An Empire State of Mind

Imara Jones Nov 1, 2012

“Listening to Obama talk about the economy is like listening to a chick talk about football.” That’s not a quote from a sexist frat kid trying to impress before a big night out. It comes from the heart of some of the world’s wealthiest people who work in the most elite bank on Wall Street: Goldman Sachs.

Broadcast to the world through @GSElevator—a Twitter handle that everyone concerned about economic justice should know about—it’s but one of a myriad of Tweets which make public the private musings of investment bankers.
According to the anonymous Goldman employee who runs @GSElevator, the comments are spoken off-the-cuff on rides between floors at the firm’s headquarters. What they reveal about America’s economic elite is downright grotesque. “Whenever I see a black guy with my last name, I can’t help but wonder whether my family used to own his,” said one Goldman staffer. “Feminists are just ugly underachievers who make the excuse that they’re female for their failure,” chimed another. “My son doesn’t look like George Zimmerman or Trayvon Martin. He looks like a kid in a Ralph Lauren ad,” rejoined one Twitterer.
With the election just a few days away, President Obama is in the fight of his political life largely because he protected and reinvigorated the people and institutions represented in these tweets. Leaving big financial institutions intact is his administration’s original sin, and it’s haunted the president ever since.
When America and the rest of the world called for the banks to be broken up, Obama insisted that Wall Street be rescued and made whole—at taxpayer expense, no strings attached. Goldman Sachs received $10 billion of taxpayer money through the $700 billion Troubled Asset Relief Program (TARP). TARP wasn’t enough to keep the financial industry afloat, so the Federal Reserve quietly made close to $8 trillion dollars of zero-interest loans to financial institutions. Goldman Sachs, according to Bloomberg, was one of the top six banks to get these loans backed by you and me.
Wall Street has returned the favor of the administration’s support with unjustified, unrestrained fury. “Obama loves America like OJ loves Nicole,” said one @GSElevator Tweet recently. “The next president will have to eat on paper plates once Michelle Obama gets done looting,” surmises another. In 2008, Goldman Sachs gave more money to Barack Obama’s campaign than any other company in America; this election year, 70 percent of Goldman’s contributions went to Republicans.
Of course, Wall Street’s ire has stretched past inappropriate jokes and fundraising for the GOP to damage us all. In keeping the big financial institutions intact, Obama enabled the banks to successfully resist his efforts to slow foreclosures and stem job losses. The impact of prolonged economic anemia on people of color and youth has been a disaster. Moreover, those billionaires and millionaires are now an organized cohort against the entire progressive political agenda whom they say Obama represents. This hardcore of America’s economic elite have unleashed bottomless pools of dark money that are changing America’s political system in ways that no one can predict. The War on Unions in Wisconsin was but a trial run for what they have in store for us.
Driving the efforts of the economic elite to remake America in their own image is the growing sense of cultural entitlement amongst the super wealthy. More than ever, America’s billionaires and millionaires believe that they should get what they want, when they want and how they want. Should their wants include a new president, the economic elite believe that they are entitled to have one. What’s frightening is that—as evidenced by our broader, rabidly-consumerist popular culture—too many of us have bought into their entitlement as well.
The fetishization of wealth in TV, film, and music has spread ever more rapidly in the last four years. It’s contaminated the very way America sees itself. We celebrate the rich as a special protected class and want to join them. In revering plutocratic ideals—entitlement for those with money and disdain of everyone else—we’re participating in the destruction of our democracy. This very moment is the one that the nation’s founding political leaders feared most. They hoped that the Constitution would keep it from happening.
In 2008, America elected Barack Obama—a former constitutional law professor—to lead it. Emphasizing that he was neither the child of privilege nor its champion was a key part of Obama’s personal narrative. It was an important reason why he was chosen by the nation for its top job. America was ready for change and a big shift out of entitlement culture. But once in office, Obama seemed uneasy in the role of lighting the way. He got lost—and America stayed lost with him.
It’s fair to point out that Obama has occasionally been rhetorically tough on the financial sector. In 2007, he told a gathering of Goldman Sachs at a private meeting that he would raise their taxes. In 2010, he told an assembly of Wall Street executives, “A free market was never a free license to take whatever you can get.” Last year, in a fight with congressional Republicans over taxes, Obama said, “Millionaires and billionaires can afford to pay a little more.”
