Monday, July 26, 2010

Greed Is Good For Me, But Not For Thee

In case you missed it, yesterday’s Washington Post had an op-ed by Neel Kashkari, a former Goldman Sachs man who oversaw the TARP program. In it, he warns an unsuspecting public about the dangers of the growing deficit and the need to choke it off at the source, entitlement spending. His piece is called “No ‘Me First’ Mentality On Entitlements.”

Our belief in free markets is founded on the idea that each individual acting in his or her self-interest will lead to a superior outcome for the whole. The financial crisis has reminded us that free markets are not perfect — but they do allocate capital better than any other system we know. A “me first” mentality usually makes markets more efficient.

But this “me first” mentality can also lead to shortsighted political decision making. Most Americans agree that we need more energy from clean sources, such as wind power -- until someone proposes installing a transmission line near their homes. Most people are against earmarks — unless it is their representative scoring money for their district.

Cutting entitlement spending requires us to think beyond what is in our own immediate self-interest. But it also runs against our sense of fairness: We have, after all, paid for entitlements for earlier generations. Is it now fair to cut my benefits? No, it isn’t. But if we don’t focus on our collective good, all of us will suffer.

Let’s put this in perspective. Neel Kashkari worked at Goldman Sachs and later directed TARP. In between he worked at the Treasury Department under that notorious skin-flint and deficit hawk George W. Bush. Did he rant about deficits then, I wonder? Now, after his golfing buddies have ruined the economy and run off with the loot, he comes out in the Washington Post and scolds us all about the need to rise above our immediate self-interest and make sacrifices for the collective good. How fucking noble.

By the way, while this apostle of selflessness was overseeing the distribution of TARP payments, where exactly were those payments going? Um, let’s see

In the fall of 2008, with the financial system on the verge of collapse, 17 large banks that were being propped up by taxpayers doled out $1.6 billion in bonuses.

On Friday, the Obama administration’s pay czar, Kenneth Feinberg, passed judgment.

He said the payouts were “ill advised.” But he also said he did not believe the payments were “contrary to the public interest,” and he does not plan to ask the companies to pay the money back.

The 17 companies making the excessive bonus payments while on government life support included Citigroup, Goldman Sachs and Bank of America. Feinberg described the payments in an interview with NPR after he delivered his report on executive pay to the Treasury Department.

“Some of the payments ... many of them were over $10 million per individual, which were in our view ill-advised,” Feinberg said.

I assume his former Wall Street colleagues were spared any lectures about the virtue of self-sacrifice. In their case, you see, a ‘me first’ mentality is good. It allocates capital better than anything else the human race has ever invented. It makes markets more efficient. But when it comes to you, Mr. and Mrs. Kramden, a ‘me first’ mentality leads to short-sighted political decision making and all kinds of other scary things, like debts and deficits. A $10 million dollar bonus payment to a paper pushing con-man is an economic boon; collecting a six-hundred dollar a month social security check is narrow short-sightedness and consitutes a dire threat to the economy.

Somebody get me a bucket.

To steal a line from The Outlaw Josey Wales, don’t piss down my back and tell me it’s raining. The day we cut back on the $700 billion plus we spend every year on defense is the day I’ll listen to patriotic calls for self-sacrifice. Until then, go back to your freakin’ golf course and leave the rest of us alone.

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