Critiques & Commentary

11/13/16…And we go on….

  1. Chris Hedges is a fine writer and a terrific polemicist. Sometimes, however, he goes a bit over the top, as here:

2. I find this interesting and worth thinking about. And very probably accurate:

3. I’ve been trying to understand why I voted for HRC:  it was all negative. Trump himself seemed no worse, although I felt there was a greater likelihood of him being forced out of office – impeached, shot, sentenced in court – and that did matter to me. I felt Trump had asked a number of the right questions, although come up with wrong or dubious answers. Then, this morning, reading the Times, I felt a shiver of Pauline revelation and knew what really had tipped my scales anti-Trump. It was the ascendancy of Giuliani in the Trump campaign/machine. I think Rudy Giuliani is one of the five worst people in the world. Someone who should never ever again be allowed near any levers of power or influence. And here he was, next to Trump. Enough, already, said my Id last Tuesday.


11/13/16…Overclass – Alternative First Chapter….





























In England and Scotland, at the end of the mediaeval era, says The Encyclopedia Brittanica (15th Edition, Vol. 8, p.186). the Lord of Misrule “was specially appointed to manage…festivities…at court, in the houses of great noblemen, in the law schools of the Inns of Court and in many of the colleges of Cambridge and Oxford…” The Brittanica notes that in earlier times the Lord of Misrule had “presided over the Feast of Fools.” REMINDS OF PARADE OF EMPEROR. They make a tremendous uproar, and bring to mind a description of the Lords of Misrule from Stubbs Anatomie of Abuses (1595): “each had twenty to a hundred officers under them, furnished with hobby-horses, dragons and musicians…(And) paraded in church with such a babble of noise that no one could hear his own voice.”

In America, at the end of the twentieth century, “Lord of Misrule” is the title conferred on the personage chosen to preside over the annual ovrclass gathering known as the Bohemian Grove. Each summer, to a cluster of rustic camps set in a dramatic grove of redwoods some hundred miles northeast of San Francisco, America’s great and good, its male great and good, that is, the only women approximately present being the hookers who throng the motels in nearby towns, congregate for a fortnight devoted to amateur theatricals, speeches, good fellowship and that singular, exalted form of self-congratulation which is summoned, like a genii from his bottle, by rubbing the right elbows.

The Bohemian Grove-variety overclass is the end of the socioeconomic spectrum I know best. I have written about it in five novels and roughly a million words of what I would loosely describe as social commentary. I am myself, by every conceivable measure, a member of the American overclass.

My life as an American has been blessed with every advantage the country has to offer. Years ago, in the course of a “Today Show” spot to promote a book, Jane Pauley ended our brief chat with the observatioon, “Exeter, Yale, Lehman Brothers. Hardly the school of hard knocks.” “No,” I heard myself say, “more like Fort Knox.”

I grew up and for forty years, at least until very recently, flourished in the inmost circles of this nation’s privileged elite: right parents, right schools, right clubs, right firms, right connections. White, well-off, educated and plugged-in to a fare-the-well. Anyone who could be in any way helpful was never more than a couple of phone calls away. I am, in a peculiar Episcopal fashion, “related” to George Bush. I have known at least two members of the Bush Cabinet for over twenty years. I have sat on the boards of large corporations and generally hung around Big Cheesedom. I’ve golfed there, drunk there, whored there (in several senseas), and, in the name of money, conspired there – often without a thought to the general good and sometimes contrary to the most elementary notions of right and wrong.

If, relatively late in life, I’ve gotten religion, it hasn’t been the knee-jerk revulsion to capitalism with which Schumpeter, currently head boy in the Pantheon of laissez-faire market capitalism, charged “intellectuals,” whom he singled out for the “the absence of direct responsibility for practical affairs…the absence of that first-hand knowledge which only actual experience can give.”

Unlike many of my colleagues in blahblahblah, on either side of the ideological table, I have had considerable “direct responsibility for practical affairs,” at least if you grant the (in my view) doubtful assumption that investment banking, to which I devoted a quarter-century of my life, has anything to do with “practical affairs.” These are just about the last words I would ever apply to the business of investment banking, or “financial engineering” or whatever other high-sounding euphemisms Wall Street prefers to confer on its dubious games whenver the game’s afoot and the sap’s (and the saps) running. I’ve scrambled amongst the Alps and Himalayas of high finance, and I can report that up there the air is as thin as at the summit of Everest: it breeds raptures of altitude which produce such delusions of the 1980s as: “You can borrow your way out of debt” or “You can lend your way out of credit problems.”

The world in which investment bankers and merger lawyers dwell, that Disneylandish realm of spreadsheets and teleconferencing, of Concorde, Crillon and Claridge’s, is as remote from ordinary life as the astrophysical sums in which they phrase their excellent adventures are from the economy of the average household. In these hermetic temples of self-regard, a single keystroke on a computer, the flick of a pencil point on a contract draft, can decree the closing of a plant or a line of business, the economic devastation of whole communities. This separation from everyday reality is intensified by the speed and ease with which the Street can move money in amounts so huge as to be abstract.

With due respect to Schumpeter, therefore, I have been there. I know how “it” is done, which only makes me respect all the more Richard Hofstadter’s statement of the thinking man’s predicament in market society: “Intellectuals in the twentieth century have…found themselves engaged in incompatible efforts: they have tried to be good and believing citizens of a democratic society and at the same time to resist the vulgarization of culture which that society constantly produces.”

This book began life as a commission for Whittle Communications’ “Larger Agenda” series. My subject then was “The Invisible Infrastructure.” I envisaged an extended essay on the need for America to refurbish and rehabilitate the framework of ideals, values, attitudes and standards which underpins our notion of what a great country we are. We acknowledge the dilapidation of the nation’s physical infrastructure, its schools, highways, hospitals and so on, but to my thinking the spiritual counterpart of that “plant” is every bit as dire, every bit as much in need of refurbishment and rejuvenation.

I felt that something had gone terribly wrong in and with America. Part of that feeling was a consequence of growing older, I recognized. It is in the normal, nostalgic order of things to imagine the past as better than the present and probably better than it actually was at the time. Still, the sorry evidence of the present day seemed incontestable. The America of Ronald Reagan, Michael Milken and George Bush confronted me with sights I never in my lifetime expected to see in America: filth, beggary, illiteracy, selfishness, effrontery and violence on a scale unimaginable to anyone alive and remotely sentient in, say, 1960, let alone the decade following V-J Day.

I am perfectly willing to accept that “my” America (1945-1963) was to some extent a myth, like James Thurber’s unicorn, but I would argue that it was a myth that had its uses. Were we better off with the myth of Camelot, or knowing, as we now do, that JFK had the sexual proclivities of an alleycat? Do we throw his exhortation “ask not…” out the window because he slept with Marilyn Monroe? Do we deny the lofty intentions and good deeds of a generation of Peace Corpsmen and Civil Rights activists because the President was naughty? Do we cancel out Charlayne Hunter Gault with Judith Exner?

I think not. I once described myself as an old-fashioned conservative: that is, as someone who examines the bathwater to see if there might be a baby in it. Harvard’s Judith Sklar has made the point that a certain amount of hypocrisy is necessary to the conduct of a civil society. Such myths – what George Eliot called the “ennobling illusions” – may be what she has in mind.

There were changes in social attitude I found particularly indigestible. A primary article of faith in the self-consciously, admittedly pretentiously patrician world in which I was raised was the notion of noblesse oblige: those who were fortune-favored were taught that personal privilege bred public obligation – in any number of ways ranging from simple discretion in the conduct of private advantages to outright philanthropy. Instruction came as much by example as by exhortation: from Dwight Eisenhower and George Marshall, Harry Truman and Eleanor Roosevelt. It flowed from the acknowledgement of interdependency and responsibility which underwrote the unconditional triumph of World War II in both the theaters of war and the home front. There was also a practical side to such behavior, flowing from the unarguable proposition that if you call attention to your money long enough and loudly enough, it may occur to someone to come and take it away from you.

It was not an age which proclaimed that “life isn’t fair” because it believed that life could be made fairer. Luck might be the residue of design, as the baseball magnate Branch Rickey held, but it wasn’t all our own doing: good fortune was what separated us from those to whom life had been more grudging with its advantages. Of course, back then, we were not privy to the great revealed truth of the 1980s: that luck is the residue of inside information.

I was born, raised, educated and for much of my life employed in a world nicely insulated from workaday concerns by money and access. When the Reagan-Milken-Bush Era got well and truly launched, in August, 1982, I was a veteran of twenty years on Wall Street. I had done Wall Street work at the highest levels at which such work gets done. I sat on boards and schemed in private dining rooms. I had learned a fair amount about how money was made in America, especially on and via the capital markets: the money that finances the deals that pay for the yachts, the jets and the groovy third wives, the apartments and country houses pictured in glitzy, glossy magazines, the deference of headwaiters and the acquaintanceship of dukes. I also got to know, and formed an estimate of the character and capabilities of, many of the defining figures of the last decade, the twentieth-century equivalents of the Victorian “Kings of Scrip,” as Carlyle called the promoters of his era. I was a member in good standing of Insiderdom: paid up, sought after, suitable to serve on the house committee. I belonged.       It is an understatement to say that I found the ’80s uncongenial. I loathed the era and its values and was predisposed to do so. The fact was, I had set my face against the ’80s long before the decade actually arrived.

That would have been around 1970, during the final, gasping coda of the great ’60s boom: a time of ill-judged, speculative, difficult-to-do financings and deals, a desperate last-minute effort, more emotional than rational, to locate the lat remaining greater fool.

I was then one of two partners running the Industrial Department at Lehman Brothers. This was the firm’s corporate-finance arm, responsible for promoting and processing transactions.

One pleasant forenoon, I received a call from a financing client in the grip of a thoroughly bad idea. He had been seduced – a word I use advisedly, since the scheme had been promoted by a woman who was closest I have ever seen to an authentic siren on Wall Street, capable of inveigling sexually-befuddled, middle-aged Middle American chief executives into steering their corporate craft onto the fiscal rocks – into contemplating a bid for Youngstown Sheet and Tube. YB (its Stock Exchange symbol – known to traders as “Yellowbelly”) was one of the nation’s largest steel companies – and a mess.

My client wished us to represent him in the takeover: that is, to evaluate YB, which is to say, to come up with the accounting persiflage – in our brochures we called it “financial engineering” – that would permit him to justify the price he knew he was going to have to pay; to negotiate the terms, which is to say, to come up with a medium of payment, in the form of securities, which would permit both buyer and seller to claim having scalped the other; to get the deal done, in other words.

As he talked, I could tell my client had been talked – or whatever – into accepting one of the basic delusions peddled by Wall Street: namely, namely that financial sleight-of-hand can turn sows ears into silk purses; that financial cleverness can somehow offset basic commercial weakness. Time and again, especially with steel companies and airlines, the Street has successfully sold this notion – at great profit to itself, at great (often terminal) cost to everyone else concerned.

I told him I would think it over. I knew YB was running short of oxygen. Research in the financial manuals confirmed my general impression. The company was in desperate shape. To further encumber it with $300 million in debt, the price of buying it “with its own assets” (as they say), most of which were overage and close to obsolete, would kill it.

I called the client back and said thanks but no thanks: I wanted no part of a deal which was certain to bankrupt the company, cost thousands of people their jobs, and economically devastate a large part of the Ohio River Valley. Lehman Brothers, said I rather virtuously, will pass on this one.

Of course, the deal got done, another firm was willing to sign off on the paper – and that firm earned the fat fees and commissions that are the real rationale for ninety-nine percent of the deals promoted and implemented by Wall Street.

My partners were angry with me. A fee is a fee is a fee. I thought I had done the right thing, but there is no ticker symbol for right; it isn’t quoted in eighths and quarters. That YB went promptly down the toilet was no consolation. It would subsequently be merged into LTV, with more fat fees all around, and then, in a sublime instance of two and two adding up to something less than one, exactly as could be predicted, the entire house of paper collapsed at a cost to the American taxpayer of something on the order of $500 million.

By then, however, I had come to understand clearly what I had been dimly sensing for some time: that I was in the wrong business. I had left Wall Street, although it wouldn’t be until 1986 that I would cash my last fee check – as an independent “finder.”

It wasn’t a complete write-off, however. In due course, the ’80s arrived in all their flagrant glory, and my years on the Street equipped me to understand better than most other journalists what was in act going on: that what its apologists burnished with the name of “market capitalism” and “Schumpeterian creative destruction” was basically a rigged and dishonest inside scam played with socialized credit. That I might not be absolutely au courant on the latest in computer-driven trading techniques, or the legal stratagems which made literally billions in tax liability vanish just like that in ten-digit mergers, didn’t matter. The game changes ony in particulars, mass and velocity, but the underlying principles remain constant. The horticulture of peculation doesn’t change, whether we’re speaking of seventeenth-century Tulipmania or twentieth-century junk-bond “daisy chains.” I had priced – both honestly and “creatively” – enough securities and negotiated enough deals in my time to have a solid conceptual and mechanical grasp of what was happening.

Two things were different about Wall Street in the ’80s. The first was attitudinal, and largely a consequence of the actuarial tables. There had been a wholesale changing of the guard on Wall Street and in the nation’s executive suites. The Old Guard departed, and took with it its collective memory of the 1920s and the Depression. Only a few remained to raise a voice, and their protests were drowned out by the booming, surflike roar of easy money at floodtide.

And then there was the amount of money in the market. To say that the ’80s were simply the ’60s with three or four additional zeroes misses the point, because in high finance, “size” – to paraphrase the football coach Red Sanders (not Vince Lombardi) – isn’t the only thing, it’s everything. Under Ronald Reagan, policies were implemented which simply relieved the custodians of the nation’s capital from any obligation to exercise judgment or more than elementary investment prudence. These policies made literally billions available to rank, discriminatory and unproductive short-term speculation on terms which made long-term invstment uncompetitive. They encouraged what one student of the mania for railway speculation which swept England in the 1820s has aptly called “a madness of credulity,” a form of short-term insanity (with, however, abiding catastrophic side effects) that swept not only Wall Street and Washington, but spilled over into the press.

What the latter, in particular, failed to bring to the nation’s attention was the looming anomaly of the day: the extent to which this heralded outbreak of private enterprise was being underwritten, directly and indirectly, by the taxpayer-in-the-street, without the latter receiving anything like the compensation a private suretor or guarantor would have demanded for the use of his money or signature. The upward redistribution of the national wealth during the decade has been copiously written about, and needs no recapitulation by me. What has not been adequately grasped, as a political fact, is the extent to which this redistribution was state-subsidized through the overclass’s rank and cynical exploitation of what I call “the Public Capital.”

This is a sublime irony, for if the underclass has been the victim of misguided public policies, the overclass has been to an even greater degree the beneficiary of public policies even more misguided, policies which manifestly enhanced the comparative advantage of those who were more than well enough advantaged to begin with.

I say this paradox needs to be grasped “as a political fact” because that is how it must understood before it can be dealt with fiscally, with any degree of economic realism. It is not a matter of statistics, percentiles and so on. These display the facts with the intention of concealing the truth. The truth-hiders prefer that such issues be reduced to statistics, because it has been proven over and over again that the way to eviscerate an issue is first to anaesthetize statistically. This book contains few statistics and no tables, charts and graphs. In our time, statistics have become the enemy of truth. They can be adduced to prove anything in connection with any issue or assertion, so in the end they prove nothing, although they have their obvious uses in mentally anaesthetizing an electorate which knows nothing and thus can be made to believe anything.

Take the question of the deficit, for example. Defenders of the Reaganomic faith argue that the deficit doesn’t matter, because even at $400 billion it is reasonably small relative to the Gross National Product. This is crap. What matters about any shortfall in revenues versus outlays is not its relative statistical heft, but how that shortfall is financed. To dip into accumulated cash savings, or piled-up past profits is one thing; to borrow to meet the shortfall, as we have been doing for the last dozen years, is quite another.

If there is one immutable truth I have learned about finance, it is this: compound interest always wins. Today, interest on the debt piled up to financed the accumulated deficits accounts for roughly $300 billion annually, which is about the size of the deficit.

What matters about the deficit is just that. Financing it in ways politically and ideologically consistent with the spirit of the age has produced a Federal debt of $3-odd trillion. The longer this goes unpaid, the worse both the deficit (thanks to accrued interest) and the skewed upward redistribution of wealth become; more and more of the Federal income goes to bondholders, less and less to public services.

At some point, this simply cannot continue and a massive political and ideological shift occurs. A new spirit of a new age which demands that the debt be reduced on the backs of those who own it: paid off by expansion of taxation of capital, repudiated outright or inflated out of existence.

That the debt has risen as high as it has is generally laid at the feet of the government, but it was with the by-your-leave of the overclass, who were the principal beneficiaries of the explosion in public and (socialized) private borrowing.

I was vastly amused at the spectacle of so-called 1980s “private enterprise,” sucking away voraciously at the splendid lactations of the public teat and pausing between swallows to intone that we were living in a golden age of can-do private entrepreneurialism. I was dubious about the wisdom of using Public Capital to further enrich the already well-off. And I was flat






11/13/16 (2)…And then this….

NOTE: I’m pulling these from discrete files, so they may not match up exactly.


Chapter Four (not yet titled)

I live year-round in Bridgehampton, on the South Fork of Long Island, about a hundred miles from New York City. It is an old town, settled at the end of the seventeenth century by Englishmen who came down from New England. During the school year, Bridgehampton is the sort of place which on the surface at least George Bailey would have found congenial: Grovers Corners updated to 1992.

This part of the world used to be the center of a thriving truck-gardening industry, but in recent years that has withered away in the face of a real-estate boom (and the tendency of opportunistic localities to tax all land as prospectively residential). The Long Island potato, the local staple, is too moist for modern fast-food technologies; the land on which it was grown does better sprouting luxury second-homes for the wealthy stockbrokers and professional people from Manhattan who throng the town in the summer and on weekends in spring and autumn.

In Bridgerhampton, great wealth rubs shoulders with comparative – in some cases profound – indigence. Along the old turnpike which runs to the north, toward Sag Harbor and Peconic Bay, is a black settlement, people descended from migrant agricultural workers who arrived in these parts many decades ago, and in some cases from freed slaves who came here after the Civil War. The houses are small, hard-used, often ramshackle. Three or four miles due south, in the fields and along the dunes, are the monuments to the Wall Street boom of the Reagan era: big houses, often behemoths of 15,000 to 20,000 square feet with – in season – at least one Range Rover and a brace of German sedans parked outside.

The men of the Turnpike community work largely in landscaping and lawncare, seasonally, and in various public-sector jobs, the women clerk in local stores and clean houses. The subregional hospital five miles west in Southampton is a significant employer. Times are hard now, and jobs are scarce. We’re feeling ripples of the big city’s sociopathic sewage; dope use is up, as are drug-related crimes, mostly along “the Turnpike.”

The prospects of the people who live along “the ‘pike” are limited. Partly by opportunity, but also, it seems, by choice. Ten years ago, there probably weren’t a hundred Hispanics – immigrants from Central and South America – between Westhampton and Montauk Point, the thirty-odd mile stretch of which Bridgehampton sits in the middle. Today there must be a thousand. They are a presence; an entire aisle in the large supermarkets is devoted to Latin foods and condiments; Sunday mass in the area’s largest Catholic church is conducted in Spanish. Most importantly – and most interestingly – these people are working. They have taken over entire service sectors, from lawncare to housepainting.

They have gone right past the blacks. The economic growth that underwrote these jobs wasn’t imported from Guatemala, it was there for the taking.

So what is the answer? Racism? I don’t think so. Blacks down here have complained of being denied jobs for which I know for a fact they haven’t applied. White men I know say, with a mixture of sadness and curiosity, that black guys with whom they went to high school seem to have been swallowed up by the earth.

Even at the height of the building boom of the ’80s, few of the faces glimpsed at work on the million-dollar houses which sprouted like mushrooms, often four or five to a field where once rye or millet grew, were black. The volunteer fire department, in many small towns the living expression of local oligopoly, here composed mainly of farmers and artisans, is lilywhite. Once upon a time, its chief was black. What happened?

