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March 17, 2012 1:39 PM Obama and the Anxieties of the Financial Meritocracy

By Rich Yeselson

In the New Republic, Alec MacGillis has a brilliantly insightful article (behind a pay wall) about the growing hostility towards Obama of many former supporters among the wealthiest hedge fund managers in the country.

MacGillis describes what these guys liked about Obama during the 2008 campaign, and what they now despise—not too strong a word—about him. Back then, Obama seemed like almost a mirror image of themselves to the hedge fund crew: he was a meritocrat, like them. He didn’t come from “old money” and neither did most of them. He was president of the Harvard Law Review because he was genuinely, measurably brilliant—just like them. The test scores, the excellent schools, the demonstrated achievement proved it. Just a bunch of brilliant guy who manipulate money admiring another brilliant guy that some of them actually went to school with.

Then he started talking about raising their taxes, especially by ending the “carried interest” tax loophole, and he called them “fat cats” once, and they even claimed that they were worried about excess government debt. And so now most of them hate him, a crazy hate that, as MacGillis notes, doesn’t seem quite rational, given how mild most of Obama’s rhetoric and policies have been, and given that, as Obama himself has noted, a lot of voters think that he has been way too accommodating of financial sector. And they’re raising money hand over fist for Romney—even those of them who, famously, supported same sex marriage in New York. Now, as Barney Frank is quoted as saying in the article, they want to put in power the party that fanatically opposes gay rights.

MacGillis has a lot of astute explanations for all of this, some of them materialist, and some of them psychological. You should get your hands on the piece and consider all of them. But one that I found particularly arresting and convincing is that the very thing that helped Obama win their support originally—his intellectual/demographic similarity—now threatens them. Right, Obama might have been their classmate. Was their classmate in some cases (as he reminded some of them during a meeting in 2010). And that was the problem—Obama was asking them—in his cool Obama way, not in FDR’s almost maliciously naughty, “I welcome their hatred” way—to demonstrate some social solidarity, some noblesse oblige. And this pushed all the wrong buttons. As MacGillis writes, “That, in between his relatively measured lines about tax codes and financial reform, he was delivering an unmistakable moral judgment about the worth of the profession they had chosen. That the story they were telling themselves about their own lives was highly questionable.” Yes, they had chosen one life. And this guy they had played basketball with at Harvard had done just fine—he was president!—but he had chosen another life. He taught law, did community organizing, and didn’t dedicate himself to making a billion bucks per year or more (literally in the case of the top 40 or so hedge fund managers, something Obama also pointed out to them at the 2010 meeting). By liberal blogospheric lights, Obama isn’t enough of a lefty. But by the standards of his old hedge fund buddies, Obama enrages them because he shames them.

And it is interesting to compare this dynamic to what FDR confronted from the superrich of his presidency. Back then, old WASP wealth dominated the banking and financial industries. It wasn’t, for the most part, “earned” meritocratic wealth. And thus oddly enough, FDR, like Obama, knew these guys from the school—he was from the old money WASP aristocracy, too. He blew off his Harvard classes to go sailing—just like a lot of them must have. After all, they were going to stay rich, no matter what—they didn’t need to graduate Harvard with honors. FDR thought most rich people were, like himself prior to polio, fatuous, lazy toffs. The rich had never impressed him, he thought they were sort of lazy fools. But then, after he became governor and then president, his laughter became more cutting, and he realized he couldn’t let them smugly continue to destroy the country.

Today, the rich are very impressed with themselves based upon self-perceived merit, not their families of origin. And they thought that Obama, being a fellow meritocrat, would be impressed with them, too. They earned it—just like the president—so, surely, he would admire them, and would never call them fat cats (verbal criticisms stings these guys as much or more than policy proposals that affect their wallets). So, yeah, they thought Obama was like them—and he is, sort of, that’s the funny thing—and now they’re mad he called them out in the pretty minimal way he did. What the hedge funders don’t seem to realize is that, while Obama doesn’t respect them all that much, he respects their meritocratic achievement—and, therefore, his own—just enough not to have the full throated, glib contempt for them that FDR had for his wealthy peer group.

If you think you worked hard and plus have a superior intellect that all the good schools and all the good grades and test score ratify, then you’re going to be, at least, minimally empathetic, to those who took a different path than you did after Columbia and Harvard. Obama gets these guys, finds them wanting, but, ultimately, like he does with almost everyone from John Boehner to Bibi Netanyahu— understands and contextualizes them. It’s his great strength and his great weakness all rolled into one.

