In the midst of all the recent scandals affecting the global banking system, journalist Christopher Hayes (Editor-in-Chief of The Nation) talks about his most recent book, Twilight of the Elites: America after meritocracy. Therein, he examines why Wall Street and other banking institutions were caught up in the ineptitude and corruption of their management. The following is a text edited from a conversation with Amy Goodman broadcast on Democracy Now!
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Twilight of the Elites means that what we have seen in this last decade is this almost uninterrupted cascade of institutional failure and, specifically, elite failure. And I think what the system is telling us, what these failures are telling us, is that the current social model and the current mechanisms of elite formation, the extreme levels of inequality we have, are producing an elite that cannot but help but fail, that one of the most insidious aspects of the current distribution of resources in this country and the current inequality we have isn’t just that it’s bad for people on the bottom of the social pyramid but that it makes people at the top worse. It conditions them to be incompetent and corrupt. And so, I think that’s one of the main arguments of the book, is that what we’re seeing in elite failure is produced by the system that produces those elites.
“Meritocracy” is a really fascinating word. It’s coined by a British left-wing social critic named Michael Young in the 1950s. And he writes a book called The Rise of the Meritocracy. This book is kind of in the vein of 1984 or Brave New World. It’s a dystopic work of social criticism about the future, in which he writes about a Britain in the future that manages to use intelligence testing and productivity testing inside firms to select out for the people who were the smartest and the hardest-working and have them run everything. Michael Young says in the book, tongue in cheek, “You know, we realize democracy can be no more than an aspiration, that we can’t have rule by the people, but rule by the cleverest people.” Later in his life, Young was horrified to find that this word, “meritocracy,” which he had intended as satire, had been adopted as an actual social model. In 2001, he writes in an op-ed in The Guardian, while Tony Blair is campaigning for New Labour on a vision of meritocracy, he’s saying, “No, no, no, no, no! I didn’t mean this as a model; I meant it as a critique and what an awful vision it would be of a society that didn’t take our egalitarian commitment seriously, that didn’t take democracy seriously, and instead decided to outsource the important decisions to people that were selected out for their brains or their other features.”
It’s such a perfect example, again, of this concept of social distance, right? I mean, the people like Robert Gnaizda and the folks at the Center for Responsible Lending down in North Carolina that were working among communities that were on the wrong end of the subprime crisis, right, that were seeing their homes foreclosed on, that were seeing equity stripped out, that were seeing these serial refinancings with fees and fees and fees–the folks working there started ringing the alarm bells in 2002, 2003, publishing reports saying, “We’re going have ten million foreclosures. This is going to be a totally disastrous thing.” And they were meeting with the Federal Reserve, and they were waving charts in their faces, right? They were giving them data. And the Federal Reserve didn’t act.
So the question is, why didn’t the Federal Reserve act? And there’s a whole bunch of complicated reasons. But I think, partly, at the core of it, is that they, the folks in the Federal Reserve–Frederic Mishkin; Ben Bernanke, who was a Fed governor, who was saying, “Don’t worry about subprime,” more or less; Alan Greenspan, the Fed chair–were just completely removed from the world in which subprime finance was metastasizing and wreaking havoc. And that removal allowed them to sort of go along doing what they were doing, doing the things that they thought were ideologically justified or justified by the data. When they were not embedded in that world. And the thought experiment I have in the book is, if Ben Bernanke or Alan Greenspan were in a neighborhood where this was happening, if they were walking down their street every morning and seeing the foreclosures signs, if they had a neighbor who had been through one of these serial refinancings and had all the equity stripped out and now faced foreclosure, I can’t help but think the Fed would have cracked down much earlier and with much more vigor.
Interestingly enough, the hearings over Barclays before Parliament were much more rigorous and much more aggressive. And obviously the systems of campaign financing are quite different, which is not to say British politics doesn’t have its own problem with capture by banking interests. Part of the problem is that this kind of elite solidarity, this self-protection impulse, it stretches across the public and private sector, and it stretches across, in some ways, ideological lines. People are going to move on from being senators to go work at big corporate law firms in Washington, D.C., or lobbying firms that are going to represent those same interests.
The Libor Scandal (London InterBank Offered Rate)
The Libor scandal is a perfect example. We’re just hearing about this now, about this systematic rigging of rates that was happening. And we think now it wasn’t just Barclays–there’s an implication that we know about Barclays because they cooperated with the investigation– that the other banks were doing it, too. Something as routine as that, it’s hard to think, well, it was just cordoned off with the way that they were dealing with the Libor. No. I mean, I think it’s a natural thing to think that this was much more widespread. And the widespreadness of it and the fact that there hasn’t been criminal accountability makes efforts to pass regulatory reform–and, in fact, they have passed regulatory reform–much weaker, because accountability really matters. And accountability is something that doesn’t just come from regulation; it does come from the force of criminal law, as well. It comes from seeing your livelihood and life at stake in making decisions or in nurturing a culture in which decisions are made that are counter to the law. And I don’t think that–I think the absence of that accountability defeats much of the intent of regulatory reform. You have to have those two things together. CEOs, particularly, top bankers, people at trading desks, who are overseeing billions and billions of dollars, have to genuinely be worried that if they do something wrong, they will be held to account by the law. And right now, I think, if you look at the way the emails work, if look at the casualness with which the traders at Barclays are, in writing, rigging a rate and saying, “Thanks, bro. Good looking out. Let’s get a bottle of champagne,” these are not people that are afraid of accountability. I mean, you do not put that in an email if you’re afraid of accountability. If that’s the culture in finance–and I believe it is the culture in finance–in which there is no fear of reprisal, then you are going to get systematic wrongdoing.