About three-quarters of mile west of my house stands the Bridgehampton School, grades three through twelve, elementary through high school. It is a small school – roughly 160 students. Ninety percent, as you might have gathered, are black. It is a paradigm for much that is wrong – as well as some things that give hope – about American public education today. The problem is not so much in the school itself – which is to say that the teachers are dedicated and good at what they do. I recently ran into the mother of one of the few recent local graduates – a white girl whose family sticks with the Bridgehampton School as a point of community principle – to go off to what most readers would consider a first-rate college, that is, a college where they would be happy to see their own children matriculate. I congratulated the mother, observing that Laura’s achievement showed what you could accomplish if you really stuck with it. “Oh,” I was told, “they have wonderful teachers there!” Which, come to think of it, is understandable. The school budget is so ample per student that it could cover tuition at the best private schools in the country.

In recent years, there has been agitation to close the school and disperse its students into the larger, more abundantly resourced public school systems of the townships which flank us. Local taxes, mainly paid by white houseowners, many of them part-time Bridgehamptonites, are high and rising. High in the absolute, and in term of results per school dollar: astronomical! Comparative test scores have been dismal, although improving. College acceptances are modest, but these are mostly poor kids from strtaitened families and a narrow culture for whom the prospect of college must be financially and socially terrifying.

The school has been kept open, however, by a combination of civic theory – the notion that every hamlet worth its salt should have its own school – and civic pride, enhanced by vigorous lobbying: by school officials and by the black community. The infighting has been tough, with charges of “racism” and ballot-box fiddling, not to mention questioning of personal motives, but the community has so far, by a thin margin, in spite of killer school taxes, elected to have its own school. Within the district, there are sixty children who might attend the Bridgehampton School but don’t. They’re enrolled at private or parochial schools, or the school systems of the adjoining districts. My son is one. Why?

Because the cultural values I see at work trouble me. I know a number of the black students in the school. They are nice kids, responsible kids who my wife and I trust without hesitation to take care of our little boy. Despite a growing drug problem out here, “my” black kids come from homes in which a powerful religious culture has so far kept them from crossing the threshold of temptation, namely the front door of the seedy dwelling a mile or so down the Turnpike rumored to be a “crack house.”

But they have given up. Or that’s what they’re telling me. Their white classmates, their best friends, taking the same courses in the same classrooms, graduate and go on to colleges famous for bending over backwards in search of qualified minority students. But these kids aren’t going to qualify, and don’t really seem to care. They’re starting to lose that “light of childhood in the eyes.” They are apathetic about school and apathetic students don’t make the kind of grades you have to have to move onward and upward. If I ask them how they would feel if Bridgehampton closed and they and their teachers were absorbed into the school systems of the adjoining towns, they shrug and mumble “I dunno.”

The fact is: they don’t see the point of school. Everybody knows the point of school, that if you study hard, you can go on to be something, but for these kids it’s just a tunnel with no light at the end. They look around, see their parents holding four jobs and barely making enough to get by, buying groceries with food stamps, unable to save up enough to afford any of those things – the equity in a small house, a new car, a trip somewhere, the basic attributes of the American dream, the symbols of the famous first rung on the ladder of opportunity. Tell these kids that an education is the most important visa in the passport of citizenship, and they’ll reply with downcast eyes and shrugs: “Maybe so, but we got turned away at the border.”

If that’s true, where are the Hispanic – or the Pakistani, or the Korean, or the Polish, or the Irish immigrants and “guest workers” getting their energy and resolve? Why are they getting the jobs that are obviously there for the doing by local workers – if they wished?

Money has a lot to do with it. They’re willing to work for less, and to accept the privations – families doubling up, workers sleeping six to a room – which go with such privations. Whatever they’re getting here, it’s obviously a hell of a lot better than that which they left behind. It’s also obvious that if there was a social safety net in Guatemala or Poznan, many jobs out this way would go unfilled.

These immigrants aren’t here for welfare, however, they’re here to work, to get paid cash money. Many of them are running on not much more than hope and optimism, which even in their most vaporous form are supposed to power the engine of the American Dream.

It seems to me that any social policy which claims to have the smallest realistic chance has to some degree to begin by erxtracting from the immigrant experience, past and present, those elements which can be incorporated in a policy, which aren’t simply aspects of human nature unreducible to reflective planning. I say this because it frankly seems to me that in the American underclass, wherever found, however ethnically constituted, we face nothing less than a class looking every bit as covetously at America as the meanest Central American peasant dreaming of El Norte.

The difference is that ours is homegrown. Which means that certain elements of that class, mainly the subsistence black population, feel none of the constraints of “strangerhood” typical of immigrants trying to accomodate themselves to the terms, language, forms and customs of the “public” society – outside the immediate home, that is – in which, by choice, they find themselves, and where jobs and opportunity are to be found – provided they can prove themselves to those in whose gift the jobs and opportunities lie. The “American,” native-born, underclass seems to feel it doesn’t have to prove itself, a delusion encouraged and exacerbated by idiotic, hyphen-festooned calls for cultural self-assertion, often expressed as “black nationalism.” Unless people can be persuaded to emigrate from that “nation” to mainstream America, on a basis not really different from any other immigrant group, there is no hope for them in the long term. I hasten to add that “no hope for them” does not mean “no hope for America.” No hope, perhaps, that it will ever be the ideal country envisioned by its greatest men, or by many of the rest of us, but no doubt that it will remain the best place on earth for the clever, ambitious and opportunistic to make money, and with that money to buy the insulation and protection which may be required. The “peace dividend” may in time come to be offset by a larger overall national police budget, but such is the price of no progress.

Much has been made of the increase in recent years of the black middle-class. Our propensity for elusive doublespeak on any matter of substance leads us to duck the plain fact of the matter: “growth of the black middle class” is a synonym in most cases for emigration pure and simple – from the black world to the white. “First the business suit, after that there’ll be plenty of time for the dashiki,” a young black woman was quoted in The New York Times a few years ago. When black people emigrate within American society, they tend to be castigated for “abandoning” (let us say) their “black roots,” which is nonsense – especially if by “black roots” is meant a know-nothing, illiterate, violent, “in yo’ face” rap-based urban anticulture.

The Bridgehampton kids are fortunate by comparison with their contemporaries in the inner cities, or those whose scant educational opportunities are being perverted by adults, often including their own parents, attempting to inject a politics of cultural fragmentation into the schools. But the ripples are spreading.

So what do we in the overclass do about it?

Obviously, we say, we have to start with the schools. Certainly the evidence supports this view. WE all know that public education in America is a mess. According to the economist Thomas Sowell, in 1972, 116,000 students scored 600 or better on the SAT tests; a decade later the number had dropped to 70,000; the 1992 figure will probably be unspeakable. And here are some numbers set forth in a letter to The Wall Street Journal. I submit they are more vital to the well-being of this country than any statistic on output or money supply produced by the Department of Commerce or the Federal Reserve:

“More than 36% of our fourth-graders can’t read. 40% of seventh-graders can’t read seventh-grade lessons written fourth- and fifth-grade levels. And 61% of 11th-graders can’t read and understand ninth-grade lessons written at sixth- and seventh-grade levels…(By comparison) Only three to four out of 100 of the 18 million men tested for military duty during World War II could not read. Seventeen out of 100 prospective recruits between ages 18 and 23 were rejected for illiteracy during the Korean War…Three million Americans over 25 could not read in 1930,1940 and 1950. Thirty million to 40 million American adults cannot make sense out of a printed page today.”

I take the point as made, so my purpose here is not to blow on further about the decline in education. A hundred-foot shelf of books on the education crisis exists: tens of thousands of pages – “endless eructations” one critic has called them – with very little in the way of practical problem-solving.

I think we have to go back to square one. Our aim ought to be to remake our schools the vital artery for emigration within American society: the place where values, skills and incentives are passed along to the young in ways that will stay with them and do them good in later life.

We have to be realistic, which means facing our schools problem in the context of America society as it is in 1992, not as it was in Norman Rockwell’s heyday. America today is selfish, consumerist, materialistic, confused and cynical. Not the sort of place where exhortation gets the job done. Our mass media see to it that we know all there is to know about each other, speaking broadly, and that presents problems.

Thanks largely to that ubiquitous and cost-effective babysitter, television, we raise our kids to be consumers, teaching them that having things is the essence of life, and that getting the money to buy those things with (or doing whatever it takes to get them) is what it’s all about. In what is perhaps the single most vivid example of the cynicism, the moral and intellectual corruption of the overclass, Whittle Communications, a company owned by a multimillionaire and two large multinational corporations, has introduced a program which proposes to bribe public and private schools (with gratis audiovisual equipment) to interface commercials with so-called “educational” or “informational” material.

This is the way it is. Simple logic dictates that we work within present realities. We must prove to the potential consumers of education, the children of this country, that education has a real economic value. The process should be organized so that while they’re going for the gold, certain values and habits will be encouraged to the point of actually taking hold.

To begin with, I propose that we pay children to learn. Not to go school: to learn. Think of it as “educational capitalism.”

The notion comes out of my own experience, goingh back to 1945, when my brother and I returned to New York to live with our father who had returned from four years’ service in the South Pacific. As an officer and now (again) an investment banker, he was used to looking for results. As a fervent capitalist, he had a powerful faith in economic incentives. Accordingly, he instituted a scheme whereby my brother and I would be rewarded for our grades with bonuses over and above our normal allowances. As I remember, an “A” on the monthly report card would earn a bonus of fifty cents, and a “B” was worth a quarter. Good money in those days. I suppose many American families operated under such a “plan” back in those more straightforward days.

So why not today? Good intentions have failed. Various educational mysticisms have failed. An educational bureaucracy has barnacled the breath out of most school systems. Here and there a single inspired educator makes good copy for “60 Minutes,” but systemwide improvement seems beyond all possibility. Anyone reading this could draw up their own bill of particulars.

Nor do I have much faith in the “market” solutions now being bandied about: voucher programs and the like. These will end up no better, I predict, than any other field in which the Federal government has created a second paper currency: what money that isn’t siphoned off by opportunism and graft will be spent at the wrong stage in the cycle, in the wrong way.

We pay for teaching, so why shouldn’t we pay for learning? For results, not potential. Instead of subsidizing school attendance, why not reward scholastic achievement?

It would have to be uniform, weight-for-age as they say in racing, which means a nationwide series of standard achievement tests. Not as credentials for college admission, but as checkpoints. Not like the examinations in France which create a narrow, elitist pyramid of the best and the brightest, but as pots of gold stationed at the bottom of a series of rainbows along the road top adulthood.

Achievement would produce real rewards. Financial rewards. Cash money.

As I see it, every student in a given class-level/age group in America, whether in the snottiest Manhattan private academy or a Milwaukee ghetto or a barrio in El Paso or Seattle’s Chinatown would take the examination: one set of questions, one set of answers, one absolute pass/fail grading standard and a testing process as untamperable as voice- and character-recognition technology can make it (it might be possible to devise a variation on current automatic voting machines).

And then suppose every student – regardless of tax bracket – who passed would be rewarded by a grateful nation with a limited cash bonus and an account in a national educational/family housing trust fund modelled on the Social Security system.

Failure would not be tainted with disgrace. Anyone who failed could try again – and again and again and again. The examinations would be administered at least semiannually. The rewards would be proportionately greatest at the early end. It is more important that all of the people be able to read a newspaper than a fraction of them be able to parse Kant.

Fourth-graders passing the exam would win, say, a $500 cash bonus and a non-transferable “Education/Family Housing Account” of up to, say, $15,000 – which is the equity in a very modest house. Rich kids and poor would receive equal cash rewards, which is what kids care about.

I know, I know: there’ll be cases where a seven-year old ghetto child’s money will be filched to buy crack for an older sibling, but this is a problem for local community and family intervention. What really counts is the ticket out of the ghetto in the form of the Education Account which could only be used, and would be so structured, to buy further schooling or housing.

Where and when spent would be up to the studentand his/her family. He or she might elect to spend it right away, to move to a better elementary school, or let it build up as a nest egg for secondary school or college.

Such a system might introduce achievement-based market choice to the educational process. Communities and private interests might choose to put in additional incentives. Finance school uniforms, for example, or add other fillips and blandishments. Teachers could be bonused on results, just as college football coaches are compensated on the basis of won-loss records. Schools which failed over any period to deliver would lose their students, be restructured – or burned down by angry parents.

The economics seem workable, especially at a time when entering school populations are declining. It is an approach which lends itself to limited, pilot-program testing. It addresses the problem in a direct fashion in tune with our commercial values. An honest dollar for honest work. Earned gratification. It lends itself to technology. Above all, it emphasizes productivity. We too often pay people for doing something regardless of how well they do it – and then we resent that. The leveraged buyout boom of the 1980s traded on this resentment, on the impatience of stockholders with overpaid, timeserving managements. Hostility to affirmative action is much the same. Writing about education, the conservative economist Thomas Sowell, a black man with no time for “victimist” thinking, has noted: “This whole issue (educational quotas) is part of a fundamental conflict between those who believe in rewarding productivity and those who believe in handing out rewards as ‘entitlements’ just for being around. Many people are poor because they were not born into circumstances that encouraged them to develop productive skills or attitudes. .. such children have a bleak future, unless they can be encouraged or required to develop basic skills as they grow up.” I think my plan offers the right sort of encouragement. A recent article in The Harvard Business Review baldly states that “managers and employees respond best to precise financial incentives.” Why not teachers and schoolchildren? Variations have been tried tentatively elsewhere, and the criticism has been predictable. Old hat and attitudinal. In an article in The American Scholar (Autumn 1990), provocatively entitled “White Guilt,” the sociologist Shelby Steele, every selectively bien-pensant white American’s favorite black pundit, makes the conventional objections: “Recently Pennsylvania State University launched a program which pays black students for improving their grades – a C to C+ average brings $550, and anything higher brings $1,100. Here is the sort of guilty kindness that kills. What kind of self-respect is a black student going to have as he or she reaches out to take $550 for C work when so many white students would be embarrassed by so average a performance?…What more Pavlovian system of conditioning blacks to dependency than shelling out cash for grades?”

I dsay: bullshit! I concede Professor Steele one point – why doesn’t Penn State pay every student who brings up his grades in a core curriculum – but he is also to some extent being disingenuous. It is well known that at Penn State – in particular – young black men who can run forty yards in less than five seconds while wearing full football gear, a performance no better than average by the norms of that “major,” receive considerably more than $550 and frequently do not graduate. Admittedly, tens of thousands of white fans do not fill a stadium on autumn Saturdays to watch black undergraduates make C+ grade point averages, and perhaps that is the substance of the distinction, but Steele is really begging the question. Many young black people, starting in childhood, have only one economic choice – and it is frighteningly simple: stay in school and see what happens, or drop out and deal drugs. There is a financial certitude to the latter course which can only be met by money on the other side. Certainly this is recognized by Dartmouth Professor Noel Perrin, who has proposed that the nation pay a bonus to potential young mothers for not getting pregnant. Cash now or welfare later – is what the professor is saying. Be truly cost-effective: give the money directly to the people who are the problem, not to those charged with keeping it under control.

In Georgia, Rep. Newt Gingrich has sponsored a pilot program called Earning by Learning Reading. Approximately two hundred “at risk” third- and fourth-graders took part. The Wall Street Journal invited one child to write about her experience: “Last summer I read 83 books. I earned $166.00, $2 for every book…I went to the school library and found different books. The books were fun…I picked the books out all by myself. My mom helped a little bit by aying, ‘Would you like all these books?’…I spent a lot of time this summer reading. If I hadn’t read the books, I would have been bored…The awards ceremony was in the gym at my school. All the kids (sic) families were there. The awards ceremony, my mother, my father, and my sister and my brother were there. All the kids were very happy to get their money…With the money I earned I bought some new clothes and a lot of Barbie stuff. The summer reading program is over. I am still reading. I am still reading because it is fun. I think it is a good idea to give kids money for reading books. it showed me reading was fun. It also helped bring my mom and I closer together. We had fun reading together.”

It’s easy to be cynical about this letter – to mutter “put-up job,” “Gingrichian claptrap,” etc. etc – but suppose we take it at face value. The response it evoked was interesting. In one case, trite. “It doesn’t seem right for children to get paid to read,” wrote this reader. “It sounds to me like a bribe.” And what is the mortgage-interest deduction, pray tell, but a bribe to buy a house?   Another letter – from a girl who participated in a variant program – was more interesting for what it said about emoluments: “When each participant finishes five books he or she is given a coupon as an incentive from a local business…The highest reader from each library receives a gift certificate of $5 for a bookstore. The highest reader from the county then receives a grand prize such as a cruise on the river…Even though we weren’t offered money as an incentive, kids were still motivated to participate.”

All the theoretical objections can be met so long – I suspect – as we simply disregard the outcry which will be raised by educational bureaucrats. We must simply look past them and through them.

Antagonism will then ultimately boil down to the issue of cost. Well, what would such a program cost? I don’t know and I don’t care. Economists and demographers will extrapolate birth rates and school populations, as well as speed and breadth of implementation, and pronounce the scheme unfeasible. Sociologists anbd “educationalists” will condemn the plan as contaminative. These same economists, demographers, sociologists and educationalists would gave declared the New Deal and the GI Bill to be statistically and sociologically impossible and let those great initiatives die stillborn.

The inescapable conclusion must be that the fiscal reckoning will be insignificant compared to the real costs, which are both social and economic, of the situation as it stands today. Here again, Thomas Jefferson deserves to be heard: “Preach, my dear sir, a crusade against ignorance; establish and improve the law for educating the common people. Let our countrymen know, that the people alone can protect us against these evils, and that the tax which will be paid for this purpose, is not more than the thousandth part of what will be paid…if we leave the people in ignorance.”

I call my scheme “educational capitalism,” but I also think of it as “entrepreneurial education.” At the end of the day, it seems only fair that a society which provides a free lunch for its best-advantaged citizens demand that its least-advantaged sing for their supper. But let us at least recompense them fairly, even generously, if they hit the right notes!

By any name, the big winners will be the kids that actually learn, the teachers that actually teach, the administrators who do administer effectively. The children and their families who go for the gold may along the way acquire something that no cash prize on earth can ever properly represent. And so may the rest of us. We may even begin to win our country back.

A system of earned tangible rewards might render palatable other innovations. To wage war effectively against the worst angels of our nature must involve a degree of regimentation unseen on – that is to say, undemanded of – the home front since 1953, and that regimentation should begin at the beginning of the social journey. Reagan-Milken-Bush Capitalism had placed much stress on “the meritocratic society,” and “the new meritocracy.” While a careful study of the role of the Public Capital in all this gives rise to second thought with respect to some of the more effusive claims for the socioeconomic gains of the fat years, let’s take as a given that a meritocratic society is a generally worthy objective.

A pure meritocracy is probably unattainable – even if it were socially and culturally desirable, which I, along with other observers like Nicholas Lemann, don’t think it is. A pristine meritocracy rates ambition too highly, and overrewards the tricks and ploys (the hegemony of the MBA degree, for example) which ambition, realized, invents to consolidate and perpetuate its gains anbd its type. Our goal is a better society, even at the cost of some objectivity and efficiency.

Not surprisingly, since it is a war I am writing about, I would urge that we take as a model the U.S. military, which around 1980 set about to repair, with a vengeance, the various kinds of damage inflicted by Vietnam on its visible and invisible infrastructure. The results seem amply borne out by the American military’s performance, on every score, from fighting efficiency to the public display of morale and comradeship, in the Gulf war.

The military approach has been persuasively outlined and analyzed by Charles Moskos (The New Republic, August 5, 1981) and I have no hesitation in passing along his excellent recapitulation pretty much as he wrote it, adding only my impression that what has proved effective in organizing and motivating a regiment of air cavalry seems equally applicable to getting a battalion-strength of schoolchildren up and at ’em.

The key, writes Moskos, is “an unambiguous commitment to non-discrimination coupled with uncompromising standards of performance.” The same theory was expressed to me – somewhat differently – by the retired coach of a championship Texas football team which drew its players mostly from a nearby, fully-integrated

Air Force installation. “Everybody was treated white,” he told me, “no exceptions.”

I’d begin with uniforms, after the British fashion, or in the manner of certain American parochial schools. Every school or district could design its own (Made in U.S.A., of course), which might encourage a preadolescent version of regimental pride. If boys and girls see each other dressed the same from the shoetops up, it helps makes many of life’s other playing fields look level, too. The old Cub Scout/Boy Scout (Brownie/Girl Scout) achievement-based regalia of merit badges, sashes and the like might also be taken as a model. We live in a purse-proud, house-proud, possession-proud world which unambiguously wears its material attainments on its sleeve (where the heart used to be) – so why not let our children do the same?