On the other hand, if you think you’re just a lucky sob born into money and you’re not a particularly analytical type to begin with—and, then, you’re humanized by a crippling disease, and a empathetic spouse—-you’re going to think your peers are just lucky sob’s born into money, too. So you’re not going to be very kind to your old Harvard classmates. You’re going to view them, at best, instrumentally, and, at worst, as everything that’s wrong about America.

Leon Cooperman and the rest of these hedge fund guys should thank God they were born when they were, and that they can comfort themselves with their meritocratic badges of honor. This president at least understands them, and, yes, he’s not all that impressed, but he sees their are reasons why the are the way they are. But it could have been much worse. They could have gotten FDR, remembering what lazy bozos they all were during their college days. He would have just laughed in their faces—at least, Obama’s never done that.

Update:

Alec MacGillis sends along a pass-thru link to his terrific article:

Comments

  • Hedda Peraz on March 17, 2012 4:21 PM:

    Fellow Texan Molly Ivans had a saying: "Too much is not enough."
    I reckon that also applies to Wall Street.

  • Styve on March 17, 2012 4:26 PM:

    Typos hurt... check your last paragraph, in particular...

  • SteveT on March 17, 2012 4:48 PM:

    I look at the guys on Wall Street and see Patrick Bateman, the character from the movie American Psycho who goes to restaurants because the NY Times food critic says they're "trendy", who listens to music because the Village Voice critic says it's what sophisticated people listen to and who wears the suits that GQ says he should.

    When your only goal in life is to make a lot of money the soul that lets you appreciate good food and good music shrivels away. You're left as nothing but an empty expensive suit; an automaton with no convictions of your own -- kind of like Mitt Romney.

    When our country's "best and brightest" dedicate their lives to inventing clever new ways to trick customers into paying higher or unnecessary fees, the country in trouble.

  • Mimikatz on March 17, 2012 5:22 PM:

    Haven't read the article, but the post makes sense. Someone observed that the more wealthy the really wealthy get, the more they seem to espouse a kind of Social Darwinism that transforms their financial success into moral success, much like the Puritans came to feel that those who were successful must be God's Elect.

    Obama, like many of the rest of us, doesn't share the opinion that these masters of the universe are great moral paragons. Imstead many of us see them as greedy predators who are endangering everyone else. Obama obviously doesn't share this view (or at least he doesn't out loud) but his life is a rebuke in the sense that it shows them what a life of service looks like, the road not taken. They must have very fragile egos that the lack of his adulation turns them into such sniveling, hateful people.

  • square1 on March 17, 2012 5:30 PM:

    By liberal blogospheric lights, Obama isnít enough of a lefty. But by the standards of his old hedge fund buddies, Obama enrages them because he shames them.

    Yesterday, Kilgore made a critical post on Rutherford B. Hayes. In turn, I made the point that Obama would not likely share Kilgore's criticisms of Hayes, as both Obama and Hayes shared a belief that they could bring together groups of Americans who, unfortunately, had irreconcilable differences.

    The comparison of Obama to Hayes is most apt with respect to financial-services reform. Hayes' backtrack on post-Civil War Reconstruction pissed off liberal Republicans without endearing Hayes to Southern Democrats.

    Similarly, Obama has repeatedly gone to bat for Wall Street: making AIG counterparties whole on their CDS holdings; guaranteeing bankers' bonuses; using the Treasury, the Fed, and Fannie and Freddie as slush funds for Wall Street banks; refusing to seriously investigate the banking and mortgage industries for criminal behavior; aggressively pushing a pro-bank settlement on robo-signing and MERS fraud; and, most recently, implementing tax regulations to permit AIG to avoid paying billions in taxes.

    Like Hayes, Obama's efforts to placate both sides have placated neither. Liberal financial-services reformers properly view the economy as just as likely, if not more likely, to suffer another massive banking crisis as when Obama first took office. And Wall Street hates his guts.

    Wall Street bankers have as much love for government regulators poking into the affairs of Wall Street as Southern Democrats had for federal troops during Reconstruction.

    Rhetorically, Obama also shares Hayes' propensity to talk out of both sides of his mouth. Yes, sometimes Obama has referred to Wall Street bankers as "fat cats." But then again he would turn around and refer to Lloyd Blankfein and Jamie Dimon as "savvy businessmen". Blankfein, of course, being the guy who former Goldman Sachs banker Gregg Smith blamed for "losing hold of the firmís culture" and "a decline in the firmís moral fiber [that] represents the single most serious threat to its long-run survival".

