The Point of [No Risk and] No Return

End Bonuses for Bankers

By NASSIM NICHOLAS TALEB

Published: November 7, 2011

I HAVE a solution for the problem of bankers who take risks that threaten the general public: Eliminate bonuses.

I have a solution for the problem of declining newspaper circulation: stop publishing this sort of tripe.

More than three years since the global financial crisis started, financial institutions are still blowing themselves up.

Bankruptcies are part of the rejuvenation intrinsic to the business cycle. This is particularly true in an environment of prolonged recession that has been characterized by central planners’ attempts to divorce cause from effect.

The latest, MF Global, filed for bankruptcy protection last week after its chief executive, Jon S. Corzine, made risky investments in European bonds. So far, lenders and shareholders have been paying the price, not taxpayers.

Lo and behold, the market is working as it should. It’s also worth noting that Corzine is a Democrat, and also probably guilty of fraud.

But it is only a matter of time before private risk-taking leads to another giant bailout like the ones the United States was forced to provide in 2008.

The United States was forced to provide a bailout in 2008? If memory serves, the government was the one forcing the banks to take a bailout because an unpopular sitting duck president and a Congress in the throes of a political dust-up decided that the risks of inaction were a greater threat to their legacy than the risk of failed policy.

The promise of “no more bailouts,” enshrined in last year’s Wall Street reform law, is just that — a promise.

While I believe that a promise from a politician to a constituent ranks somewhere below “iron-clad,” the solution is to make bailouts and crony capitalism so politically poisonous that no politician could do it and retain their job. By blaming banks for the bailout—indeed by claiming that the banks forced government’s hand—you have absolved all responsibility from our public officials. Congratulations, Taleb. In a mere paragraph you have a) shown historical illiteracy of events that happened a mere three years ago, b) misdiagnosed the problem, c) blamed the wrong people for the problem, and d) given poorly thought-out cover to those who are actually responsible. Is “quadfecta” a word?

The financiers (and their lawyers)

We hate financiers enough without bringing lawyers into it. Let’s not incite another OWS riot, big guy.

will always stay one step ahead of the regulators.

Despite acknowledging that there will always be a way around regulations, he proposes more regulations. Fucking brilliant.

No one really knows what will happen the next time a giant bank goes bust because of its misunderstanding of risk.

We do indeed live in an uncertain world. Trying to protect from the infinite possibilities of existence will have you shadowboxing in no time (this is Mr. Taleb’s fundamental misunderstanding of the difference between uncertainty and risk). The public policy question is much simpler: what should happen? The answer is simpler, too. The firm should enter bankruptcy court and liquidate assets where necessary to emerge as a fiscally solvent entity.

Instead, it’s time for a fundamental reform: Any person who works for a company that, regardless of its current financial health, would require a taxpayer-financed bailout if it failed,

I could make a very good argument that this either applies to either no companies or to all companies. This standard is purely asinine.

should not get a bonus, ever.

In this instance, compensation will either occur in other, less transparent ways, or talent will flee these industries. Get ready for a world where your bank’s employees are all compensated like the IRS.

In fact, all pay at systemically important financial institutions — big banks, but also some insurance companies and even huge hedge funds — should be strictly regulated.

Why is it that despite the demonstrable financial inefficiency of literally every governmental agency ever created (military included) that Mr. Taleb’s particular class of morons still insist on turning our most profitable and functional industries into extensions of the government bloat?

Critics like the Occupy Wall Street demonstrators decry the bonus system for its lack of fairness

Which is, on it’s face, laughable. Wall Street bonuses are the purest form of fairness still in existence in America. The better you perform—as judged by the stone-cold metric of profit—the more you make. Period.

and its contribution to widening inequality.

Stop pretending like the OWS protesters are people with policy goals; they’re a mob of malcontents with the corresponding propensity towards violence and incoherent rationalizations.

But the greater problem is that it provides an incentive to take risks.

Bonuses do not provide an incentive to take risks. All risks have downside. That feature is encapsulated nicely in the definition of risk. Performance-based compensation provides an incentive to succeed. While greater risk carries a greater chance of huge returns, it also carries a greater chance of poor performance reviews, socially stigmatizing derision, and sleeping in a cardboard box.

The asymmetric nature of the bonus (an incentive for success without a corresponding disincentive for failure)

The disincentive is a lack of pay, lack of status, and eventual termination, you colossal jackass. The bonus is the carrot. The stick comes from the boss when he realizes that your portfolio has performed 53 basis points under market averages over the last three years and boots your ass while trying to stifle a giggle as you plead through your job through gasping sobs.

Wow. That got dark.

causes hidden risks to accumulate in the financial system and become a catalyst for disaster.

Counter-party risk in derivative contracts were indeed undervalued in the models that led up to the 2008 crash. I fail to see how the modeling shortcomings of a few analysts somehow subordinates the entire financial sector to the federal government or invites nationalization.

This violates the fundamental rules of capitalism;

The bailouts violate the fundamental rules of capitalism.

Nationalizing the banks violates the fundamental rules of capitalism.

Regulating employee compensation violates the fundamental rules of capitalism.

Compensating employees based on performance-based metrics does not—in any conceivable form—violate the fundamental rules of capitalsm.

Adam Smith himself was wary of the effect of limiting liability, a bedrock principle of the modern corporation.

If you want to eliminate bankruptcy proceedings and reinstate debtors prisons, and low usury interest rate ceilings, you’re welcome to present an argument, but for most of us, those issues were settled even before the issue of American slavery.

Bonuses are particularly dangerous because they invite bankers to game the system by hiding the risks of rare and hard-to-predict but consequential blow-ups,

You speak, of course, about the agency problem as it pertains to risk. This is a relevant and sober topic that corporations have worked to minimize for decades. Yet you believe that the solution is to compensate the men with their hands on the switches of the global economy like a DC paper-pusher. Not only does this asinine “solution” have the dubious honor of not solving the agency problem it was specifically designed to address, but by legally prohibiting compensation for financial professionals commensurate with their responsibilities and competence, it encourages the outsourcing of an entire industry worth trillions of dollars and hundreds of thousands of jobs. In short, fuck you, Mr. Taleb.

which I have called “black swan” events.

The irony of promoting your own book while undermining the capitalistic system makes me want to punch a swan out of spite. See, jackass? It’s the swan that bears the consequence of your shamelessness.

The meltdown in the United States subprime mortgage market, which set off the global financial crisis, is only the latest example of such disasters.

This is an academic’s smarmy way of saying “shit happens.”

Consider that we trust military and homeland security personnel with our lives, yet we don’t give them lavish bonuses.

The military is a lifestyle, not a job. Soldiers are often contractually compelled to continue service. Quitting will get them jail time. Likewise, not obeying orders will get them jail time. That combination is a pretty damn big stick that market-based employers don’t (and can’t and shouldn’t) have.

They get promotions and the honor of a job well done if they succeed, and the severe disincentive of shame if they fail.