Uniforms may be levelling, but only as a starting-point. It’s not the khaki that counts after a while, but the insigna on the collar, the merit badges on the bosom, which count in the end. The only guaranteed levelness must be that of the track or playing field. After that, it is up to the individual to fly across that ground as fleetly as he can, to soar from it as high as she is able.

The military works this way. As Moskos breaks it down, there are four critical elements: 1) a level playing field (insured by uniform basic training along with elementary remedial programs); 2) no discrimination: that is to say, an absolute prohibition against any institutional (on-duty, in-uniform) expression of racism; 3) acceptance of hierarchy (“earned inequality”); 4) goals, not quotas (in the military, to some extent reflective of demographics, which means, writes Moskos, that everyone promoted in grade is “fully-qualified if not always the best-qualified,” a forgivable imperfection, given the objective.)

Why, in a time of obvious crisis, wouldn’t these principles apply to educatio – adjusted, of course, for the age of the subjects?

Modifying the process is only the beginning of the task.

We have to reexamine and redfine what education – at different levels – is supposed to supply in terms of the larger and longer interests of the nation. Here, I emphasize, I am not talking about curriculum alone – in the spirit of the followers of Allan Bloom who have taken his generally meritorous advocacy of a “canon” in higher education to the point where the claim seems to be made that a good dose of Plato, broadly administered, will set everything to rights. I like the idea of a canon – in “lower education” I think it should be mandatory – so long as that canon is defined, along with the educational system which disseminates it, in terms of what kind of citizen this country needs and wants to produce. We used to teach something call “Civics,” the point of which was to instill an awareness of tradition and an ongoing commitment to that tradition’s best lessons which goes by the name of citizenship.

But the content of any education is just words between experts unless it gets learned. Learned, not taught. A solid curriculum attracts, indeed produces solid teachers and creditable graduates. The best public and private schools in the country, the Boston Latins and New Triers, the Exeters and Andovers, have maintained their primacy through several generations of faculties. No one who taught either the Class of ’40 (or my class) was still active – few were still alive – when I spoke on that June evening at Exeter, but I am certain that no one in the room believed that the school wasn’t every bit as good as it had ever been.

The strength of these schools is not so much in their personnel, therefore, but in their enabling ideas, what you might call their moral and intellectual charters, which define what their students are supposed to receive and take away; in these ideas are the schools’ greatness, provided they are diligently and sometimes creatively maintained decade after decade after decade in a true expression of fiduciary responsibility; America’s greatness is its idea, which, if properly expressed institutionally and sedulously maintained, should ensure a decent start in life for all who live within its borders and a better overall life for the nation.

What then should a core curriculum for younger students contain? I think that question is best answered by rephrasing it: what problems in American life today should an “American” standard education confront. The conventional wisdom would doubtless respond, “Illiteracy, Innumeracy,” but I think that is putting the cart before the horse. To be sure, it is essential that our children be able to read and count, without those aptitudes there is no such thing as “education,” but those aptitudes can quickly atrophy without direction.

The great problem in America today is politicization. There seems to be no element of life without a rawly sensitive political dimension: race, gender, ethnicity, cultural bias, language, age, tax bracket, religion. We have become like a kaleidoscope without the enclosing tube: a patternless scatter of bits of brilliant glass. Fragmented, quarrelsome, litigious. Everyone with his own set of rules, which means there are no rules. To many Americans of a certain age, I suspect this “particle-ization” is nothing less than amazing, but one of my few respondents from the Class of ’40 sent along the following quotation (said to be) from Theodore Roosevelt, a member of the overclass if ever there was:

“We of America form a new nationality. We are by blood, and we ought to be by feeling, akin to but distinct from every nationality of Europe. If our various constituent strains endeavor to keep themselves separate from the rest of their fellow-countrymen by the use of hyphens, they are doing all in their power to prevent themselves and ourselves from ever becoming a real nationality at all.”

We are the only nation in the world – although England seems to be learning from our example – to conduct our collective national life in this fashion, and it has not worked to our advantage. Our competition, Asiatic or European, is almost without exception blessed with a degree of cultural and historical homogeneity that we lack – or that we have discarded. Consider the observations of a young Boston Globe reporter, Tom Ashbrook, who won the 1989 Livingston Prize for “A View from the East,” an extended look at his country by an American returning after several years in the Orient:

“Asian kids learn their national mission – push up, push ahead, join in, put your shoulder to the wheel, let’s succeed – with their mother’s milk. American children now seem never to be told…A failure to pass on principles and give guidance looks like simple irresponsibility. Against the Asian model of common assumptions and pervasive atmospheric ‘lessons’ for the young about responsibility, I feel suddenly very much alone in instructing my children. Alone and somehow abandoned.”

The principle of cultural homogeneity is not new to America. In fact, it was the essence of America, when it was known as the theory of “the melting pot.” A glorious demographic stew in which the most disparate elements merged and mingled in a single vessel to make the tastiest dish the world have ever known.

The key, the critical ingredient in that concoction was the English language. And why not? Every single document and parable which defines an amplifies the idea of America was first set down in English. The language in which the citizen’s rights, responsibilities and possibilities was expressed was English. It was the sky in which were suspended all our fixed stars, the Declaration, the Bill of Rights, the Federalist, “the American Scholar,” the Emancipation Proclamation, Brown vs. Board of Education, Roe v. Wade, all our abiding utterances and anecdotes from the Pledge of Allegiance to George Washington and the Cherry Tree. It is also the language of tracts and contracts and instructional manuals; orally, it should be the common ground – every reader will have his own telephone horror story – where individuals from entirely different backgrounds can communicate in a manner which transacts their business efficiently, expeditiously and agreeably. English is the language in which we conduct our commercial and civic business. Consider the international air-control system, which operates in English; just imagine if everyone piloting a plane insisted on his own language for communicating his intentions: the skies would be full of falling aircraft and the airports would scrapyards. We are seeing the equivalent of this in American society and it is time it ended.

As the heart of curricular reform, therefore, I would propose a set standard performance examination in English to be offered at, say, four different levels during the primary, elementary and high-school years, which would mean an exam about every three years. In the course of an early draft of this essay, I was pleased to read (in Newsday, November 11, 1990) that “a federal panel (has) proposed the nation’s first official performance standards in mathematics, along with tests to measure math skills among students in grades 4, 8 and 12.”

With due respect to the proponents of numeracy, I suspect their advocacy is based more on a concern that U.S. education yield graduates capable of engineering a better space module or high-definition TV than their Japanese or German counterparts, but not necessarily a better country, which I believe to be the larger issue. Mathematics is necessary, and standard performance examinations should certainly be a prong of the thrust, but the teaching of English can also involve the teaching of values through stories, as well as give a grounding in American History and – by implication – in the American Idea. We do well to retain in our memories Lincoln’s famous statement in his Independence Hall (Philadelphia) speech of 1861: “I have never had a feeling politically that did not spring from the sentiments embodied in the Declaration of Independence.”

A sense of right and wrong works best and lingers longest if imparted early in a readily grasped form like Parson Weems’ tale of George Washington and the cherry tree. Every religion in the history of mankind has understood this. I am aware that right and wrong are concepts which efficient marketeers tend to disparage as mere concomitants of expediency – as in “I’m honest, because it’s good business to be honest.” The evidence, however, appears to contradict this thinking. Professor Tom Tyler in his Why People Obey the Law (Yale, 1990), “found that a widespread feeling of moral obligation to obey the law was at the root of the belief in its legitimacy and that compliance was much more stronngly related to views of legitimacy than to assessment of the likelihoodbeing caught” (I quote from the Times Literary Supplement, December 14-20, 1990, p.1344). A month earlier, the august Harvard Business Review published a survey/study on commercial ethics which overwhelmingly indicated that ethical business conduct stems from powerful convictions about right and wrong and not pecuniary pragmatism.

Language used to be the principal medium of acculturation. Recently I picked up a copy of A Bintel Brief, a selection from sixty years of letters to Manhattan’s The Jewish Daily Forward, with a touching foreward by Harry Golden, a North Carolina newspaperman famous in his day (and the author of several bestsellers):

“One of the earliest and continuing processes in ghetto life was the hurry up to be assimilated,” wrote Golden (at a time (1971) before “assimilation” was a “politically incorrect” term). “The kids insisted on speaking English to their parents and tried to get the old man to trim his beard in the style of Ulysses S.Grant, or to shave it off altogether.” One shudders to think how this would be met by proponents of Black Pride, either linguistically or tonsorially.

So we start with English. English read, English written, English spoken. Based on texts and lessons which teach about America, starting – for the youngest children – with its parables: the first Thanksgiving and such. The object would be to impart a sense of our country as part of the larger process of learning to read and write.

What the standards would be – namely, the expected levels of written, visual and oral literacy at each examination level – would be established by a Federally-funded panel of eleven educators, five from the strictly private sector, four from the public, and two from the parochial and other religious. These would be chosen by lot – let the “Education President” draw the names – from nominations put forward by the deans and heads of department of several hundred educational institutions, including school systems having heavy inner-city concentrations, with proven records of educational success. These eleven good men (and women) and true would be charged with setting down what a six-year old should be able to read – both visually and out loud – and write. They would also prescribe a canonical core of basic texts and books for which examinees would be held accountable. Every American child should know the story of Paul Revere, for example, or Jackie Robinson: the most basic, brightly-colored building blocks of American mythology.   The canon would be apolitical and colorblind. Which is also to say that it would not be “politically correct” – or perhaps it is closer to my intent to say that the material would not be “politically corrected.” In the very early years, of course, this would be less of a problem; at that point, the objective would be to teach young children to read with understanding and to express themselves in a manner that can be understood. Establishing a common ground, free of the weeds, stumps and overgrowth of politicization.

There must be a standard English in use – making the usual allowances. If people wish to speak Spanish, or “Black English” or Yiddish at home or in special, circumscribed situations, fine. But there must be a common denominator in which our interactive public life is expressed – and only English qualifies.

A core curriculum, distributed over the school years to match conceptual complexity to appropriate grade level, would also incorporate a grounding in mathematics – the numeracy statistics are as awful as those on literacy! – some History, some of what we used to call “Civics”, Science, Geography and above all some Economics – possibly beginning with the childrens book author Richard Scarry’s “child’s garden of capitalism,” which my four-year-old finds both fascinating and understandable. One of the paradoxes of American intellectual life – I went through this myself – is that otherwise educated young men and women inevitably enter schools and colleges which are monuments to the fruits of capitalism, to find themselves harangued off the bat by disenchanted but tenured pedants on the evils or irrelevance of the profit system, while the young people themselves have no objective idea of what “the profit system” is about or how it works!

The objective would be a curriculum to ensure that by, say, the age of five or six, every American child could read and write a basic level of English; that by, ten or eleven, that child would have a rudimentary grasp of what the world is like, will be able (and want) to read a newspaper; that by the end of High School (twelfth grade), that child would have an understanding of what America is about, how it has evolved, what he or she can expect of it and what it will expect of him or her. By that point, let us hope, some vocational choice, some sense of personal possibility, will have begun to be clear.

This is what, were I king, American public and private schools would universally teach. Popular contemporary educational subsets, essentially bogus “disciplines” having little other purpose than to instil an agenda-ridden tribal or subgroup pride, would be left to the home or elsewhere, they would be checked at the schoolhouse door.

And there I leave the question of the content of education. There would be no prescribed teaching methodologies, no official pedagogy. Just the results: the money in the pocket, the education/housing trust account – the end by which the means could be judged.



11/13/16….Next Chapter of “The Overclass”…..


The American Overclass II: From “Noblesse Oblige” to “Argent Excuse.”


In the immediate wake of the 1992 Los Angeles riots, there was considerable public wringing of soft, white hands and rending of pinstriped garments.

“(We business leaders) deserve to be criticized severely, because we have given up the moral high ground to the liberals (in the fight against poverty,” proclaimed Joseph L. Jacobs, chairman of Jacobs Engineering Group in Pasadena, the closest there is in Southern California to an old-style blue- and silk-stocking enclave.

Jacobs’ remarks were echoed by other business and financial leaders. “I don’t think (our neglect of the poor) is a conscious meanness,” observed an officer of the investment firm Bear, Stearns & Co., “I think it’s just bad leadership.”

Well, perhaps, but on the basis of a lifetime’s observation of the overclass, especially in its Wall Street incarnation, I think we’re dealing with more than mere moral or political absentmindedness. To a great degree, we’re faced with people who simply don’t know any better – which is ironic, given their aristocratic pretensions in the superficialities of existence. The blame here must be laid squarely at the door of a society which fails to instruct those whom it elevates.

But ours is not really a case of Horatio Alger acquiring fine manners. It has not been generally noticed, but a good many of the crassest, greenmailing titans of the Reagan/Milken/Bush financial Ozymandiate were upper- or upper-middle class by anyone’s standards except, perhaps, their first wives’. Most were graduates of Ivy League universities: Penn/Wharton in particular, but also Harvard, Yale, Princeton, Columbia and the rest.

In these patrician temples of purported moral and intellectual virtue, the flame seems at best to have been carelessly tended or -to be more charitable – was difficult to keep alight in the face of the 80s. In 1989, for example, over half the graduating class at Yale signed up to interview Goldman, Sachs. So it goes, when the bes and the brightst yield to the wost and the wiliest.

In The Work of Nations (1991), the political economist Robert Reich denounces the “secession” of the “symbolic analysts,” his term for the professional and financial overclass. These are people who are economically insulated from the travails of life and have no need of the support services society provides, certainly not to the degree that they see society reducing their comparative advantage through the taxes it requires to provide these support services to others.

It is constantly asserted, not without justice, that the provision of such services by government is inequitable, inefficient and unproductive. The corollary is that the use of overclass tax dollars for such hopeless purposes amounts to outright embezzlement by politicians on behalf of the undeserving, indolent and (may I add) unvoting poor. Progressive taxation is condemned as “redistributive.” Advocacy of progressive taxation is damned as a “politics of envy.”

The assertion by the overclass of such opinions has been exponentiated by the collapse of the totalitarian socialist regimes of Eastern and Central Europe, which has eliminated the need for a powerful, wealth-protecting Federal defense establishment – notwithstanding that common sense would argue that the plumes of smoke rising above the Los Angeles Basin, and not the Don or the Vistula are more threatening.

No longer tied umbilically to the collective common weal, financially “loose upon society,” as the philosopher Robert Nisbet puts it, the overclass’s sense of its larger obligations has shrivelled, at least if its behavior in recent years is any realistic earnest of the condition of its public spirit. “Noblesse Oblige” (High Station Obligates) has been replaced as a guiding principle of overclass societal values by “Argent Excuse” (Money Exempts).

Reich properly deplores the “secession” which has resulted. Unfortunately, his only antidote – perhaps because he is a member of the class – is to invoke the doctrine of “self-interest properly understood” noted by Tocqueville: “…in the end one comes to believe that one sees that by serving his fellows man serves himself and that doing good is to his private advantage…American moralists do not pretend that one must sacrifice for his fellows because it is a fine thing to do so. But they boldly assert that such sacrifice is as necessary for the man who makes it as for the beneficiaries…It gives Americans pleasure to point out how an enlightened self-love continually leads them to help one another and disposes them freely to give part of their time and wealth for the good of the state…Every American has the sense to sacrifice some of his private interests to save the rest. We (Europeans) want to keep, and often lose, the lot.” (Democracy in America, Volume II, part II, Ch. 8)

While this may have been true of the calloused hands welding B-17s together in 1942, there is little evidence it applies to the manicured fingers tap-tap-tapping on Wall Street computer keyboards fifty years later.

It was in connection with Wall Street that I found myself forced to think hard about this issue of overclass “secession,” five years before Reich’s book appeared. In the summer of 1986, in the wake of the apprehension of Dennis Levine for insider trading, Litton Industries, an investment banking client of Levine’s former firm Shearson Lehman Brothers, brought suit against Shearson Lehman, alleging that it had been forced to overpay for an acquisition as a consequence of Levine’s insider trading. Among other particulars, Litton charged Shearson Lehman with a breach of fiduciary responsibility.

Lehman and Litton were family to me. My father had helped Litton founder “Tex” Thornton get the company off the ground; he had served on its board from 1958 right up to his death in 1977. During my time at Lehman Brothers, I had now and then been involved with the Litton relationship. In 1970, it had been my misfortune to carry back to One William Street the bad news that LIT’s unprecedented string of one hundred fifty-odd consecutive quarters of increased earnings per share, the commercial equivalent of Joe DiMaggio’s 56-game hitting streak, had ended. At long last, every last accounting ruse had been deployed, every hidden reserve exhausted, and disclosure could no longer be postponed. Litton would have to confirm what the tickertape (if not the company) had been saying for six months, during which the stock had lost almost half its value and report decreased quarter-to-quarter profits.

Wall Street does not take such breaches of faith lightly. It would take Litton almost a decade, and a brand new market cycle, to regain its standing with the investment community.

In my father’s house, Tex Thornton had been God and Litton could do no wrong. Now – over a decade and a half later – with both Tex Thornton and Joe Thomas sketching out terrific new deals on whatever Heaven uses for cocktail napkins, to read of bad blood between Lehman and Litton was saddening.

Not long after the account of Litton’s suit appeared, I was invited to contribute an article on a subject of my own choosing to a special “Business” supplement of The New York Times. This was a semiannual promotional fold-in cooked up by the paper to siphon off some of the vast sums of money which Wall Street was then willing to spend on self-congratulation. Well-known business journalists were invited to contribute articles on a variety of subjects. The few that could be called “negative” followed the tried and true formula of “hard-hitting” business journalism: pick out those who are tumbling precipitously down the chute from success to failure, preferably those who have already ben indicted, and give them an extra kick in the shins as they fall past.

With Litton-Levine fresh in my mind, I proposed (and submittd) an essay on the collapse of fiduciary responsibility. Not for the first time, I found mysellf out of step with the times and The Times. The piece was rejected, with the by now familiar litany, “We love it, but it’s just not right for what we’re doing.”

In the course of working on this book, I took it out and reread it. It was written when the Milken music was at its maddest, just two months before Boesky went down and took the rat-infested ship with him. Six years later, I find it still on the money. It has never been published, so I see no harm in printing it here for the first time exactly as I submitted it in the early autumn of 1986.



“Whose Brother, Whose Keeper: The Collapse of the Fiduciary Ideal”


At the the end of August, Litton Industries sued Shearson Lehman Brothers, alleging that, as a consequence of the insider trading activities of Dennis Levine, at that time a Shearson Lehman managing director, Litton had been obliged to up the ante in its acquisition of Itek Corporation by as much as $30 million.

There is a sad irony in the very fact of Litton bringing suit against Shearson Lehman, since without Lehman Brothers, Litton might well never have existed. It was Lehman Brothers that just about thirty years ago showed the confidence and raised the money which translated a dream of the late Tex Thornton’s into a business reality that over time became a multimillion dollar corporation. To people with long memories, the Litton-Lehman-Levine imbroglio seems a singularly shabby way for a generation-long partnership so rich in mutual accomplishment and profit to go whimpering off into the dreary sunset of dead deals and busted relationships.

Litton’s suit argues (correctly, I think) that in matters of this kind institutional and individual morality are fungible, one and indivisible, and that Lehman and Levine cannot and should not be held separably accountable or excusable. It asserts the existence of a confidential fiduciary relationship between an investment banking house (and its employees) and a client (individual or corporate) with respect to the former’s knowledge of certain kinds of information.

The operative word is “fiduciary,” defined by one popular dictionary as “…a person who holds something in trust for another…” A secondary definition is: “…Valuable only because of public confidence and support…”

The word derives from the Latin fidere, “to trust,” whence cometh fides which means both “trust” and “faith.” It is a word that can with justice be used both narrowly and broadly, as suggested by the dictionary definitions quoted above. On one level, therefore, “fiduciary” is a strictly legal term redolent of ribboned trust-deeds and spare men in pince-nez, of precisely defined measures of obligation and liability. On another, which seems perhaps more to the point, it resonates a general sense of ethical and moral responsibility, of looking out for the interests of others, which transcends the cramped work of lawyers.

It is in this context that the word trips from the lips of even the hardiest proponents of market capitalism to describe the very essence of what makes the markets work. Men whose violent unsentimental wheelings and dealings in the takeover\greenmail line suggest they go off to work in jackboots turn more righteous than Cotton Mather when excoriating “abuse of fiduciary responsibility,” an abuse exclusively discovered among the managements of those corporations they have targeted for financial demolition. It is thus well to remember -if only as a balancing gloss on the public utterances of defenders of the faith like T. Boone Pickens – that altruism invariably contains a rich dose of self-interest, generally in direct proportion to the self-righteousness with which it is enunciated.

