|President Barack Obama makes his point to Lawrence Summers, left, head of the National Economic Council, and Office of Management and Budget Director Peter Orszag, seated next to Summers, during a Saturday budget meeting in the White House Roosevelt Room in the President's first week in office. Rahm Emanuel, White House Chief of Staff, is seated to the President's left.|
As the Irish face years of payback for the negligence of poltroon politicians and wonder at a failed political system that is so unfit for purpose, it's well to remember, there is no magic formula for good governance and the United States in particular does not provide a template. The brightest have been shown as not always the best, while Ireland's system of crony capitalism has its counterpart in the revolving door between Wall Street and Washington. The late American journalist and author David Halberstam highlighted “the difference between intelligence and wisdom," and said "true wisdom...is the product of hard-won, often bitter experience."
US commentator David Sirota wrote last week: "In the last decade, the financial industry's $5 billion investment in campaign contributions and lobbyists resulted in deregulation, which generated trillions for executives. And when the bubble burst, there was another boatload of free money! By Bloomberg News' account, $12.8 trillion worth of taxpayer loans, grants and guarantees — all to Wall Street!
But wait ... there's more!
The Associated Press this week reports that "companies that spent hundreds of millions lobbying successfully for a tax break enacted in 2004 got a 22,000-percent return on that investment" — $100 billion in all. That could be you!
Of course, the secret is investing heavily in specific political stocks."
Wall Street made two of President Obama's top advisers multimillionaires, in recent times.
The New York Times reported last November that Barack Obama’s choice to be his chief of staff, Rahm Emanuel, a former adviser to President Clinton and later as a congressman from Illinois, made millions of dollars on Wall Street as an investment banker with Wasserstein Perella, in his time between his jobs in politics.
Despite having little experience or education in finance, Emanuel became a managing director at the firm’s Chicago office in 1999, helping to bring in business and seal deals.
The Times said according to a 2003 article in The Chicago Tribune, that Emanuel was brought in by one of the firm’s founders, Bruce Wasserstein, who was one of President Clinton’s most active fund-raisers on Wall Street and is now the head of Lazard.
“Rahm did a great job for our firm,” Wasserstein told the New York Times. “When Rahm worked with us at Wasserstein Perella, he showed a great ability to reconcile divergent interests for a constructive outcome.”
In his two-and-a-half-year stint as a banker, Emanuel made $16.2 million, according to Congressional disclosures.
Last week, the White House released records, which showed that the President's top economic adviser Lawrence Summers, earned nearly $5.2 million in just two years at one of the world’s largest hedge funds - - working one day a week.
Summers, who had once compared finance to ketchup sales, had succeeded Robert Rubin as Treasury secretary in mid 1999. Rubin had worked at Goldman Sachs for 26 years before joining the Clinton administration. He pushed for repeal of the Depression-era Glass-Steagall Act, which had mandated that investment and commercial banking be separated. The repeal act was popularly known as the "Citigroup Authorization Act" and Rubin joined Citi as a senior adviser, where he earned about $115 million excluding stock options, until his resignation last January. Rubin was not aware of the detail of $55 billion of collateralized debt obligations (CDOs) and other subprime-related securities on the group's balance sheet. "The answer is very simple," he told Fortune Magazine. "It didn't go on under my nose." This from a man who earned $18 million in 2008!
Even worse, The New York Times reported in November 2008 that in September 2007, Citigroup’s then chief executive, Chuck Prince, had learned for the first time that the bank owned about $43 billion in mortgage-related assets! On January 2, 2009, Citigroup said that Robert Rubin had resigned as a senior adviser and would not seek re-election as a board director. Rubin told The Wall Street Journal his pay was justified and that there were higher-paying opportunities available to him. "I bet there's not a single year where I couldn't have gone somewhere else and made more," he said. Asked if he had any regrets, Rubin, who had been termed by President Clinton, the greatest Treasury secretary since the first one, Alexander Hamilton, said: "I guess that I don't think of it quite that way," adding that "if you look back from now, there's an enormous amount that needs to be learned."
“Wages in finance were excessively high around 1930 and from the mid 1990s until 2006,”wrote Thomas Philippon of New York University and Ariell Reshef of the University of Virginia, in a National Bureau of Economic Research working paper released last January,“Wages and Human Capital in the U.S. Financial Industry, 1909-2006.”
New York Times business columnist Floyd Norris wrote, that Philippon said "the society could benefit from a flow to other industries. 'As a society, do we want to put a third of our best brains in the financial sector?' he asked, pointing to a study indicating Harvard graduates from the early 1990s were far more likely to go into finance than were those who had graduated a decade earlier."
"That generation has grown accustomed to the idea that investment banks, not to mention hedge funds and private equity funds, pay far better than companies in other industries."
Those who are regarded as the brightest can be duds, while the brightest may not always be the best.
David Halberstam in the "The Best and the Brightest," his scathing indictment of the Washington policy makers who crafted and escalated the Vietnam War, asked: "If they were so very smart, how could they have got it so wrong?"
Last December, New York Times columnist Frank Rich wrote on the "Pavlovian ovations" of media colleagues to Barack Obama's economic policy appointees, such as Summers and now Treasury Secretary Geithner, who he termed as both protégés of master of the universe, Robert Rubin.
Rich said: "In his 20th-anniversary reflections, Halberstam wrote that his favorite passage in his book was the one where Johnson, after his first Kennedy cabinet meeting, raved to his mentor, the speaker of the House, Sam Rayburn, about all the President’s brilliant men. “You may be right, and they may be every bit as intelligent as you say,” Rayburn responded, “but I’d feel a whole lot better about them if just one of them had run for sheriff once.”
Halberstam loved that story because it underlined the weakness of the Kennedy team: “the difference between intelligence and wisdom, between the abstract quickness and verbal facility which the team exuded, and true wisdom, which is the product of hard-won, often bitter experience.” That difference was clearly delineated in Vietnam, where American soldiers, officials and reporters could see that the war was going badly even as McNamara brusquely wielded charts and crunched numbers to enforce his conviction that victory was assured."
Rich said for some of JFK’s best and brightest, Halberstam wrote, wisdom came “after Vietnam.”
He said Geithner's sparkling résumé is missing one crucial asset: experience outside academe and government, in the real world of business and finance. Mary Harney, former leader of the defunct Progressive Democrats and Irish government minister since 1997, worked 9 months as a teacher before becoming a full-time politician.
Irish political leaders generally have neither useful experience outside politics nor are they viewed as particularly bright but leaders can leave much human wreckage in their wake.
James C. Thomson, wrote in a 1996 obituary on President Kennedy's National Security Adviser McGeorge Bundy, his former colleague at the White House: "In 1968, after I wrote a critique of Vietnam policy in The Atlantic, Mac chastised me for betraying LBJ's trust. We didn't make up for eight years. By then I was running Harvard's Nieman Fellowships for journalists, and Mac came to talk to the fellows.
He was crisply articulate, but there was one persistent young man, who resembled Trotsky, needling Mac with questions about the war. Mac finally cut him off saying, "Your problem, young man, is not your intellect but your ideology."
Later, as we were clinking highballs, the Trotsky look-alike cornered Mac: "What about Vietnam?"
Bundy: "I don't understand your question."
Trotsky: "Mac, what about you and Vietnam?"
Bundy: "I still don't understand."
Trotsky: "But Mac, you screwed it up, didn't you?"
Glacial silence. Then Bundy suddenly smiled and replied: "Yes, I did. But I'm not going to waste the rest of my life feeling guilty about it.""