But his administration’s deeds haven’t matched his words. And in the gap between the president’s phrases and actions, we stand at an ironic moment: Obama—who used his office to strengthen America’s economic elite—now faces one of their own, Mitt Romney. Like a bad scene from one of the “Terminator” movies, Obama is running against the beast that he fed.
Why Obama and the country have arrived at this point is a vexing question that has a long answer. It begins by going into the minds of the economic elite and looking out on the world they have planned.
The Fantasies of Billionaires
“The super rich live in a fantasy world,” a private consultant to hedge fund managers said to me recently. The consultant helps some of the wealthiest on Wall Street manage their private affairs, and spoke on the condition of anonymity. “I mean, there’s a side entrance for dog walkers at high-end apartment buildings, but the dogs themselves are allowed to come through the front door. A doorman takes them from the walker at the main entrance, puts them on an elevator, and returns them to their owner upstairs.”
The fantasy world of the super rich is made possible through unimaginable levels of compensation. Richard Dalio, head of the world’s largest hedge fund, Bridgewater Associates, made $3 billion last year. The head of Goldman Sachs, Lloyd Blankfein, made pennies in comparison; he raked in a mere $16 million in 2011 compensation. During the height of the boom, pay for Dick Grasso, then head of the officially non-profit New York Stock Exchange, totaled $235 million.
Financiers justify such outlandish levels of pay through an odd assertion of persecution and privilege.
Leaders of the financial sector believe that Wall Street jobs are so distasteful, so unwanted, that they require outrageous sums of money to attract qualified candidates. The fact that whom they hire also believe themselves to be the best and the brightest reinforces a sense of entitlement about their pay.
“No offense to Middle America, but if someone went to Columbia or Wharton, [even if] their company is a fumbling mismanaged bank, why should they all of a sudden be paid the same as the guy down the block who delivers restaurant supplies,” said a Citigroup executive to New York Magazine’s Gabriel Sherman in his article article, “The Wail of the 1%.”
In justifying her salary, another aggrieved financial veteran told Sherman, “People just don’t get it. I’m attached to my Blackberry. I get calls at two in the morning.”
Astonishingly, not only does Wall Street conceive of exorbitant pay as right and proper, but as an utter necessity. “There’s a cost structure of spending $40,000 to send your kids to private school that is not optional. You can’t live in New York and have kids and send them to school [making] $75,000 [a year],” said a Goldman employee to Sherman.
But according to the New York City Comptroller’s office, the average income of 99 percent of New Yorkers is $47,000. The average income of the top 1 percent of New York residents is $2.2. million.
The Goldman Sachs employee put it another way to New York Magazine, “There’s a sense of entitlement, that you need that amount of money just to live, that’s not optional.”
That sense of entitlement—that billions of dollars a year are required for one person to live—is the essence of their fantasy. The super rich have transformed their wants and desires into needs. The fantasy has become so hardened and real to them that even the suggestion that it’s fanciful is enraging. And if that person is the president, Wall Street goes nuclear.
Their Fear, and Obama’s Nightmare
On Feb. 19, 2009, CNBC correspondent Rick Santelli fronted a shouting group of traders on the floor of the Chicago Board of Trade as they boisterously called out “no,” to his question of whether the Obama administration should help struggling homeowners. “Losers’ mortgages,” he called them. Santelli declared that, instead of pushing for a bailout of average Americans, he was going to organize a “tea party on Lake Michigan” for “capitalists.” The tea party name stuck. Eventually the sentiments expressed by Santelli and his supporting cast of traders organized into a political movement which bore the name that he gave it. A fellow CNBC anchor referred to the “mob rule” atmosphere of the whole thing.
Since Santelli’s rant, CNBC has served as the mouthpiece for America’s offended rich. CNBC anchors and correspondents regularly pepper guests with questions about Obama’s “anti-business” policies. The fact that the stock market has doubled during his term in office seems lost on the network. The fact that almost none of these gains has translated into sustained prosperity for the vast majority of Americans is also equally lost.
CNBC’s Michelle Caruso-Cabrera lectures viewers on the “moral imperative of capitalism.” Joe Kernan, co-anchor of “Squawk Box” has called Paul Krugman—the Nobel Prize-winning economist who wants to reorient our economy towards the needs of the working class—“an idiot” and a “communist.”