Nevertheless, when we are so unremittingly reminded by scalliwags and innocents alike that our markets run on confidence and trust, there is surely something to be said for the assumption – as there is for the notion that it is the responsibility of those with influence and access to sustain and perpetuate certain standards for the benefit of all. Franklin’s observation, apropos of the signing of the Declaration of Independence, that “we must all hang together, or, most assuredly, we shall hang separately,” seems as relevant to Wall Street in 1986 as it did to the Continental Congress two centuries earlier.

Financial markets have become the heart and soul of our postindustrial capitalism, the dominant form of economic activity. The viability and vitality of these markets depends to a large extent on public confidence. This is true despite the fact that the markets and the credit system have become so technologically complex, so heavily institutionalized, and so tilted toward the big player (“program trading” for example is simply not available to the $5000 portfolio) as to virtually exclude the small investor from the juciest action and the quickest buck. Nevertheless, today’s oligopolistic, insider-driven markets rally should not trifle as they do with the small investor’s faith in the system, if only for one reason: beat him about the head too often and too callously, and the small investor will mobilize what these markets fear most: Washington.

Public confidence, then, is everyone’s bridge to Golconda; it may be paved with regulation, but what holds it up, like the cables of the George Washington Bridge, is a web of intertwined understandings and assumptions, some legally codified, most not, of which the concept of fiduciary responsibility is a central strand.

It is a strand that these days looks frayed to me, perhaps dangerously so. It’s been around so long, it easily falls into disrepair from neglect or being taken for granted; what is worse, however, is that today – for reasons that are as understandable as they are unacceptable – busy men with deals to get on with seem to find inconvenient, or, in the argot of the Chicago School, “inefficient,” to pause and consider the implications of protracted abuse: to do so can trip one up in the rush for the big bucks and is therefore to be dispensed with. As an investor, this concerns me, and even more so as a paterfamilias whose children’s economic futures are, like every American child’s, now bound up with the integrity of mushrooming financial markets which seem to have taken over our economy and everything else.

The Litton-Lehman-Levine matter brings the issue to the forefront, but this is only one form of fiduciary responsibility easily susceptible to being breached in fact or in spirit. Therre is, for example, the complicated relationship between the directors of a corporation, its officers (often overlapping) and its stockholders, not to mention such other constituencies of interest

as employees and communities and customers. Or the ethical puzzle created when the legal fiduciaries of a body of assets, the trustees of a pension fund, say, and the money managers those trustees appoint, generally with de facto discretionary powers, to deploy a corpus of investible funds to greatest advantage and profit. But whose advantage and whose profit? A case can be made that as long as Federal Insurance exists for depositors in banks and thrift institutions, or private pension plans, the directors or trustees of such institutions stand in a fiduciary capacity to every American taxpayer.

Put as simply and broadly as possible, the fiduciary equation breaks into three parts: there is treasure; there are the people who own it; and, finally, there are the fiduciaries hired by the owners to watch over it, to make it grow in value, and to see that it is not appropriated or sold for less than a fair price.

The “treasure” in question can be anything from a corporation’s assets to a sum of money in a pension or trust fund. As in love, proximity is everything. Because there is so much money involved, not to mention any number of practical considerations, it is not surprising that an entire body of law, regulation and habit has grown up which renders it virtually impossible for the owners of the treasure to have more than an indirect hand in its stewardship. They are left to rely on trust, and that, as the financial pages suggest almost daily, is turning out to be pretty thin gruel.

Look at some recent examples.

On the corporate front, the Metromedia buyout seems especially egregious. The stockholders followed the advice of the directors, who accepted the imprimatur of two investment banking firms hired to vet the offer for “fairness” and sold the cimpany to its incumbent management for $40 a share. Within two years, the new owners\old management had realized $250 a share.

The bottom line on the Metromedia buyout was that the company’s stockholders left $2 billion “on the table,” as the gunslingers say. How could that happen? Could it be that the management knew something the stockholders didn’t? What sort of figures were shown to the bank group that put up the $1.2 billion to finance the buyout? Were these the same asset valuations and cash value projections that the stockholders had been shown? Who was watching out for whose interest?

Only the insiders to the transaction can truly say, and they don’t appear to be talking. But the tangled fiduciary web is much wider than just an inferred insider-outsider conflict of interest. Of the $2 billion of potential value foregone by Metromedia’s stockholders, it is fair to assume that some substantial part was “spent” by institutional stockholders – pension funds, insurance companies, trust departments – acting on behalf of thousands of individuals. What prompted pools of money presumably managed by smart, informed investment professionals to take this kind of a deal? Ask a dozen money managers and to a man they will assert “fiduciary responsibility,” namely an obligation to take the bird in the hand rather than the flock in the bush.

But must this be so? Isn’t there another answer, to wit: with money managers’ fees calculated on the basis of quarterly performance figures, won’t they jump at anything that will produce a profit for purposes of calculating the next quarter’s compensation base? Is, then, the “prudent man” he who takes $40 for assets which overnight will become worth six times that figure? He is, provided a great and famous investment banking firm hired on behalf of the stockholders will meditate over the entrails and pray over the ashes and opine that the transaction is just and fair.

Firms willing to do this for a handsome fee are not hard to find. The great names of Wall Street are regarded as avatars of rectitude, paragons of probity, staunch, incorruptible, world without end, amen. These firms are paid great sums for putting their consoling judiciousness on display in “fairness letters.” Indeed, a great investment banking name on a prospectus has long been regarded by investors as a surety for value and dependability. Yet even these vessels of trust are showing cracks. Consider the interesting sequence of events in which Bear, Stearns figured as principal. One: in 1985, it established a public market for its own shares through an offering; Two: the stock having flourished in the aftermarket, a second offering was made in early 1986, in which a number of Bear, Stearns partners cashed; Three: with the ink hardly dry on the checks written by investors to pay for these shares, Bear, Stearns announced that earnings during the current quarter were off 50%; Four: hard on the heels of that disclosure, with investors reeling, Bear, Stearns announced that the firm’s compensation/bonus formula had operated so as to produce embarassingly large bonuses for top executives. Something is out of whack.

The so-called “junk bond” market seems particularly rife with fiduciary anomalies, not the least of which is that, thanks to its evasive handling of several issues of low-rated, high-yield debt for beleaguered People’s Express, it may be Morgan, Stanley & Co., the most aristocratic of all Wall Street names, who will finally legitimize the “junk” in “junk bond.” Not that Drexel Burnham, the inventor of the genre, is above reproach. Hired to produce a financial restructuring for Western Union, it now finds itself appraising an offer made by an investment firm in which certain key Drexel Burnham partners are substantial shareholders.

Perhaps Lewis Carroll could rationalize this world in which everyone seems to be wearing and profiting from several different hats. Tweedledum and Tweedledee might make sense of the transaction in which Citibank, as trustee for various Martin Marietta pension and employee benefit plans, tendered the Martin Marietta stock held by those plans to Bendix in the latter’s abortive 1984 hostile bid for the Maryland defense contractor. It is conceivable that a Bendix victory might have cost the jobs of some of the very employees covered in the pension plans. In that case, could Citibank be said to have acted in the best interest of those for whom it served as fiduciary?

These are all knotty questions; indeed, it is their very knottiness which makes them both a picnic for lawyers and a tangled thicket in which all sorts of vermin can flourish beyond the reach of winnowing predators. Something clearly needs to be done, from ensuring that stockholders receive a fair price relative to actual (not necessarily stock market) values in a sellout to seeing that trust and depositary assets aren’t overly exposed. There is every reason to believe that the present mania for looting pension funds to finance corporate buybacks and buyouts is facilitated by the substitution of annuities jerrybuilt on junk bond portfolios. This is precisely the sort of chain letter structure likely to produce the financial implosion which an emerging consensus believes the next financial crisis will be – if it comes.

Two types of solution suggest themselves. In the first place, life should be msde either less risky or exponentially more profitable for fiduciaries. A director or trustee today is looking at rewards which are miniscule by comparison with his exposure. Then there are the “fiduciaries by proxy,” the hired wheel-greasers, backbone-stiffeners, grey eminences, advisers/experts. money managers and investment bankers should be put on a deferred basis with respect to their fees, earning them out only as time proves them correct on one-shot decisions. If Metromedia proves to be worth $250 within months of its sale at $40, no money manager should be paid a nickel for selling it out, no matter how good it made that particular quarter look.

Management should be obliged to be more forthcoming with what it knows, especially when an insider LBO is on the table. Management knows what analysts can only guess at. They know the real whats, whys and hows of present and future cash flow. They know what the assets are worth in real life, which is not usually reflected by the balance sheet. They know what can be done to pull cash out of a business without impairing it competitively. Perhaps even more than a given corporation’s facilities and inventories, especially at a time when energy and attention are utterly focussed on securities prices, this is real gold, a valued hoard we pay our Alberichs-in-pinstripes millions a year to guard, not to make off with.

Indeed, a heightening of disclosure alone could do wonders. Publicly-owned corporations should be appraised annually, and not by young people a year out of business school who think the real world is made of paper. Disclosure is the arterial blood of efficient markets that are also truly free and thus deserving of the support of a democratic society.

Some thought could also be given to creating new types of fiduciary. Should there not be some random representation, perhaps by lot, which would put on a board one representative of the interest of small (500 shares or less) stockholders, and one representing the large? I am perfectly aware of the theoretical and practical objections to such a plan, but I am naively optimistic that a solution could be found. It may well be that a stockholders’ lobby, as advocated by Boone Pickens, is a workable alternative, although in this case I am not sure the cure wouldn’t prove more dire than the disease.

Finally, of course, one confronts with regret the utter failure of our multibillion dollar media to have bred a race of committed investigative business journalists who will go sfter the scoundrels with the same knowledgeability, avidity and doggedness as their colleagues who cover politics or organized crime. Even though it could be argued that such reporters might turn on their own employers, those “media moguls” more attentive to what is printed on the tickertape than on the front page, the absence of quality business reporting on a scale commensurate with the subject is a disgrace. There’s little hope to be expected from the zeitgeist; as far as today’s journalists are concerned, money is as intoxicating, and (may I say) far more toxic than was gin for their predecessors. Many news organizations are under pressure from bottom lines bent double under mountains of LBO or “restructuring” debt. Business journalists trade yen instead of tips; they scramble to dine with people they should be dining on. Indeed, not a few have abandoned Grub Street for Wall Street.

And so, we small entrusters, like Eliza Doolittle, look at what’s going on and cry out, “What’s to become of me!” There has to be a better answer than what we’re handed: an updating of Herblock’s immortal cartoon which showed the circle of Watergate blamecasting: Nixon pointing to Haldeman pointing to Ehrlichman pointing to Colson pointing to Mitchell and so on back to Nixon.

I don’t find this acceptable, notwithstanding that I have time and again been informed that capitalism brooks no ideals apart from the maximization of profit. I know that the name of the game is to exploit other peoples’ money for one’s personal aggrandizement. I have heard a thousand times that efficient market capitalism must be one hundred percent ethically and morally neutral. All of the above seem confirmed by the way money is being made today, and the sort of people who are making it.

Nevertheless, I cannot escape the idea that if free market capitalism is to survive, it must incorporate certain of the ideals of the democratic society in which it admittedly flourishes best. One of these is the felt responsibility for looking out for the less advantaged, especially if it is their money “in play.” No less than in society at large, there are ghettos in capitalism which need to be expunged. Otherwise, at the end of the day, the accumulated resentment and mistrust will culminate in revulsion, and bring political trouble of a kind which will blow the glass out of every limousine in Manhattan. This need not occur. The costs – principally a modicum of self-restraint – of preventing it will not be great compared to the benefits. But it will surely happen if the financial community continues to behave toward its outermost constituency in a manner that shamelessly declares that on Wall Street there are no hearts of gold, only calves.




I was surprised that The New York Times rejected the piece – and yet I wasn’t. To anyone with half an ear, it was evident that the Times hierarchy was more attentive to the price of Times Corporation stock on the Big Board than to what was on the front page. America was consumed with money hunger, money fever. Few were exempt. To be rich, as had been the case in the days of Charles Francis and Henry Adams, was everything!

It was a state of affairs which a few us found deplorable. Not simply on grounds of taste: to be condemned for extravagance, glitz and ostentation. To be sure there were extravaganzas – one thinks of the Steinberg-Tisch wedding, Saul Steinberg’s fiftieth-birthday party with its tableaux-vivants of famous paintings, Malcolm Forbes’s self-parodying Moroccan rout, the entire lifestyle of the Trumps, the Gutterman bas mitzvah – which would have had Juvenal licking his chops. Vulgar these may have been, but in the last analysis no more than passing offenses against past-proud oldveau taste committed by purse-proud nouveaux.


What, I wondered, had become of “Noblesse Oblige”?

We should pause here to consider the origins of the phrase. It does not, as you might think, derive from feudal or aristocratic society. According to all my sources, from The Oxford English Dictionary to The Facts on File Encyclopedia of Word and Phrase Origins, it is a relatively recent English coinage, first noted in the 1830s, at the onset of the Industrial Revolution. Though it has a fine aristocratic sound, it is in fact the product of a society of rising industrialists, of men of trade, of a capitalist class system, where wealth alone dictates stratification and rank. “Noblesse oblige” belongs to the High Street, not the castle. It is expressive of the yearnings of solid, industrious, moneyspinning burghers, not nobles of the blood or landed gentry.

Does this make a difference? After all, is not class, class? Capitalism’s tendency toward class structure is as pronounced as feudalism’s and probably has been ever since the first coin was loaned out at interest.

I think the answer has to be yes and no – especially when we ponder the fate of “noblesse oblige,” as a term of social art, in recent years. In my youth, N/O was unabashedly a good thing, a quality to be proud of, even to flaunt. It was exemplified by the likes of Eleanor Roosevelt and General Marshall. There was nothing arrogant about such people; they didn’t stand for the kind of feel-good do-nothing moral imperialism which the Reagan/Milken/Bush era has promoted. Those paragons not only believed in the notion, they acted upon that belief. For them, voluntarism went beyond a personal commitment to public service or private altruism; nor was it a by-product of character, although character certainly helped. It was a duty, an outright obligation of advantage, an imperative of station: the responsibility of those of a higher class of good fortune to help improve the lot of those less favored than themselves. Marietta Tree, a great lady of impeccable ethical taste, put it as well as I have ever heard: “I believe that everyone in a community has duties as well as rights. I am impelled by a feeling that I have so many blessings I must somehow try to pay for them in hard work for the community and in gratitude for being an American.” Elizabeth Hardwick recently described her fellow writer Mary McCarthy as animated by “a dreamy expectation that persons and nations should do their best.”

Today, however, the phrase has acquired a pejorative coloration, overtones of snobbery, even bigotry. It has become a trope of choice in the ’80s’s rhetoric of moral minimalism. Snootiness is implied, ancien regimisme, a disconnected looking-down on modern works and ways: a moral sentimentalism of interest only to antiquarians and clothes designers, with no calculable social or market value – and, at a marginal rate of 28%, not much in the way of tax value, either. It is now possible to accuse a person of “noblesse oblige.” Mary McCarthy’s dreaminess would be read as an unrealistic failure to grasp the practical truth that since life isn’t supposed to be fair, and time is money, why waste a second trying to make it a little less unfair?

This change of emphasis accords with generally accepted principles of Humptydumptyian lexicography. The wider significance of switching the phrase’s moral voltage from positive to negative is what it implies about the moral philosophy – I suppose we can call it that – of the people who are now at the top of the American heap. Nowhere in the ’80s, as I suggested in my rejected piece for the Times, was this more clearly demonstrated than on Wall Street.

In The Importance of Being Earnest, Oscar Wilde observes that natural ignorance is like a rare fruit – touch it, and the bloom is gone. Democratic capitalism, that is to say a democratic political system whose economy is substantially based on the market’s allocation of capital, is fragile in the Wildean sense. The markets must be fair and honest, even if they lack the moral balance which people like me would insist upon, but fairness and honesty are delicate qualities. Squeeze them, and they shatter.

The fact is, America’s financial markets, as they have evolved during and since the New Deal, would strike most reasonable people as inherently too profitable to justify the risks implicit in meddling with them. Even when the fine old game of High Finance is played completely honestly, the market will still throw off incomparable rewards relative to the qualities of mind required to exploit it. Momentum is ninety percent of any boom, which makes moneyspinning a mug’s game.

It is the market which defines wealth. Bill Gates of Microsoft is surely not a mug – indeed he is probably a genius. But it is Wall Street, on which mugs outnumber mugs by three or four to one, in my experience, which capitalizes that genius and makes Gates seriously, seriously rich. This power makes the market an authentic public resource. Its interests must be above those of any individual.

But of course they aren’t. One morning, a few weeks after Boesky’s public mea culpa, while strolling on Park Avenue I encountered a man I’d known from the old days, a consigliere in a leading leveraged buyout “family,” a “made man” in the racket of taking over companies with borrowed money.

After the usual pleasantries, I asked what he thought of the Boesky scandal.

“A terrible thing,” he said, shaking his head with such gloomy vehemence that droplets of expensive, pungent cologne flew from his impressive jowls and hung sparkling in the sunlit morning air. In his expensive coat, he looked like a sleek sausage encased in glistening mohair, a fat seal surfing on endless combers of easy money.

“A terrible, terrible thing,” he repeated.

I hastened to agree. People like Boesky put the entire system at risk, I declared vehemeently. They kill the goose that lays the golden eggs etc etc etc. They need to be made an example of etc etc; no punishment too severe etc etc etc.

He endured my sermon the age’s wicked ways with the patience those who have capital gains reserve for those who don’t, studying his reflection in his highly-polished tassled loafers as if to find truth therein, then looked at me with an expression which told me I’d missed the whole point.

“What’s terrible,” he said, “is that a man could turn in people he did business with. Who would have thought such a thing was possible?” He sounded exactly like Vito Corleone discussing a grievous breach of omerta, the Mafia code of silence. Instead of chatting on Park Avenue, he might as well have been sitting at a cafe table in Palermo, deploring over a Punt e Mes the decline of standards in the white slave trade.

In other words, the evolved conspiracy which Boesky was then laying out for the Feds shouldn’t be seen as a threat to the integrity of the market – and by extension the public sufferance of the market’s utter freedom of action, freedom which had draped my friend in $1000/yard mohair. That was beside the point.

I – tutored in capitalism by men with memories – saw it differently. If a market economy is to be truly free and effective, which is not necessarily the same as truly “efficient,” it must depend on conscience, individual and collective, to do hard custodial work which the government will otherwise take over. In my time downtown, the most effective policemen patrolling Wall Street weren’t the SEC, or the Stock Exchange, or the compliance departments of various firms, or even some vague code of knightly ethics. The most effective force for law and order was the collective memory of the Street’s elders, the men who remembered ’29, ’33 and ’38 and had no interest in risking a repetition of those awful times. Self-interest properly understood, in other words, with rememberance as the basis for proper understanding.

The ’80s supplied other examples of the fiduciary notion being battered by moral casuistry. Typical was the mysterious affair of the Beatrice warrants.

When a deal is difficult to sell, and cutting the offering price is out of the question, it is often necessary to “sweeten” it by adding inducements (“kickers”) in the form of stock purchase warrants: options to buy stock which may, if the deal works out, be cashed in at some future date on a basis which will manifestly improve the investors’ return on a given play. In late 1985 and early 1986, at the crest of the market, Kohlberg Kravis and Roberts, whose investment pools included the public-sector pension funds of the states of New york, Oregon and Washington, orchestrated two big leveraged buyouts: Storer Communications Inc., the broadcasting company, Beatrice Inc., the consumer products conglomerate whose holdings included Tropicana orange juice and Hunt’s tomato products.

Financing for these deals (apart from bank loans) was handled by Michael Milken’s team at Drexel Burnham. In each case, Drexel advised KKR that in order to induce investors to buy the junk bonds in which the non-bank financing was denominated it would be necessary to throw in “kickers” or “sweeteners” in the form of present or contingent equity participations. It is as if, in order to obtain a second mortgage, I am obliged to promise my bank or other lender a participation over and above his interest rate when I sell or refinance my house.

