Wednesday, October 12, 2011: Roundtable Discussion on Occupy Wall Street
-- Roger Berkowitz, Associate Professor of Political Studies and Human Rights; Academic Director, Hannah Arendt Center for Politics and the Humanities, Bard College.
-- Paul Mariental, Director of the Bard TLS Program.
-- Jennifer Derr, a former professor in the History and Middle Eastern Studies programs at Bard College.
-- Steven Maslow, a banker on Wall Street and an avid supporter of the Hannah Arendt Center.
-- Two Bard Students who have been involved in the OWS demonstrations.
On October 12th, 2011, the Arendt Center hosted a roundtable discussion on the Occupy Wall Street movement with Bard faculty, Bard students who participated in the protests, and representatives of Wall Street.
Peggy Noonan is worried about the decadence of elite American culture. While the folks over at DailyKos are foaming about the irony of Ronald Reagan’s speechwriter complaining about the excesses of the power elites, Noonan makes an important point about the corrosive effects that irony has on elites and on culture more generally.
The two targets of Noonan’s scorn are a “Now This News” video compilation of real congressmen quoting their favorite lines from the Netflix series “House of Cards,” and the recent publication of an excerpt from Kevin Roose’s new book Young Money. The “House of Cards” is about the scheming, power hungry, and luxurious life of our political elite in Washington. Roose’s excerpt provides audios, videos, and a description of a recent Kappa Beta Phi meeting, in which Wall Street titans binge on alcohol and engage in skits and speeches making fun of anyone who would question their inalienable right to easy money at the expense of rubes in government and on main street.
Noonan’s response to these sets of recordings is bafflement and disappointment. Why is it, she asks, that elites would join in on the jokes made at their expense?
“I don’t understand why members of Congress, the White House and the media become cooperators in videos that sort of show that deep down they all see themselves as ... actors. And good ones! In a phony drama. Meant I suppose to fool the rubes. It’s all supposed to be amusing, supposed to show you’re an insider who sees right through this town.”
Why do elites join in the laughter of a popular TV serial that grills them and shows them to be callow, avaricious, and without public spirit? Why do they delight in demonstrating their ability to view their failings with irony?
““House of Cards” very famously does nothing to enhance Washington’s reputation. It reinforces the idea that the capital has no room for clean people. The earnest, the diligent, the idealistic, they have no place there. Why would powerful members of Congress align themselves with this message? Why do they become part of it? I guess they think they’re showing they’re in on the joke and hip to the culture. I guess they think they’re impressing people with their surprising groovelocity.”
Noonan is right to see this elite reaction of wanting to be in on the joke as meaningful and worrisome. She finds it decadent:
“They are America’s putative great business leaders. They are laughing, singing, drinking, posing in drag and acting out skits. The skits make fun of their greed and cynicism. In doing this they declare and make clear, just in case you had any doubts, that they are greedy and cynical. All of this is supposed to be merry, high-jinksy, unpretentious, wickedly self-spoofing. But it seems more self-exposing, doesn’t it? And all of it feels so decadent.”
It is insufficient, however, to watch the videos on both these sites and conclude the obvious that they offer damning evidence of corruption and decadence.
What is more important than the decadence on display is the self-satisfied irony. The elites in Washington and Wall Street seem not to care about their decadence and even take joy in the revealing of their decadence. It is as if a burden has been lifted, that we all in the outside world can now know what they have borne in secret. With the secret out, they can enjoy themselves without guilt.
