I received the following letter from a reader, which I felt compelled to respond to at length. I’ll be interested in hearing your reactions:
Dear Margo: “This is not about your ‘Dear Margo’ column. I was hoping you would write your thoughts on wowOwow.com about the economy — not as an economist or columnist, but as a person of means, and as someone who also works for a living when you don’t need the income.
Do you think we are in the new age of robber barons? Are the CEOs and CFOs of billion dollar companies fundamentally corrupt and without moral fiber? Is the deciding factor individual greed? Does their leadership justify their salary, bonus, and perks? Is the exception Warren Buffett, and the rule Bernie Madoff? Are fortunes in the hundreds of millions of dollars a threat to the middle class?
The reason I’m asking is that the few wealthy people I know believe it to have been their actions alone that brought them all that money. They feel entitled, though for the most part they are trust fund babies. With all the hype, and being of limited resources myself, I don’t know what to believe. So I’m asking you: Is too big to fail too big to exist? — Sincerely, Bill Myers
Dear Bill: Good that you don’t want me to write as an economist, because I am not one … but I knew what you meant. Where to start? This very well could be the new age of robber barons, probably ushered in by the tech boom. I am old enough to remember when being a millionaire was to be considered quite rich. I have also been floored (like you, I imagine) to see so very many identified as “billionaires.” And for reasons I find unfathomable, some of these Daddy Warbucksian characters have no qualms about publicizing that “mine is bigger than yours.”
Birthday parties, for example. Steve Schwarzman comes to mind with his multimillion dollar birthday party. I have never met him or his wife, but I would not consider them desirable friends. Would I seem Victorian if I said I thought them vulgar? I find their display of … everything … to be nouveau riche in spades. (Schwarzman’s wife, by the way, previously dated Henry Kravis, suggesting, at least to me, that she had her heart set on a certain lifestyle.) Lloyd Blankfein is another one who comes to mind. I don’t know Schwarzman’s background, but it has been reported that Blankfein came from nothing – which shows – and perhaps explains the (misguided) instinct to buy, overdo, and flaunt. Interestingly, I know one of the Rockefeller cousins well, and one thing I have always admired about her (and she worked, by the way) is that there was never an effort to be in-your-face about her financial wherewithal. But there was also no need to. I probably have particular antipathy to Blankfein for both the uber-conspicuous consumption he and his wife indulge in, along with some of his statements during the investigation into Goldman Sachs. The very best one was that “he was just a banker doing God’s work.” I would say, “That’s rich,” but it would seem too punny in this context. I am wondering how you get to be a person who even thinks like that. Maybe what he meant to articulate was that money was his god? And not to go all John Simon on you, but he physically reminds me of a lawn ornament … which might explain his insecurities and his need to feel important – which many people these days equate with “rich.”
You ask if these lucky (and I believe often accidental) billionaires are “corrupt and without moral fiber.” I would say they are “morally corrupt,” with the help of their hand-picked boards, because they are grossly overpaid, and often for failing. Their golden parachutes, which really should be renamed platinum and diamond-studded farewell balloons, are a disgrace. Many of these top guns are essentially being paid for failing. It is called “failing up.”
There are remarkably few innovators in the Bill Gates/Steve Jobs mold among the fabulously wealthy. The idea that the Goldman Sachs guys and their ilk could rake it in on derivatives that they knew were dicey drek is beyond appalling. One might even call it criminal – an idea the Justice Department is pursuing. You ask if this is greed. Well, it’s greed plus. When you’ve made a certain amount of money, it becomes a game. My father told me this in the 1960s when he sold Budget Rent-a-car to Transamerica. When you’re making way more than you need to live, and live well, you are playing a game, and the money is how you keep score. I do think this kind of funny money is deleterious to the middle class. (Paul Newman, referring to movie business salaries, also out of this world, referred to it as “fuck-you money.” It is so out of proportion that it loses all meaning.)
We are getting to the point where there may be no middle class. I think it is bad public policy, if you will, when the 1% are living an entirely different life than the 99%. There is something new, different and bad going on that is unlike what used to be the norm with “regular” rich people and those on the rung below.
I disagree with you about “trust fund babies.” Today’s big rich have some of those (i.e., the Koch Brothers) but most of the billionaires positioned themselves, either on Wall Street or in real estate, to make it … and often, I believe, by nefarious means. I didn’t used to, but now I think Balzac nailed it when he said, “Behind every great fortune is a great crime.” And some trust funders, like Ted Turner, to name but one, started with a large inheritance and increased it a hundred fold. The friends you mention who believe their fortunes accrued through their own actions are in many cases rationalizing – because it would be too emotionally harmful to think of things any other way. Who, after all, wants to acknowledge his wealth by saying, “Thanks, Dad?”
So to your question, is too big to fail too big to exist? I would say the thrust of the question is on the money. (Sorry, again, for an infelicitous phrase.) What’s going on now (i.e., the “Occupy” movements worldwide) will change some basic structures: compensation, among them. It seems that things as they have become finally reached a boiling point, and let us hope the revolution is an orderly one. — Margo, earnestly