The problem was, these “sweeteners” never got to the Storer and Beatrice investors. Drexel Burnham kept them for itself – or rather for the off-the-books Milken partnerships of which Drexel would plead ignorance. In time, the principals of KKR became aware that these sweeteners/kickers had never reached investors, as represented, but did nothing.

The presumptive reasoning would do a medieval scholastic proud. Modern thinking holds that it is the overriding duty of a fiduciary to obtain the best possible pecuniary result for his entrusters at any given point of decision. Carpe       , in other words: seize the deal! It is this bird-in-the-hand thinking, sanctioned in case law, which has decreed as “prudence” the sellingout in LBOs of entire workforces and communities.

As manager of its investment pools, KKR stood in a fiduciary relationship to the fiduciaries who had made the decision to commit money under their discretionary guardianship to KKR. If investors did not require the equity participations to buy the deal, as Drexel represented they did, proper observance of KKR’s at-one-remove fiduciary responsibility required that the LBO firm insist that rexel return the warrants. This “fiduciary responsibility”, may I add, was not merely to the prospective pensioners of Oregon, Washington and New York, or any other jurisdiction or enterprise, but to several types of taxpayer.

Here is what I mean by this. The Beatrice warrants kept and cashed in by Drexel were worth $380 million. In other words, since the warrants were not required to get the deal bought (there is a difference, to which I will come shortly, between getting a deal bought and getting a deal sold), a pound of flesh worth almost $400 million had been handed to Drexel, flesh taken right out of the side of KKR’s investors. Among these, I have said, were pension funds – some private, some public. Contributions to pension funds in both sectors are actuarially determined; the value of a given pension fund’s portfolio decrees how much its sponsor (or participants) will be obliged to contribute to ensure its ability to pay defined benefits when the time comes. If its value exceeds its actuarial target, less has to be contributed; if a plan’s sponsors are the taxpayers of a state, its bite out of revenues is less, leaving money to be invested elsewhere, or less of a current need for tax revenues. If a plan is directly or indirectly taxpayer-insured, as most are, a surplus reduces the taxpayer-in-the-street’s contingent exposure. A gain here acts as a hedge against losses there.

The bottom line is that by making a $400 million “gift” of its investors’ (including itself) money to Drexel, KKR turned its back on not one, but at last two levels of fiduciary obligation. Not unlegally, to be sure. You can be certain the evasion was checked up one side and down the other for legal ramifications. The argument would go: well, it’s gonna take $400 million to get the deal done, so what does it matter who ends up with. Investors might not demand $400 million in kickers to buy the deal, but Milken in effect insisted on it as the price of selling it: that is, of folding the Beatrice deal into his junk bond daisy chain. No kicker – no daisy chain – no deal. That’s the way such things work on Wall Street.

The boys at KKR were nothing if not pragmatic. Their end of the syllogism went: no deal – no fees. You can take it from there: no fees – no Park Avenue – no fancy new friends, trophy wives, ski chalets, Forbes “400.” You can give names to the blanks in the list, but it takes big money to fill them in. As George Anders writes in Merchants of Debt, his definitive account of KKR, “Kravis and Roberts…craved the financial power that Drexel provided.” They chose not to know too much about Drexel. When the RJR deal (see p. ) needed to be financed in 1988, KKR remained loyal to Drexel, a firm then in disgrace and under investigation, which raises the question of what Drexel may have known about KKR.

What may merely seem fast financial footwork often devolves on serious issues of public morality. Reagan/Milken/Bush propagandists would argue otherwise. Right through the uncovering of one putrefactive scandal after another, the Wall Street Journal, whose editorial pages were for Milkenism what Der Sturmer was for an earlier cadre of sanctioned gangsterism, continued to insist that the real problem was government: that deregulation, for which the Journal had fanatically lobbied, was at fault for placing irresistible temptation in the way of otherwise sterling fellows. When Salomon’s depredations in the treasury-bond market were revealed, the Journal was quick to print an article headlined “Don’t blame Salomon! Blame the Regulators!”

I think it will probably take the perspective of fifty years hence to grasp the extent and character of the lawlessness of the last decade. “In the ’80s,” my wife observes, “the rich were looters; they rampaged through the economy no differently from the way ghetto rioters break into stores.” Indeed, the rich did seem to run wild. Publicity was their “crack.” I found their antics as contrary to the norms and interests of a civil society as the smash-and grab depradations of slumdwellers raising the price of a fix. In terms of adverse impact on the communitarian fabric, I found little to choose between what I saw outlined by blazing storefronts and houses in Watts or Detroit or what was illuminated by a thousand candles (at $20 apiece) at lavish affairs a few miles away in Beverly Hills or Grosse Pointe.

The thirst for visibility amazed me. Until the ’80s, people in the upper echelons and higher tax brackets by and large tended to practice inconspicuous consumption. A picture in Town and Country or a passing item in a gossip column was about as much of their lives as they cared to show the public – and how many people read Town & Country? They were both discreet about and generous with the blessings conferred on them by the American Way. That was part of noblesse oblige. The new gospel, “argent excuse“, represented a complete reversal. Some people buy houses to live in, says the comedian Jackie Mason, others to show them off. In the Roaring Eighties, the latter prevailed.

It’s all very well to speak of jets and ski lodges and catered bacchanales. You expect that of people. What saddened me was what was left off the overclass’s shopping list, the luxury which, as much as a Gulfstream V or a Palm Beach mansion, it can better afford than most Americans.


Idealism about this country, about what kind of country it ought to be, about what aspects of American life and society today are simply not acceptable for a nation which thinks as highly of itself as we do.

There are many reasons why this should be so. Perhaps the darkened windows of limousines, the twentieth-century equivalent of the drawn curtains of the great gilded coaches which rumbled pellmell through Bourbon France, are as impenetrable from within as from without. The erosion of certain tendencies of collective memory obviously plays a part: the Depression and World War II and the Marshall Plan have been consigned to dusty attics. Of course, this kind of idealism involves commitment and sacrifice, infused with a sense of history, and that may make it too expensive or too intellectually difficult for the very, very rich and powerful.

But if the best-advantaged members of the society can’t afford it, who can? Is the overclass entitled to take the moral equivalent of a Chapter 11 bankruptcy? To declare its public obligations null and continue as a debtor in possession of its private satisfactions? Not long ago, I walked through Rockefeller Center with my little boy. As we paused so he could admire the Atlas fountain, my eye was caught by a large marble slab on which the credo of John D. Rockefeller Jr. (not the grasping skeletal progenitor of Standard Oil, but his son, the philanthropist) was set in raised bronze letters. “I believe that every right implies a responsibility,” it read, every opportunity, an obligation, every possession, a duty.”

Rockefeller Center belongs to the Japanese now. The tablet was presumably sold as part of the deal. And so, to judge by the behavior of today’s would-be John Ds, were the sentiments.

I have been studying the overclass for a long time now. It would be nice to anticipate a miraculous voluntaristic resurgence of public spirit in the overclass, that the example set by a few woul be taken up by the many, and through them to the mass of the people.

But exhortation clearly does not work with these people. The alternative is: show us some public spirit or else. By saying “or else,” I am not advocating “soak the rich” policies arising from a half-baked “politics of envy,” or some ill-considered, outsiderly socialistic impulse (I consider myself, like James Fenimore Cooper, an old-fashioned conservative).

“Soak” bespeaks economic unfairness, it reeks of the worst sort of levelling. Equity – a fair return on investment – should be the objective.

The general public has a huge investment in the overclass – to an extent, and on terms, of which it is largely unaware. If you look at how wealth has been created in this country in the last boom, “or else” or “soak the rich” or whatever name you choose can with equal justice be read as a matter of recompense rather than redistribution.

In America, the basis of class is wealth. So it is, has been and ever shall be, world without end. What we fail to take into our calculations, however, is the extent to which the process of wealth creation is, for lack of a better word, socialized. You would think this would be a self-evident truth. Leverage – the use of other peoples’ money however obtained – is the key to the creation of wealth in this country. In the last dozen years, the socialization of credit proceeded not merely apace but pellmell, which also seems an apt characterization of the rate of growth in the “high net worth” sector of the economic pie. The number of billionaires has grown faster than the money supply, and this growth has to a great and unpublicized extent been underwritten, directly and indirectly, by the American taxpayer – which leaves us facing the delicious irony that the blatant differentials in consuming power by which we measure status in America have despite the babble of the free-market men produced a state-subsidized class system, or American nomenklatura.

This causality has been largely kept from the taxpayer in the street. Not by accident: ignorance of it breeds a political quiescence which the regime’s apologists can (and do) interpret as popular enthusiasm for the way things are. To spread enlightenment to the contrary strikes me as perhaps the single greatest political opportunity of the next decade. Only then can the rules of the game be changed, only then can we can begin to speak of true economic justice, only then can we begin to regain our boasting rights among nations.


11/11/16…Day Three of the Singularity…

1.The idiots are in charge. Check this out:

Presumably this is to protect these children from the shock of undeserved tax cuts, higher interest returns on their trust funds…..

And just heard on WNYC that Brooklyn Museum has set aside “a safe space” for sensitive souls traumatized or otherwise afflicted by the election. Museums are supposed to be above politics.

2. Now here’s an interesting if controversial take…

3. I should add that the capable and decent bankers I know (I’m aware that this characterization may sound oxymoronic) agree to a person that Dodd-Frank as it has evolved is counterproductive, adds to banking costs and needs to be severely pared. We needs to get Uncle Sam out of the loan guarantee/bailout business while keeping the depositors’  money safe.

4. It’s interesting to compare the way the GOP and its adherents handled Obama’s 2008 election with the way HRC voters are behaving following DJT’s win last Tuesday. Both, let us remember, involved real outsiders not only winning big, but heading to Washington with their party holding majorities in both houses of Congress. Today, the HRC forces are whining and weeping all over Facebook, taking to the streets in Portland and New York, and putting their ever-so-sensitive grieving souls on display for all to sympathize with. In 2008, the GOP hardnoses stayed off the streets, got together and dealt with a situation. It hasn’t been pretty, and I think it may prove ultimately damaging to the country, and of course the luck of the census allowed for a gerrymandering orgy – but it got done and it worked.

5. NYT grimly reports insults, violence etc. against minorities on college campuses. College campuses are breeding grounds for offenders and the offended both. What most bothers me are reports of the educational process being disrupted by political action. Read this:

6. A rare grain of retrospective common sense:


8. This is what concerns me about Trump and why I voted for HRC:  namely, that he could be tied up in lawsuits relating to his actions as a private citizen. I asked Google for enlightenment and got the following from a presumably reliable legal website: “A private citizen may sue the President over alleged actions undertaken before or independently of the Presidential office. When the President acts on the authority of his office in any way, he is shielded by the doctrines of immunity.”

9. I pray daily for that which the poet Burns himself prayed: the gift to see ourselves as others see us. My friend Tunku Varadarajan has written what seems to me a very sensible analysis of the election. Link is below. As far as I’m concerned, here’s the whole story:

SO HOW DID Trump win? In the most basic terms of electoral arithmetic, he won because Hillary got many fewer votes—6.6 million to be precise—than Obama did in his re-election in November 2012. That isn’t a mere fall, it’s a bungee jump (without reliable elastic). Yes, Trump, too, got fewer votes this year than the Republican Mitt Romney did in 2012, but only by 1.8 million.

Here’s the link to Tunku’s essay.






Here is the Preamble to “The Overclass”








The Looting of America by the Reagan-Milken Overclass


What We Ought to Do About It Now



Dedication TK



“…the social duties of an American gentleman, in particular, require of him a tone of feeling and a line of conduct that are of the last importance to the country. One of the first of his obligations is to be a guardian of the liberties of his fellow citizens. It is peculiarly graceful in the American whom the accidents of life have raised above the mass of the nation

to show himself conscious of his duties in this respect, by asserting at all times the true principles of government, avoiding, equally, the cant of demagogueism with the impracticable theories of visionaries, and the narrow and selfish dogmas of those who would limit power by castes…Liberality is peculiarly the quality of a gentleman. He is liberal in his attainments, opinions, practices and concessions. He asks for himself no more than he is willing to concede to others. He feels that his superiority is in his attainments, practices and principles, which if they are not always moral, are above meanness, and he has usually no pride in the mere vulgar consequence of wealth.”

– James Fenimore Cooper, The American Democrat, 1838





The Class of ’40


In May, 1990, I received a phone call from a member of the Class of 1940 at Phillips Exeter Academy, my old prep school, inviting me to be the Friday dinner speaker at the class’s fiftieth reunion.

I accepted happily. Exeter occupies a very special place in my heart and memory. My father went there; I followed him thirty years later and four of my children followed me, with a fifth still to come, although as you shall see, that may no longer be in the cards. My own four years at “the Academy” were among the happiest I have known. Mind, body, libido were unleashed. Intellectual challenge and distinction hung in the very air like sunbeams. The pursuit of excellence was the name of the game.

Beyond such considerations, I was frankly flattered at the invitation, which I took to be a tacit endorsement of some of the things I’d been writing over the previous several years in The New York Observer and elsewhere. Much was predicated on values and ideas I considered as much a part of Exeter as its weathered brick. The invitation also happened to come at a propitious time, when I was working out a number of ideas about the decay of America’s “Invisible Infrastructure,” the phrase I use to denote the complex, specifically American framework of values and attitudes which supports our collective life as a nation. People can wail about the decreptitude of our highways and our educational system’s physical plant, but until something is done about the parallel dilapidation of our intangible armature, their plaints will be just so much moaning on the wind.

It seemed likely as well that the 1980s would left the Class of ’40 as depressed as myself. Here was a heavensent opportunity to check my own recollections and beliefs against someone else’s of more or less the same vintage. We represented different slices of the generation shaped by World War II and the postwar decades. I came in at the end. These men, fourteen years older, had arrived at manhood in the heart of that glorious era: born into the great roaring ’20s boom; sent off to Exeter in the trough of the Depression; graduated at the time of Dunkirk and the Nazi conquest of France and mainland Europe. Pearl Harbor would have found them in the middle of sophomore year at college; a number of them would presumably have gone off to war during the next four years.

Following V-J Day, the Class would have returned to college and graduate school(many, I supposed, on the G.I.Bill) and begun its working life in a nation which had emerged from four years of unrestricted warfare unconditionally victorious and physically unscathed. Young people of the present globalized era of diminishing expectations will find this hard to believe, but there was about a decade or so beginning in 1945 when America not only ruled the world, but had all the money as well! It was a time I find aptly characterized by the late Professor Thomas Bergin of Yale in a memorial for his departed colleague (and my beloved friend and teacher) Charles Garside Jr: “…between the end of World War II and Vietnam a sense of stability and even a kind of serenity prevailed…in the country…Things stayed in place, and for a while there was the illusion of permanence in the air.” (Yale Alumni Bulletin, October, 1987).

All in all, the Class of ’40 was on the leading edge of an American generation to whom the fortunes of history would prove to be generally kinder than most before or since. As Exonians, moreover, creamiest of the white urban upper-middle-class creme, my audience could be expected to have to have had the very best of those halcyon days.

That would all now be coming to a close. In May, 1990, the members of the Class would be in their late sixties. Many would have already retired; most of the rest would be nearing the end of their active working lives – in a world vastly changed from the one in which they had gone to work. The United States no longer enjoyed unquestioned domination of global affairs and markets. Viet Nam had cast even our cocksure military hegemony in doubt (the Gulf “war” was still some six months off). Even the torch of moral supremacy guttered in the wake of Watergate.

All things considered, the Class of ’40 struck me as uniquely situated to bear witness: to confirm or repudiate some of my own feelings about America as we entered the final decade of this convulsive century.

Would they share my impression that the country had become hardhearted? Would they echo my outraged astonishment at being confronted almost daily with sights and awarenesses that I as an American had never expected to see in my own country? What about the last decade? Would they too feel that the frenetic moneygrubbing of the ’80s had somehow produced a pettiness of spirit that those of us who knew an earlier America found embarassing, even shaming? As members of the overclass, would they be as put off as I by the antics of the Big New Rich, as disgusted by the obvious corruption of Wall Street and Washington, as outraged by the failure of the nation’s great public and private institutions to give direction to American life? Did they share my fervent hope that the America of Ronald Reagan, Michael Milken and George Bush was an aberration; that soon we would come to our moral senses, “the real America” would return from wherever it had been vacationing, and all would be set to rights?

It would be up to us, I planned to say, the best-fed and best-educated, to take the lead in restoring the values of our youth, the values of our school, to national prominence, in reshaping America to resemble more closely the land of our recollections, to make the America we live in look more like the America we boast about. I planned to quote a favorite line coined by the sports announcer Jack Drees, who for many years broadcast the Kentucky Derby on ABC Radio. Year after year, when the field thundered into the homestretch, Drees would shout into the microphone: “Now, here’s where they run on their pedigree!” It was time for us to run on ours.

I planned to be basically upbeat. This was, after all, an occasion more for celebration and self-congratulation than soul-searching. Although I felt that, since roughly the assassination of President Kennedy, and very much on the watch of the generation which embraced the Class of ’40 and my own Class of ’54, the country had gone to hell in a handbasket, to belabor that point at the end of what would have been a happy and nostalgic day would be ungracious. The business of rekindling old institutional and personal connections can be tiring, and these were people of a certain age.

I expected that the harshness of some of the things I intended to say might be tempered by my audience’s recognition that, unlike many doomsayers, academics particularly, I knew from broad practical first-hand experience what I was talking about. In particular, I knew something about how money is made in America, especially on and via Wall Street. If I wasn’t fooled by the scrim of cant draped by apologists like the editorial pages of The Wall Street Journal over what was, plain and simply, the greatest economic con in American history, it was because for thirty years I had been an accomplice before, during and after the fact.

And what was this “con”? A huge (probably close to $6 trillion, all in) escalation of debt-financed consumption, embracing everything from defense systems to consumer goods to multibillion-dollar companies, which effected a massive transfer of the nation’s wealth to the creditor class, a class which, ironically, must be understood to include those debtors – Donald Trump comes to mind – whose borrowings are so so large that their interests and those of their creditors become virtually identical.    By the end of the second Reagan term, with the potholes in the nation’s arterial financial highways only beginning to be filled up with taxpayer dollars, America had suffered the equivalent of a fiscal hit and run, committed by those at the apex of the economic heap, abetted by a government corrupted from top to bottom.

I didn’t intend to press – to hammer – this point with the Class of ’40. I would have to tread carefully on the subject of the 1980s. For some in the Class, especially its Wall Streeters, the ’80s would have been exhilarating and all for the good, the best years of their lives. They might agree with me that the United States in 1990 no longer resembled the nation in which they had grown up, but a neither did their bank accounts, and the fat condition of these would settle their minds as to whether the changes had been generally for the better or the worse. There would be some, I guessed, who might be as uneasy in their souls as well-off at the bank. There would be others for whom life had turned out less satisfactorily – for whom America would not have made good on its famous “dream. As I remarked to my wife, the point of such reunions seems to be for is for half the class to show off wealth which the other half wants to borrow.

I didn’t plan, therefore, to speak apocalyptically or critically – to pound the pulpit or point the finger – but I did intend to raise legitimate issues for serious consideration, to be examined in the spirit of a shared rather than adversarial dialogue.

As for my outlook for the ’90s…well, I believe that problems usually contain the germ of their solution: tThe way in frequently suggests the way out. The ’90s would be a time of challenge, I intended to say, and would require that the legacy of the ’80s be faced candidly, clearly and honestly. I intended to leave it at that, notwithstanding that I might feel that candor, clarity and honesty were qualities unknown and unrespected in the value system personified by Reagan and Milken, and for that matter George Bush.

And so, at the appointed hour on an agreeable Saturday evening in late May, 1990, I presented myself at Exeter’s Thompson Gymnasium, the building where, thirty-six years earlier, I had delivered the “history” of the Class of 1954 to an audience of proud parents and relieved faculty, a few of whom, I saw, had been invited to join ’40 on this auspicious occasion.

It turned out to be quite an evening. Here is what I wrote about it in my column in The New York Observer (May 28, 1990):

(I’ll have to locate the column. Basically, what happened was that when I began to describe aspects of America that I thought needed fixing (greed etc), I was booed offstage. There was no point in trying to continue, so I got in my rental car and drove back to Boston.)


Usually, a column inspired by an event is cathartic, but in this case not. The evening refused to die. It kept coming back to me. What did it really mean? Did it mean anything beyond the fact that in one man’s loud opinion the Class of ’40 had chosen the wrong speaker for their fiftieth reunion? That I had presumptuously picked the wrong audience on which to try out certain of my own vexations? After the first, fine careless rapture of shock, I realized that it was all too easy to write deeper significance into the occasion than it merited.

