
Panic of the Plutocrats - diogenescynic
http://www.nytimes.com/2011/10/10/opinion/panic-of-the-plutocrats.html?_r=1&src=mv&ref=general
======
geebee
I've noticed that wall street is taking a very clever tactic in what is
clearly a critical PR battle - they are trying to associate anger against
_wall street_ with anger against _wealth creators_ in general.

It's a great tactic, because Americans generally are not hostile toward very
wealthy individuals when they perceive these individuals as wealth creators -
in fact, they actually _admire_ these people [1]. Yes, most support
progressive taxation and would support higher taxes for the rich (even wealth
creators whose activities we want to support), but they'd oppose a "soak the
rich" kind of class warfare, on practical and moral grounds.

No surprise, then, that people who profited, first from risky and economically
worthless activities [2], and next from a massive taxpayer supported bailout,
would want to get real close to the founders of tech companies in silicon
valley and hope that nobody notices the difference.

I'm not surprised that the movement against "wall street" is incoherent right
now. There are so many angles, so many different opinions. You have the
anarchists who protest globalization in general, but you also have Tim
O'Reilly stating that he thinks wall street bankers got away with a crime [3]
(and kept the money too).

As someone in high tech, the most important thing to me is to make sure that
financial "engineers" don't get to associate themselves with the wealth
creation of real engineers and other people who are wealthy because they
created wealth.

[1] An interesting article about this in the nytimes titled "How we value the
super rich" talks ab it about the mentality behind this distinction...

<http://www.nytimes.com/2008/09/28/weekinreview/28stone.html>

[2] For a pretty comprehensive version of the argument that much of investment
banking is useless, check out a New Yorker article "what good is wall
street"...

[http://www.newyorker.com/reporting/2010/11/29/101129fa_fact_...](http://www.newyorker.com/reporting/2010/11/29/101129fa_fact_cassidy)

[3]
[https://plus.google.com/107033731246200681024/posts/Sy8Z2uWy...](https://plus.google.com/107033731246200681024/posts/Sy8Z2uWy655?hl=en)

~~~
jacoblyles
Wall St. is responsible for raising capital for companies representing a huge
portion of the American economy. Outside of Silicon Valley, people don't do
VC. Instead they go to Wall St.

I'm not going to defend rampant mortgage speculation and public bailouts. But
be careful at the venom you heap on Wall St. We will miss it when it's gone.

~~~
rayiner
Sure, Wall Street serves a purpose in allocating capital. So do personal
injury lawyers. That's not why people are mad at them. Read the New York
Times. The outrage is largely directed at activities that don't pass the
"smell test." Traders losing billion dollar bets with pension fund money,
private equity firms loading up healthy companies with debt than cashing out,
the insidious relationship between Wall Street and the Treasury/Fed. If Wall
Street stuck to underwriting IPOs and providing business loans and other
unobjectionable activities, it wouldn't raise peoples' ire. But if they stuck
to unobjectionable activities, their revenues would also be cut by more than
half and profits by even more than that.

An interesting statistic is that Google's is more profitable than Goldman
Sachs by almost every metric. They have higher revenues per employee, higher
profits per employee, higher profits per unit of equity, etc. Nobody is
demonstrating in Amphitheatre Parkway about how Google is ruining the country.
Because people are smarter than you give them credit for.

~~~
droithomme
Yes, absolutely. It's not just that they are making high risk bets for clients
who are advised of the risk. It's that they are taking "investments" that have
zero percent chance of payout, such as selling million dollar McMansions to
unemployed high school drop outs, and scheming the system to package them as
AAA securities by creating bogus insurance schemes that have no chance of
being paid out, then ensuring their profit by investing the money in
"donations" to political candidates. The idea that this is investing in
productive economic activity or that these are investments at all is a
fallacy. It's fraud.

------
paulkoer
The shrill tone in American politics has always irritated me. Be it economic
policy or going to war, it seems terribly easy to choke off a sensible
argument by calling it 'unamerican'. Maybe controversy and argument should be
resuscitated as American values... Clearly having had a sensible argument
over, say, the Irak war, no matter the outcome, would not seem so ridiculous
now. The way I remember it, this was pretty much impossible in the media.

~~~
Cushman
It's really the height of irony.

If there's one guiding principle that Americans should believe in, it's that
we're all Americans, and that America is all of us. There's really nothing
more un-American than calling someone who lives here un-American.

