Jan 31 2009
Failed Businesses
I guess it was Erin Burnett on CNBC yesterday complaining about government limitation of Wall Street bonuses. She used the traditional Reagan era “class warfare” argument, noting that the government is trying to limit the ways people “reward success.”
What success? What success was there? Pretty much all the Wall Street firms are failed businesses. Merrill Lynch is a failed business. Citigroup is a failed business. Bank of America is a failed business. These businesses have failed just as surely as the local corner video store that didn’t think to retool for DVD, or the restaurant down the street that is always, always sadly empty. They are failed businesses. So what success is being rewarded at Merrill? There is no success, even if one particular unit happened to make more money than another. This is like the night manager at the failed video store having a slightly better terrible month than the afternoon manager: it is a pointless distinction when the business is a failed business. The only thing that distinguishes Merrill Lynch from C&G Video is scale: the failure of Merrill would have caused general misery in the society, so the people came in to prop up an essentially failed business. Merrill, Citigroup, Bank of America, etc. are all beneficiaries of a social safety net – the dole. These businesses are on the dole. And if the conservative heartlessness of the 1980′s taught us anything, it taught us that the taxpayer gets the ultimate say in the life of people on the dole. There’s a delicious inversion of Reaganism going on at all levels, as it were, as if a multitude has merely picked up the critical tools supplied by the worst of the supply-siders and turned them on the new version of the “welfare queen” – the corporate executive: what’s good for the goose, you know?
Of course, the businesses – the failed businesses – now argue that they need the bonuses in order to “retain talent.” What talent? The supposedly talented are just as surely failures as the businesses they ran into the ground with their complex schemes. Before I accept that such-and-such financial “genius” has “talent,” I’d want to see some evidence that he or she can contribute to a successful business, not these failed businesses destroyed by the bad decisions of the “talented” MBA elite. Besides, where are these people going to go? Every businesses in the financial sector has essentially failed, at least the big ones. I say let them go. Good luck finding non-bail-out related work anywhere in the fucking world. These are failed businesses, and Ms. Burnett and her colleagues at CNBC – a cesspool of completely unhinged and unreconstructed Friedmanites – will need to learn this. It is not a matter of government preventing these businesses, these failed businesses, from rewarding success. It is a matter of the society preventing them from rewarding failure. I’m perfectly happy to use the very categories that the conservatives supplied in order to hang them (as somebody once said…).
So basically, you’re comparing the Merrill Lynch of today to the single mother on welfare of the 1980s (that inspired the draconian welfare reform act of 1996)…. cool, I dig it.
Meanwhile, these two rants on Friedman made me laugh out loud.
http://www.nypress.com/article-19271-flat-n-all-that.html
http://www.nypress.com/article-11419-flathead.html
Well, I wouldn’t go that far. Generally speaking, the single mother had the decked stacked against her in all kinds of ways. Now, I’d suggest that the financial companies also had the “deck stacked against them,” to the extent that the systemic tendencies work against the form of profit they were putatively producing, so the development of complex derivatives, ridiculous mortgage terms, insane debt instruments, and the insurance to back up all the nonsense (credit default swaps and the like) had to be invented to reverse those tendencies temporarily, and so forth. These are the fingers in the dike on the falling rate of profit, which can only be dealt with through borrowing or government expenditure (the latter of which, of course, amounts to the same thing at a different level): we’ve seen the end of the latest borrowing phase, and so we’re back to government expenditure now, but the problem remains the same. But still. These companies invented the instruments of their own destruction in a way that the single mother on welfare did not. At the same time, I’m happy enough to appropriate the logic they used to insult and control the poor and turn it on them, now that they’re crying for government assistance and basically admitting the failure of their supposed autonomous domain. As for the links, yes, funny, but I was referring to Milton, not Tom.