But still…these were supposed to be my people! Were my expectations realistic, then? Had I have romanticized a generation which in the last analysis was no more or no less moneygrubbing and solipsistic than any other? Such were the questions that lingered long after the occasion. These were the people who could best afford to face up to the condition of America as Reagan-Milken-Bush had left it. If they didn’t want to know about it, perhaps the country really had gone to hell!

A month or so afterward, I received (among several thoughtful expressions of apology from members of ’40) a letter which put the issue admirably: “When we graduated in 1940,” wrote the author, a physician in one of the Plains states, “we all felt we had a real purpose. We all felt very much a part of our country and that what we did mattered. We felt a patriotism and this was inbred in us through study of American History and the type of ‘sermons’ that were preached to us…We were steeped in tradition, a tradition of service to our country and our fellow man…the question I wanted to ask during this reunion of my fellow classmates was ‘What had happened to their ambitions and feelings which they graduated with and also I wished to ask some present students of Exeter as well as…present instructors what it was today that had taken the place of the idealism and the goals that we had in the late 1930s?’ Then, as I remember it, it was despotism and dictatorships – depriving the people of their freedom – that was the enemy. What is it today that the young men and women are setting as their goals?”

Well, for one thing, I would have told him: to work on Wall Street. The year before I appeared at Exeter, roughly half the graduating class at Yale, my other alma mater, had signed up to interview Goldman, Sachs. I had written a sharp column about that, provoking an equally acid rebuke in the ’58 Class Notes in the Yale Allumni Bulletin.

I admit it might have been old-fashioned of me to think that young men and women should have loftier goals on their minds than mindless number-crunching in pursuit of deals which of dubious economic merit – except to the promoters (which is the point!) – and demonstrable social counterproductivity. It was understandable that legions of the best and brightest young men and women in the country would be listen to Wall Street’s siren song: the sums being thrown around even after the 1987 downspike would have seduced an anchorite. Nevertheless I found the fact intensely discouraging. Thirty years “on the Street” had left me with the conviction that in ninety-nine individual cases out of a hundred, Wall Street Work added up to a wholesale repudiation of the point of a first class education: assuming (an assumption which by 1988 was highly conjectural) that the point of that education was something more than acquiring a handsomely lettered parchment to dress up an investment-banking office. The best definition I have ever seen of the point of a first-class education was pronounced on the even of World War I by an otherwise obscure Oxford professor of Moral Philosophy: “the main, if not the sole, point of education,” he opined, was to be able to tell “when another man is speaking rot.”

“Rot” is Anglo for “bullshit.” The Reagan-Milken Era was a Golden Age of Bullshit, of casuistries designed to put a gloss of respectability – intellectual, social and cultural – on the subsuming of every meaningful aspect of American life to the cash nexus, of reducing all of socioeconomic and cultural existence to a matter of exchange value – Marx’s great complaint against capitalism. Of the several thousand Wall Street-promoted deals I have looked at in my lifetime, of the few hundred in which I have played an active role as agent or promter, not more than a handful have had as their real object any social or economic good larger than the gratification of the egos of men in corner offices or the lining of the pockets of the higher class of middlemen/parasites: investment bankers, lawyers, tax accountants, public relations counselors. Few have not involved the mulcting, to some degree, of innocent (that is to say, ignorant – designedly so) taxpayers and investors.

These are issues to which I shall return. The more I thought about my encounter with the Class of ’40, the more it seemed to me that these people were “in denial,” as they say. They didn’t want to hear about the dark side of what one prime Reagan-Milken propagandist, Robert Bartley of The Wall Street Journal, would call the “Seven Fat Years.”

Why should they have? In a way, I was telling them that they were part of the problem, and in a tone of voice that said that I considered that I wasn’t. Their ears weren’t lying to them. I hated the ’80s, hated Ronald Reagan, hated Michael Milken, hated what was being done to the country and had said so – over and over and over and over, even up to that June night at Exeter. It was a losing battle: money not only talks, it can shout down every dissenting voice, and even as I write I take little comfort that it has all turned out just about as I said it would, just about as it had to.

What bothered me most about my evening with the Class of ’40, however, was that it obliged me to deal with some reality-denial of my own and to face up to the explosion of certain home truths which I had spent most of my maturity avoiding (probably a sign of immaturity!), circumnavigating them intellectually time and again despite evidence which only someone deprived of all mental and sensory powers could ignore.

Principal among these was the assumption that the America in which I came of age, the America formed of my imagination and conviction, the America personified by Harry Truman, George Marshall and Eleanor Roosevelt, was the sort of nation we truly are. Thanks to the ’80s, to episodes of which my encounter with the Class of ’40 was but one example, I no longer take that as a given. The more I study this country, the more of our history I read, the more closely I analyse the figures in the carpet, the more it seems to me that postwar America may have been a boyhood fantasy born of overreading, an atypical historical aberration shaped by extraordinary, non-recurring historical forces – principally World War II and its aftermath- in effect over the course of the approximate quarter-century from Pearl Harbor to the assassination of JFK – and that it is the America of Ronald Reagan and Michael Milken which is – in its attributes, preferences, tendencies and character – the real McCoy.

I am not the first to make this error. In a famous letter of 1816, the man who drew up the American blueprint deplored that “legerdemain tricks upon paper can produce as solid wealth as hard labor in the earth.” There is something in Jefferson’s words that suggests he believed that “hard labor in the earth” is the true American way, but I think Jefferson got it wrong. Take a look at our history. Booms and busts aren’t made on factory floors, but on the floors of stock and credit exchanges. It is “legerdemain tricks upon paper” which is the true, instinctive, inertially inevitable American commerce, as innate to our scheme of things as baseball and apple pie. What people like me deplored in the ’80s, or Mencken in the 1920s, or the Adams brothers in 1870, or James Fenimore Cooper in 1837, or Jefferson in 1816 is not the exception, it is the rule. It is innate to our commercial character as a nation. Unprovided by history with a native, feudal landed gentry, how natural it seems that our inherent commercial instincts should be those of the real estate speculator and broker, and the vocational cousinage which traffics in engraved pieces of paper. Practically from the moment the first stock exchange set up for business in 1792 in the shade of a buttonwood tree in lower Manhattan, with the ink on the Constitution barely dry, there was launched a metronomic cycle of speculative cycles of paper- and real estate-driven boom and bust. The notes floated by the country banks of Jefferson’s time are next of kin to the junk bonds of ours.

I make this point simply by way of asserting that if we are goinng to fix what seems broke about this country, we have to do so on the basis of the way we are, and not the way we like to think of ourselves. It is all very well to imagine ourselves a great industrial, lunchpail nation, with smokestacks belching into the sky above the fruited plain, but the true course of empire is charted in bankers’ ledgers and county clerks’ mortgage records. It is all very well to assert the need to invest in infrastructure, but the nation might be better served by examining the books of its ruling elite. That is what, in a broad way, I intend to do.

After Jefferson, in the American pantheon of those whom we selectively read to hear good things about ourselves, comes Tocqueville. The Frenchman visited America at a time very like the 1980s: a speculative boom driven by bank credit was in full uproar, bestriding the national awareness like their counterparts in leveraged-buyouts and commercial real estate a century and a half later were promoters of stocks and land rushes. It would all come to grief in a massive wave of bankruptcies and bank failures in 1837, just as Tocqueville’s Democracy in America was published, but during his sojourn on American soil, that sediment nurtured saplings which – it was assumed – must surely grow to the sky.

“The prosperity seemed limitless and without a flaw, ” writes Robert Sobel in his history of American booms and busts. Here is Philip Hone, the diarist, writing early in 1836: “Everything in New York is at an exorbitant price. Rents have risen 50 percent for the next year. I have sold my house, it is true, for a large sum; but where to go I know not.” To anyone who watched the Manhattan real estate market in the ’80s, Hone’s words must have an eerie echo. By 1840, Hone was bankrupt.

So great was the surplus of revenue produced for the Federal Government that a bill would be passed in January, 1837, calling for redistribution of the windfall to the states in four installments. The fourth installment would not be paid. In May, 1837, the credit madness imploded and there ensued a financial crisis – the first in forty-five years – which would last well into the next decade. In the first year of the crash, over six hundred banks would fail.

Tocqueville was too early to see the madness in full flower. It is interesting to guess what he might have written had he stuck around another five years. I doubt it would sound exactly like this: “… the Americans put something heroic into their way of trading …The whole of life is treated like a game of chance, a time of revolution, or the day of a battle…Choose any American at random, and he should be a man of burning desires, enterprising, adventurous and, above all, an innovator,” (Book I, Part II, Chap.10). In this passage, he sounds like someone who has been spending too much time with stockbrokers.

Five years after the 1837 Crash, another visitor set down his impressions, a visitor perhaps better acquainted with the way Wall Street works than the aristocratic Frenchman. This writer would observe: “Another prominent feature is the love of ‘smart’ dealing: which gilds over many a swindle and gross breach of trust; many a defalcation, public and private; and enables many a knave to hold his head up with the best, who well deserves a halter; though it has not been without its retributive operations, for this smartness has done more in a few years to impair the public credit, and to cripple the public resources, than dull honesty, however rash, could have effected in a century…I recollect remarking on the bad effects such gross deceits must have when they exploded, in generating a want of confidence abroad, and discouraging foreign investment: but I was given to understand that this was a very smart scheme by which a deal of money had been made: and that its smartest feature was that they forgot these things abroad, in a very short time, and speculated again, as freely as ever.” (Charles Dickens, American Notes, 1842, Chapter XVIII).

As Michael Milken might say, now that’s more like it!

Like Petronius, or Juvenal, or Moliere, Dickens would have found the 1980s vastly entertaining, full of the sort of pretensions and self-contradictions on which satirists feast. It would have been funny, that is, if it hadn’t been for real.

It was, we were solemnly informed by Reaganaut dogsbodies like The Wall Street Journal‘s editorial page and George Gilder, a golden age of can-do private-sector entrepreneurialism. And yet, to anyone with a sharp ear, behind the clink of coin could be heard the unmistakable sowlike snufflings of insiders sucking voraciously at the public teat. The full faith and credit of ordinary taxpayers was being deployed to underwrite the creation of an economic “overclass.” This would be, in my eyes at least, its most baneful hypocrisy, made even more unendurable by the new overclass’s conduct of the advantages it used its taxpayer-underwritten new wealth to buy.

My repugnance was partly grounded in taste, partly in sheer amazement. Centimillionaires were being minted daily. Many were people I’d known for quite a while, of whose abilities and capacities I had a clear and accurate idea. It seemed clear that something, some form of wealth-creating pollen perhaps, or a flotilla of undiscriminating fairy godmothers, was loose in the air; in more than one case, supernatural forces had to be at work. Of course it was neither of these: what was at work was mindless, hyperabundant, risk-rinsed, fee-driven credit. For about five years, anything and anyone could get financed.

Some – a few – were content to keep their heads down and count their blessings. Others displayed an arrogance and presumptuousness that gave teeth to Montesquieu’s observation in the Persian Letters: “…Providence is to be admired for the manner in which it shares out wealth: if it had been granted only to good people, it would not have been possible to differentiate clearly enough between it and virtue, and its worthlessness would not have been fully appreciated. But when you consider which people have accumulated the largest amounts of it, you come at last, through despising rich men, to despising riches.” (Letter 98, trans. C.J.Betts).

In observing the spectcle, in writing and speaking about it, I often found myself in the position of the child in Hans Christian Andersen’s fable of the Emperor’s New Clothes.

I could picture myself squatting at curbside, in the very front row of a clamorous throng waiting to see and cheer the emperor and his court. It was quite a parade.

First to pass by would be the imperial brass band, led by a high-stepping drum majorette suspiciously resembling Vanity Fair editor Tina Brown. Behind her, bleating, squalling and blatting, would follow a serried motley of publicists and gossipists, editors and staff writers from the glitz and celebrity press, hostpersons of radio and television celebrity shows.

Next, bells atinkling and rattles a-rattling, would come the jesters: a buzzing, hand-waving, pinky-pointing retinue of dress designers, caterers, florists, interior decorators, socialites-for-hire and other Lifestyle Parasites, “glib and slippery creatures” spawned by “the dazzling gloss of prosperity,” as Hazlitt characterized such people.

Then, in a shift to a more serious key, would come the High Priests, robed and hooded by Valentino and Armani, walking with ponderos dignity, bearing garishly-painted processional banners glorifying “The Death of Decorum,” “The Apotheosis of Mammon,” and “The Triumph of the Second-Rate.” As these went by, the crowd would fall silent, the people would cross themselves in a figuration of the dollar sign in the way that once upon a time they placed their hands above their hearts when the flag passed. Overhead, like a noisome aerial escort, pass strange pterodactyl-like creatures with the features of Dennis Levine, Ivan Boesky and Charles Keating, in formations so tight that the beating of their scabrous wings would momentarily darken the sun.

At long last, the Emperor would arrive, waving a silken topper spangled with stars and stripes. His features would change kaleidoscopically: now he would seem a grotesque taking dummy, made-up and dyed, chemically tan and pompadoured, with an amiable, vague grin; now crooked-smiling and ill-made, with a crooked smile like a skull’s rictus under an ill-fitting toupee that looks like a bad joke on a corpse; now wispy and WASPY, obviously as narrow of soul as of body, all angles and elbows, limbs beating this way and that in frantic confusion, like the wings of a netted bird.

In the buzzing crowd behind me I would hear tremendous oohing and aahing about the ruler’s new clothes. From my angle, I could see little, the potentate being closely surrounded by the persons of the imperial household, palace guards and palace wizards, some martial and helmetted, others in conical hats and robes marked with astrological signs, all accompanied by their personal book agents. Among them I would recognize The Wall Street Journal’s Robert Bartley, trained Beltway monkey Paul Craig Roberts, George Gilder, Irving Kristol and other necromancers-in-ordinary to the Age of Greed. But instead of the maces and wands of office normally borne by courtiers and functionaries, they would brandish outsized stalks of spinach.

But what exactly would the Emperor be wearing? I could hear the crowd gasp its approval like a fashion editor at a St.Laurent opening: look, see how splendid are the emperor’s raiments, how artful, how chic, how a la mode, how too, too divine, how transforming!

How can they tell? The old boy’s courtiers are packed in so closely around him, all I can make out are flashes of splochety, suety pink flesh. Then, for an instant, there is a break in the human screen, and I can see the old boy plain and – what do you know? – the old sonofabitch is buck, bare-ass naked!

“Hey, everybody,” I cry out, “wait a minute! The Emperor’s naked! He has no clothes on!”

At this moment, I become another fictional personage with whom I have closely identified ever since I made her acquaintance.

She is a little girl who makes a single unforgettable appearance in a famous New Yorker cartoon drawn by Carl Rose in 1926, with a caption said to have been written by S.J.Perelman, a man who should have lived to see the ’80s in all their gilded squalor. More than once, watching the antics of the high and mighty, I murmured to myself: “Sidney, thou shouldst’ be living at this hour.”

Rose’s drawing shows an androgynous little girl and her mother at the dinner table. The mother is vulpine and dressed to kill, very self-consciously bon ton , surely in the ’80s a charter subscriber to Vanity Fair and every other guide to the “in,” the “smart,” and the “chic”. She is obviously putting in her mandatory five minutes with her daughter before heading out for a swell-elegant evening on the town.

The daughter sits sullen and dubious, the picture of gloom. On the table before her is a plateful of leafy vegetable.

“Eat your broccoli, dear,” says the mother.

“I say it’s spinach,” the child replies, “and I say the hell with it!”

Exactly my view of the ’80s, which is why I outfit my metaphorical courtiers with stalks of the stuff.

By “spinach, I mean of course cant. I mean rot, bullshit, bushwah, tommyrot, snake oil, whim-wham, codswallop, lip service, bunkum, buncombe, hokum, moonshine, pishtosh, flapdoodle, lily-gilding, claptrap, doublespeak, humbug, hypocrisy, and dozens of other esoteric tropes of dissimulation, euphemism or evasion up to and including outright lying, which in the past decade was defined as “positioning the truth.” What James Fenimore Cooper in his not dissimilar day called the “fulsome, false and meretricious eulogiums” of a nation buying into the sweet con of a crack team of bunco artists.

Cooper actually echoes Tocqueville: “The Americans are impatient of the slightest criticism and insatiable for praise. They are… seldom quite satisfied by by even the most fulsome eulogy. They are at you the whole time to make you praise them, and if you do not oblige, they sing their own praises…Their vanity is not only greedy but also restless and jealous. It is both mendicant and querulous.”( Democracy in America, Volume II, Part III, Ch.16).      In the entire history of the nation, no one has understood this better than Ronald Reagan and his handlers. They saw that their own brand of spinach would do for American self-regard what the ord9inary kind did for the musculature of Popeye’s forearms, and so they dished it out by the cubic yard, in every form imaginable, in enough varieties, tastes and shades to win every prize at every garden show held since Adam first stuck his spade in the primordial dirt.

Living in the ’80s was like wandering through a jungle of giant mutant spinach plants. Plants with stalks stouter than redwoods and taller than Jack’s beanstalk, with leaves thick enough to block out the light.

It came in a hundred varieties. There was economic spinach, political spinach, fiscal spinach, Wall Street spinach, Beltway spinach, Hollywood spinach, ethical spinach, art spinach, literary spinach, lifestyle spinach, celebrity spinach. So pervasive was it, I wouldn’t I wouldn’t have been surprised if some politico had proposed to replace the arrows and lightning bolt in the talons of the national eagle with stalks of leafy green Spinacia oleracia.

The economic spinach, dipped in gold leaf in the style invented by the chefs of an earlier Gilded Age, was positively hallucogenic although it would prove as ultimately lethal as Jonestown Kool-Aid. Under its spell, in money matters, black became white, day night; money owed was money owned; the way to get out of debt was to borrow more. Under its influence, the public watched and applauded as the government flooded the economy with trillions in borrowed money and called it a boom. As a feat of illusion, it was sensational, (as I have said) the greatest economic confidence trick I could ever expect to see, breathtaking in its scope and audacity, and scarcely less remarkable for the ease with which it went down.

Popeye, so to speak, was among the Age of Spinach’s principal household deities. When it came to the preparation of spinach, Humpty Dumpty served as chef de cuisine, and also as chief speechwriter, drafter of prospectuses, and arbiter of accounting standards. “When I use a word,” the talking egg had informed Alice huffily, “it means just what I choose it to mean – neither more nor less.”

And what Humpty Dumpty could do with numbers was sensational, as many a junk-bond buyer would discover.

People with no liking for spinach by and large went hungry. Consigned to the scullery, we amused ourselves as best we could and quarrelled over crumbs of morality and commonsense. Most days I sat in the corner and, in the spirit of Elizabeth Barrett Browning, counted the ways I hated the age.

There was so much to abhor. The mind-boggling tolerance for hypocrisy and cant bespoke a pervasive moral, political and rhetorical cowardice and evasiveness, characterized by inversion, misspeaking and other distortions of language. In the public discourse, it became impossible to phrase, let alone settle arguments on their merits. Noise counted for more than sense.

Following the example of Ronald Reagan, the nation adopted the principle that the unexamined life is the only life worth living. Soon mediocrity was everywhere in the ascendant. Standards declined in every area which mattered to me, from spelling to etiquette to art. The sneer became the standard form of judgment; the put-down the basic trope of analysis. Slovenliness became the guiding principle of craft. Nothing produced in America – plays, buildings, novels, policies, automobiles, high school graduates – was required by the country at large to be well-made or thought-out, and most critics served their calling only with their lips. Inevitably, volume came to be more important than pitch. Publicity equalled achievement. Wealth was meaningful proof of wisdom and virtue. What money could not buy, or hubub claim, such as honor and merit, was deemed superfluous to the great business of getting and spending, which would secure the esteem of headwaiters, dressmakers and interior decorators, and open the way to the ultimate circle of heaven: flattering exposure in the lifestyle or celebrity media.

Commotion – frequently euphemized as “energy” – was given the name of art, cultural value became calculable solely as a function of quantity: book sales, column inches and fractions of airtime. Press releases took the place of critical evaluation. The pollster, the focus group and the flatulent offerings of the public relations “consultant” (in my youth: “press agent”) were accepted not only as indices of quality, but as elemental standards of good and bad. It followed that price and financeability became the defining yardsticks of value.