But of course ya can't say that.

~~~
orky56
Very good point. If the majority of Americans advocate for something "un-
American", then you really need to think what's what. That's the revolution
Wall St is trying to prevent.

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xsmasher
The movement seems situated somewhere between the Bonus Army, which had a
clear and attainable goal, and the Hippie Movement which was far more diverse.

The 60's counterculture still managed to have a huge cultural impact. Refusing
to take part in a system which is apparently working against your interests is
a necessary step one, even if you don't know what step two is.

~~~
bbq
Perhaps, but sometimes you just have to get your hands dirty, right?

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msluyter
I like Krugman, but a Krugman editorial is the epitome of the sort of topic HN
should avoid, imho.

~~~
ramanujan
1000 upvotes. Let's keep both the regular NYT and WSJ opinion page writers off
HN. The regular columnists provide zero signal as you can predict their
positions on any issue (does anyone think Krugman will counterintuitively
oppose OWS? Or that James Taranto will support it?)

These editorials carry zero information in the Shannon sense.

~~~
dorkitude
The substance -- not the source -- is what should be considered in every
encounter with an idea.

~~~
ianterrell
There are too many ideas to consider them all. Source is a valid filter.

------
thehigherlife
Just thought I'd throw this out there. If you're looking for a way to
help/support the protesters: Why not order them some food and have it
delivered to Zuccotti Park Zip Code: 10006

I found this pizza place that accepted online orders.
<http://www.majesticpizzatogo.com/>

~~~
VladRussian
upvoted you for a specific practicality - too rare and precious element in the
environment where many talk, yet a few do.

Though personally i will not order the pizza or do anything else that would
leave records trail on the government servers and till the end of my life can
be mined with "an active sympathizer to extremists" result.

~~~
jellicle
Maybe you can pay with bitcoins.

------
partoa
The funniest thing about today's plutocrats is that they fail to see that they
are setting the economy up for an implosion in which they will be the greatest
losers.

~~~
Cushman
Funny? I find it utterly bizarre.

The people who owe $300,000 on a house they never should have bought? They're
going to be left with no debt and a house to live under. The people with $700m
in net worth are going to lose _everything_ they can't fit in their pockets;
their houses are all going to get looted and razed the night of the collapse.

So why the hell is the guy with debt working hard to prop up the system, and
the guy with investments doesn't seem to care what happens to it?

~~~
mseebach
Yes, that's _clearly_ how what's going to happen. Revolutions historically
share the single property that they're totally predictable.

And, by the way, your disgusting cheering for violent robbery is exactly why,
even though I sympathise with some of the fundamental grievances of the
movement, you will never find me expressing support for it.

~~~
Cushman
What the hell makes you think I _want_ this to happen?

Shit, I'm not wealthy, but I'm upper middle class. You think I'm coming out on
top in this scenario? It's pure self interest: I'm the guy who _doesn't want
to get looted._

~~~
mseebach
I'm glad that's not the case, and I apologise for assigning you ideas you
don't hold. However, I did, and still do, have a very hard time reading your
comment differently.

------
sportsTAKES
What are the Tea Party 'riots' of Summer 09 he is referring to?

Seems like both the Tea Party and OWS demonstrations are peaceful (I'm sure
there are a couple of knuckleheads in each group).

------
fistofjohnwayne
Wow! Now I know that only Republicans represent the obscenely wealthy. Thanks,
Krugman!

------
anamax
The bank bailout is the one thing that seems to have actually worked.

The Fannie and Freddie bailout is still sucking money. TARP was a disaster.

And, the less said about Obama's green initiative, the better.

~~~
jeffool
I'm a bit confused. TARP was a part of the bank bailout. And according to the
Congressional Budget Office, the 700B investment will actually cost about 19B.

