Attacking Wall Street's Attackers

"But isn't that . . . 'Socialism'??"

He who frames the question wins the debate.

I've been struck in recent months, talking to various people about the economy, by two things:

One. The generally limited vocabulary people have when it comes to understanding all things financial -- even people who are otherwise very sophisticated, well-educated, etc.; and

Two. The tendency -- again, amongst otherwise sophisticated people -- to somehow equate outrage about Wall Street misconduct and calls for genuine, structural reform with a "fringe" political agenda.

The "S Word"

So, what do you call someone who thinks:

--Hedge fund managers should pay a higher tax rate than teachers or firemen? (They don't; thanks to an especially sleazy tax break, their compensation -- called "carried interest" -- is taxed at 15%).

--CEO's shouldn't make literally *400 times what the janitor makes -- up from the 30x-40x that prevailed for almost half a century (roughly from the '30's to the '80's).

--Having half a dozen monster financial institutions -- whose balance sheets can literally be measured as a % of U.S. GDP -- is bad for our economy and political system.

Apparently . . . . "a socialist."

Sorry, folks, but we already have a socialist economy.

Except that it's socialism at the very top . . . and capitalism for everyone else.

*The 400 times is merely an estimate; the truth is, no one really knows, because executive compensation disclosure rules are exceptionally murky and porous.

It's also the case that CEO compensation is not set by the market; it's determined by captive boards of directors -- which is to say, the CEO's themselves.

"The Plot Against America" Redux

Schwarzman's "Nazi's" Comparison

We have met the enemy, and he is . . . us.

--Pogo

Stephen Schwarzman, a Wall Street honcho, made headlines last month for comparing President Obama's proposal to raise (the absurdly low) tax rates on hedge fund compensation -- called "carried interest" -- to Hitler's invasion of Poland.

Funny, I had another Hitler reference in mind.

Specifically, Philip Roth's provocative and very unsettling "The Plot Against America."

No George Bailey's

The book's central premise is that a politically weakened FDR is defeated by Charles Lindbergh, a Nazi sympathizer. Once elected President, Lindbergh first appeases, then cooperates with Hitler in what is effectively a bloodless takeover of America (sorry, Lindbergh relatives).

In my economic version of Roth's nightmare, I imagine what The Great Depression and the following decades would have looked like if there'd been no FDR, no New Deal, no Securities Act of 1933, no Glass-Steagall, etc.

Instead of reform and recovery, Wall Street uses its financial and political muscle to lay claim to the (remaining) public resources it hasn't yet appropriated.

And the result would have been what?

Potterville, writ large?

Unfortunately, as you read today's headlines discussing Too Big to Fail financial institutions, (still) obscene Wall Street pay, devastated savers, etc., this alternative, nightmare scenario hardly seems imaginary at all.

Re-read your Pogo, Mr. Schwarzman.