True to form, CNBC produced a program called “Dangerously Rich.” It details how Occupy Wall Street’s rhetoric of “we are the 99 percent” has sent the 1 percent into a state of mass fear. An entire industry has sprung up to protect the possessions of millionaires and billionaires. Million dollar safe rooms are sold to protect the rich from their fellow citizens. Private jets are now equipped with military grade “countermeasures” to down missiles and scramble an opponent’s radar. James Bond-like weapons are concealed in blast resistant walls, ready to foil any protesters who might enter. “Only the paranoid survive,” says Dan Clark, who heads up Warren Buffet’s security detail. For the super rich, fantasy and fear seem to go hand in hand.
Billionaires’ opulent dreamworld, coupled with the paranoid delusion that it could crash at any moment through the actions of a lone 19-year-old demonstrator, is astonishing. It goes a long way to explaining why the perceived lack of deference from the president is so enraging to them. His suggestion that they should “pay a little more in taxes” shakes the fantasy of their entitlement and sets off their paranoia.
But the core question is why do the rest of us put up with it?
Caviar Dreams, Recession Realities
Our society has become deeply invested in the image that the super rich sell. The notion that their lives of glass and glitter are durable and better than ours is highly seductive. We want what they want. Marketers know it. In order to ensure that a product flies off the shelf, Madison Avenue strives to make it “aspirational.”
One company that has the “aspirational” shtick down is Apple. They’ve become the world’s largest company off the back of it. Companies regularly send the super wealthy things for which the rest of us have to pay. As comedian Lewis Black said, “as soon as Apple knew that I was rich and famous, they sent me an iPhone. ( But I actually needed it when I was poor.” America’s companies know that if the rich are seen with a new shiny product, the rest of us will chase after it. And it reinforces the wealthy’s sense of entitlement.
“It never occurs to them to raise the salary of the people that work for them,” muses the hedge fund consultant. “They can afford it. But to them generosity is giving their maids, au pairs, and nannies discarded couture. They say things like, ‘Oh, she will really appreciate this Prada. I’m giving her the nicest thing she’ll ever own.’ ”
The fact that the super rich believe that employees would rather have leftover high fashion than good jobs at strong wages says a lot about where we are culturally. It perhaps explains why the movie “The Help” was so resonant last year. For huge swaths of the American elite, and the millions of people employed by the them, it captured the modern truth of an essential dynamic. The fact that scores of Americans have to scale back their lives so that the elite’s Disney Land-vision can thrive is not 1963, it’s now.
Fantasies are alluring, especially those that hold out the promise that everything can be made better, if we just possess something we don’t have. Witness our various national lotto crazes which occur throughout any given year. The New York Lottery induces us to play Powerball with the slogan, “Yeah, that kind of rich.” In the words of Robin Leach, host of the long-cancelled TV show “Lifestyles of the Rich and Famous”,we’ve all bought into “champagne wishes and caviar dreams.” In spite of the current crisis and real day-to-day misery for millions, a crisis not seen in almost a hundred years, our attachment to the dream of a diamond-studded lifestyle is greater than ever.
The last era of economic distress comparable to our own was the Great Depression. In contrast to the Depression-era cultural celebration of tough people eking out hardscrabble existences in difficult economic times, we celebrate the purveyors of bling, bling.
Donald Trump holds court on “Celebrity Apprentice”, NeNe Leakes screams “I’m rich” on the “Real Housewives of Atlanta”—a show about 10 cent millionaires —and NBC’s new hit comedy “The New Normal” portrays a working class family brought by rich people to Los Angeles in order live on their estate. The monied pair wished to keep an eye on their working-class surrogate mother from Ohio.
What’s true on TV is also true in music.
Instead of Woody Guthrie’s 1930s populist anthem, “This Land is Your Land,” Jay-Z and Alicia Keys belted out—at the height of our crisis in 2009—“Empire State of Mind.” Their aspirational hymnal was played regularly at every nightclub and strip club within a stone’s throw of Wall Street. At these establishments, where America’s foot soldiers of “creative destructive” went to replenish themselves, the mostly male financial sector employees knew all the words. All the while, Beyonce advised them to put a diamond ring on it.
Jay-Z touts his stake in an arena owned by a Russian billionaire, Mikhail D. Prokhorov. 50 Cent crafts a profitable juice deal, and Dr. Dre enriches himself to the tune of $100 million by hawking headphones. We’re a long way from N.W.A.
In the 1930s, bank robbers not bankers were among America’s national heroes. John Dillinger and “Bonnie and Clyde” were the celebrities of their era. Americans may not have approved of these criminals’ shooting and maiming, but they did identify with their thievery from the monied interests who’d brought the country to its knees. Now, billionaires on the Forbes’ 400 Richest Americans list are celebrated household names. Oprah Winfrey, Warren Buffet, Michael Bloomberg and George Soros are on a pedestal. They’ve set the standard for everybody else.