This is why the military (and for that matter, the police force as well) is more of a vocation than a profession. Priests aren’t compensated by market factors. Social workers, artists, and writers are all usually undercompensated by virtue of their qualifications (most have postgraduate degrees), yet there is no shortage in any of these fields because they are intrinsically rewarding. Banking, however, is not.

For bankers, it is the opposite: a bonus if they make short-term profits

It is reasonable that bonuses should reflect a longer period of time, but this isn’t exactly a matter of public policy. That’s between employer and employee.

and a bailout if they go bust.

I still don’t understand how the bailout is a fait accompli when virtually everyone acknowledges that it is unfair crony capitalism and very few believe that it worked to alleviate the impact of recession.

The question of talent is a red herring: Having worked with both groups, I can tell you that military and security people are not only more careful about safety, but also have far greater technical skill, than bankers.

That’s not what talent actually means. The military does not recruit talent. It creates it through massive training organizations because it is divorced from the profit motive. Private industries have to hire talent—often from the military—because training is cost prohibitive.

The ancients were fully aware of this upside-without-downside asymmetry, and they built simple rules in response.

So why, instead of re-instating a downside, are you instead eliminating the upside?

Nearly 4,000 years ago, Hammurabi’s code specified this: “If a builder builds a house for a man and does not make its construction firm, and the house which he has built collapses and causes the death of the owner of the house, that builder shall be put to death.”

Which, in Ancient Wherever-The-Fuck, caused the great housing bubble of 2000BC as building prices ballooned. This principle hasn’t been abandoned; we have mountains of tort case law for these situations. Here’s the rub: with few exceptions, the actions of banks--both before, during, and after the housing bust--were neither criminal nor tortious.

This was simply the best risk-management rule ever.

We can’t get liberals to support capital punishment for murder. Imagine trying to put someone for death for mere incompetence (which they generally support).

The Babylonians

I prefer to call Babylon “Ancient Wherever-The-Fuck.”

understood that the builder will always know more about the risks than the client, and can hide fragilities and improve his profitability by cutting corners — in, say, the foundation. The builder can also fool the inspector; the person hiding risk has a large informational advantage over the one who has to find it.

You’ll get no argument from me. The question is not why we should punish poor performance, but why you insist on not rewarding good performance.

Banning bonuses addresses the principal-agent problem in economics:

Yeah. I know. I was talking about this paragraphs ago. Let’s wrap this shit up. I’ve got things to do.

the separation between an agent’s interests and those of the client, or principal, he is supposed to represent. The potency of my

[bat-shit crazy]

solution lies in the idea that people do not consciously wish to harm themselves;

Holy fuck! This dude just cracked the code on the mystery of why self-mutilation isn’t socially acceptable behavior! Let’s give him a Nobel Prize!

I feel much safer on a plane because the pilot, and not a drone, is at the controls. Similarly, cooks should taste their own cooking; engineers should stand under the bridges they have designed when the bridges are tested; the captain should be the last to leave the ship.

Yes, the argument for commensurate consequences is well taken. But you’re not arguing for commensurate consequences. You’re arguing for no consequences. The fact that you’re also arguing for no rewards is, I suppose, logically consistent, but it’s still mildly retarded.

The Romans even figured out how to deter cowardice that causes the death of others with the technique called decimation: If a legion lost a battle and there was suspicion of cowardice, 10 percent of the soldiers and commanders — usually chosen at random — were put to death.

Nothing says “justice” like the cold rationality of arbitrary killings.

No such pain faces bailed-out, bonus-taking bankers.

A more sensitive reader might infer that he’s calling for the death of 10% of bankers.

The period from 2000 to 2008 saw a very large accumulation of hidden exposures in the financial system. And yet the year 2010 brought the largest bank compensation in history.

It’s almost like there was a prolonged, multi-year period in between those two events in which all the other stuff got sorted out. Oh wait.

It has become clear that merely “clawing back” past bonuses after the fact is not enough.

Nothing like passive verbs for issuing blanket statements of unassailable fact. No, Mr. Wizard, it has not become clear at all.

Supervision, regulation and other forms of monitoring are necessary, but insufficient — consider that the Federal Reserve insisted, as late as 2007, that the rapidly escalating subprime mortgage crisis was likely to be “contained.”

Oh come on. The Fed doesn’t exactly use the same language as the rest of us and you know it. They lie all the time so as to not undermine investor confidence.

What would banking look like if bonuses were eliminated?

Bleak and unprofitable.

It would not be too different from what it was like when I was a bank intern in the 1980s,

The time-frame is nothing short of pure hilarity. Go back to the Reagan years by reregulating!

before the wave of deregulation that culminated in the 1999 repeal of the Glass-Steagall Act, the Depression-era law that had separated investment and commercial banking.

The problem was undervalued risk. That problem would have persisted whether or not commercial and investment banks remained separated.

Before then, bankers and lenders were boring “lifers.” Banking was bland and predictable; the chairman’s income was less than that of today’s junior trader.

Thanks for the nostalgia. I’m depressed already.

Investment banks, which paid bonuses and weren’t allowed to lend, were partnerships with skin in the game, not gamblers playing with other people’s money.

Again, the argument that there should be skin in the game flies in the face of the assertion that there should be no skin in the game. That is, after all, this article’s central thesis of regulating bankers pay. (For the record, there is nary a whiff of Constitutional justification for this gross overreach of federal authority anywhere. After all, we need new laws to stop all of these violations of non-laws.)

Hedge funds, which are loosely regulated, could take on some of the risks that banks would shed under my proposal.

I agree. But here’s the kicker: there’s no good reason to divorce investment institutions from lending institutions. The risk is still there.

While we tend to hear about the successful ones, the great majority fail and their failures rarely make the front page.

Taleb’s plan: boatloads of underpublicized failure!

The principal-agent problem they have isn’t a problem for taxpayers: Typically their investors manage the governance of hedge funds by ensuring that the manager is hurt more than any of his investors in the event of a blowup.

Now, explain how the principal-agent problem is an issue if you allow firms to go bankrupt. Managers and executives lose their jobs and get a giant black mark on their resumes, impairing future employment. Shareholders (including managers and executives with equity compensation) lose most of their investment. The taxpayers, quite literally, have no place in this event.

I believe that “less is more” — simple heuristics are necessary for complex problems.

No you don’t, you arrogant fuck. You believe that more regulation is more. What’s more, this isn’t a complex problem.

So instead of thousands of pages of regulation, we should enforce a basic principle: Bonuses and bailouts should never mix.

That’s not what you argued. You argued that bailouts are inevitable and that bonuses are nonsensical means of compensation. Bailouts are purely in the public sphere. Bonuses are purely in the private sphere. In order for you to balance your silly little equation, you have decided that the private needs to become public, not that the public needs to stay out of the private. It is in this point, the first one that you made, that you ignored all questions about the proper role of government and discounted the plausibility of effective, minimalistic government in favor nationalization.