That said, to claim that they were "too big to fail", bail them out, and then
not address that "too big" issue is bullshit. Either they're too big and need
to be broken up, or they weren't, and should've been allowed to fail. Trying
to have it both ways is, in my estimation, part of the reason for discontent
today.

~~~
anamax
> TARP was a part of the bank bailout

Lots of things were bundled together. I'm pointing out what cost money and
what didn't.

> That said, to claim that they were "too big to fail", bail them out, and
> then not address that "too big" issue is bullshit. Either they're too big
> and need to be broken up, or they weren't, and should've been allowed to
> fail.

I agree, but point out that there's no good reason to limit that argument to
financial institutions.

For example, it applies to govt institutions (fannie and freddie come to mind)
and even govts (the US govt being a prime example).

------
jsavimbi
> wealthy Americans who benefit hugely from a system rigged in their favor
> react with hysteria to anyone who points out just how rigged the system is

Just like unions. You can't have it both ways.

------
acslater00
To steal shamelessly from the George Will piece that Krugman pretends to
respond to, "Paul Krugman is a pyromaniac in a field of straw men."

------
tsotha
I see no evidence at all the "plutocrats" are panicking. "Rolling their eyes
with the rest of us" is probably closer to the truth. So far these protests
are a media creation, of which Krugman's effort is a part.

~~~
wh-uws
_So far these protests are a media creation_

That is categorically false. This protest is about as organic as they come.

"Adbusters Media Foundation is a not-for-profit, anti-consumerist, pro-
environment organization"

<http://en.wikipedia.org/wiki/Adbusters>

They concocted the idea, started it, Anonymous did some promotion, and it
caught on with people

~~~
pnathan
So it was astroturfed/seeded by a media organization.

~~~
knowtheory
Adbusters is an advocacy organization. Do you count PETA as a media
organization?

~~~
pnathan
My survey of the Adbusters wikipedia article suggests that it is a media
organization dedicated to activism for particular political aims.

------
TomOfTTB
The movement still, as far as I can tell, has no intellectual grounding. Watch
the Reason.TV Video: <http://reason.tv/video/show/what-we-saw-at-occupy-wall-
str>

You have a Ron Paul supporter next to a guy who wants to nationalize the
banks. You have a guy supporting Obama next to a guy who thinks Mitt Romney
will "fix the country".

And of course the folks "letting their freak flag fly"

So this movement stands for nothing. Except for maybe "we're unhappy with the
world right now" and really who isn't unhappy with the world right now? The
only thing more ridiculous then the Occupy Wall St crowd are the pundits and
politicians trying to use them to make their own points (which includes
Krugman and the people he's criticizing)

~~~
danilocampos
> So this movement stands for nothing.

I read your comment, shrugged, then read the op-Ed. When I got back, I found
myself scratching my head as to whether you'd even bothered reading it.

The thread of common anger among the protesters is the notion that banks took
risk, enjoyed protection by tax payers and then, once resuscitated by the
people, bought politicians to prevent regulation that would prevent future
indiscretions.

I don't need to have philosophical agreement with my neighbor for us to be
joined in outrage when the guy across the street gets mugged while we're
watching. These guys have a legitimate beef. I'm not going to quibble about
whether their proposed solutions are in agreement.

~~~
InclinedPlane
The _seed_ of common anger is the perversion of regulation and governance at
the highest tier of financial institutions.

However, the expressions of anger at the occupy* protests has been running the
gamut. From moderate calls for financial reform all the way to straight up
marxist wealth redistribution.

There may be fairly broad public support behind the sentiment that there's a
fair number of problems with the system as it exists today, but there is
nothing like widespread support for the gamut of messages coming out of
occupy*.

------
jeffdavis
How is a partisan political analysis _Hacker News_?

It's hardly news, the protesters have been there a while. And it's not an
objective analysis of the economics involved -- in fact, there's hardly any
economics in there at all.

Sure, he's a Nobel laureate. But this particular piece by him is clearly
partisan. He calls parties and politicians by name.

Is this what Hacker News is going to turn into? Linking to partisan political
columns?

~~~
ender7
Oh man, does mentioning the name of famous people or parties count as partisan
now? How exactly would you like your news?

"A party tried to vote on a bill today. A leader of that party said it was a
good idea."

Since HN is targeted at the startup crowd, many of whom hope to become or are
already wealthy, this seems applicable. Doubly so, since Krugman is pointing
out that the financial industry is using a false association with productive
rich people to cloak their behavior. If the hammer end up falling anyway,
Silicon Valley might be wishing that Wall Street didn't drag their name down
into the mud alongside their own.

~~~
sgoranson
I thought the article brought up points worth discussing, but surely you're
being disingenuous when you imply that it wasn't partisan??

FDR praise...complaints on "Republican politicians"...Cantor criticism...Obama
the victim...

you could write a bayesian classifier to determine how a columnist votes :P