In our disjointed dystopia of economic crisis and the celebration of wealth, struggling Americans identify themselves as the “CEOs” of their lives and obsess over their “personal brands.” We’ve begun to think of ourselves as corporations at precisely the time when we need to think of ourselves as citizens. Unlike wealth, citizenship is the great equalizer. It’s the one action that affirms that we all have equal worth. Citizenship confers the same status on a soldier serving in Afghanistan as it does on Bill Gates. That’s why undocumented residents need a path to citizenship so that they can have their equal say too. Under our political system, a billionaire and a work-study student at a community colllege each get the same number of votes: one. In the eyes of our Constitution, more money doesn’t equate more worth.
As long as we think of ourselves as corporations, there’s no way that we can pull ourselves out of this economic mess. As long as we fetishize wealth, we’ll always defer to those who have more. As long as we get to keep the dream of joining their ranks, “we the people” will allow the the hyper wealthy to continue to bend the political system to their exclusive benefit.
Viewed Through the Looking Glass
How did we end up here?
In the 1980s, leaders in Washington changed the rules of the game to benefit Wall Street over every other industry. In less than twenty years, Wall Street doubled its share of control over the American economy and became the country’s largest industry. As the size and power of banks swelled, the nation’s political and economic elite began to argue that the finance industry, like the military, was in the national-interest.
The logic went something like this: since the United States was home to the world’s largest financial market, the financial sector was pivotal to America’s global dominance and projection of power. Finance was America’s “soft power.” It was the flip side to the military’s “hard power.” Together, these two powers assured America’s lasting supremacy. By redefining private profit as a national security interest, whatever was right for Wall Street was right for America.
This oddball formulation led to disaster. It meant that the government, as with the military in time of war, would spend whatever it took to preserve the financial sector. For both war and financial bailouts, “not enough money” was never an option. For financial instituions, sky’s the limit. Become “too-big-to-fail” thorugh the repeal of Depression-era safeguards on banks? Sure. Ignore our dangerious gambling and discriminatory loan practices? No problem. Change the accounting rules to make us look richer? You got it. Give us trillions of dollars, no strings attached? Without a doubt.
The “anything they ask for” policy for Wall Street fed their entitlement and eventually broke the world. Because Washington told them that “what was good for Wall Street was good for Main Street,” they did whatever they wanted.
But Obama told us it would be different under his watch.
Upon election in 2008, Obama promised to hold those responsible for the economic mess accountable and to fix the “broken politics in Washington and failed policies” which caused it.
But then he chose the very people responsible for the mess to help clean it up: Tim Geithner and Larry Summers. Obama said that he had named Geithner and Summers to lead the Treasury Department and serve as his top economic advisor because of their “fresh thinking [and] bold, new ideas.”
Throughout the 1990s, Geithner was a top Treasury official and chief lieutenant to then-Treasury Secretary Bob Rubin. Rubin was a former co-Chairman of Goldman Sachs and spent 26 years at the firm. When Larry Summers moved into the top spot at Treasury, upon Rubin’s exit, Geithner stayed on. As Treasury Secretary, Summers succeeded in getting through Congress legislation that created too-big-to-fail institutions. Geithner was alongside Rubin and Summers every step of the way.
When President-elect Obama was asked about whether the choice of these old guard economic hands conflicted with his promise of change, Obama responded, “[change] comes from me.”
It turned out, the would-be change came from Summers, not Obama.
In 2009, Summers argued that Wall Street could not be reformed and needed to be shrunk down to size. He pushed for Wall Street’s biggest institutions to be broken up, but Geithner resisted. According to PBS’s “Frontline,” the Treasury secretary believed that holding Wall Street accountable was “Old Testament justice.” For Geithner, harsh penalties for the best and brightest were too much to ask.
The administration’s “pro-bank, anti-bank” battle raged so furiously that it paralyzed the White House. In stalemate, they finally took their case to the president. In a six-hour debate, the two sides argued it out in front of the commander-in-chief. In the end, Obama sided with Geithner. Summers subsequently left the cabinet.