You want to go back to the 80s in banking? The hours are 9-5, Monday through Friday, closed all holidays, including arbor day and secretary’s day. Employees are unfriendly and unyielding. ATMs are sporadic and inconvenient. Product lines are thin and uncustomizable. Customer service is a joke. Margins are high because overhead is high. Barriers to entry for new competitors are higher. Congratulations, Nassim Taleb. You’ve turned the most profitable sector in the American economy into the DMV.

Equality, Inequality, and other Mathematical Concepts Eugene Robinson Doesn't Understand

The study that shows why Occupy Wall Street struck a nerve

By Eugene Robinson, Published: October 27

The hard-right conservatives who dominate the Republican Party

It seems odd that Robinson doesn’t get that “right-wing” isn’t a pejorative in the way that “left-wing” is to most Americans. After all, the differences between the right and left have never been so stark. Conservatives clean up after themselves, tell you what they believe, and go to work in the morning. Liberals engage in weird chanting rituals, espouse complete incoherence, and eventually riot against a system they don’t even understand.

claim to despise the redistribution of wealth,

Indeed we do.

but secretly they love it — as long as the process involves depriving the poor and middle class to benefit the rich, not the other way around.

If this is a class-war between the 99% and the 1%--as OWS protesters are so eager to assert--then how would any constituency of 1% retain power by bilking the 99%? This isn’t a riddle or an invitation to anticapitalist kookery; they wouldn’t. Indeed, you can’t make the assertion of 99% vs. 1% class warfare without veiled allusions to brainwashing and outright demagoguery. After all, why would anyone vote to be oppressed? 9/11 truthers (also almost all liberal) have a more grounded set of explanations than this.

What’s more, billionaires are generally not Republicans at all. How many liberal billionaires can you name off the top of your head? Bill Gates. Paul Allen. Warren Buffett. Michael Bloomberg. George Soros. Mark Zuckerburg. George Lucas, Steven Speilburg. The richest man in the world right now is Carlos Slim because American billionaires have been shedding wealth to whatever do-gooder charity they see.

How many conservative billionaires are there? The Koch brothers. Rupert Murdoch. Maybe Steve Wynn. Sort of/Kind of/Maybe Donald Trump, but he’s more of a populist/protectionist than anything. The blanket assertion that Republicans are synonymous with wealth is downright batty.

The truth of the matter is that the rich, even the super-rich, have mostly the same policy concerns that the rest of the country. They tend to skew towards social justice policies because the economics don’t have any threat of changing their economic standings whereas social awareness most assuredly has the ability to elevate their social cachet. What’s more, entrenched, established billionaires fear low-taxation and low-regulation policies (bedrocks of conservatism) that obliterate barriers to entry for competing new start-ups. The billionaires’ left-leaning tendencies aren’t mere coincidence, but the product of a web of incentives.

That is precisely what has been happening, as a jaw-dropping new report by the nonpartisan Congressional Budget Office

It can’t be said enough: the CBO is nonpartisan, but being nonpartisan, it often makes demonstrably stupid assumptions that are demanded by politicians. It is particularly egregious when Democrats are setting the inputs.

demonstrates. Three decades of trickle-down economic theory,

Which hasn’t been implemented since the 80s.

see-no-evil deregulation

Which hasn’t been implemented ever.

and tax-cutting fervor

Which has absolutely nothing to do with income distribution.

have led to massive redistribution.

I don’t think Robinson really understands the concept of redistribution. Distribution of wealth is part of any economic system, and it happens every minute of every day. In capitalist societies, wealth is distributed through profits, incomes, expenses, investment gains and losses, and gifting—all results of voluntary contractual agreements.

Redistribution occurs when that regular distribution is altered to address social desires that are not reflected in the marketplace. In other words, redistribution is the act of arranging the outcome of economic activities before those activities occur. By asserting that the outcomes are somehow undesirable, you, Eugene Robinson, have made the argument for redistribution. This wouldn’t be surprising or even worth pointing out if not for the fact that you have dedicated this entire article to accusing Republican policies of redistributionism.

Another word for what’s been happening might be theft.

If you want to go there, you’re contractually obligated to stick to the “redistribution = theft” definition once your trite world-view is debunked.

The gist of the CBO study, titled “Trends in the Distribution of Household Income Between 1979 and 2007,” is that while we’ve become wealthier overall, these new riches have largely bypassed many Americans and instead flowed mostly to the affluent.

In the shock of the century, rich people have money!

Perhaps my memory is faulty, but I don’t remember voting to turn the United States into a nation starkly divided between haves and have-nots.

If your memory is faulty, it’s most likely the result of a more global brain damage, because that sentence has the intellectual acuity of a YouTube comments section. We have a representative Republic, which means that you don’t vote on how to distribute wealth; you vote on representatives. Moreover, the nation is not starkly divided between haves and have-nots, despite what the CBO report might say because “the rich” is not a monolithic and stagnant group of people. People flow in and out of income deciles rather freely. Consistently showing the top 1% as though the grouping were somehow meaningful is flagrant and particularly brazen selection bias.

Yet that’s where we’ve been led.

This is the danger of giving numbers to the mathematically illiterate. I’d feel safer around a child with a hand grenade.

Overall, in inflation-adjusted dollars, average after-tax household income grew by 62 percent during the period under study, according to the CBO. This sounds great — but only until you look a little closer.

For those at the bottom — the one-fifth of households with the lowest incomes — the increase was just 18 percent. For the middle three-fifths, the average increase was 40 percent. Spread over nearly 30 years, these gains are modest, not meteoric.

By contrast, look at the top 1 percent of earners. Their after-tax household income increased by an astonishing 275 percent. For those keeping track, this means it nearly quadrupled. Nice work, if you can get it.

I explained this above, but this entire analysis willfully misrepresents what the number actually means. Since the study didn’t actually track individual actors, it can’t represent that the 1% in 1979 is an entirely different dataset than the 1% in 2007. (I’m graciously ignoring that this study didn’t detail the crash of 2008.) Which means that by the definition of what constitutes the top 1%, no one in that group lost money, otherwise they would have fallen out of the top percentile and been counted elsewhere. Similarly, no one in the lowest decile made any money, or they wouldn’t have still been included in the lowest decile. Again, as a description of have-versus-have-nots, the data is about as useless as a yacht in New Mexico.

This is not what Republicans want you to think of when you hear the word redistribution.

We’ve already proved that Democrats are much better at distributing tax dollars to their campaign donors. (See: Solyndra et al.) We’ve also proved that Democrats are great at filtering federal funds through favored constituencies (unions) that then come back in the form of campaign contributions. If you’re asking why so many billionaires are Democrats, look no further.

You’re supposed to imagine the evil masterminds as Bolsheviks, not bankers.

“Mastermind” and “Bolshevik” haven’t been compatible terms since the fall of the Soviet Union. Indeed, Bolshevism precludes one from being a mastermind.

You’re supposed to envision the lazy free-riders who benefit from redistribution as the “poor,” and the industrious job-creators who get robbed as the “wealthy” — not the other way around.

Again, if this is all based off of a really shallow reading of a mathematically flawed analysis, then these assertions quickly become laughably inaccurate.

