Sunday night I spent a few hours feeding my continued fascination with the financial crisis, finally getting around to reading things like Matt Taibbi’s piece on Goldman Sachs in Rolling Stone, as well as Michael Lewis’s piece on AIG in Vanity Fair, a trail that finally sent me to Matt Taibbi’s blog at TrueSlant.com which is, itself, full of other posts hacking away at Goldman Sachs (1, 2, 3, 4, etc.). It’s all enough to make one quite shrill.
Given that I’ve spent the last 11 years of my life at Harvard watching as many of my classmates, then later students[1. Luckily not too many of those.], then even later students, advisees and friends from Eliot House head out the door to places like GS, I think that I’m most sensitive to the “best and brightest” argument that — thank God — people like Matt Taibbi do an excellent job of refuting. I knew a lot of very smart people in college, and have met many more at Harvard since, and after graduating while many are doing very well for themselves most are doing something that has a shred of social utility to it. Which, in my mind, distinguishes them from many highly-paid bankers.
However, the question that always nags in the back of my mind when thinking about the financial crisis and certainly compensation at the firms whose greed pushed us to the edge of the abyss is how can they think that they deserve that much money? You graduated college several years ago, you’re pushing money from pile A to pile B, and somehow you’re worth 10, 100 or even 1000 times as much in salaried compensation as a tenured faculty member at one of the world’s top universities[2. Forgive my example. I'm becoming intimately familiar with faculty salaries during the initial stages of my job search.]? Or 50, 500 or 5000 times as much as a schoolteacher/firefighter/<insert low paying, high social utility job here>? It just doesn’t make any sense. At least not to me. After all, I knew a lot of these people. They seemed like decent, normal Harvard students while they resided in Cambridge. Yet somehow they got to Wall Street and became gods among men, worthy or however many zeros they could squeeze out of the financial system.
The usual argument offered as an answer is some variation on “the market set my salary, so I must have earned it, and I must deserve it.” To me this seems like an interesting dodge, and perhaps akin morally to the “I’m not a racist” defense we see coming out the mouths of people who are supporting — or at least not actively resisting — systems that are themselves structurally racist, and systems from which these people have benefited greatly. This connection occurred to me after reading Malcolm Gladwell’s latest piece in the New Yorker. In the article — which I’ll admit I found a bit thin, if convincing — Gladwell summarizes recent criticism of Atticus Finch, the lead character in Harper Lee’s To Kill a Mockingbird which casts Atticus’ defense of Tom Robinson in a different, less-flattering light. Discussing Jim Folsom, Governor of Alabama from 1947 to 1951, who Malcolm likens to Atticus Finch in the piece, he writes:
Folsom was the same way. He knew the frailties of his fellow-Alabamians when it came to race. But he could not grasp that those frailties were more than personal—that racism had a structural dimension. After he was elected governor a second time, in 1955, Folsom organized the first inaugural ball for blacks in Alabama’s history. That’s a very nice gesture. Yet it doesn’t undermine segregation to give Negroes their own party. It makes it more palatable.
I think that you can make a similar argument about compensation, that there are powerful structural elements within our society that are responsible for the fact that an oil speculator receives a 100 million dollar bonus (while producing no tangible benefit to society), while many Americans are struggling through an economic downturn and watching their wages stagnate and expenses rise.
It seems to me that, like racism, the growing wealth gap in this country is at heart a moral issue that will require some form of moral calculus to truly address. You can’t really end racism without the class that is benefiting from it being willing — usually by being shamed — to put down the privileges that result. And you probably won’t really effectively end the compensation gap, as well as the idea that expensively-educated college graduates deserve to be making fortunes on Wall Street without contributing anything to society, without some of those same people standing up and saying: “I’m really not worth this much. I don’t deserve these millions of dollars. My job isn’t that important. I don’t make a product, and I don’t provide a service. I want to make a good living, like everyone else, but I don’t deserve the yachts, the multi-million dollar homes, the fancy vacations, a car and a driver. Maybe nobody does, but definitely not me. It’s just not fair.” My guess is, as is my (poor) understanding of the dynamics of racial change in American, the fire will have to start down below, but there will have be be kindling on top.
Returning to Harvard, in my darker moments I wonder if we as an institution aren’t more responsible for what is happening than we realize. We have attempted to teach “moral reasoning”, but our graduates seem to find ways to reason, morally, that they are so much better than the people that surround them and should be given permission to extract massive amounts of wealth even if that transfer is predicated on the suffering and sacrifice of others. So maybe we have failed to really teach our students moral reasoning. And if we have failed, I fear we have produced too many students that are like Matt Taibbi’s Goldman Sachs in minature: “great vampire squids wrapped around the face of humanity, relentlessly jamming their blood funnel into anything that smells like money.”