This embrace of the revelation of decadence recalls the cultural milieu of Weimar Germany, and especially the reception of Berthold Brecht’s classic satire the “Threepenny Opera.” Here is how Hannah Arendt describes the arrival and reception of Brecht’s play:
“The play presented gangsters as respectable businessmen and respectable businessmen as gangsters. The irony was somewhat lost when respectable businessmen in the audience considered this a deep insight into the ways of the world and when the mob welcomed it as an artistic sanction of gangsterism. The theme song in the play, “Erst kommt das Fressen, dann kommt die Moral” [First comes the animal-like satisfaction of one’s hungers, then comes morality], was greeted with frantic applause by exactly everybody, though for different reasons. The mob applauded because it took the statement literally; the bourgeoisie applauded because it had been fooled by its own hypocrisy for so long that it had grown tired of the tension and found deep wisdom in the expression of the banality by which it lived; the elite applauded because the unveiling of hypocrisy was such superior, wonderful fun.”
Brecht hoped to shock not only with his portrayal of corruption and the breakdown of morality, but by his gleeful presentation of Weimar decadence; but the effect of “Threepenny Opera” was exactly the opposite, since all groups in society reacted to Brecht’s satire with joy instead of repulsion.
Arendt has little hope for the mob or the bourgeoisie, but she is clearly cut to the quick by the ease with which the elite felt “genuine delight” in watching the bourgeoisie and the mob “destroy respectability.” As Arendt explained, the “members of the elite did not object at all to paying a price, the destruction of civilization, for the fun of seeing how those who had been excluded unjustly in the past forced their way into it.” Because the elite had largely rejected their belief in the justice and meaningfulness of the moral and common values that had supported the edifice of civilization, they found more joy in the ironic skewering of those values than they felt fear at what the loss of common values might come to mean.
There is no greater thinker of decadence than Friedrich Nietzsche. This is how Nietzsche defines decadence in The Case of Wagner as a “question of style”:
“I dwell this time only on the question of style–What is the sign of every literary decadence? That life no longer dwells in the whole. Word becomes sovereign and leaps out of the sentence, the sentence reaches out and obscures the meaning of the page, the page gains life at the expense of the whole–the whole is no longer a whole. But this is the simile of every style of decadence: every time, the anarchy of atoms, the disgregation of the will, “freedom of the individual,” to use moral terms–expanded into a political theory, “equal rights for all.” Life, equal vitality, the vibration and exuberance of life pushed back into the smallest forms; the rest, poor in life. Everywhere paralysis, hardship, torpidity, or hostility, and chaos: both more and more obvious the higher one ascends in forms of organization. The whole no longer lives at all: it is composite, calculated, artificial, and artifact.”
As Andrew Huddleston has recently written, Nietzsche understands that “decadence is literally a kind of disorder – that is, a lack of cohesive order – within the individual or the culture.” It is a sickness by which individuals and groups think only of themselves and lose sight of their belonging to a common world or a meaningful order.
The disordering forces of decadence are not always disadvantageous. Throughout American history centripetal forces have allowed an understanding of power that permits different states and plural groups that pursue their own interests to, nevertheless, hold fast to the common idea of constitutional republican democracy and government by the people. What we see in the irony of the elites—let alone the decadence of the bourgeoisie and the power brokers—is the superior feeling of freedom that proceeds from the belief in the comic dissolution of the moral, political and economic values that have for two centuries animated the American imagination of itself as a exceptional experiment in free and democratic self-government.
Noonan is right to call out this ironic pose of the elite. She is right to worry that “No one wants to be the earnest outsider now, no one wants to play the sober steward, no one wants to be the grind, the guy carrying around a cross of dignity. No one wants to be accused of being staid. No one wants to say, “This isn’t good for the country, and it isn’t good for our profession.”” Her essay is your weekend read. Don’t forget to watch the videos. See if you catch yourself smiling.
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.
