As of the middle of September, presidential candidate Mitt Romney still has not released his tax returns for a few years’ span in which he likely either paid an embarrassingly low rate of taxes or engaged in some nefarious and high-priced loopholing, which happens to be the closest to a deviant sex act he’ll ever get. Plenty of talk among Romney’s defenders gripes about the media’s hot-blooded eagerness to see his returns as being part of a larger anger at elites in general. I believe the frustration with Romney’s “low” taxes has little to do with the fact that he’s rich, and everything to do with the way he got there.
To hear the anti-tax crowd tell it, a cocktail of recession and statism has taken this country’s edge off, so that where we used to respect wealth, we now idly envy it. This isn’t the case. The United States is still as hungry for wealth as ever. Don’t worry libertarians, we still see money as the only yardstick of status, and yes, still to a fault. It’s not wealth that the American commoner can’t stand, it is unearned wealth. Specifically, we resent the members of an exclusive industry that seems to spin golden silk out of the productivity of the actual economy: financiers.
Steve Jobs was the most beloved man in America at the time of his death, when he also happened to be the billionaire founder of the largest company in history. No one suffered him his wealth. Nor do we fault Bill Gates for his, or Larry Ellison for his, or Paul Allen for his. Nor, importantly, would Americans begrudge Thomas Edison or Henry Ford any money that they enjoyed. All these people earned their wealth by being inventors and keen businessmen, and most of all, through tangible contributions to society. It’s true that if Steve Jobs ran for president, his luster would dim and we would demand to see some blood. But even now, at a time when American resentment of elites is particularly strong, the public forgives Apple their rampant (legal) tax evasion. The issue has never been whether or not a particular corporate or personal tax burden was large enough; everyone dislikes taxes and avoids them where permissible. In an economy freely and profitably wielded by its biggest constituents, all the American public wants to see out of our wealthy class is some correlation between money and the good done to earn it. And the group of wealthy Americans that consistently has the least economic contribution to show for their wealth are “professional investors” like Mitt Romney.
Finance as an industry is uniquely maligned in this country for three reasons, the first just alluded to: there is a widespread difficulty in the peanut gallery with wealth accrued by those whose careers is dedicated only to accruing it. This is rooted in a deeper and unspoken conception of money itself, one whose progressive obviation, day by day, I believe will eventually spell the ruin of our monetary system. Money's best use is as an adapter to convert the goods and services of diverse specialized producers into a common engagement by the larger community, and a unit of account to enable the investment that grows the economy’s capabilities. The roles that financiers fulfill can be important, such as traders spreading a market's risk more broadly, investment bankers fostering ventures, brokers allocating clients’ resources, etc. Even the necessary functions of the financier, though, are lubrication at the meeting between capital and actual production. They are not producers themselves, but by positioning themselves at this lucrative juncture, they’re able to skim a certain amount of what was created to facilitate the production. This leads non-financiers to a legitimate suspicion about how much they deserve the money they make, especially when they make huge quantities.
If one worker knows carpentry and another knows pig farming, their productive knowledge is commuted between them through the medium of money. If someone’s knowledge, however, is that medium itself, it undercuts the purpose of even having a currency. This person enjoys all the benefits of the productive worker without a fraction of the benefits contributed to the community. Cynically stated, financiers are beneficial parasites on the actual economy.
The natural popular disdain for the inflated wealth of those no more talented at their profession than the average tradesman enables the second source of disdain toward the industry, politicians. America's political class of elected officials are acutely aware that financiers represent a group just below them in terms of power and importance. Wall Street is nearly as powerful as Washington for two reasons. Not only does most campaign money come from the financial world, but financiers falsely stake a claim as the flagship representatives of capitalism and economics, which is the single most important and legitimizing construct in our culture today. (Meaning only that decisions made in the public sphere must be justified economically, just as in past eras they may have had to prove legitimate against the assumptions of Christianity, imperialism, militarism, etc.) And nearly all national policy has repercussions in the markets, thereby further vesting the financial industry with the actions of the actual ruling class. Well, the politicians don’t like this, which they’re right not to. The same power dynamic once existed between monarchs and nobility. Indeed, it was the equivalent of today’s financial class that drafted the Magna Carta—the penultimately powerful class of the wealthy looking to protect their fiefdoms from above. While presidents certainly cheer on the Dow and base important decisions on the bond market, there will always be an uneasiness with sharing a certain portion of power between the various factions of the highly elite, and knowledge that their own power over this beta class is only so effective.
Finally, I think bankers are mistrusted by those who understand the unfortunate role that our monetary system needs them to play: they are the toll booth that money from the government passes through en route to the larger economy. They’re the interface through which the Fed affects the money supply, Treasury finances operations, and Greece scams the eurozone. The American financial industry is also a kind of auxiliary State Department, being that global cooperation in high finance smooths the way for diplomacy in politics. Not only is finance a powerful lobby, but it currently claims essential macro-scale functions.
Ultimately, the American suspicion of financiers comes from both sides of the class spectrum. From below, there is a resentment bred from doubt that the industry deserves the returns they receive. From above, there is a desire to suppress the power of the industry without compromising its health or stanching the flow of campaign money. This creates a kind of insulation in which Wall Street can incubate its own culture, distinct from not only broader society, but functional society. With the lines on the field drawn for them by regulation, financiers are safe to engage in a no-holds barred, never-ending game of subterfuge and gambling that make the capitalism of Adam Smith seem as competitive as a handshake. The financial shark tank is so apart from the mores of normal society that when financiers do occasionally resemble a functional civilian community (such as when a private consortium of banks came together to save Bear Stearns and nearly Lehman in 2007) it is grotesque. Such is the arrangement we as a country allow to persist in our endless desire to have a stronger, faster, bigger economic machine than we had the day before.
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