True, Obama would eventually advocate for and sign the Wall Street Reform and Consumer Protection Act. The bill seeks to prevent future taxpayer funded bailouts and created a crucial new agency, the Consumer Financial Protection Bureau, to look out for average Americans. But many believe that it didn’t take away the government’s essential guarantee of Wall Street’s gambling and left too many loose ends. Two years after it was passed, only 30 percent of the law’s 400 regulations have been finalized, thanks in no small part to Wall Street lobbyists. Even the reform that was supposed to limit financial firms, turned out to be theirs for the taking.
Our Current Choice
The stupefying question of why Obama chose to protect and defend Wall Street above all else remains. Obama’s top political advisor, David Axelrod, told The New York Times that Obama and Geithner are “kindred spirits.” When Geithner wanted to leave the administration last year—reportedly for a senior position at Goldman Sachs—Obama pressed him to stay and he did.
Regardless of “why,” the choice has left a lot of damage done. Three decades could easily pass before the wealth lost by African American and Latino families ever comes back. Poverty in communities of color is at an all time high, placing yet another barrier in the education of black and brown children. Black homelessness is off the charts.
But increasingly in this election year the “why” of the past matters less than the “what next” of the future.
As the son of a governor and millionaire CEO, Mitt Romney is both the product of a culture of entitlement and a hawker of it.
In his now infamous “47 percent” comment to a room full of like-minded rich people, Romney railed against those “who are dependent on government and don’t take responsibility for their lives.” The irony of course is that the only way that the 1 percent thrives is because of the very policies that cause nearly 50 million Americans—1 out of 3 of those with jobs—to work but still not earn enough to live. The 1 percent actually owe the “47 percent” a lot.
Romney took his million-dollar inheritance of privilege and turned it into a quarter-of-billion dollar permit to run for the presidency. Romney claims that his leading credential for the nation’s highest office is that he made loads of money at Bain Capital. He’s feeding off of our notion that the “successful business person [is] a leader for our whole society. A hero of our times,” as Chrystia Freedland author of “Plutocrats: The Rise of the Super Global-Rich and the Fall of Everyone Else,” told Bill Moyers on his show recently.
Romney and Obama recently shared the stage, practically side by side, at the annual Alfred E. Smith Memorial Dinner in New York City. The affair, literally a gathering of the fat cats on Wall Street, is a must-stop for presidential candidates every four years. Besides the debate, it’s the only time that both presidential contenders share the same spotlight. Like two ennobled court jesters, the candidates’ job is to entertain attendees through self-deprecating jokes and not-so-thinly veiled jabs at their opponent. It’s all done in the name of charity.
Romney drew the largest laugh of the night.
Looking around at his peers in the hall, the former CEO said drily, “As President Obama surveys the Waldorf banquet room, with everyone in white tie and finery, you have to wonder what he’s thinking: ‘So little time, so much [wealth] to redistribute.’ ” Packed with billionaires and millionaires, the room erupted in whoops, whistles and sustained applause. Satisfied, Romney stared out at them knowingly.
Obama has redistributed, but likely in the wrong direction. Even as the middle class has shrunk, the number of millionaires is projected to grow by 5 million people over the next five years.
Franklin Roosevelt, the Depression-era president, attacked Wall Street as “money changers” who constructed “an evil old order.” Obama has done nothing like that, but the financial industry certainly treats him as if he did.
The fact that Obama has neither assailed nor broken up the banks is the problem. He’s helped grow a serious structural barrier to the change he pledged to bring about. And one wonders whether he has learned anything from his experience.
“My impression from recent evidence is that he has found his footing, and has come to understand how to use the constrained but still real powers of a president,” writes veteran journalist Jim Fallows in The Atlantic Magazine. “The evidence suggests that given a second term, he would have a better chance of becoming the figure so many people imagined,” he concludes.
This sort of exploration of what the president has learned in office might allow us to answer the question of why Obama did so little to turn back the monied power that broke the country. “Barack Obama is in many ways one of the [plutocrats],” Freedland mused to Moyers. “He was educated like them and had a chance to join their ranks.” But “he isn’t awed by them,” she added.
And this is the essential point: President Obama is not outside of our culture. He is a product of it. For too long we’ve celebrated aspirational entitlement without asking hard questions about how it came about, who benefits and what the costs are to our society, to our democracy and to ourselves. Obama swims in the same cultural pool as the rest of us.
Regardless of what happens on Tuesday, let’s hope that we all find a way to come up for air sooner rather than later. We’ve got to shake off the wayward dream of the past thirty years and reconnect with reality. For both the president and the country that he leads, whether we’re up to the task is the biggest unanswered question of all.
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