    Just as Southern Democrats refused to accept any moral culpability for slavery and the Civil War, Wall Street bankers react with apoplexy against anyone who would point any blame in their direction for our current economic problems. Blame the legislators. Blame the regulators. Blame the greedy homeowners. Blame Fannie. Blame Freddie. Blame the CRA. Just don't blame the MOTUs.

  • Citizen Alan on March 17, 2012 5:51 PM:

    I said something last year that I still stand by: If the banksters will not hear and respond to the criticisms of the Occupy Wall Street movement, then they will eventually hear and respond to the criticism that will be made by those who will come after OWS. Because those criticisms will be accompanied with bullets, explosions and envelopes filled with white powder. We are about to have several hundred thousand well-trained and battle hardened troops come back home to face a job market openly hostile both to those under 30 and those who have served in the military (due to fears about PTSD sufferers making poor employees). Many of these returning vets will have lost their homes due to the malfeasance of banksters who can't even be bothered to obey laws which regulate foreclosures against active duty soldiers.

    The Persian Gulf War lasted barely a month and yielded Timothy McVeigh. We've spent ten years in the Middle East appeasing George W. Bush's blood-lust. How many Timothy McVeighs will turn to violence in response to pampered elites who consider every single American who makes less than $250,000 a year to be a peasant, a resource to be strip-mined and discarded and nothing more. These bastards are playing with fire and they're going to get burned.

  • Doug on March 17, 2012 6:04 PM:

    square1, on the whole I agree with much of your post EXCEPT where you return to your habit of "knowing" what or why Mr. Obama does something.
    Being fat cats does not prevent the MoTU from also being savvy businessmen. One can recognize the a group of peole became the former BECAUSE of the their abilities as the latter. As best I can see, that's what the President has done.
    The resentment felt by these people may also be partially due to a realization that they really haven't "earned" their fortunes. They've gamed the system, are the recipients of tax breaks major corporations don't have and, for the most part, aren't even using their own money!
    I wonder if some of their attitude towards President Obama isn't more along the lines of him reminding them, however unconsciously, that, despite all their intelligence and business smarts, they're also very, very, lucky?
    And don't wish to admit it...

  • Rich on March 17, 2012 6:21 PM:

    "Meritocracy" and "hedge fund managers" really don't belong in the same sentence. Yes, these aren't Harrimans, but they're not exactly everymen (or everywomen). Obama should be thrilled to have these people as enemies.

  • kindness on March 17, 2012 6:38 PM:

    It all boils down to money and greed.

    How someone who literally makes 500 times what I make pays half the tax I do as a percentage of income is an abomination.

  • Tyro on March 17, 2012 7:06 PM:

    "Meritocracy" and "hedge fund managers" really don't belong in the same sentence. Yes, these aren't Harrimans, but they're not exactly everymen (or everywomen).

    The nature of meritocracy is such that those at the top aren't "everymen" (or everywomen). They're the people who rose to the top in an academically and professionally competitive environment.

    The problem is that the hedge fund guys got to the top, but everyone else realized that the "top" these guys arrived at was more destructive than constructive.

  • square1 on March 17, 2012 7:11 PM:

    @Doug:

    I wasn't pretending to read President Obama's mind. I was noting that, rhetorically, Obama has echoed liberal reformers at some times and at other times he has bent over backwards to defend Wall Street icons, even those that represent the worst excesses of Wall Street culture.

    Frankly, I don't pretend to know which view Obama truly algns himself with.

    As for whether Lloyd Blankfein is a savvy businessman, I would reiterate that when Greg Smith resigned from Goldman Sachs he explicitly blamed Blankfein for destroying the business culture that made Goldman successful. Clearly, Smith was not a critic of banking or vast accumulations of wealth. He was a critic of potentially running Goldman into the ground.

    Is everyone who accumulates a short-term personal fortune at the expense of the long-term health of his employers and clients a "savvy businessman"?

    Personally, when I hear that term, I think of people like Bill Gates, Warren Buffett, or Henry Ford. I don't think of Bernie Madoff, Allen Stanford, or Lloyd Blankfein.

  • Eisbaer on March 17, 2012 7:27 PM:

    good riddance to these limousine liberal elitist shits. they've been as destructive to the Democratic Party as the Teabags have been to the GOP, and they're even more insidious. let them go back to their natural home in the GOP, or if they can't stand the bigoted morons that have taken over that party they can team up with Bloomberg and have their nice little "centrist" party of plutocrats.

  • Davis X. Machina on March 17, 2012 8:28 PM:

    McVeigh mostly killed government workers, and their children in daycare.

    Citizen Allen's worst nightmare would cause tolerable casualties among the rulers, and the ruled would rush to surrender their few remaining liberties in the aftermath. The rulers can buy their safety with money -- the ruled don't have any currency to trade in but their freedom.

