The Generation Gap

Posted: March 24th, 2009 | Author: | Filed under: Business, Culture, Journalism, Politics | Tags: , , , , , | No Comments »

Now that it all appears to have blown over, I want to say a few more words about the AIG bonuses, and the media role in stirring the pot of fury. We had a long discussion about this in my core business journalism seminar last night.

Here’s where I come down: it was and is good journalism to comb through the government’s agreements with AIG and the company’s SEC filings, to try to find out who was getting paid for what and to probe the possibility of backscratching when it came to Goldman Sachs. [Though, as we determined in my seminar, there isn’t actually any backscratching involved. GS, it seems, really was smarter than the others.] Anyway, it was good journalism to ask these questions. Once. And report the answers. Once.

It was and is bad journalism to report, on the top right hand column of the A1 page of every major newspaper over two weeks, what various regulatory and elected officials had to say about these bonuses as though it were ACTUALLY the most important event of each day’s news cycle, when any number of other items needed that space. This is info-tainment at work.

Such poor editorial judgment is pernicious. The bonus rage not only derailed politicians from doing the important work of sorting out a real bank plan and a budget; it squandered the political will to have a real bank plan. Now that everyone in the country is out with their pitchforks for the bankers, how is the administration going to sell spending more money on this industry?

If the press had been doing its job, the last two weeks might have produced stories explaining that Wall Street funds Main Street, that even venal AIG insurers are worth your tax dollar right now. Or we might have read on page A1 about the strange phenomenon of Americans ranting against the pursuit of profit and how absurd that is. Such circumspect and constructive items appeared, but only on the inside pages of our newspapers, and in elite pockets of the wonkosphere.

I have a hunch as to why it wound up this way: it’s generational. (Note: Dan Drezner is talking the generations meme today too) The bulk of voters are over 50, close enough to retirement that even a superhero’s bank plan won’t bring back their 401K’s. The bulk of editors are the same age. Most of the time, such people are capable of putting enormous national emergencies above their own interests when the national emergency is framed as securing the future for their children.

This weekend, my mother, generally the type to lie down before moving buses for my sister and myself, said leaving her children to careers in a depressed, deflated, Japan’s-Lost-Decade economy might be worth it to get a pound of flesh from those who destroyed her retirement. I post this not as an indictment of her per se but as an example of the level the rage has reached and an explanation for why young people I know, even soak-the-rich liberals, are far less incensed by the whole bonus question than their parents. Unfortunately, elected officials won’t take any real steps on the banks until such policy polls well among our parents’ generation.


The Only Cure for Populism is Prosperity

Posted: March 18th, 2009 | Author: | Filed under: Business, Culture, Economics, Journalism, Politics, Video | Tags: , , , , , , , , , | 2 Comments »

I know you’re all fed up with my approving quotes of right-wing critics but this one is too spot-on. David Frum said the above in a conversation with Daniel Drezner on Monday and I was listening to the dialogue while trying to formulate my thoughts on AIG’s bonuses, Cramer vs. Stewart and the administration’s financial plan; his quip tied it all together. Joe Scarborough (another rightwinger whom I generally deplore) pointed out the other day that the anger over each of these issues is grounded in a knee-jerk populism.

I am a populist. Not in the sense the word is often (mis)used, as a synonym for political pandering, but in its actual sense of being concerned with the needs of the masses. And I believe the only way to fulfill those needs is to increase growth for all. I’m not a supply-sider: I think government should use Keynesian spending models to spur that growth, and I think we need to heavily tax-adjust growth on the way up to make sure it’s broadly shared. But there’s just no way to have economic growth without benefitting some people at the top. Get over it.

Nobody will get out of their present economic rutt unless we bail out the banks and as the TARP legislation was written, the Treasury doesn’t have strong powers over how banks spend that money. For the record, I think that’s too bad, and that we probably should have included some clause on compensation when we passed this bill in the fall. But we didn’t. Those who are really riled up about this are whining over bonuses as a focal point for their general angst over bailing out banks.

Here’s the problem: neither Obama nor Geithner, nor Bush nor Paulson before them, has been able to explain how the financial system works or why it matters. Obama’s town hall today is a good example; he was spot on for the first 45 minutes or so, speaking about schools and health care (even I was sold), but when he tried to address the banks, he stopped making sense, even to the biz journos I was watching with, who spend all their time on this stuff. The people on the audience all had glazed expressions–it was clear he wasn’t communicating; it even seemed to me he didn’t understand the math himself–he kept confusing securities with derivatives. Before you crow that such matters are too complicated for the attention spans of ordinary political audiences, listen to the speech FDR gave before bailing out the banks of his day. The only contemporary policymaker who I think has spoken with such clarity is Ben Bernanke, both in his October speech and his 60 Minutes interview this past Sunday. Unfortunately, explaining policy is NOT Bernanke’s job; it’s the job of elected officials and the press. The only person in media I’ll credit with getting this one right is my friend Vikas Bajaj at the NYT.

It’s because elected officials and the mainstream media are doing such a lousy job that Americans are turning to info-tainment outlets like Jim Cramer for investment advice and Jon Stewart for political analysis. Jim Cramer has been wrong-wrong-wrong on many stock calls, but it was never the proposition of his show to be right all the time; it always depicted itself as bullish market propoganda for enthusiasts. By the same token, business journalists defending Cramer should watch their words: the only reason Jon Stewart had to take him on is because professional reporters beyond the elite/expert outlets, like the government, did not do a proper job explaining the financial markets to Cramer’s middle America audience.

The result is that firms like AIG have us in their palms. I’m reminded of the moment in Richard III, when Richard, self-described as “deformed, unfin ish’d” woos Anne, a woman whose first husband he actually killed. First, he tells her he wants her, so bad that’s why he killed her hubby and no one else will love her as he does. She’s flattered, but she hates his guts. So he hands her a spear and dares her to kill him in revenge; the moment she fails to do so, she admits she’s his. We have already failed to kill these banks, but it means all our whining about bonuses is wasted breath and they know it. Like Richard, they take the opportunity to adorn themselves with fineries and enjoy the license we have given.

The reality is that we do need the banks, but that we’ll have to regualte them more aggressively as we give them more aid. I for one would much rather our elected officials devoted their attentions to devising a plan for such aid, and explaining it, in real detail, than to righteous indignation. I am hoping that my peers in the media and I will then focus on dissecting and analyzing such a plan, rather than taking pot shots at one another. Until that happens, I suppose I’ll just curl up with Lawrence Olivier.