If Americans were to realize they’ve been the victims of Republican-style redistribution — stealing from the poor to give to the rich — the whole political atmosphere might change.

I let him slide on the “stealing” thing once, but theft requires the appropriation of goods from the rightful owner without consent. Robinson, for his part, wants to assert that the money rightfully belongs to the middle class just by virtue of them being middle class Americans. Whatever that ideology may be, it’s not capitalism.

I believe that’s one reason why the Occupy Wall Street protests have struck such a nerve.

That, and conservatives needing someone new to laugh at. Obama’s policies are too depressing to be a punching bag anymore.

The far-right and its media mouthpieces

I think it’s kind of stunning to liberal media figures that conservatives don’t have an equivalent apparatus. I think that’s why they get caught shadowboxing when they realize that their understanding of the American political spectrum is skewed left.

have worked themselves into a frenzy trying to disregard,

Why would we want to do that? This rabid hysteria is the best contrast against which we can present conservatism.

dismiss

Already done.

or discredit

This one they did to themselves.

the demonstrations. Thus far, fortunately, all this effort has been to no avail.

Seriously? There are Nazis in New York, calls for violence in Chicago, Communists everywhere, and riots in Oakland. (And that’s just off the top of my head. Imagine if I weren’t too lazy to do research.) This is the organization that you want to trumpet as a pillar of the American left?

The right maintains that inequality is the wrong measure.

Of course it is. Fairness is a function of both input and output. Looking at output alone necessarily misses the point.

To argue about how the income pie should be sliced is “class warfare,”

It sure is, you dirty socialist.

and what we should do instead is give the private sector the right incentives to make the pie bigger.

If by “give the right incentives” you mean “get the hell out of the way” then yeah, you’ve got it.

This way, according to conservative doctrine, everyone’s slice gets bigger — even if some slices grow faster than others.

In that sentence, reasonable people have found a reprieve from lunacy that is desperately needed.

Indeed, the CBO report says that even the poorest households saw at least a little income growth. Why is it any of their business that the high-earners in the top 1 percent saw astronomical income growth? Isn’t this just sour grapes?

No, for two reasons. First, the system is rigged. Wealthy individuals and corporations have disproportionate influence over public policy because of the often decisive role that money plays in elections.

And yet, liberals are the ones who want public policy to be more influential. Conservatives want less influential public policy. All of this is a function of the country getting more liberal—not more conservative, as Robinson suggests—over the time period of the CBO study he cites.

This is why I continue to insist that OWS is the larval stage of conservative thought.

If the rich and powerful act in their self-interest, as conservative ideologues believe we all should do, then the rich and powerful’s share of income will continue to soar.

That seems to indicate that those of us without bottomless pockets all have a vested interest in reducing the size and scope of government interest. Funny, that sounds a lot like the Republican platform.

Second, and more broadly, the real issue is what kind of nation we want to be. Thomas Jefferson’s “All men are created equal” is properly understood as calling for equality of opportunity, not equality of outcomes.

File this one under “no shit, you dirty socialist.”

But the more we become a nation of rich and poor,

Which is a silly assertion based on mathematical incompetence.

the less we can pretend to be offering the same opportunities to every American.

Dammit, you already screwed up Jefferson. The government doesn’t offer opportunities. Existence, unfettered by government meddling and lawlessness, guarantees opportunities. Everyone in the country has the right and the opportunity to drive a bus, or be an accountant, or enjoy a heroin addiction, or be a school teacher, or be a rodeo clown, or—heaven forbid—be a hedge fund manager. The difference is that there is a very specific set of skills that qualify one for any of these opportunities. (There are fewer skills required for heroin addiction, but needles are kind of tricky, I guess.) The great equalizer is that if you believe that the system has unfairly put up barriers between you and your vocation, you can always start a business.

By giving people control over their opportunities, it encourages people to develop skills and cultivate competence. In contrast, giving people an undeserved opportunity entrenches incompetence.

As polarization increases, mobility declines.

Except polarization hasn’t increased. The gulf between rich and poor is a function of mobility, not a symptom of a lack of mobility. The massively wealthy in this country didn’t all start out massively wealthy. That is the American Dream in action.

The whole point of the American Dream is that it is available to everyone, not just those who awaken from their slumbers on down-filled pillows and 800-thread-count sheets.

Fuck off, I like my sheets.

So it does matter that as the pie grows, the various slices do not grow in proportion.

You haven’t shown that at all. It’s a naked assertion, and a bad one, at that.

We’re not characters in one of those lumbering, interminable, nonsensical Ayn Rand novels.

Rand’s novels present flat characters because they are archetypes. The problem is that you are, very much, a character from a Rand novel: Ellisworth Toohey. I wouldn’t like the comparison either.

We believe in individual initiative and the free market,

[footage not found]

but we also believe that nationhood necessarily involves a commitment to our fellow citizens, an acknowledgment that we’re engaged in a common enterprise.

There is nothing in my enterprise that is common to a vagrant in San Diego or a billionaire in Boston. My enterprise is my own.

We believe that opportunity should be more than just an empty word.

No, you believe that opportunity should be replaced with certainty. In reality, the two are diametrically opposed. If you believe in opportunity, then you must also believe in the purposeful threat of failure. You must believe that those that fail should not be rewarded for failing because doing so inverts the risk/reward incentives and skews the economic calculus.

In short, this entire column is based on provable falsehoods and basic statistical illiteracy. I suppose it shouldn’t be surprising that a failing business model (print news) seems to be leading the charge against creative destruction and the cleansing efficiency of capitalism. In an unfettered market, the incompetent get left in the dust.

Roger Cohen: The Conscience of a Bureaucrat

The Beauty of Institutions

By ROGER COHEN

Published: October 24, 2011

LONDON — Jean Monnet, the postwar architect of European unity, once wrote: “Nothing is possible without men,

Except growth, decay, life, death, nature, change, termite colonies, hurricanes, asteroid collisions, sunrise, sunset, the tides, migratory birds, and literally any of a hundred thousand things that you can think of that doesn’t involve man.

but nothing is lasting without institutions.”

Again, with the exception of gravity, time, magnetism, and the thousands of other natural truths we have uncovered over the millennia.

So upon even a cursory examination of its two assertions, neither holds to be anywhere close to true. And yet, this is the type of thing that you want to build a column off of? Have at it, hoss.

When humankind fails, the best institutions save it from the brink.

Ah, so this is a defense of the Catholic Church vis-à-vis the litany of child molestation scandals that have peppered the institution for decades?

No?

Then certainly it’s a fawning declaration of industrial prowess under Fascism?

No?

An ode to organizational efficiency at the DMV? A rousing defense of the corporate responsibility of the oil industry? An essay praising the traditional nuclear family?

Of course not.

The forging of the European Union is up there with the U.S. Constitution as an act of creative genius.

No. Now you’re deliberately trying to piss me off. This is precisely what conservatives mean when they argue that liberals are disdainful of American exceptionalism. Comparing the United States to the EU would be hurtful if it weren’t so ludicrous.