Jim Sleeper turned me on to Dean Starkman’s excerpt from his new book chronicling the failure of the press to expose wrongdoing in the lead up to the financial crisis, The Watchdog That Didn’t Bark: The Financial Crisis and the Disappearance of Investigative Journalism. Starkman writes: “Now is a good time to consider what journalism the public needs. What actually works? Who are journalism’s true forefathers and foremothers? Is there a line of authority in journalism’s collective past that can help us navigate its future? What creates value, both in a material sense and in terms of what is good and valuable in American journalism? Accountability reporting comes in many forms—a series of revelations in a newspaper or online, a book, a TV magazine segment—but its most common manifestation has been the long-form newspaper or magazine story, the focus of this book. Call it the Great Story. The form was pioneered by the muckrakers’ quasi-literary work in the early 20th century, with Tarbell’s exposé on the Standard Oil monopoly in McClure’s magazine a brilliant example. As we’ll see, the Great Story has demonstrated its subversive power countless times and has exposed and clarified complex problems for mass audiences across a nearly limitless range of subjects: graft in American cities, modern slave labor in the US, the human costs of leveraged buyouts, police brutality and corruption, the secret recipients on Wall Street of government bailouts, the crimes and cover-ups of media and political elites, and on and on, year in and year out. The greatest of muckraking editors, Samuel S. McClure, would say to his staff, over and over, almost as a mantra, “The story is the thing!” And he was right.” Starkman has incredible optimism in the power of the press is infective. But in the weekend read, Roger Berkowitz turns to Walter Lippmann to raise questions about Starkman’s basic assumptions.
Kathleen Frydl has an excellent essay in The American Interest arguing against our professionalized military and for the return of a citizen’s army. “Without much reflection or argument, the United States now supports the professional “large standing army” feared by the Founding Fathers, and the specter of praetorianism they invoked casts an ever more menacing shadow as the nation drifts toward an almost mercenary force, which pays in citizenship, opportunity structures (such as on-the-job technical training and educational benefits), a privileged world of social policy (think Tricare), and, in the case of private contractors, lots of money. Strict constructionists of the Constitution frequently ignore one of its most important principles—that the military should be large and powerful only when it includes the service of citizen-soldiers. This oversight clearly relates to the modern American tendency to define freedom using the neo-liberal language of liberty, shorn of any of the classical republican terminology of service. We would do well to remember Cicero’s most concise summary of a constitutional state: “Freedom is the participation in power.”” I don’t know what Hannah Arendt would have thought about the draft. But I do know she’d sympathize with Frydl’s worries about a professionalized army.
Tim Wu marvels at the human augmented by technology. Consider what an intelligent time traveler would think if talking to a reasonably educated woman today: "The woman behind the curtain, is, of course, just one of us. That is to say, she is a regular human who has augmented her brain using two tools: her mobile phone and a connection to the Internet and, thus, to Web sites like Wikipedia, Google Maps, and Quora. To us, she is unremarkable, but to the man she is astonishing. With our machines, we are augmented humans and prosthetic gods, though we’re remarkably blasé about that fact, like anything we’re used to. Take away our tools, the argument goes, and we’re likely stupider than our friend from the early twentieth century, who has a longer attention span, may read and write Latin, and does arithmetic faster. The time-traveler scenario demonstrates that how you answer the question of whether we are getting smarter depends on how you classify “we.”” We, the underlying humans may know less and less. But “we,” the digitally enabled cyborgs that we’ve become, are geniuses. Much of the focus and commentary about artificial intelligence asks the wrong question, about whether machines will become human. The better question is what will become of humans as we integrate more fully with our machines. That was the topic of Human Being in an Inhuman Age, the 2010 Arendt Center Conference. A selection of essays from that conference are published in the inaugural edition of HA: The Journal of the Hannah Arendt Center.
In an interview with high school teacher David Cutler, history professor Eric Foner explains how we could make history education more effective: "Knowledge of the events of history is important, obviously, but also I think what I see in college students, that seems to be lacking at least when they come into college, is writing experience. In other words, being able to write that little essay with an argument. I see that they think, 'OK, there are the facts of history and that's it—what more is there to be said?' But of course, the very selection of what is a fact, or what is important as a fact, is itself based on an interpretation. You can't just separate fact and interpretation quite as simply as many people seem to think. I would love to see students get a little more experience in trying to write history, and trying to understand why historical interpretation changes over time." Foner wants students to think history, not simply to know it.
