Tuesday, April 14, 2009

Scraping the Bottom of the Barrel...

with Richard Cohen. Amidst the outcry over Larry Summers' $5 million sinecure at the hedge fund DE Shaw, Cohen takes to the Washington Post to voice his unsurprisingly contrarian dissent from the simmering populist rage. Cohen, after all, has made a career out of defending the prerogatives of the elite - from government officials who lied us into war, to the very journalists (such as himself) who failed to investigate these lies, to financial journalists who couldn't be bothered to ask questions about the housing bubble. But with the Summers-DE Shaw flap, Cohen takes his standard establishment hagiography to new Orwellian heights: we should not censure Summers for his ties to the financial industry, but, rather, lavish praise on him for passing up the riches of our new robber barons to re-enter public service. In other news from Robert Cohen: war is peace; freedom is slavery; ignorace is strength. From Cohen:
The recent headlines about Lawrence Summers had it all wrong. They announced with an implied breathlessness that he earned around $8 million last year -- much of it from the hedge fund D.E. Shaw. Here's what I would have written: "Man Takes More Than $7.9 Million Cut in Pay." Somewhere in the Diagnostic and Statistical Manual of Mental Disorders, the bible of shrinks, there should be an entry for "public servant." They are all, bless their hearts, a little nuts....

In our scandal-soaked culture, it is de rigueur to denigrate public officials and to search for the inevitable conflict of interest. But here are people, such as Summers, who have put aside wealth and lavish perks for government service. They have their reasons, sure, but whatever they are, we -- not they -- are the richer for it.
Unfortunately, Cohen is hardly alone in this establishment defense. Indeed, most of the establishment deign to indulge the masses with bouts of populist fury - AIG bonuses anyone - only to later lead the backlash against the backlash; informing the uneducated and unsophisticated masses why focusing on such details is trivial. The following discussion between Noam Scheiber of TNR and Megan McArdle of the Atlantic typifies this attitude.

This misses the point. For Scheiber, as long as there is no quid pro quo between Summers and DE Shaw, there is no scandal. Maybe. But does anyone believe that Summers will push for oversight or regulation of hedge funds/derivatives if he thinks a very lucrative post-government career at a hedge fund awaits him? The cognitive capture of our government, media, and academic elites by Wall Street is of vital importance. If our elites believe that what is good for Wall Street is good for America, then they will likely try to revive the status quo ante. Beyond whether this is even possible, it should be asked whether it is even desirable. Unfortunately, most establishment figures deem that a silly, unserious question.

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