Loving an entity is hard, given the intangibility of the thing,

No. It isn’t. Patriotism is easy—or it should be. It’s quite easy to love a sports team or a church or a school or a brand—all institutions. In fact, the intangibility is what makes the love easier. Loving tangible government—with its corruption, inefficiency, factionalism and petty egos--is both weird and foolish. Loving country and the promise it holds is an instinct that only grows stronger with understanding.

but I love the bland Brussels institutions that gave my generation a peace denied its forbears —

…seriously? That is what you love? You need to start watching football.

all those young men engraved in stone and granite on melancholy town squares across Europe. It’s a measure of the success of the European Union that peace is now taken for granted by its half billion inhabitants.

That’s wasn’t the EU. It was postwar demographic and economic shifts away from European power, Cold War-era mutually assured destruction, and stringent military prohibitions from Europe’s transatlantic victors.

Nobody pauses at the memorials. These days I find myself wanting to shout: “Remember!”

You self-important dolt. You write for one of the most widely circulated papers in the country and you find yourself compelled to get the message out by shouting? Even if you were that dumb, I would shout back “Remember what? Be more specific.” You’re a professional writer for God’s sake. The very idea of making a vague proclamation or an unsubstantiated assertion ought to be hateful to you.

I suppose I shouldn’t be so surprised; you’re not very good at your job.

That’s a tall order when people glide from France to Germany and onto Poland, across the killing fields of old, without pause for a border, and the Basque separatists of ETA have just laid down their weapons in Europe’s last armed confrontation.

If you’re going to give the EU credit for disarming the Basque separatists, will you also fault them for Bosnia and Kosovo (and pretty much all of the ethnic cleansing shenanigans that go on in the Balkans?)

Yet I detect a dawning sense of the gravity of Europe’s crisis — its political rather than financial peril — in the parallels being drawn between dying for Danzig in 1939 and paying for Athens in 2011.

If this financial crisis can so easily turn into a political one, a rational observer would underscore the necessity of conservative fiscal policy that frowns upon deficit spending. Cohen, being both dangerous and a buffoon, is going to propose hyperinflation.

These are dangerous times. Helmut Schmidt, who as a German is hardwired to the nature of cataclysm

The German people appreciate you distilling their national identity from six thousand miles away. (Not only distilling their national identity, but giving them “cataclysm” as a national identity. Then again, I’m itching to machete some video game zombie-Nazis tonight, so I suppose it’s justfied.)

and at 92 knows what sacrifice brought a borderless Europe,

Exchanging the Lira for the Euro was hard for us all. VIVE LA FRANC!

declared as much the other day, lambasting “anyone who considers his own nation more important than common Europe.”

What a buffoon.

There are plenty of such people these days, driven by frustration or boredom or pettiness to the refuge of the tribe.

The people of Germany are not the people of Greece. They have different languages, cultures, politics, traditions, religions, histories and virtually everything else that ties a people together in common identity. And yet, the sins and excesses of the Greek people are expected to be funded by the Germans? Or French? This is a clear highway to resentment, and will do more to foment aggression than to promote harmony.

The euro’s creation was an irrevocable political decision.

Um…it’s pretty revocable. A sovereign country simply just needs to pull its funding and cash out. It would require recreating a central bank and currency, but these are pretty manageable feats when confronted with the alternatives of hyperinflation and social collapse.

The currency, however, had the misfortune to be birthed just as the idealism that fired Europe’s integration sagged.

In other words, the groundswell of pan-Europeanism that birthed this “irrevocable political decision” was pretty temporary.

The federalist implications of a common currency met the fissuring rancor of complacent Europeans.

Leaning pretty heavy on the thesaurus, huh?

They had been lulled by the end of the Cold War, irked by European bureaucracy and wearied by the E.U. expansion to post-Communist states. The bad history uppermost in the minds of François Mitterrand and Helmut Kohl had faded. If ever a crisis was foretold, it’s the euro crisis.

The only thing predictable is that internationalism will always fail. Always.

But the danger is broader. European frustration with remote, seemingly unaccountable institutions

Remote and unaccountable is a veritable definition of the European Union.

has spread into a wider anger against the impunity of the powerful and the richness of the ever richer.

As I have said before, the Occupy protests stem from the larval form of conservative thought.

Growing numbers of people feel that the levers of globalization’s compounding advantages are manipulated by the privileged few. From Manhattan to Milan, the Occupy movement is saying “Enough Already!”

And much like Richard Cohen shouting “remember,” the rest of the world is screaming back: “be more specific! (And take a shower!)”

No, European leaders retort, we need more — more budget-cutting, more sacrifice to set our houses in order after the debt-driven binge of this century’s first decade.

We have a fundamental definition of what “more” means. “More” does not mean “less” government. This isn’t some sort of Orwellian thought exercise or an appropriated architectural slogan from the 60s. This is just stupidity.

Just as the euro had to row against an unraveling tide,

This should be obvious, but tides most certainly do not “unravel.”

so the austerity prescribed to save the currency now has to row against a tide of skepticism.

Europe isn’t embracing austerity to save the currency. They’re doing it because they simply can’t continue to self-finance at their prior spending levels. The market for their debt securities would balloon more than Violet Beauregard. That’s right, it’s a Willy Wonka reference. Want to fight about it?

Jean Arthuis, a French senator, gave this recent assessment of the state of the West: “Globalization led us, through outsourcing, to give up our productive substance and opt for the comfort of consumption, while other states became the producers of what we consumed on credit: on our side sovereign debts, on the other sovereign wealth funds.”

Tying debt to manufacturing outsourcing is pretty much retarded, but hey, they’re French. The nation of Camus has different standards for logical cohesion. Have I mentioned that I disdain Camus?

Many Europeans and Americans experience that shift day to day as lost jobs, the disappearance of the credit that cushioned relative decline, growing disparities between rich and poor, a feeling of powerlessness, too many bills to pay, a gathering sense of injustice, and growing anger toward hapless politicians outstripped by markets they cannot control.

Recessions blow. We get it. But it has very little to do with globalization. If you want proof, ask yourself why China continues to attract manufacturers despite having almost completely lost its labor wage advantage over some of our less crazy/communist neighbors like Brazil, Mexico, or Colombia.

“Capitalism is crisis,” says a big banner of the Occupy movement at St. Paul’s in London. Indeed it is.

I told you before why conservatives think liberals have no regard for American exceptionalism. This is why we feel confident in calling the rest of you socialists. If you don’t believe that capitalism is the most efficient economic system, the alternatives are socialism (or it’s synonyms—and yes, they are synonyms--Marxism and communism), fascism, feudalism or...uh…mercantilism? Syndicalism? Honestly, I think we’re being kind.

As Joseph Schumpeter noted, “Economic progress, in capitalist society, means turmoil.”

Turmoil is not the same as crisis.

The trick

Trick? A trick is something a whore does for money. This is an illusion.

is to convince people that crisis is creative more than it is destructive —

As opposed to literally every other economic system ever devised, each of which has been empirically proven to be destructive.

and that’s not happening right now. The European Union was created for such a moment.