Gary Shteyngart, Google Glass wearer and author of the recently published memoir Little Failure, explains the arc of his reading habits: "When I was growing up, I was reading a lot of male fiction, if you can call it that. I was up to my neck in Saul Bellow, which was wonderful and was very instrumental but I think I’ve gone, like most people I think I’ve expanded my range quite a bit. When you’re young you focus on things that are incredibly important to you and read, God knows, every Nabokov that’s ever been written. But then, it is time to move beyond that little place where you live and I’ve been doing that; I’m so curious to see so many people send me books now it’s exciting to go to the mailbox and see a work of Croatian fiction."
This week on the blog, Sandipto Dasgupta discusses Arendt and B.R. Ambedkar, one of the authors of the Indian constitution. In the weekend read, Roger Berkowitz examines the merit of muckraking journalism and its role as watchdog of corruption.
Stephanie A. Miner, the Mayor of Syracuse NY, has an important op-ed essay in The NY Times Thursday. Syracuse is one of hundreds of cities around the state and tens of thousands around the country that are struggling with the potentially disastrous effects of out-of-control pension costs. Where this crisis is heading can be seen in California, where San Bernadino has become the third California city to declare bankruptcy. These cities are dying. They are caught in a bind. Either they decide not to pay their promised debts to pensioners; or, in honoring those debts, they so fully raise taxes and cut services as to ruin the lives of their citizens.
In Syracuse, Mayor Miner understands well the depth of the problem. First, public employee labor costs are too high not because salaries are high, but because pension costs and medical benefits are rising without limit. Second, revenues are being slashed, both from the recession and from cutbacks from the state and federal governments. Finally, the middle and upper class flight from cities to suburbs have left the tax base in cities low at the moment when poorer city dwellers are disproportionately in need of public services.
The result is that cities are faced with a stark choice: Do they pay older citizens what has been promised to them? Or do they cut those promised pensions in order to provide services for the young? This is a generational conflict that is playing out across the country.
Miner is worried that the response by NY State is making the problem worse. In short, Governor Cuomo and the legislature have decided to let cities that cannot afford to fund their burgeoning pension obligations borrow money to pay those pensions. The kicker is, that the cities are being told to borrow money from the very same pension plan to which they owe money.
If this sounds suspicious, it is. As Danny Hakim—one of the best financial reporters around—wrote almost exactly one year ago in the NY Times, this is a desperate and dangerous move:
When New York State officials agreed to allow local governments to use an unusual borrowing plan to put off a portion of their pension obligations, fiscal watchdogs scoffed at the arrangement, calling it irresponsible and unwise.
And now, their fears are being realized: cities throughout the state, wealthy towns such as Southampton and East Hampton, counties like Nassau and Suffolk, and other public employers like the Westchester Medical Center and the New York Public Library are all managing their rising pension bills by borrowing from the very same $140 billion pension fund to which they owe money.
The state’s borrowing plan allows public employers to reduce their pension contributions in the short term in exchange for higher payments over the long term. Public pension funds around the country assume a certain rate of return every year and, despite the market gains over the last few years, are still straining to make up for steep investment losses incurred in the 2008 financial crisis, requiring governments to contribute more to keep pension systems afloat.
Supporters argue that the borrowing plan makes it possible for governments in New York to “smooth” their annual pension contributions to get through this prolonged period of market volatility.
Critics say it is a budgetary sleight-of-hand that simply kicks pension costs down the road.
Borrowing from the state pension plan to pay municipal pension costs is simply failing to pay the pensions this year and thus having to pay more next year.
Hakim, as good as he is, allows Thomas P. DiNapoli—the state’s comptroller—to get away with calling the scheme “amortization.”
The state’s comptroller, Thomas P. DiNapoli, said in a statement, “While the state’s pension fund is one of the strongest performers in the country, costs have increased due to the Wall Street meltdown.” He added that “amortizing pension costs is an option for some local governments to manage cash flow and to budget for long-term pension costs in good and bad times.”