There’s a lot of distrust in the media itself. And when you have distrust in the mechanisms by which you even get information, it’s hard to stoke outrage, because people discount information that they hear. So, you know, there are a lot of folks who just don’t believe what, you know, might be reported on Democracy Now!, might even be reported in the New York Times, which is an establishment publication, because they’ve been told by the people they do trust–Glenn Beck or Rush Limbaugh–that those are completely untrustworthy sources. Part of the issue we have right now is that–and I’m going to sound a little bit like a nostalgic or a conservative here, but there is no common table that the American people come to. There just isn’t, for better or for worse. And I think there’s great things about that, about the death of the kind of broadcast era, and there’s troublesome things about that. But the fact is, the conversation that we have about public life, even the facts that we have at our disposal, the things that we learn day to day, there is no common table that we receive them from. We all get them from different places, increasingly balkanized. And that means, even when there is outrage, that outrage is specific in its targets and diffuse in different ways and in sometimes intention across these ideological lines.
Climate Change and The Elites
I think climate change is the biggest problem. It’s the biggest challenge we face. And it’s also a place where our inaction is the most dramatic, in some senses. People barely even give it lip service in the conversation in Washington, D.C., anymore. I mean, it’s just essentially evaporated from the conversation.
The problem with climate change that’s distinct in some ways is that it requires a certain level of mediation to take seriously. If you live in Youngstown, Ohio, which has a massively high unemployment rate, you don’t need anyone to tell you that unemployment is a problem in Youngstown, Ohio, because you see the empty stores, you see the people out of work, you know them, you are them, they’re in your family. If you’re in a neighborhood that has incredibly high crime rates, you don’t need anyone to tell you that high crime is a problem. You, yourself, have been victim. People you know have been victim. Climate works in a different way. We are not, as human beings, equipped to just perceive what is essentially an imperceptible gradual rise in global average temperature.
We need people to be putting the dots together, right, to say this is part of it. Now, I think that when you have this distrust–when you have distrust of science, for instance–when you have distrust of elites in general, it’s a harder case to make. What I think is happening now for the first time–and Bill McKibben made this point on my show, and I thought it was kind of an interesting one, which is, look, the weather, the wolf is at the door. The weather is freaking out. We no longer have to worry about mediation or even persuading people. It’s real. He basically has this perspective, which I’ve become more and more persuaded by, which is that the climate disaster, as it unfolds before us, is going to do the convincing that ten or fifteen years of the press or, you know, scientists have failed to do. You need states to get together, and everybody, particularly those in the developed world, the wealthiest nations, the ones that have been responsible for already putting the most carbon in the atmosphere, that have drawn out of the bank account the most, to take the hit, to say, “Yes, we’re going to take these steps, even if you don’t,” because if everyone wants someone else to go first, then no one goes first. And that’s precisely the framework, increasingly, that’s happening. And the people that are best equipped to lead, the nation that’s best equipped to lead on this is, of course, the United States, is, of course, the source of the greatest carbon emissions.
America After Meritocracy
If you look at American history from the progressive perspective in a positive way, say, from the New Deal to now, I think there’s, in some ways, two eras of equality, that had different kinds of equality developed. There was unparalleled–and unrepeated since–economic equality, income equality, wealth inequality, from basically the New Deal to the 1970s. And that’s now gone by the boards. But that same period of time had a tremendous amount inequality along lines of race and gender and sexual orientation, which wasn’t even a political issue, largely, at the time. Since 1972 or 1973 to the present, we’ve seen tremendous strides made in gender equity, although still a long way to go; strides made in racial equity, although still a huge way to go; huge strides made in the equality of people along lines of sexual orientation. But we’ve seen that wealth and income equality evaporate.
So I think that we need a third era of the equality that combines those two, and I think that that’s not an impossible task. I think we can have a society that is dynamic, that is free, that is prosperous, but also that has much greater levels of equality, much lower levels of inequality and extremes between the rich and the poor, between the rich and everybody else, and also values equality along all these other lines of identity.
It can be achieved by pressure from below. And that’s the case in what happened–the New Deal was created by a series of social movements that restrained the plutocrats and the crisis, actually, and the way the plutocrats were discredited by the crisis, which I think we discount now as we think about it. And the same thing happened in the amazing liberatory movements, the 1950s, ‘60s and ’70s, towards equality along the lines of race, gender and sexual orientation. That’s the only way we make progress.
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