And yet it continues to fail spectacularly. Can we finally put to rest the unjustifiable reverence for international organizations like NATO, the EU, or the UN?

It was meant to guarantee the impossibility of the worst — not to deliver Europeans to postmodern bliss but to save them from the hell that began almost a century ago in 1914 and did not really stop until the Continent lay in ruins in 1945.

This is like asking an electrician to fix your toilet. Unless you live in Japan, where basic household appliances have the computing power of the WOPR from War Games, he simply doesn’t have the right tools in his belt. Similarly, you can’t promote responsible representative democracy by centralizing power abroad. You can’t purify capitalism with government involvement.

That metaphor may have gotten away from me.

Now, thankfully, the big bazookas are financial. Roll them out, whatever the subsequent cost in inflation. Irrevocable means just that: The euro cannot be turned back.

If you’re trying to prevent the re-implementation of Nazism in Europe, which is firmly entrenched as a “worst-case scenario” behind only pterodactyl invasion in calamitous repercussions, you might want to do a little research into the Weimar Republic’s policies on inflation. Inflation isn’t a bazooka; it’s a kamikaze.

There is no soft euro exit imaginable, only mayhem and danger.

Why? Why is there danger? Obviously there would be some pain in reestablishing national central banks and currencies. The alternative, however, is tying a rope around a group of shipwreck survivors floating in the ocean. When one of the frail, exhausted bodies stops kicking, his weight invariably pulls the others under.

Recapitalize the banks.

With what? Worthless paper?

Bulk up on the rescue fund.

Again, how do you do that without inflating or begging?

Turn bankers’ Greek haircuts into buzz cuts.

At first I confused this call for higher taxes with support for austerity. I nearly had a heart attack.

Do whatever it takes.

This is just sad.  Very few financial crises have been known to be avoided by begging, desperation, or shamelessness.

Germany, ushered from ruin by the European Union, must lead the safeguarding of the euro or risk the loss of the stability that it prizes above anything.

Stability is overrated; existence is not.

The best institutions are also self-correcting mechanisms.

The self-correcting mechanism here would be for Greece to become a subjugated client-state of Germany and/or France. As much as the idea of German territorial expansion horrifies me, Greece has forfeit the right to exist as a sovereign nation. It is their citizens that must pay the price for their bankruptcy.

They work like the checks and balances of the U.S. Constitution. They turn crisis into opportunity. In time the euro’s defense will demand a federative leap forward. That will be good for Europeans even though they cannot see it now.

So all of this—the crisis, the defense of Greece—is all just a guise for an pan-European central government. National sovereignty still means something. This article is titled “The Beauty of Institutions.” There has been no espousal of beauty. Only a grim, dystopian future of European inflation in which, at the end of the trials of financial collapse, the entirety of Europe congeals into one federal government. This is some weird mix of a Bond movie villain’s plot, a UN ambassador’s wet dream, and Napoleonic conquest. To Cohen, that is what beauty looks like.

Opinion Nuggets: Slapping down the Invisible Hand

Krugman... The guy has a name like an 80's high school villain. The guy who pushes the bike-riding protagonist off the road and into a ravine while speeding by in the convertible. (I'm envisioning the Goonies, but most 80's movies featured their very own resident jackass, so take your pick.) It’s hard to believe sometimes that the bearded, tweed-clad weirdo is a Nobel Laureate. Take this little gem from today’s column, for example:

…[T]he financialization of America wasn’t dictated by the invisible hand of the market. What caused the financial industry to grow much faster than the rest of the economy starting around 1980 was a series of deliberate policy choices, in particular a process of deregulation that continued right up to the eve of the 2008 crisis.

If you’re not banging your head against the wall, you’re not paying attention. The “invisible hand,” Adam Smith’s eloquent elucidation of the omnipresence of market forces, describes the natural forces at work in the economy. These forces can be diverted or dammed by non-market forces like regulation. Yet the removal of regulation has the precise effect of showing the direction and magnitude with which the invisible hand pushes the markets. In other words, the “financialization of America” was absolutely and necessarily dictated by the invisible hand, not—as Krugman obtusely suggests—by deregulation.

More astonishing, however, is that Krugman acknowledges that “a series of deliberate policy choices, in particular a process of deregulation” was what “caused the financial industry to grow much faster than the rest of the economy starting around 1980.” And yet Krugman’s conclusion, remarkably, is that regulation is the answer to our economic woes. Indeed, in addition to showing greater growth up until 2008, the financial sector has rebounded more briskly than the rest of the economy as well (and not as a result of bailouts—there were plenty of fiscally solvent institutions to take up market share had some of the big banks collapsed). Wages are higher. Productivity is higher. The industry employs a veritable legion of well-paid and well-trained high-performers in bespoke suits. While we can quibble about how they’re all kind of assholes in their personal lives (though my experience has been that they are not), from a macroeconomic sense, there is absolutely nothing to not like about a lightly regulated financial sector.

The drumbeat of anti-capitalism drowns out the low hum of cognitive dissonance for the readers of the Times. Krugman knows that these arguments are downright silly, but he has long since sold out his credibility to rank populism.

An Open Letter to Occupy Wall Street

To Our Smelly Occupiers:

Let’s get this clear right off the bat: I don’t like or respect you.  Your message is garbled. Your reasoning is labyrinthine. Your methods are repugnant. Your style is insipid. Your morality is reprehensible. Your rebellion is trite. Your raison d’etre is nonexistent. Most importantly, you are simply wrong.

Trudging through the mire of drug-addled mumblings and pseudointellectual jargon, the unifying theme of your squandered mass of humanity appears to be that you want the end of corporate money in politics. Yet with the awareness of a lemming, you fail to recognize that Republicans and specifically the Tea Party have been on the front lines of this fight for almost three years now.

Imagine political influence as a market. Unions, corporations, individuals, and groups are all consumers of political influence; politicians are the suppliers. That influence has value, which is set by the marginal profit realized from that influence. The market is impeded by campaign finance laws and ethics guidelines, of course, but the immutable laws of economics simply point towards the sly execution of dubiously ethical political quid pro quo in lieu of notarized contracts. It may not be technically illegal, but--not unlike you hippies--it doesn't pass the smell test. A lack of transparency makes it smell worse. The greater the value that political influence has, the more you're going to see corporate, union, and private money flood into the political sphere. Don't blame Citizens United for economics of the situation. Embrace the economics and get to work on a functional solution to the root causes of this corruption.

The single most effective way to impair the value of political influence is to constrain government’s authority. If government has less authority to set utility prices, then there will be fewer utility lobbyists. If EPA regulators have the authority over impeding private construction, then there will be fewer lobbyists for builders and developers. The protestors envision a beefy government as a bulwark against corruption. Precisely the opposite is accurate. A larger government with more functions gives the corrupt more places to hide transactions and forces watchdogs to cover more area. There is no salve to cure the problem of the influence of money in politics; there is only the scalpel (or in times like these, the hacksaw).