But how is this amortization? The assumption or hope is that the market will rise, the pension fund will go up, and then the municipalities will owe less. That is hardly amortization. No, it is desperate speculation with public monies.
The crisis in our cities afflicts the whole country, according to a study by the Pew Center on the States.
Cities employing nearly half of U.S. municipal workers saw their pension and retiree health-care funding levels fall from 79% in fiscal year 2007 to 74% in fiscal year 2009, using the latest available data, according to the Pew Center on the States. Pension systems are considered healthy if they are 80% funded.
The reason to pay attention to the problems in cities is that cities have even less ability to solve their pension shortfalls than states. The smaller the population, the more a city would have to tax each citizen in order to help pay for the pensions of its retired public workers. The result is that either cities get bailed out by states and lose their independence (as is happening in Michigan) or the cities file for bankruptcy (as is happening in California).
Mayor Miner, a Democrat, takes a huge risk in standing up to the Governor and the legislature. She is rightly insisting that they stop hiding from our national addiction to the crack-cocaine of unaffordable guaranteed lifetime pensions. Piling unpayable debts upon our cities will, in the end, bankrupt these cities. And it will continue the flight to the suburbs and the hollowing out of the urban core of America. Above all, it will sacrifice our future in order to allow the baby boomers to retire in luxury. Let’s hope Miner’s call doesn’t go unheeded.
The Wall Street Journal ran an interview this week with Luke Muehlhauser, the Executive Director of the Singularity Institute. The Journal asked: Will Artificial Intelligence Make us Obsolete? Muehlhauser's answer was, well yes. In his words:
Cognitive science has discovered that everything the human mind does is done by information processing and machines can do information processing too.
The first statement is clearly false, or at least depends on a strangely mixed up idea of "information processing." The old determinist canard that humans are simply complex machines has not been proven or discovered by cognitive science. And even if humans do process billions upon billions of bits of information it is not at all clear that such a humanly fallible process is reproducible. That is not the claim that cognitive science can make.
But cognitive science can claim that machines can be built that act in ways that are so like humans as to be almost nearly indistinguishable from them. Or, they can even be better than humans in doing many quintessentially human tasks. So machines can not only beat humans at chess, they can make moves that seem like moves only a human could have made, as Gary Kasparov learned to his dismay in the second game of his rematch with Deep Blue. Machines can create paintings that appear to be fully creative, as does Aaron, the painting machine created by artist and computer scientist Harold Cohen. And machines can increasingly make ethical decisions in warfare, as the robo-ethicist Ron Arkin has argued—decisions that are more humane than those made by human warriors.
Too much of the debate over artificial intelligence is caught up in the technical and really irrelevant question of whether machines can fully replicate human beings. The point is that if machines act "as if" they are human, or if they are capable of doing what humans do better than humans, we will gradually and continually allow machines to take over more and more of the basic human activities that make up our world. Already computers make most of the trades on Wall Street and computers are increasingly used in making medical diagnoses. Computers are being used to educate our children and write news stories. Caregivers for the elderly are being replaced by robotic companions. And David Levy, artificial intelligence researcher at the University of Maastricht in the Netherlands, argues that we will be marrying robots in the near future. It is not that these robotic lovers or artificial artists are human, but that they love and paint in ways that do or will soon pass the Turing test: they will be impossible to distinguish from human works.
Undoubtedly one reason machines are acting more human is that humans themselves are acting less so. As we interact more and more with machines, we begin to act predictably, repetitively, and less surprisingly. There is a convergence at foot, and it is the dehumanization of human beings as much as the humanization of robots that should be worrying us.
Readers of the Hannah Arendt Center blog are well acquainted with the pension train wreck that is heading our way. It is not only public union pensions but also those corporate pensions that still guarantee defined benefits that are radically underfunded. And what hides the immensity of the problem is continued unrealistic assumptions about long-term future returns.
