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"They just got the optics wrong"

From: David Farber <dave () farber net>
Date: Fri, 27 Mar 2009 08:59:31 -0400



Begin forwarded message:

From: "Ronald J Riley \(RJR Com\)" <rjr () rjriley com>
Date: March 27, 2009 8:35:02 AM EDT
To: <dave () farber net>
Subject: "They just got the optics wrong"

Dave,

Madison Powers observes about East Coast business and media elites,“They just got the optics wrong.” I don’t think we have thetechnology to correct their distorted vision.




Ronald J Riley



http://www.cqpolitics.com/wmspage.cfm?docid=news-000003086269



CQPolitics CQ TODAY ONLINE NEWS

March 27, 2009 – 12:01 a.m. Corridor America Vs. Other America ByMadison Powers, CQ Guest ColumnistA common refrain among East Coast business and media elites along theNew York-Washington corridor is that President Obama’s economic team,especially Treasury Secretary Timothy F. Geithner , has a perceptionproblem. They didn’t quite get how it might look to ordinary Americanswhen making the decision to protect large bonuses for Wall Streetexecutives who drove the world economy into a ditch.

Both inside the government and among the media and business elites,there seems to be a shared assumption that nothing done by Sen,Christopher J. Dodd , D-Conn., and the staffers in Geithner’s officeinvolved any serious policy mistakes.


They just got the “optics” wrong.

They misjudged how the rest of the country might be swayed by theappearance of doing something that continues to reward massive failurewith full insulation against the negative consequences of takingoutsized risks with other people’s money.

The premise of that understanding is off the mark. They don’t have aperception problem along the elite corridor. They have a realityproblem.

There are two Americas: Corridor America of the elites (and honorarymembers residing in affluent enclaves elsewhere) and the Other America(as Michael Harrington called them 50 years ago) are worlds apart —not only in how things seem, but also in how things are for them.

Far too many people in media, business, and government alike have cometo see as normal — and indeed necessary to attract and retain talentedpeople — a system of compensation that has increasingly divided thenation into the two Americas that presidential candidate John Edwardsmade the centerpiece of his campaign.

Few other industrial nations — not just the much maligned French orSwedes — have permitted the massive inequalities in income and wealthto accrue so profoundly in the midst of economic prosperity.

Outsized compensation, coupled with little-known tax benefits anddeliberately engineered regulatory exemptions for a minority ofbeneficiaries in the financial services industry is but oneconspicuously repugnant element of a set of skewed economic policiesthat has allowed some of us to acquire wealth in quantitiesunimaginable to most Americans.

The predictable consequence of policies that produced a risingeconomic tide that never came close to lifting all boats is a sea ofleaky vessels that grandstanding state governors, know-nothingcongressional Republicans and frightened Blue Dog Democrats nowcomplain we haven’t sufficient resources for their bailout.

Critics of extending unemployment benefits, doing something seriousabout the uninsured and underinsured in America, or incorporatingPresident Obama’s “Making Work Pay” tax cut for low- and middle-incomeworking Americans really must not know much about how most Americansreally live — or they are indifferent.


I prefer to think that they don’t know.

One reason those in the economic elite have so little insight into thelives of the people who clean their houses, mow their lawns, servetheir meals, and pick up their garbage lies in the simple fact ofdemography.

We inhabit separate social spheres. We live in separate neighborhoods.We send our children to separate schools. We take for granted ouraccess to medical care, the opportunities our children have for highereducation, and the security of knowing that with an economic downturnwe won’t be out on the street or even have to scale back when we go toWhole Foods or Starbucks.

Our biggest complaint in Corridor America and in other segments of theeconomic elite is that we may have to sell the summer home or notretire as early as the financial planner and investment companypitchmen promised in those endless television ads appearing since the1990s.

But in Other America, things have always been riskier and less rosy.It did not share proportionately, and indeed, only modestly even inthe boom years of the Clinton administration. Except for brief andtransitory periods over the last 30 years, real wages over time fellbehind for most Americans, and they fell even further behind forAmericans of color.

So too did savings rates differ among the two Americas. As affluentAmericans struggled to decide among choices of granite for theirshowcase kitchens, other Americans struggled to pay the rent ormortgage, provide medical care with no or only intermittent healthinsurance, or deal with missing work and lost wages when a child getssick and has to miss school.

The problem is that without either job security or adequate wages, theOther America might well get their chance at a flat screen televisionin better days, but they have neither enough personal resources nor asufficient safety net to weather bad times.

Now that bad times are here, they are worse for those at the bottom ofthe economic ladder, and those on the middle rungs are climbing downfaster than they might have expected.

It is little wonder that the “pitchfork” sentiment is rising, and notjust among the faux populists on cable news. Real people are hurtingand not enough people in power seem to recognize the utter absurdityand moral intransigence of Corridor America thinking that feels thepain of those at the top of the ladder but can’t even see what it islike for those below them.

The worst insensitivity to the brutal economic reality experienced bymuch of the Other America is the rhetoric that suggests, evenobliquely, that we are all guilty in more or less the same way andsame degree for the problems in which we find ourselves. We were allgreedy. We all got into debt over our heads. We lived beyond our means.

The core of the message is that everyone is on a moral par in thiscrisis. It’s no time to point fingers or assign blame, they will say.The implication is that it is unreasonable to demand that those at thetop should have to answer for their decisions in any special way.

Punitive sentiments, they say, are but the product of demagogues whofan the flames of a mob reaction. We in Corridor America know better.We are calmer, more judicious. We know things Other America doesn’t.They have no rational choice but to trust us. We’ll even go on cableTV and admit that it’s not fair, but such things just have to be done.

The narrative for deflecting blame also argues that now we have toimpose some economic discipline. Now is the time to return to fiscalsanity. It’s for our children that we have to tighten the belt.Obama’s agenda is too ambitious. It smacks of socialism, they say,either to do more to relieve the plight of the worst-off or to takethe sort of steps he’s taking with regard to distressed financialinstitutions.

Such baseless charges of the latter sort are leveled even as Obamaseems determined not to do anything remotely resemblingnationalization. Instead, he offers private market solutions to marketfailures by buying up banks’ “legacy assets.”

The heart of his bank plan is an arrangement that minimizes downsiderisk with the prospect of massive windfall rewards to those withenough resources to enter the game. Those of us in Corridor Americalike that approach. We demonstrated our collective joy with an almost500-point gain on the Dow. If it’s socialism for the rich, then thatseems to be more acceptable than any policy proposal that would easethe downside risk for the rest of us.

Madison Powers is Senior Research Scholar, Kennedy Institute ofEthics, Georgetown University. His column appears on Friday in CQPolitics.







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"They just got the optics wrong" David Farber (Mar 27)