The Rotten Crowd Gap

“They’re a rotten crowd,” I shouted across the lawn. “You’re worth the whole damn bunch put together.”

I’ve always been glad I said that. It was the only compliment I ever gave him, because I disapproved of him from beginning to end. First he nodded politely, and then his face broke into that radiant and understanding smile, as if we’d been in ecstatic cahoots on that fact all the time.

—The Great Gatsby

I saw some folks puzzling a few days ago over the fact that Bernie Madoff has a non-zero approval rating. I told one of them that I had some sympathy for that point of view amidst the ruins of the Second Gilded Age just as in an unguarded moment Nick does seem to approve of Gatsby despite the fact that he “disapproved of him from beginning to end.” Of course I don’t really approve of Madoff and his fraud. But the more it looks like a huge swathe of the big money game was just an elaborate fraud, the more an undercurrent of respect for the very boldness and criminality of Madoff’s fraud comes through. He plead guilty in a court of law, while the architects of Citibank’s bankruptcy remain wildly wealthier than the average American—people who no doubt would be completely competent to destroy a major business as well as anyone else—slinking around somewhere and various finance types skulk around the streets of New York feeling sorry for themselves because congress might screw around with their bonuses.

All of which is by way of introducing Michael Hiltzik’s point about changing attitudes toward the wealthy:

For decades, the wealthy have been held up as people to be admired, victors in the Darwinian economic struggle by virtue of their personal ingenuity and hard work. [...] One factor fueling the public fury over the AIG bonuses, so inescapably in the news this week, is the recognition that so many huge fortunes landed in the hands of the undeserving rich. Some of them added little value to the economy but merely moved money around in novel, excessively clever and ultimately destructive ways; others are corporate executives who were ridiculously overpaid whether they succeeded or failed at their jobs. [...] The shift in sentiment should surprise no one. As the management sage Peter Drucker once predicted, “In the next economic downturn there will be an outbreak of bitterness and contempt for the super-corporate chieftains who pay themselves millions. In every major economic downturn in U.S. history the ‘villains’ have been the ‘heroes’ during the preceding boom.” Drucker was speaking in 1997, two downturns ago.

A lot of people, myself included, spent a lot of time in 2007 and 2008 observing that a lot of the old gaps inside the progressive camp had narrowed or vanished since the 1990s. But I think the Panic of ’08 is tending to reopen a new gap. On the one hand you have people basically inclined toward Hiltzik’s that a lot of the people making the big bucks for the past 10 years are basically scammers who lucked into the ability to siphon tons of money out of the economy without really doing anything useful or valuable, and between people who think that they’re genuinely smart hard-working people who just happen to deserve to pay somewhat more in income taxes than they currently do.

In other words, was Madoff really a black hat among honest businessmen, or was he just one unusually crude player amidst a rotten crowd?