As was reported recently, Maryland—to take just one example—continues to assume a 7.75% annual return on its public pensions, which is even higher than the 6.6% 100 year historical average on stock returns.
While there is blame to go around—including feckless politicians and Wall Street hucksterism—the root of the problem may be a general unwillingness on all sides to realize that the last 100 years may have been an aberration. This is the argument that legendary investor Bill Gross makes in a report he sent to PIMCO clients this week.
Gross takes aim at the oft-repeated "truth" that over time stocks will return a real return of 6.6%. He argues that the returns over the last century were predicated on a Ponzi scheme, giving extra returns to shareholders at the expense of laborers (declining real wages) and government (declining real taxes). As those trends reach their limits, it is inevitable, Gross writes, that real returns must decline as well:
The legitimate question that market analysts, government forecasters and pension consultants should answer is how that 6.6% real return can possibly be duplicated in the future given today’s initial conditions which historically have never been more favorable for corporate profits. If labor and indeed government must demand some recompense for the four decade’s long downward tilting teeter-totter of wealth creation, and if GDP growth itself is slowing significantly due to deleveraging in a New Normal economy, then how can stocks appreciate at 6.6% real? They cannot, absent a productivity miracle that resembles Apple’s wizardry.
And it is not only stocks that will suffer. With treasuries yielding 2.55% (less than inflation), it is increasingly unlikely that long term bonds will provide meaningful returns. The sad result:
Together then, a presumed 2% return for bonds and an historically low percentage nominal return for stocks – call it 4%, when combined in a diversified portfolio produce a nominal return of 3% and an expected inflation adjusted return near zero. The Siegel constant of 6.6% real appreciation, therefore, is an historical freak, a mutation likely never to be seen again as far as we mortals are concerned.
The consequence of these reduced expectations for public and private pension funds (and also for retirees with 401k plans that assume healthy investment returns) are dire. Simply put, throughout society, we are living beyond our means. We are in denial and continuing to make unrealistic investment assumptions. Gross draws the inevitable lesson for pension plans:
Private pension funds, government budgets and household savings balances have in many cases been predicated and justified on the basis of 7–8% minimum asset appreciation annually. One of the country’s largest state pension funds for instance recently assumed that its diversified portfolio would appreciate at a real rate of 4.75%. Assuming a goodly portion of that is in bonds yielding at 1–2% real, then stocks must do some very heavy lifting at 7–8% after adjusting for inflation. That is unlikely. If/when that does not happen, then the economy’s wheels start spinning like a two-wheel-drive sedan on a sandy beach. Instead of thrusting forward, spending patterns flatline or reverse; instead of thriving, a growing number of households and corporations experience a haircut of wealth and/or default; instead of returning to old norms, economies begin to resemble the lost decades of Japan.
We should applaud Gross for saying what many of us suspect: that the efforts of technocrats who populate pension plans to predict future returns is unpredictable at best and more likely subject to rosy biases. And yet even Gross then goes on to assume the tone of an all-knowing sage, something that seems de rigueur for public commentators today. We will solve the problem, Gross assures us, by turning to inflation.
Maybe Gross is right. But whatever the future holds, we must first confront the fact that as things now stand, we face a collective reduction in our wealth. How we respond to the reality of that threat will define the United States in coming generations. Either we can continue to insist that we are a wealthy nation and go on spending and living as if nothing had changed, or we can adjust our expectations downward.
Or we can somehow seek to unleash new forces of wealth creation that would generate the kind of economic growth and social and economic change that will lead to unexpected transformations in who we are.
We should neither take Bill Gross' prognostications as prophecy nor deny the reality he describes. Gross offers merely a hypothesis about the future, something far different from a fact. We do not have an adequate understanding of human nature and human economy to predict the GDP for this year, let alone for 2030. Human spontaneity, chance, and freedom mean that predictions of the future are simply calculations based upon the assumption that such and such will happen if men act rationally and nothing unexpected happens. In such cases it is helpful to recall Pierre-Joseph Proudhon's remark (loved by Hannah Arendt) that "the fecundity of the unexpected far exceeds the statesman's prudence."