Yet, in contradiction to the single discernable goal of the occupiers, you ragged malcontents have politically aligned with the forces most eager to give government unlimited authority: communists, socialists, unions, and Jan Schakowsky.

When age sets in and your underdeveloped minds have grown a sense of shame, you will look at this country, glorious and free, and realize that despite the carefully manicured self-image of a bold leftist revolutionary, you were a conservative all along.  We'll welcome you with open arms when you're ready (and have taken a shower.)

Best Regards,

Boojtastic

Hippies and Scraggly Facial Hair: A Love Story

Panic of the Plutocrats

By PAUL KRUGMAN

Published: October 9, 2011

It remains to be seen whether the Occupy Wall Street protests will change America’s direction.

It will. The American people are seeing hippies crapping on cop cars. They’re seeing throngs of privileged nitwits blocking the Brooklyn Bridge and being arrested en masse. They’re seeing whatever the hell this creepiness is (http://www.youtube.com/watch?v=3QZlp3eGMNI). After hearing about the anti-intellectualism of conservatism, they’re seeing aspiring intellectuals paralyzed into perpetual indecision by their own lack of mental dexterity and a natural timidity.  After hearing about [heretofore unseen] bigotry and racism at Tea Party rallies, they’re seeing the influence of anti-Semitism in Occupy Wall Street. After hearing about the [heretofore unseen] rage of the right, they’re seeing left-wing mobs on the brink of riot. After chiding conservatives for using socialist as an ad hominem epithet, they’re seeing the rise of a movement that is proudly anticapitalist. If that doesn’t give the country a violent shove to the right, then it might be too late for America.

Yet the protests have already elicited a remarkably hysterical reaction from Wall Street,

Namely, laughing hysterically at the poor little dullards. In fact, I haven’t seen anything resembling a reaction from Wall Street.

the super-rich in general, and politicians and pundits who reliably serve the interests of the wealthiest hundredth of a percent.

Paul Krugman’s already got the verbiage down! Accuse the rich and the superlatively rich of ill-defined nefariousness. Imply a moral superiority to the tyranny of the majority, and stay short on specifics.

And this reaction tells you something important —

The laughing? Yeah, it tells us that we, thankfully, still have a sense of humor.

namely, that the extremists threatening American values are what F.D.R. called “economic royalists,” not the people camping in Zuccotti Park.

First, Wall Street is not extreme in any sense of the word (in fact, it is usually a moderating force.) Second, I don’t think Paul Krugman could name an “American” value if he tried. Third, the assertion here is that the wealthy (and those that protect their interests) are anti-American simply by virtue of having wealth.

If Krugman believes wealth to be anti-American, is it any surprise that his vision for our nation’s future is steeped in poverty?

Consider first how Republican politicians have portrayed the modest-sized if growing demonstrations,

Non-sequitur Number One: That Republicans are the party of Wall Street. Of course, the exact opposite is actually true. Wall Street lies in the heart of a big blue city in a big blue state in a big blue region and Democrats take more money—by a wide margin—from the financial institutions than Republicans.

which have involved some

[many]

confrontations with the police — confrontations that seem to have involved a lot of police overreaction —

I guess the statute of limitations on criticizing the NYPD from the 9/11 attacks has finally lapsed for liberals. Krugman’s got ten years of pent-up rage against the police built up.

but nothing one could call a riot. And there has in fact been nothing so far to match the behavior of Tea Party crowds in the summer of 2009.

The Tea Party was and is clean, civil, and purposeful. Occupy Wall Street is none of the above. Virtually every rancorous allegation against the Tea Party has been disproved; virtually every hyperbolic allegation against Occupy Wall Street has been corroborated on video.

Nonetheless, Eric Cantor, the House majority leader, has denounced “mobs” and “the pitting of Americans against Americans.”

He happens to be completely right.

The G.O.P. presidential candidates have weighed in, with Mitt Romney accusing the protesters of waging “class warfare,”

You just said that wealth was anti-American. One would think that “class warfare” is something that you would want to own up to.

while Herman Cain calls them “anti-American.”

Which is obviously beyond the pale to someone who believes that the wealthy are “extremists [that are] threatening American values.”

My favorite, however, is Senator Rand Paul, who for some reason worries that the protesters will start seizing iPads, because they believe rich people don’t deserve to have them.

There are four components to Paul’s comments: 1) The protesters don’t believe the rich deserve their wealth. 2) The lack of deserving empowers the protesters, in their own minds, to seize and redistribute those assets. 3) They may do so by force. 4) That wealth is roughly represented in the primiative mind of the mob by iPads.

None of these items is contested by those at the protests or anyone who ascribes to the progressive agenda. Plus, they’re all big Apple users, because, frankly, Apple users generally suck. The sole point if differentiation is that they usually want the government to function as a redistributionist mob by proxy.

Michael Bloomberg, New York’s mayor and a financial-industry titan in his own right, was a bit more moderate, but still accused the protesters of trying to “take the jobs away from people working in this city,” a statement that bears no resemblance to the movement’s actual goals.

Have you seen the movement’s actual goals? http://occupywallst.org/forum/proposed-list-of-demands-for-occupy-wall-st-moveme/ All but two of those items will immediately reduce employment. If New York had a mayor that didn’t sprain his vagina in a freak knitting accident, this disruptive bacchanalia of collegiate ennui would be broken up by dusk.

And if you were listening to talking heads on CNBC, you learned that the protesters “let their freak flags fly,” and are “aligned with Lenin.”

That’s being generous. Reports are that Occupy Wall Street is becoming a mass drug den.

The way to understand all of this

[Undefined pronoun]

is to realize

This is already the second infinitive verb of the sentence.

that it’s

[Undefined pronoun]

part of a broader syndrome,

[Unsupported extrapolation that is still undefined]

in which wealthy Americans who benefit hugely

[Unquantifiable assertion]

from a system rigged in their favor

[Citation needed]

react with hysteria

Maybe Krugman’s got a different idea of hysteria than the rest of us. The evidence that he presented in support of the claim of hysteria are:

a) Cantor’s statements that Occupy Wall Street is a “mob” that “pit[s] Americans against one another.” This, of course, is both true, and decidedly un-hysterical.

b) Mitt Romney calling Occupy Wall Street “class warfare.” Personally, I wasn’t aware that this charge was either insulting or contested.

c) Herman Cain calling Occupy Wall Street “un-American,” which is referenced mere moments after Krugman asserts that the wealthy are “extremists [that are] threatening American values.”

d) Rand Paul asserting that these riots have the potential to turn into riots (which still pales in comparison to Nancy Pelosi claiming that the Tea Party was going to re-kill Harvey Milk) is also completely true.

e) Michael Bloomberg thinks that these protests could cost the city jobs, which is also folly to argue against.

These all seem like well-founded assertions of fact or predictions based on observed behavior.

to anyone who points out just how rigged the system is.

The only things that Occupy Wall Street has pointed out are the merits of internal plumbing.

Last year, you may recall, a number of financial-industry barons went wild over very mild criticism from President Obama.