The middleman was lord of the day. High visibility brokers, commissionaires and agents were more influential and celebrated than their principals: executives, centerfielders or, God knows, authors. Every enterprise, commercial, hogh-cultural or low was reduced by these, with their Sammy Glick mentality, to the calculus of the deal or promotion. Never pausing to catch breath, to learn, to refine, they spread a trail of vulgarity through every field they entered.

Any bill of particulars would also include the age’s culture-deadening coarseness of spirit, its incivility, the effrontery and shameless opportunism of its notable dramatis personae, its worship of portability and distaste for permanence, its rapacity and lack of principle, its mental and moral shiftiness, its cupidity, sleaziness, and lack of social conscience or generosity. It was an age seemingly unable to grasp the relationship between cause and effect unless the interval between the two was as infinitesimal as the alphanumeric wink of a computer trading screen.

Culture and society became utterly bottom-driven. The risen overclass went remained downmarket in its soul: lowbrow in spirit and conscience, audience-sniffing, poll-driven, utterly in thrall to the mass-market, shaped by rather than shaping public taste, wholly committed to whatever might yield the biggest grosses – a fact which gives the lie to the notion that the 80s was a Golden Age of the “bottom line.” What the decade was a Golden Age of, was the creaming rich fees and commissions off the top of deals.

There was also a surpassing lack of respect for the territoriality, privacy, rights, sensitivities (which in my lexicon has nothing to do with “political correctness”), work, originality, precedence, and equity of others. The Golden Rule, it seemed, had been melted down for coin. Disgrace and shame no longer functioned as controlling principles of private civility and order. Like other “public” sentiments, they had sunk without a trace in the vast mushy Sargasso of self-esteem-seeking which is the most disinctive feature of the present-day mental landscape.

None of this seemed to square with the world I thought I had grown up in, but it was hardly new to America. Here is Charles Francis Adams (Henry’s brother) writing in 1870:

“No portion of our system was left untested, and no portion showed itself to be sound. The stock exchange revealed itself as a haunt of gamblers and a den of thieves; the offices of our great corporations appeared as the secret chambers in which trustees plotted the spoliation of their wards; the law became a ready engine for the furtherance of wrong, and the ermine of the judge did not conceal the eagerness of the partisan; the halls of legislation were transformed into a mart in which the price of votes was higgled over, and laws, made to order, were bought and sold; while under all, and through all, the voice of public opinion was silent or was disregarded.

“…Failure seems regarded as the one unpardonable crime, success as the all-redeeming virtue, the acquisition of wealth as the single worthy aim of life…Ten years ago such revelations as these…would have sent a shudder through the community, and would have placed a stigma on every man who had had to do with them. Now they merely incite others to surpass them by yet bolder outrages and more corrupt combinations…The only remedy lies in a renovated public opinion.” (“A Chapter of Erie,” in Chapters of Erie, 1871)

But who would “renovate” public opinion if not the people at the top? That was the message I was trying to put across to the Class of ’40. I had been raised within the American elite and educated in the notion that with privilege went responsibility. All the more so when one saw money being made the way it was in the era of Reagan and Milken, thanks to utterly reckless and cynical fiscal policy and the socialized deregulation of institutional credit. The Wall Street Journal might trumpet it as “wealth creation,” but what it amounted to was no less than the wholesale embezzlement by the overclass of the financial property of future American generations. About a year after I slunk from the rostrum in Thompson Gymnasium, I came across a book which said many of things I was trying to find the right words for. Written during what we might think of as our first Gilded Age, I have frankly taken it as the model for this book. It is James Fenimore Cooper’s The American Democrat, first published in 1839.

I learned of Cooper’s book serendiptously, while on a journalistic asignment in Canada’s Maritime Provinces. I had brought along as a travelling companion that most browsable of volumes, Louis Kronenberger’s “Atlantic” Brief Lives: A Biographical Companion to the Arts (Atlantic Monthly Press, 1971). The sun was setting on Passamaquoddy Bay outside my hotel window when I chanced upon the entry for “Cooper, James Fenimore,” whom I knew mainly as the author of Settlers ‘n Indians spellbinders. The entry was written by Robert Penn Warren; my eye lighted on these words, which were evidently not about The Last of the Mohicans: “(Cooper) saw the rising Whig plutocracy, not the mob, as the most dangerous enemy of democracy. The key of Cooper’s criticism was the fear that a majority, swayed by popular passion manipulated by wealth, would create a tyranny devoid of justice and taste…The only counterweight he saw to such a tyranny lay in those rare individuals who were both thoughtful and independent, and more broadly in a class of ‘gentlemen,’ informed and public-spirited, which might stand against the irrationalities of the democratic system.”

To someone fed to the teeth with the vulgar, grubbing behavior of the people at the top of the American heap, with an era that could make a hero out of Donald Trump, with what seemed the wholesale repudiation of everything I considered myself to have been taught about the duties of station and the obligations of advantage – and yet convinced that only from the top of the heap could the path of righteousness be sighted and regained – Cooper sounded just the ticket. I perused the bibliography at the end of the entry and guessed that The American Democrat was the book I would be wanting. On my return to New York, I found to my surprise that it was still in print as a Penguin.

It was a revelation, about the best book on this country I know, in many respects a helpful antidote to Tocqueville. Few people seem to have read it or heard of it, including the roughly two dozen great and good to whom I have given copies. Cooper’s reputation is largely based on his romantic tales of the frontier, Classic Comics staples such as The Last of the Mohicans and Leatherstocking, and this may militate against his acceptance as a serious social commentator. Arthur Schlesinger Jr. does Democrat justice in The Age of Jackson, but it doesn’t figure in such highly regarded tours d’horizon as Hofstadter Anti-Intellectualism in American Life (1963), or, more surprisingly, John P.Diggins’ The Lost Soul of American Politics (1984), by my lights one of the landmarks of American intellectual history.

Interestingly enough, Cooper’s book was first republished by Knopf in 1931, amid the rubble of another frenzy of paper speculation. Books are not revived by chance, but because someone believes they have something to say to a specific time. The Introduction to the new edition was by H.L.Mencken. “How many other treatises on politics have held up for a century?” asks Mencken. He goes on to make the point about which my evening with the Class of ’40 had left me circling uneasily.

“(Cooper) saw clearly how little genuine aristocracy is a matter of privilege and how much a matter of responsibility. If he urges his ‘superior’ Americans to to oppose the encroachments of the mob, it is not because it will work them any private benefit but because it will work a benefit to the nation…In large part his book is devoted to an argument that the gentleman, after all, has a plausible place in a democratic society, if only as a standing protest against the levelling that everywhere goes on…He launched himself against the theory, first rising in his time, that a Congressman was no more than an office boy for his constituents, bound to carry out their whims. Today we confront a Congress made up of men who play the limber jenkins, not indeed to their constituents, but to the rogues and charlatans who inflame and prey upon their constituents…”

Cooper was no socialist before his time. He stood squarely for private property, both tangible and intellectual. In fact, he anticipated and put down “communism” even while Karl Marx was making notes in the Reading Room of the British Museum. “As property is the base of all civilization,” Cooper writes, “its existence and security are indispensable to social improvement. Were it possible to have a community of property, it would soon be found that no one would toil, but that men would be disposed to be satisfied with barely enough for the supply of their physical wants, since none would exert themselves to obtain advantages solely for the use of others.”

Cooper’s sense of his country remains idealistic, however, derived principally from the Declaration of Independence and the Constitution rather than from the 1838 version of IRS Form 1040. To give the flavor of the man and the book, here are a few choice passages:

– On Commerce: “It is a mistake to suppose commerce favorable to liberty. Its tendency is to a monied aristocracy, and this, in effect, has always been the polity of every community of merchants. Commerce is an enemy of despotic power…from which…it has obtained its reputation of sustaining freedom; but, as a class, merchants will always be opposed to the control of majorities. …

“… every transfer of property leaves a profit with the merchant, he has a disposition to increase his gains, by pushing his transactions beyond the just limits of trade. This disposition is best checked by the penalties, but in a country like this, in which no such penalty exists, the consequence is to produce an unbroken succession of commercial reverses, that effect the value of all the property in the nation, almost periodically.”

– On the Adulation of Wealth: “A people that deems the possession of riches its highest source of distinction, admits one of the most degrading of all influences to preside over its opinions. At no time, should money ever be ranked as more than a means, and he who lives as if the acquisition of property were the sole end of his existence, betrays the dominion of the most sordid, base, and grovelling motive, that life offers.”

– On mutual respect: “The entire complexion, and in many respects, the well being of society, depends on the deportment of its different members, to each other. It behooves the master to be kind to the servant, the servant to be respectful and obedient to his master; the young and inexperienced to defer to the aged and experienced; the ignorant to attend to the admonitions of the wise, and the unpolished to respect the tastes and habits of the refined.”

– On public opinion: “Public opinion has got a wrong, if not a dangerous direction, already in this country, on several essential points. It has a fearfully wrong direction on the subject of the press, which it sustains in its tyranny and invasions on private rights, violating all sanctity of feeling, rendering men indifferent to character, and, indeed, rendering character itself of little avail, besides setting up an irresponsible and unprincipled power that is stronger than the government itself.’

On trade (readers in 1992 will want to substitute “Japan” for “England”): “As many of the interests of this country are opposed to the interests of (other) nations, efforts are constantly made to influence opinion here, im favor of interests there. The doctrine of free trade (has) been got up by English writers, to prevent other states from resorting to the same expedients to foster industry, that have so well succeeded in Great Britain…while America trifles with her welfare, like a vigorous youth who is careless of his health through reliance on his constitution, England watches over every material concern with the experience, vigilance and distrust of age.”

Finally, Cooper would also have understood the Milken dimension of the deregulated ’80s, which produced high financial crime and spoliation. “If the citizen is careless of his duties, regardless of his rights, and indifferent to the common weal, it is not difficult to foresee the triumph of abuses, peculation and frauds. It is as unreasonable to suppose that the private servant who is not overlooked, will be faithful to his master, as to suppose that the public servant who is not watched, will be true to his trusts. In both cases a steady, reasoning, but vigilant superintendance is necessary to the good of all concerned; to the agent by removing the temptation to err, and to the principal by securing an active attention to his interests.”

Of long-descended American roots, Cooper, returning to his native land after a long sojourn abroad, was shocked at what he saw and said so in plain English. What grated him most was the abdication of the nation’s “best and the brightest” of their responsibilities of station. A century and a half later, I share his outrage – for many of the same reasons.

My outrage is not political. This book isn’t a tract or manifesto, although it suggests certain solutions to problems that those so-minded might condemn as political. My own politics are defined by a preference for “free markets and a tradition of responsibilty for one’s fellow man,” (David Willetts, The Modern Conservative). I do not consider the bootlicking political economy predicated on selfishness which the radical, neoconservative right professes to be conservative any more than I consider a stockbroker in a Guards tie entitled to the respect due to a veteran of El Alamein. I do consider myself a true conservative: one who examines the bathwater to see whether there might be a baby in it. This seems to confuse people: I have been called a left-winger at one end of a dinner table while at the same time at the other end I’m being damned as a Tory elitist. So it goes.

I suppose to some degree my feelings about the country resemble those of Henry Adams, who also grew up in the most comfortable and refined circumstances. I admire Adams in many ways, although I realize this entails a certain amount of risk. Adams is regarded as a prize antisemite – with some justice. In the course of writing about and against the ’80s, when I pointed fingers I named names; some of those names happened to be Jewish, and so I was accused of antisemitism myself, as I was when my 1990 novel Hanover Place described an outbreak of antisemitism as a side-effect of general economic anxiety and anti-Wall Street sentiment. Although, as I write, antisemitism seems to be breaking out throughout the West, I take no pleasure in having read the tea leaves somewhat accurately.

What I gladly admit to sharing with Adams is a feeling of having known better times and better standards than today. As I have been, Adams was attacked for hating his country. In his defense, James Russell Lowell noted that it is “not a real paradox to affirm that a man’s love of his country may often be gauged by his disgust at it.”

It is one thing to complain, however; another to do something about it. One place to begin is to tape shut the mouths of those who have nothing but words to contribute: who say we need “more public investment,” but neglect to specify where, who throw billions of dollars around verbally, but neglect to specify how these sums are to be raised by a polity which has borrowed itself into a corner.

This country suffers from a plague of full-time talkinghead experts, a peerage of the mouth. By their credentials shall ye know them. If I were king, one of my first acts would be to shut down every last MBA and LL.B factory. It is not an accident of circumstance that America has declined as the latter have prospered.

I would also require that pundits be licensed, in the same sense that drivers are. Just as the motor vehicle authorities use a point system for moving violations, so should the Pundit Bureau monitor opinion-shapers. Undrr my system, pundits would be required to include a minimum of three hard, precise, practical solutions to the social, economic or political problems lamented, analyzed or addressed in an Op-Ed piece or TV blab. Failure to do so would cost points. Accumulate too many, and the penalties would be Draconian by the standards of those punished: no Op-Ed exposure in The New York Times or Washington Post, no “panelizing” on handsomely-remunerated symposia, and, above all (the pundit equivalent of capital punishment) no appearances on “McNeill Lehrer.”

Since I want to keep my license – and set a good example – the penultimate chapter of this book suggests a few hard answers to difficult problems: thoughts as to how to achieve defined goals by working within present realities.

I miss the America of my youth, but this book is not about trying to turn back the clock. A trick of history landed my generation on earth in what seems a golden time but may very well be an optical illusion. I would like to see America revive and reconstitute some significant part of the remembered essence of those years as a stimulus to practical action. I think we can.

It ,may be that “my America” was an illusion, but so what, provided enough people believe in it. Certainly we seem obsessed enough with the trappings of the mythic past as conceived by Ralph Lauren, who has profitably reimagined – I guess that is the word – the way in which the American and English upper classes furnished themselves and their residences during the 1920s and 1930s, the Golden Age of Anglo twithood. But that was about as far as the backreach has gone. There is more to renascence than accessorization. Isn’t substance also revivable? The Renaissance of the fifteeth century was a massive revival of antique values and culture, but no one in Florence and Padua went about in togas. It was the ideas which mattered.

Tocqueville observed: “…sometimes there comes a time in the life of nations when old customs are changed, mores destroyed, beliefs shaken, and the prestige of memories has vanished…Then men see their country only by a weak or doubtful light; their patriotism is not centered on the soil, which in their eyes is just inanimate earth, nor on the customs of their ancestors, which they have been taught to regard as a yoke, nor on religion, which they doubt, nor on the lawgiver, whom they fear and scorn. So they find their country nowhere, recognizing neither its own nor any borrowed features, and they retreat into a narrow and unenlightened egoism…

“What can be done in such a condition. Retreat. But nations do not retreat to the feelings of their youth any more than men return to the innocent tastes of their infancy; they may regret them, but they cannot bring them back to life. Therefore it is essential to march forward and hasten to make the people see that individual interest is linked to that of the country, for disinterested patriotism has fled beyond recall.” (Exact citation TK)

This sort of disinterested patriotism is a luxury affordable in peacetime only by the overclass. This is my main point. Only the overclass possesses the security, the power, the field position, the tactical advantage to harbor idealism and to convert it materially. The question is how to mobilize that power.

On the morning of Trafalgar, Nelson flew the famous signal “England expects every man will do his duty” from the top-gallants of H.M.S. Victory. Many a man in the fleet would have drawn inspiration from those fine words alone. Others would have found their enthusiasm for their duty sharpened less by their commander’s fine words than by the presence on the horizon of hostile men of war on the horizon or at their backs of glowering boatswains armed with marlinspikes and cat o’ nine tails.

Those incentives work best which are tantamount to coercion. Sheer survival is a more powerful economic incentive than sum-of-the-digits tax depreciation.

Writing of “the Duties of Station” in The American Democrat, Cooper observed: “Whenever the enlightened, wealthy, and spirited of an affluent and great country, seriously conspire to subvert democratical institutions, their leisure, money, intelligence and means of combining, will be found too powerful for the ill-directed and conflicting efforts of the mass. It is therefore, all important, to enlist a portion of this class, at least, in the cause of freedom, since its power at all times renders it a dangerous enemy.”


And here is Scott Fitzgerald: “The best of America was the best of of the world. France was a land, England was a people, but America, having about it still that quality of an idea, was harder to utter – it was the graves at Shiloh and the tired, drawn, nervous faces of its great men…It was a willingness of the heart.”

In the final analysis, it is the recapture, however achieved, of that willingness by the people who can afford the best cardiac care which is the subject of this little book.

Chapter One of “The Overclass”, my unpublished 1993 book:












I cannot find the word “Overclass” in either The Random House Dictionary (Second Edition, Unabridged) or The Oxford English Dictionary (Second Edition), so I suppose I can claim to have coined it: to designate the American social subgroup which is the polar opposite in advantage, access, affluence, expectations and influence to the generally-recognized “underclass.” The top of the heap as against the bottom of the barrel.

We accept as sociological truth, universally acknowledged, that there has evolved in this country, largely in consequence of misguided public policy, an “underclass” whose degraded, sociopathic condition is a living rebuke to the very idea of America. An underclass which is criminal, addicted, walled off from mainstream America: hopeless and helpless and utterly dependent on the public purse for sustenance through “welfare”.

I believe that there has also evolved, at the opposite pole of the social and economic spectrum and no less as a consequence of misguided public policy, a class of people which is also a vivid rebuke to the idea of America. This stratum, too, is streaked with criminality (although wearing a white collar), with near- sociopathic alienation, and driven by a desperate materialistic relativism. This class, too, is largely “on welfare,” although its welfare payments do not arrive in the mailbox three days late, to be cashed at some storefront “casheteria” for usurious fees, but race in nanoseconds of real time over the bank wire to marbled and panelled halls, there to be greeted by unctuous young “private bankers” dressed for the success which presumably awaits those adept at doing wealth’s bidding.

The differences between underclass and overclass are principally of degree, of financial denomination, of zeros. The similarities seem substantive. Both have been culturally coarsened by welfare. If the underclass is walled in by poverty, exclusion, ignorance and resentment; the overclass is walled off by affluence, access, inside information and contempt.

The overclass consists, generally, of people with the wealth and influence to live exactly as they choose; to do pretty well as they please, with their own property or anyone else’s, including resources which in the last analysis are, properly considered, public property or “common wealth.” These are the people with the most options: those able thanks to their capital, or the use of someone else’s, to push the most buttons – which, as Ivan Boesky once said in my hearing, is the point of the exercise.

The novelist Anthony Trollope, an author who seems to appeal particularly to the craving for Anglo-gentility of today’s paladins of Laurensque piss-elegance, characterized the overclass of his era as “the educated, the polished, the picked men of the country.” Much of American overclss life today centers on the question of who does the picking, and the polishing, and for how much.

There are other phrases which might be used with equal justice. When I first began to worry the bone at the heart of this book, the first words that came to my mind were “officer class.” These were people who had done their duty by their country, who did not regard the obligation as automatically suspended with the cessation of hostilities. They led our forces in the various theaters of war were heros, whether they carried five silver stars on their shirt-collars like Marshall and Eisenhower, or a single bar, like the Marine second lieutenants whose life expectancy on Pacific beacheads was measured in minutes, or the oak leaf of a Navy lieutenant-commander, such as my father wears in the photograph I treasure. It was taken somewhere in the South Pacific, on a carrier deck; he is helping to pull a severely-wounded pilot out of the cockpit of his Hellcat. They would also, some of them, conspicuously and no less bravely, lead the peace.

“The marketmaking class” might be better, especially in a finance-besotted culture. The overclass dwells in a hygenic world made of paper and electronic blips: its native haunts are Wall Street (and parasiteries in law and accounting), the media and public relations, entertainment, government and opinion-shaping. People who work with clean hands with computers and pieces of paper.

In a famous letter of 1816, Jefferson deplored that “legerdemain tricks upon paper can produce as solid wealth as hard labor in the earth.” His tone suggests a belief that “hard labor in the earth” is the American way, but I think Jefferson got it wrong. It is “legerdemain tricks upon paper” which is the true, instinctive, inertially inevitable American commerce, as innate to our scheme of things as baseball and apple pie. What people like me deplored in the ’80s, or Mencken in the 1920s, or the Adams brothers in 1870, or Cooper in 1837, or Jefferson in 1816, is not the exception, it is the rule. It is the way we are.