*This post originally appeared yesterday on Via Media.
Ryan Lizza has a must-read essay in The New Yorker on the challenges of presidential leadership. The first thing to note is that when Lizza began asking President Obama's team about their vision for what they want to accomplish in a second term, they hesitated to answer. "Many White House officials were reluctant to discuss a second term; they are focused more on the campaign than on what comes after." When pressed, Obama's team offered a litany of hopes for a second term, including: climate control, immigration reform, and a more robust foreign aid agenda. Also mentioned are housing reform and energy reform. While these are all important, they aren't what really ails the country. The American system of government is paralyzed. Corruption is becoming rampant on Wall Street and K Street. Our pension system is underfunded. Unemployment and underemployment are dangerously high and there are structural changes to the economy that require bold leadership.
The question raised is what leadership is and why it is so difficult in contemporary politics. Here is Lizza on one example of Obama's unwillingness to pursue his own agenda:
In 2010, Obama negotiated a new Strategic Arms Reduction Treaty with the Russians and won its passage in the Senate. But, despite his promise to “immediately and aggressively” ratify the C.N.T.B.T., he never submitted it for ratification. As James Mann writes in “The Obamians,” his forthcoming book on Obama’s foreign policy, “The Obama administration crouched, unwilling to risk controversy and a Senate fight for a cause that the President, in his Prague speech, had endorsed and had promised to push quickly and vigorously.” As with climate change, Obama’s early rhetoric and idealism met the reality of Washington politics and his reluctance to confront Congress.
Lizza explores the incredible difficulties recent Presidents have faced in pursuing their agendas. One takeaway is that the idea of a presidential mandate is a myth.
•"The idea of a mandate from the people defies the intentions of the Founders and is contrary to the way that most early Presidents viewed their role."
•"The concept of a mandate was essentially invented by Andrew Jackson, who first popularized the notion that the President “is the direct representative of the American people,” and it was later institutionalized by Woodrow Wilson, who explicitly wanted the American government to be like the more responsive parliamentary system of the United Kingdom."
•"But the idea [of the mandate] is mostly a myth. The President and Congress are equal, and when Presidents misinterpret election results—especially in re-elections—they get into trouble."
Lizza argues that Presidents don't have the importance or authority that they claim and we ascribe to them. And yet, there are exceptions.
The last two presidents who successfully amassed large majorities to pass transformative legislation were Lyndon Johnson and Ronald Reagan. What unites Johnson and Reagan—different in temperament and politics—was an uncanny quality of leadership. They were able to bring opposing sides together to accomplish grand and important visions. It is just such political leadership that we desperately need and clearly lack today.
Is such leadership possible anymore? When one looks to politics and sees that unyielding partisanship, consultant-driven talking points, and PR campaigns, one must wonder if a President can actually lead. Whether in Europe or in the US, it seems as if leaders are on strike, only acting when they absolutely have to. It is not simply a matter of lacking vision, although it is that too. More, it is that leaders are so careful and pre-packaged that politics has come to be more about marketing than about thinking and action.
Politics, Hannah Arendt argued, requires courage. It demands a risky and rare willingness to experiment and seek to bring about new directions in the world. To act politically demands doing things that are spontaneous and new; politics requires actions that are surprising and thus attract attention and generate interest, drawing people together around a common idea. Arendt's point was that a political leader can only attract citizens to their vision when they act in ways that are surprising and noteworthy. The political leader must take the risk of leadership that can either succeed or fail. When it succeeds, the surprising and new act generates enthusiasm and followers. When it fails, the people reject it.
Leaders are those who take risks and are willing to fail. To look at Mitt Romney and President Obama is to see what happens when leaders are afraid to lose. We must now confront the fact that the need to raise money and the rise of consultants and the dominance of public relations has sapped politics of the spontaneity, thoughtfulness, and fun that can and should be at the center of political action.