I don’t recall, but go on.

They denounced Mr. Obama as being almost a socialist for endorsing the so-called Volcker rule, which would simply prohibit banks backed by federal guarantees from engaging in risky speculation.

Considering that banks entire means of making a profit is their ability to assess, manage, and valuate risk, that proposal is roughly akin to telling General Motors that its cars couldn’t have wheels.

And as for their reaction to proposals to close a loophole that lets some of them pay remarkably low taxes —

The capital gains tax rate is not a loophole. Those funds have already been subjected to corporate tax.

well, Stephen Schwarzman, chairman of the Blackstone Group, compared it to Hitler’s invasion of Poland.

None of us were aghast because no one except his mother and a handful of industry insiders knows who Stephen Schwarzman is.

And then there’s the campaign of character assassination against Elizabeth Warren,

She’s a senatorial candidate. If you want to start talking “character assassination,” the conversation begins with me saying “Christine O’Donnell,” continues with you immediately conceding, and ends with some light trash talk and a few minutes of victory dancing with my mad pop-and-lock skillz.

the financial reformer

Uh…she was a presidential advisor and the candidate to run an organization established by a bill that will be repealed in 15 months. She didn’t actually reform much of anything.

now running for the Senate in Massachusetts. Not long ago a YouTube video of Ms. Warren making an eloquent, down-to-earth case for taxes on the rich

Paul, if I weren’t completely convinced that the male erection was unachievable within eyeshot of Elizabeth Warren, I’d say you flirting.

(Author’s note: this comment originally implied various sexual fetishes and alluded to Pulp Fiction. Be glad I toned it down.)

went viral. Nothing about what she said was radical — it was no more than a modern riff on Oliver Wendell Holmes’s famous dictum that “Taxes are what we pay for civilized society.”

Not a single conservative or Tea Party member—not even the furthest right member of Ron Paul’s cadre of cultists—believes that taxes should not exist. Not one. Warren’s implications were as inane as their premise was flawed. The comments were seized upon both because it underscored just how silly the left is about economics, and because it gives cover to the notion that the wealthy, who already pay exorbitant taxes, are somehow mooching from the rest of us. That is precisely ass-backwards.

But listening to the reliable defenders of the wealthy, you’d think that Ms. Warren was the second coming of Leon Trotsky.

Why not? One White House insider already openly lavishes praise on Mao.

George Will declared that she has a “collectivist agenda,”

She doesn’t?

that she believes that “individualism is a chimera.”

Definition of chimera: “A vain or idle fancy”

Warren’s comments: “There is nobody in this country who got rich on his own. Nobody.” She was, of course, implying that the idea of individual wealth was a vain or idle fancy.

Is the connection really that hard to make?

And Rush Limbaugh called her “a parasite who hates her host. Willing to destroy the host while she sucks the life out of it.”

Neither is this particularly specific to Warren nor is it particularly barbed. Outside of getting your rocks off on being her white knight, what the hell is the point of this aside, Paul?

What’s going on here? The answer, surely, is that Wall Street’s Masters of the Universe realize, deep down, how morally indefensible their position is.

Wait…what?  The world-beaters that chant “What do we want? We’re not really sure!” have slyly unmasked the impenetrable veneer of capitalism and forced its adherents to admit it was all just a crazy sham?

They’re not John Galt;

If you want to go with the Atlas Shrugged reference, Midas Mulligan was the banker amongst the heroes. Not coincidentally, he was also the first character to join Galt’s strike. Just saying.

they’re not even Steve Jobs.

But I’m guessing that Steve Jobs needed a banker or venture capitalist for Apple’s early financing.

They’re people who got rich by peddling complex financial schemes that, far from delivering clear benefits to the American people, helped push us into a crisis

How is it possible that risk bundling and derivative securities are responsible for the inherent lack of value to their underlying assets? This might have been too complex an argument for one sentence, but suffice it to say that this argument is about as well thought-out as Mel Gibson’s position vis-à-vis the Jews.

whose aftereffects continue to blight the lives of tens of millions of their fellow citizens.

I bet life is much simpler when you can just blame bankers.

Yet they have paid no price.

Financial companies hit the recession just as hard as everyone else. Often worse. Tell stockowners in Lehman Brothers that they didn’t pay a price.

Their institutions were bailed out by taxpayers, with few strings attached.

Considering that a) the banks were forced by the Treasury Department to take TARP fundshttp://articles.businessinsider.com/2009-05-13/wall_street/29994241_1_scribd-bank-documents and b) they have repaid these sums with interest, http://www.washingtontimes.com/news/2010/apr/27/treasury-has-profited-from-big-bank-bailouts/?page=all one could effectively argue that the taxpayers have been the ones to pay no price.

They continue to benefit from explicit and implicit federal guarantees — basically, they’re still in a game of heads they win, tails taxpayers lose.

So…the beef is with the government, not the banks, yes?

And they benefit from tax loopholes that in many cases have people with multimillion-dollar incomes paying lower rates than middle-class families.

You already mentioned this, and I already told you that the capital gains tax is not a loophole you doddering old fool!

This special treatment can’t bear close scrutiny — and therefore, as they see it, there must be no close scrutiny.

Most banks didn’t even want TARP. They were forced to take it. As for capital gains taxes, I welcome that argument.

Anyone who points out the obvious, no matter how calmly and moderately,

[Footage not found]

must be demonized and driven from the stage. In fact, the more reasonable and moderate a critic sounds, the more urgently he or she must be demonized, hence the frantic sliming of Elizabeth Warren.

Elizabeth Warren sounded neither moderate nor reasonable. The problem was that she used the language of radicalism to support a truism. We don’t actually object to her overt argument. We object to the next logical step off the cliff into socialism: because people didn’t earn their wealth individually that they should not be empowered to spend it individually.

So who’s really being un-American here?

The Occupy Wall Street protesters. Elizabeth Warren. To a lesser extent, Michael Bloomberg, but that mostly has to do with him being a huge bitch. But in reality, you can’t set up a conclusion like this—as though he’s actually resolved what Americanism means at its core—without having tried to articulate the defining characteristics of Americanism or un-Americanism. It just feels like sloppy writing, and that offends me more than any of this sloppy reasoning.

Not the protesters, who are simply trying to get their voices heard.

By shitting on cop cars, doing drugs, and generally indulging in society’s leniency for misbehavior from leftist protest. Is this a protest or a temper tantraum?

No, the real extremists here are America’s oligarchs, who want to suppress any criticism of the sources of their wealth.

If you want to argue against government involvement in banking, great. You’ll find a lot of allies on the right. But if you want to argue that government should stay involved in banking, but that bankers should be vilified, lamented and ultimately pilfered, well then fuck you, Krugman. The simple truth of the matter is that these protests are about replacing capitalism with a player to be named later because these buffoons haven’t really thought it through. They want to reshape America without any real understanding of what’s wrong, why, or what they want. The result is always going to be statist, whether it’s fascist or socialist or despotism. And, like these protests, it’s always going to be un-American.