The Passing of an Era

Here is a funny bit by Hilzoy on the Washington Monthly blog site Political Animal. It is funny sad. These are the yelps and squeals of the extravantly rich as their era fades and passes, just as there is a sadness when an aging movie star is pushed off centre stage by the new upcoming generation.

I now know how it felt as the Roaring 20s turned into the grim Depression Years and the rich ranted and raged at FDR and the "stealing" done to them by the New Deal:

Mr. DeMille, They're Ready For Their Closeups!

New York Magazine has what Felix Salmon calls "an astonishing concatenation of moans and whines from New York's monied classes". It's truly surreal. For example:

"Without exception, Wall Street guys have gotten accustomed to not being stuck in the city in August. So it becomes a right to have a summer home within an hour or two commute from Manhattan," says the Goldman vet. "There's a cost structure of going with your family on summer vacation that's not optional. There's a cost structure of spending $40,000 to send your kids to private school that is not optional. There's a sense of entitlement, that you need that amount of money just to live, that's not optional."

"You can't live in New York and have kids and send them to school on $75,000," he continues. "And you have the Obama administration suggesting that. That was a very populist thing that Obama said. He's being disingenuous. He knows that you can't live in New York on $75,000."

And yet, strange to say, in 2007 the median family income in New York City was $52,871. Maybe New York takes in floods of new residents every year, and so many of them die of starvation that the median income is actually below the level needed to survive. Maybe over half of the families in New York are zombies. Or maybe -- just maybe -- over half the families in New York live well below the level this "Goldman vet" thinks you just can't live on.

Likewise (this is a different speaker):

That said, he continues, "We're in a hypercapitalistic society. No one complains when Julia Roberts pulls down $25 million per movie or A-Rod has a $300 million guarantee. We have ex-presidents who cash in on their presidencies. Our whole moral compass has shifted about what's acceptable or not acceptable. Honestly, you can pick on Wall Street all you want, I don't think it's fair. It's fair to say you ran your companies into the ground, your risk management is flawed -- that is perfectly legitimate. You can lay criticism on GM or others. But I don't think it's fair to say Wall Street is paid too much."

Wrong. People at firms that would not have survived without government assistance might have been Julia Roberts a couple of years ago. Now, they're Norma Desmond.

If you want to say that whatever the free market in its wisdom dictates that people are paid is fair, then the fair wage for people at AIG, Citi, and any other firm that would not have survived without government assistance is zero. If you want to use some other metric, then Julia Roberts et al are irrelevant. But you do not get to appeal to the marvels of the market to justify your exorbitant salary when times are good without accepting its conclusions when it implies that the fair value for your work is nothing.

And I don't even know what to say about this:

"There is rage at Obama for pushing to raise taxes ("The government wants me to be a slave!" says one hedge-fund analyst)"

If raising the marginal tax rate to 39.6% counts as "slavery", then I suppose that the fact that top marginal tax rates during the Truman, Eisenhower, and Kennedy administrations were over 90% is a Holocaust. Or, you know, maybe not.

Seriously: I recognize that it's tough when the world you've known disappears. It's less tough when that means that you have to figure out how to survive on a six-figure salary than it is when your house gets foreclosed on, but still. That said, the degree of self-delusion on display in this article is just astonishing.

They don't get the fact that it is abnormal when people right out of college or business school can command more money than most people will ever see in their lifetimes. They don't get the fact that the firms for which they worked produced an economic catastrophe that has reduced people all over the world to genuine poverty (as opposed to living on $75,000 in New York.) They don't get the fact that the compensation at those firms had a lot to do with that catastrophe. They don't get the fact that because of their greed and stupidity, we had to rescue those firms -- which means that their lifestyles are being supported by truckdrivers and pharmacists and primary school teachers across the country, many of whom would love to try to scrape by on $75,000 a year.

And they really don't seem to get what's wrong with this:

"I'm not giving to charity this year!" one hedge-fund analyst shouts into the phone, when I ask about Obama's planned tax increases. "When people ask me for money, I tell them, 'If you want me to give you money, send a letter to my senator asking for my taxes to be lowered.' I feel so much less generous right now. If I have to adopt twenty poor families, I want a thank-you note and an update on their lives. At least Sally Struthers gives you an update."

How fortunate for that analyst that most of us don't feel the same way. Writing three hundred million thank you notes would take an awfully long time.