How can we today resuscitate a political culture of risk-taking and leadership? How can we make the president matter again? Do Occupy Wall Street and the rise of the Pirate Parties in Europe presage a new style of political leadership? These are important questions, and will be the topics of the Hannah Arendt Center's Fifth Annual Conference: Does the President Matter? The Arendt Center Conference will take place on Sept. 21-22, 2012 and will feature Keynotes by Ralph Nader, Bernard Kouchner, Rick Falkvinge, and Jeff Tulis. It also features talks by John and James Zogby, Todd Gitlin, Ann Norton, and many others. We hope you will join us.
Ina Drew has resigned. Why wasn't she fired?
Drew is the executive at JPMorgan being asked to fall on her sword for the $2 Billion+ loss in hedging trades. Jamie Dimon, who for four years has taken credit for running a tight ship in which he was responsible for steering JPMorgan through the financial crisis, will of course soldier on, beaten but not broken.
Aside from allowing her the dignity of not being fired, the resignation also, I have to imagine, preserves what must be a very generous severance package. All present reports refuse to disclose Drew's severance package. She was paid $15.5 million last year and almost $16 million in 2010. What justification is there for now allowing her to resign and potentially keep a severance?
The answer seems to be that Drew, like all the executives on Wall Street, deserves their stratospheric compensation. This of course was Dimon's point in his announcement of her resignation. He writes:
Ina Drew has been a great partner over her many years with our firm. Despite our recent losses in the CIO, Ina’s vast contributions to our company should not be overshadowed by these events.
In other words, Drew is brilliant and has been valuable. She should not be blamed for losing $2 Billion. She still deserves what is reported to be a severance package of over $14 Million in equity rewards, according to the Wall Street Journal.
The canard of the best and the brightest is one we hear over and over. The basic fallacy here is the belief that these executives are so smart and so valuable that they can't be angered or let go.
The fact that these blow-ups keep happening has done little to quell the applause for the bankers. All the incentives are for the executives to take on risk. What happens when they lose? They resign. I am sure Ina Drew is smart and capable and no doubt she will be back at a hedge fund or a new firm as soon as she wants.
The bigger issue, however, is that there is still the feeling around that these executives deserve to be making tens of millions of dollars every year. Recall that back in 2009 after the best and brightest brought the country's best (i.e. biggest) banks to their knees at the federal taxpayers' dole, Ken Feinberg was appointed to oversee bonuses and compensation at those banks. He has told how the big banks decided that every single one of their executives had performed above average and deserved extravagant bonuses. In an article about Feinberg from 2009, Steven Brill writes:
To take a near-comic example, the firms did not present a single executive as meriting a pay grade below the 50th percentile of their supposed peer group.... In fact, all 136 of the executives (the 25 top earners for each of the seven companies, less 39 who left during the year) were depicted as well above average, typically in the 75th percentile or higher. And the peer groups they were supposed to be in were often inflated; for example, someone running a unit might be portrayed as a chief executive because, the argument went, he ran a really big unit.
Citigroup and Bank of America, Brill writes, "concluded that everyone in their executive suites was above average when compared with peers at other giant banks that didn’t need a bailout." The banks then proposed that their average executives deserved bonuses of between $10-$21 million. After months of negotiating and cajoling, Feinberg talked them down, so that in the end, the average banker received a year-end bonus of $6.5 million at Bank of America and $6.2 million at Citigroup.
Those paltry $6 million bonuses were in a year that the banks went bankrupt and had to be bailed out. No wonder the best and the brightest like Drew deserve $14 and $16 million when times are good. Of course, the incentives to take risks are still there. If your risks work out, you make a fortune. When your risky trades go bad, you resign and take your winnings and your severance.
These bankers have nothing at risk and everything to gain by taking risks. Four years after the financial crisis, it seems that little if anything has changed.