same name published by Fordham University Press and edited by myself and my colleague Taun Toay. The other panelists were Robyn Marasco, Paul Levy, and Vincent Mai.
One of the main issues raised was the sea change in values. In his contribution to the volume, Vincent Mai, former Chairman of AEA Investors and now of Cranemere LLC, writes:
The first thing is just a complete change in the values of the people who are in the financial community in Wall Street, and in the culture. And, as I said, it’s not to say that the people in my era were all angels and that they’re all devils today. But, having said that, there has been a huge cultural shift.
Mai tells that when he began
there was a set of ground rules that governed the way you did business that imposed a discipline that was central to the way Wall Street worked. It was the same in all the firms. And I’ve watched with a combination of fascination and horror at the way the world has changed, turned upside down.
Paul Levy, Managing Director of JLL Partners, reminds us that good people work in business but he laments that these people are increasingly trained in narrow specialties and without the broad interests nurtured by excellent liberal arts educations. Levy writes,
I am no saint, but I can tell you that when I started my working careers as a corporate lawyer I wanted to be financially successful, although I did not have a firm view on how to get there.
Nowadays, Levy laments, college graduates make $150,000 per annum and quickly expect to make $300-$400,000 and soon more than $1 million. He writes: “Getting money has become the goal, instead of building the person.”
Robyn Marasco resisted the notion that greed is behind our current problems. Greed, she writes, is often good.
Moralizing against greed is no match for the realist recognition that what is often called greed—greed for life, greed for love, and greed for knowledge—is constitutive of human striving, what Spinoza called conatus, what Schopenhauer names the will to life, what Nietzsche terms the will to power. Greed is, indeed, good, if by it we mean a dynamic and energizing force that resists satisfaction in any particular object.
Our conversation touched on the moral hazard created by the lack of criminal sanctions on any of the main players in the financial crisis, something that the news summary from this week highlights. Above all, we spoke about the upending of values and the question of how to change or restore earlier values that have been lost. And, of course, we talked about Hannah Arendt.
Few thinkers saw more clearly than Arendt the connection between what Nietzsche called the devaluing of the highest values and what we today call global capitalism. Ethics requires setting limits to behavior and the political bodies that set such limits are the trustees of firms, city councils, state governments, and national legislatures. Whether these ethical limits are legal or moral, they establish common sense criteria about what is right and what is wrong.
Arendt sees that globalization—what she at the time understood as imperialism—is actually a political corollary of nihilism, the illegitimacy of all moral and political limits. If we as a people no longer feel sure that certain behavior is simply wrong, we will be willing increasingly to lower our ethical standards in order to compete with firms and nations that operate according to lower or different standards. There seems to be no ethical limits to the depths to which our companies will sink in the pursuit of profit; and profit becomes the only meaningful and objective criteria to judge success in a world in which all other values are relative and questionable.
Arendt’s insight into the intellectual origins of the rise of capitalist rationality is the impulse behind The Intellectual Origins of the Global Financial Crisis. The book grew out of the 2009 Hannah Arendt Center conference and its recent publication is as timely as ever. On this week of seemingly endless examples of corporate malfeasance, our new book is your weekend read.