    Provided they even noticed or cared. There hasn't been a revolution yet by peasants with pitchforks in one hand and an XBox controller in the other.

  • TCinLA on March 17, 2012 9:00 PM:

    Screw their "meritocracy." Their goddamned hedge funds should be declared illegal, on grounds they are wrecking the world (a good $1 of every gallon of $4.50/gal gas you're buying is the result of their speculations). While we're at it we should declare the MBA illegal, and then raze the Harvard, Yale, Columbia and Wharton B-schools.

    These bastards "know the price of everything and the value of nothing." They're The Enemy, and the sooner a few of them are taken out and hanged from the nice pretty trees in the front yards of their mansions they bought with their thefts, the better. Take 50 of them at random, charge them with conspiracy, send them to prison, and the rest of these scummy little pimps would get the message.

    These people are the cause of everything wrong on the planet today.

  • Greg on March 17, 2012 9:21 PM:

    Meritocracy is a myth. Pedigrees matter far more than "the poor kid whose now a billionaire" will ever admit.

    Wall Street now recruits at only a handful of top MBA schools and even fewer undergrad programs. The overwhelming majority of the people coming out of these schools are already upper/ upper-middle class white kids. And the few "poor" kids who manage to run the gamut of admission to, and success in, the "elite" schools are not getting an education. They are buying a pedigree.

    The hedgefund crowd might hate Obama because he judges them. I hate them because they are self-righteous and amoral pricks all rolled into one.

  • Ennis on March 18, 2012 2:22 AM:

    Obama grew up between lower middle-class and middle-class, and he sometimes lived in poverty as a kid. Even though he was poor at times, he did not grow up in ghettos or slums. Even when he lived in Indonesia, he and his friends were not ground down by poverty. He witnessed it, and he learned about it and from it.

    He also had the good fortune of having a mother and grandparents who were non-religious, and who did not worship success or money. Obama learned to get to where he was going, spend some time there, and then decide where he was going next. Getting to the White House was a goal. But it was not the goal.

    Obama watched his mother die from cancer in her mid-fifties. He watched her fight insurance companies and lose. Obamaís ultimate goal is to fix the problems, as best he can, that killed his mother and that kills many of the people that he knew growing up.

    Having a few billion dollars means nothing to him. The hedge-fund crowd just didnít understand that he was never one of them.

  • FlipYrWhig on March 18, 2012 3:21 AM:

    Earth to hedge fund shits. Nobody likes you.

  • bob h on March 18, 2012 6:00 AM:

    "..and that they can comfort themselves with their meritocratic badges of honor"

    In fact, the average performance of all money managers over long periods of time is just market performance, i.e. what a chimpanzee throwing darts at the stock pages would produce. Their meritocratic badges of honor are just statistical outliers.

  • Pope Ratzo on March 18, 2012 8:23 AM:

    I went to school with some of them too. And I will gladly laugh in their faces if the Prez is unwilling or unable to do so. Not that it matters. But for some, the fact that I chose the arts instead of finance makes them even more sensitive to my ridicule.

    Recognition trumps prizes every time.

  • Objective Dem on March 18, 2012 10:41 AM:

    Friends in the financial industry indicate that Dodd-Frank is a big part of the problem. One reason is it restructures how business can take place (likely needed, but it doesn't go over if it is your business). A second reason is there were technical errors in Dodd-Frank that need correcting but because the legislative process is so screwed up, they can't get the problems addressed.

  • Rabbler on March 18, 2012 8:20 PM:

    An excellent article and comments.

  • LosGatosCA on March 19, 2012 2:41 AM:

    Thanks to Alec MacGillis for the pass through link, that's extremely generous.

    I read the article and the theme is pretty clear. I'm not aware of anyone making say $1Billion in a year at a 15% tax rate is going to like someone who plans to raise their marginal rate to 35-40% costing them about $250 Billion.

    My only comment is the repeated use of quotes from Omegaís Cooperman who actually did not support Obama, he supported McCain, so I don't understand how he or his comments represent how Obama 'lost' the hedge fund folks.

  • paul on March 19, 2012 11:37 AM:

    There's an interesting bit toward the end of the article about some hedgies coming back to the Obama camp (as long as they can save face while doing it). Because if they think their feelings got hurt when he won with they're support, they can't help but be terrified about what might happen if he wins without it.

  • David in NY on March 19, 2012 5:35 PM:

    Meritocracy? Mitt Romney? Born with a silver spoon in his mouth and not half the man his father was? And a bunch of other guys just like that. Meritocracy?