The characters of nations may be inferred from recurrent patterns of mass behavior and folly. If there is one thread which runs hideously bright through American history, practically from the moment the first stock exchange set up for business in 1792 in the shade of a buttonwood tree in lower Manhattan, with the ink on the Constitution barely dry, it is a metronomic cycle of speculative cycles of boom and bust based on private-sector issuances of capital: from the notes of Jeffersonian country banks to Michael Milken’s junk bonds.

People roughly my age tend to think that the New Deal, World War II and the postwar period, the great age of American heavy industry, ending approximately with the assassination of JFK, as representing the natural tendency of American commerce. It’s an agreeable illusion, as was Jefferson’s belief that the enlightened, patrician, only faintly materialistic spirit he recalled from the the founding of the nation was the American turn of mind.

I make this point simply by way of asserting that if we are goinng to fix what seems broke about this country, we have to do so on the basis of the way we are, and not the way we like to think of ourselves.

The task will be harder than it has been in the past. No longer do we possess the resources at hand and within ourself automatically to create recuperative economic and commercial growth: land to be settled, a domestic market insulated by wide oceans, a hegemony in world affairs equivalent to a commercial and industrial monopoly. The world has changed drastically and our position in it.

Our situation is worsened by the fact that we are not, intellectually, an anticipatory culture. We don’t see things coming. We are reactive, transactional, given to “winging it,” to jumping on bandwagons that rumble by out of nowhere. World War II and the years of the Marshall Plan allied with our native parochialism to bestow the delusion of invincibility: the little yellow people on the far Pacific rim, with their tiny hands (too small to play baseball, noted Casey Stengel) and their delicate tea ceremonies, would never manufacture anything as big, as tough, as quintessentially American as an automobile! As John Foster Dulles famously noted: their industrial future lay in the manufacture of cocktail napkins.

Nations are managed into industrial decline, as Hayes and Abernethy pointed out in their notable – and notably ignored – 1980 article in The Harvard Business Review. If we have been blindsided by the course of events, it is the overclass which blinkered us. If we were to draw two lines, one charting the decline of American industrial competitiveness, the other the essentiality of an MBA degree to premium employability, the former would head down at a slope of around sixty degrees, the latter would incline upward at about the same gradient. In the last dozen years, the number of MBAs produced by the nations graduate schools of business has increased by a factor of ten. The two lines would have crossed in around 1983. Today, the gulf bewteen them would be wider than the Mississippi. This typifies the way in which, in the course of the last decade, while so much of the country has gone straight to hell, the overclass has actually exponentiated its “overness.”

It is time to bring the overclass back into the loop. If they will not come willingly, then they must be conscripted – psychologically, politically and, of course, financially. I think this is a simple matter of equity. One day the American people, capable of being aroused by the overclass press to a froth of indignation at a piddling scam like the House of Representatives “bank” scandal, will have the 1980s properly explained to them. Perhjaps this book of mine will help. Perhaps at last they will come to understand the sublime and unacceptable irony of the Age of Reagan/Milken/Bush: that this era, celebrated by its propagandists as one of the truly glorious epochs in the history of enterprise capitalism, going all the way back to the invention of circulating medium by the Phoenicians, drew more heavily on the public’s money than a million House bank scandals ever could. That the gross wealth was arrantly based on the resources of the many, who were hideously underpaid for the use of their money. Perhaps at last the citizen in the street can be made to understand what is meant by “socializing the risks, and privatizing the rewards,” or “the socialization of credit risk”: that these are no just jargon, that it is the citizen’s money – and his children’s and his grandchildren’s – that we are talking about.

It is is this fact that gives the lie to the assertion by the fatcats and their dogsbodies that “Tax the Rich” policies are nothing but expressions of a politics of envy. This is not about envy; this is about fairness, equity, economic justice! We the Taxpayers are entitled to better treatment – a better deal – from those we have enriched – who used our money without our permission on a basis on which they would never have committed their own.

In determining tax and fiscal policy, it is fairness – current and retrospective – which must count for most. Fairness demands that we take a hard look at exactly how money is made by whom in this country Fairness depends on a clear understanding of what wealth is, and is not. Fairness, in the end, is what this little book is also about.

To take one example, the disparity between executive compensation and ordinary working wages is all the proof needed that if the overclass once had a powerful sense of the responsibilities that go with privilege, it now has next to none. Moreover, in the last ten years, the overclass has economically cushioned itself to the point that it has little further need of the public sector, especially with the passing of the Soviet military threat. Even multibillionaires like the late Sam Walton, or young Bill Gates of Microsoft, might have balked at personally paying the cost of a fully-equipped Polaris submarine to protect their vast personal fortunes. Now they no longer need one.

The claims of any society on its best-placed, most-advantaged members in peactime are difficult to enforce. World War II converted large numbers of the overclass into officers and key members of the homefront war effort, and in the course of that monstrously large national undertaking habituated them to norms and forms of behavior which lingered on into the postwar years. Eventually – inevitably – time, comfort and other erosive forces of life wore these habits of mind and heart down. What I think of as the three-legged stool of crisis of the mid 1970s – OPEC, Watergate, VietNam – finished the job.

Tocqueville to the contrary, the reconciliation of self-interest with the general interest is a tough sell, never more so than in peacetime. No program to deal with our existing problems – education, the debt, infrastructure and so on – can have a hope of taking hold, let alone working unless it accomodates present realities. Hypocrites and euphemists peddle a dream world, frequently abstract, with not much more to it than a loose fabric of feel-better slogans. As a result, nothing gets done, nothing gets changed; theory sinks in the quicksand of reality or wanders off into the great spinach jungle, never to be seen again.

For those of us to whom the ultimate meaning of life isn’t found in the compound interest tables, this is an unacceptable outcome. We live in a country where the overclass sets the bid and ask: on Wall Street, in politics, in economic and business affairs, in public perception (which is sometimes, but not always, the same as “public opinion”), in culture high and low, and so on – and uses our money for capital. The overclass manages the information flow (not to mention the flow of disinformation and misperception) and dispenses celebrity. Taken collectively, the overclass is “the regime,” an interlocking series of mandarinates which links Capitol Hill power-mongers, Wall Street insiders, heavyweight bicoastal “players” in media and entertainment, big hitters in industry and real estate. Typical specimens include $150,000 a year think-tankers who sniff dismissively on “McNeill-Lehrer” at the notion that a tax windfall of $300 a year might actually make a difference to someone; $500,000 a year TV news “personalities” puffing shock at the malefactions of Congressmen baring fifty times the responsibility for a quarter of the remuneration; $5,000,000 a year CEOs seekig to return money-losing companies to the black by cutting hundreds, even thousands of $20,000 a year jobs; $250,000 a year journalists to whom entree is more important than truth; politicians, fund mangers, or union leaders in whom an investment of $150,000 can return a billion dollars’ worth of porkbarrel or the use of half a billion in public or private pension money to clinch a juicy leveraged buyout.

You might also call this “the executive class,” “the American elite,” “the Establishment,” “the custodial class,” “the possessing class,” “the Operator class,” “Big Cheesedom,” “people at the top,” “the In Crowd” (apologies to the late Roy Orbison), even “the upper crust,” which my late father was pleased to define as “a bunch of crumbs held together by dough.” The overclass takes in Eisenhower’s “military-industrial complex,” the Forbes “400”, the board members, inside and outside, of the Fortune “500 and the Business Week “1000,” the membership of the Augusta National Golf Club, the Council on Foreign Relations and the Bohemian Grove, and “roundtables,” “forums,” and other exclusive top-people sit-downs too numberless to list. The overclass is no longer limited to the old WASP and “Our Crowd” patriciates and their professional and political dependencies. Today is it almost entirely defined by money power and its advantage-seeking/currying offshoots.

By whatever name you know the overclass, its members are the educated, the influential, the well-off, the well-connected, the best and the brightest, the great and the good. The people who have made the potential and singular blessings of the American Way their own, who have in hand all or most of the life-enhancing options, thanks to capital, influence, ready use of the money or influence of others or some combination of the three.

Capital is best. I have already mentioned Ivan Boesky’s assertion that capital is what lets you push the most buttons. He made this remark at a characteristic overclass gathering in the upstairs private room of a luxe Manhattan restaurant hosted by a publisher whose intellectual and other attainments were nicely complemented, which is not to say underwritten, by his wife’s substantial inherited fortune. Everyone there was “someone”; the air was so thick with self-congratulation you could have sliced it like foie gras.

When his turn to opine came, the not-quite-yet disgraced financier spoke in soft, measured tones, just loud enough to conceal the faint whirring of the body recorder which, as a Federal informant, he would by my dating have been wearing under his snowy shirtfront. Buttons, he told us: that was what it was all about, this great game of capitalism. Capital lets you push the most buttons.

By this Boesky meant what economists have in mind when they speak of “comparative advantage,” the ultimate glittering prize of both capitalism and geopolitics. The American overclass possesses maximum comparative advantage. How it financed this hegemony is worth a close look and I will come to that.

Overclass membership may be the consequence of an Ivy League education, a graduate degree in business or journalism, inherited or self-made wealth, a friend at Chase Manhattan or The Washington Post. It may flow from election or appointment to public office, attainment of a high rung on the ladder of business success, or any of the scores of ways by which individuals achieve institutional influence or power. Swaddling clothes of imperial purple or a silver spoon are not mandatory. The attainment of overclass membership in good standing can come at any time in a person’s life between the cradle and the grave. A person may be born into it, buy into it, immigrate into it. It may drop into a person’s life out of the blue, like Groucho Marx’s duck, or be earned by hard and humorless striving, by genuine creativity or mere resourcefulness in manipulating the system. Madonna is a member of the overclass, as is Paul Mellon, as was Michael Milken (and may be again).

Money may be the straw that stirs the overclass drink, but there are more buttons to push than on a great cathedral organ, so a diversity of interests and ambitions is essential to the attainment and consolidation of its gross advantages. Along with businessmen, politicians and media types, financiers, news anchors and entertainment and book agents (as distinct from “literary agents), the overclass will include philosophers, art critics and inventors, movie stars, generals, museum directors and professional athletes: the people who bestride the great structures of American institutional life, who dominate the lecture rooms and libraries of academies and think tanks, the editorial offices of newspapers and radio and television news organizations. These people are essential to overclass hegemony, and are rewarded for their indispensabilty with crumbs – in cash or esteem – the size of wedding cakes. Gallant indeed have been their efforts in the service of the reigning proposition of our age and polity: the great notion that if the people know nothing, they can be made to believe anything.

To a surprising degree, the overclass as it has evolved under Reagan-Milken-Bush resembles the old Soviet nomenklatura. It, too, is state-subsidized; its wealth has largely been accumulated by leveraging what I call the Public Capital; without our conscious by-your-leave, at least until too late, it has received transfer payments, welfare, to an extent of which an unwed ghetto mother would envy the trillionth part.

The difference between the American nomenklatura and its now disenfranchised Russian counterpart is largely a matter of comparative splendor. The U.S. economy has been notably more efficient and diversified; the material advantages and rewards our own nomenklatura has been able to extract for itself from the American Way have been immeasurably greater. In other respects, however, principally behavioral, our overclass closely resembles its Soviet counterpart. “In a funny way,” an anonymous (“for fear of reprisal”) Federal official wrote in a New York Times Op-Ed piece, “one cannot help but be reminded (by free-market ideologues) of the old-guard Communist leaders before their fall, comfortable in their dachas, pointing to the theory of the collective economic system as the proof of superiority, thereby dismissing the realities of barren stores and food lines.” Donald Trump, that quintessential figure of ’80s capitalism, a straw “entrepreneur” assembled on a “public policy” armature of easements and tax exemptions, has been described by journalist Wayne Barrett as “a state-designated capitalist.”

That money confers omnipotence has forever been an American article of faith. “If you didn’t want it to snow,” says the narrator of Scott Fitzgerald’s story “Babylon Revisited,” “you just paid some money.” That was the 1920s, but it was the same sixty years later. The difference was, the money you paid had like as not been directly or indirectly drawn from the public purse. The socialization of credit risk changed the definition of risk. People got rich doing deals that even the callowest young banker would have shunned if John Q. Public hadn’t been standing there in the shadows with his bottomless bailout bucket. In other words, the 1980s present us with the paradox – in a so-called “meritocracy” – of a privileged class underwritten by the state. Without proper or proportionate compensation, may I add, a crucial truth which is the big dirty secret of the American overclass. In my viw, if the public underwrites the overclass’s material plentitude, it is entitled to a share of that plenitude, and not simply as the consequence of supplyside “trickledown,” a pernicious illusion peddled by the new political economy. The rest of us are entitled to a better bang for our buck.

Let us put questions of fiscal equity aside for the moment, and stay with the proposition that the overclass’s handling of its advantages ultimately bears on whether the system succeeds or fails. There are contracts of conscience as well as law, and philosophers such as Richard Cornuelle have argued powerfully and elegantly for a resurgence of voluntarism and altruism in the overclass. Lots of luck. We can pontificate, as I have, about how privilege breeds responsibilities and obligations, but at the end of the day we have to face up to the evidence, and the evidence is hardly encouraging. .

To put it bluntly, the overclass’s conduct of its advantages seems on the whole to have gotten unspeakably worse than when I was younger. In the dozen years following the inauguration of Ronald Reagan, as the rich have gotten richer, they have – with notable shining exceptions – gotten more arrogant, gaudy, greedy and solipsistic. If the hard-core underclass has become unspeakably degraded, the overclass has displayed a no less sociopathic evaporation of public and community spirit.

The overclass is supposed to pay its way is by raising standards, elevating taste, setting an example. It seems axiomatic, however, that a class which takes its cultural values from the bottom can hardly lead effectively from the top. Today’s overclass is unabashedly bottom-driven, convinced that the mass-market lowest common denominator yields the fastest, fattest returns on investment or effort. From cultural philistinism flows intellectual philistinism. When money talks loudest, it is the voice of the moneyspinner that commands attention, that evokes the singular silence which falls upon a gathering suddenly aware that Very Big Money has something to say. I know that anticipatory hush all too well; there is nothing quite like it; it would cause Socrates to fall dumb.

Trollope expected his “picked men of the country” to incarnate “a propriety of conduct by example and precept.” He would have been very disappointed at the recent performance of a great many people who take pains to have copies of The Way We Live Now lying in conspicuous state in their chintz-stricken living rooms. Positioned to exhort, they seem principally concerned to extort. A President who claims as his tax-residence a deserted suite in a bankrupt Houston hotel is not setting an example. The precepts which animate clever accountants are not those by which to guide a great nation whose founding documents are a catechism in promise and possibility and not, as Gore Vidal has observed, simply about “the question of who pays taxes to whom.”

But to whom else can we turn? After two decades of appropriation and arrogation, only the overclass possesses the necessary resources and freedom of action to indulge in the luxury of idealism about this country. I say “luxury” advisedly, because it seems to me that’s what it has become in an age of diminished expectations: the spiritual equivalent of a third home or a yacht. Most of the rest of us have been priced them out of the idealism market.

I hasten to add that I find the prognosis discouraging.   The overclass mind tends to be as narrow as the overclass purse is deep. The higher one rises in the American class system, the more one’s sense of citizenship and civic obligation seems to reduce to a single dimension: taxation. We pay lip service to the notion that citizenship is a house with many mansions, there is only one room in which the overclass spends most of its time: the vault – shoring it up against the depredations of the tax collector.

It has always been this way. “The purse of the people,” wrote Jefferson in 1798, “is the real seat of sensibility. It is to be drawn on largely, and they will then listen to truths which could not excite them through any other organ.” In The Harper Book of American Quotations, published in 1988, there are as many entries for “Tax”, “Taxation,” and “Taxes,” as there are for “Patriotism,” and twice as many as for “Virtue.” With one exception – Justice Holmes’ famous dictum that taxes are the price of a civilized society – all are pejorative.

When we speak of “incentives” in America, nine times out of ten it is tax policy that we have in mind. But can tax policy produce leaders? Possibly: if, as in Reagan-Milken-Bush, leadership is limited to forging the signature of generations of future taxpayers on a blank check.

This asks the question whether the apparent absence of leaders implies the possibility that the American overclass, considered as a political culture, may be incapable of producing them. A principal, perhaps the principal characteristic of leadership is a willingness to take risks. Can an egregiously risk-averse, capital-focussed society produce real leaders? Is our leadership vacuum systemic?

In peacetime, perhaps. Certainly the only time that George Bush has rsembled anything like a leader was during the 1990-91 Gulf crisis. To produce the leadership we need, it may be necessary to oblige our overclass to become re-inured to risk and the possibility of sacrifice. I think as good a case can be made for getting tough with the overclass as with its opposite. This is something which I believe lies at the heart of the political philosophy of Ross Perot.

We have a very high opinion of ourselves as a nation and a political, social and economic system. Our right to that opinion has been earned not in peacetime, however, but at times of profoundest national emergency when everything has been put by the board except the need to deal, from one end of American society to the other, with an agreed, identified enemy of the people, and to enable the dealing with the all-involving mandate of “war”. We refused to treat Viet Nam – in which 50,000 Americans died – as a proper war, and instead of a victory, we got a syndrome, which seems a pitiful thing to ask young men to die for. On the other hand, our military adventure in Mesopotamia may scarcely have deserved the name of “war”, with a human cost of less than 400 lives, but it was communicated to the nation as such, and America went the whole nine yards.

War is an overclass affair. When LSTs crunched on the sands of Pacific atolls fifty years ago, the first people to hit the beach were young guys with bars on their collars, not stripes on their sleeves: officers, not enlisted men. Apart from graduates of West Point and Annapolis, these were men who in a world at peace would have been at Harvard or Yale or Wharton, not some trade school, or on the floor of the New York Stock Exchange, not some grimy factory, or – if idle – on the veranda at Piping Rock, not on a street corner peddling apples.

They led. They didn’t huddle in the back of the landing-craft studying polls. They didn’t wince at the ferocity of the ground fire being laid down by the Japanese and beg to be returned to the safety of Stateside on the grounds that their ability to handle information made them too valuable to risk. My two cousns lie in Germany; they never got back to Harvard. The and their like didn’t quit the field, whining about “the process,” or “the system,” the way certain Congressmen recently have, the legislative equivalent of the mindless channel-switching which may be television’s most disconcerting legacy. I listen to Senator Rudman whining away about the system, and think back to a visit my wife and I made to Pointe de Hocq and the Normandy battlefields.

Is it only under fire that the American spirit is capable of the greatness – the willingness of heart – which the present day requires? Only war and equally drastic crises which threaten our material safety and convenience seem to inspire the better angels of our nature to sally forth and go head-to-head with the worse. Only when the overclass has been forced to join the crowd, within the context of a national crusade for survival, has it risen to the occasion in the spirit suggested by Fenimore Cooper in the epigraph to this book. Only then has America seemed to “work” in the way the Founders probably intended and the way which Americans like to boast that it does.

“By the end of the first decade of the nineteenth century,” writes Gordon S. Wood in The Radicalism of the American Revolution (Knopf, 1992), “…apprehensions had increased to the point where many Americans now looked to war as a necessary regenerative act – as a means of purging Americans of their greed and their seemingly insatiable love of commerce…of refreshing the national character and revitalizing republicanism.”

Wood goes on to say of the War of 1812, “…the war did have the effect of clearing the air of much traditional thinking and of helping Americans come to a new and more honest appreciation of their society and its commercialism. By the end of the second decade of the nineteenth century there were far fewer despairing lamentations over the chaotic and commercial state of American society and many more realistic attempts to find new adhesives and attachments to hold people together.”

War obliges people to do what has to be done. It gives teeth to certain “social” emotions – shame and disgrace, in particular – which are central to the conduct of a civilized polity and which have all but vanished from American life. The risk-reward ratio is weighted in favor of the risk-taker. The brave may earn only medals, but cowards and profiteers are shot, imprisoned or financially blasted.

Talk is not enough. It is all very well to proclaim, as Jimmy Carter did, “the moral equivalent of war,” but hostilities which do not universally involve the citizenry from top to bottom degenerate into mere fitful skirmishing and poster-posing. Volunteer armies are fine in theory, but no one in his right mind goes off alone to seek enemy fire unless the alternative is less agreeable. Everyone has to play, everyone has to pay.

The reconciliation of self-interest with the general interest is difficult to sell. No program to deal with our existing problems can have a hope of taking hold, let alone of working unless it accomodates the realities of our world: what kind of people we really are, the way the system really works, the sort of inducements which really pay off for the general good. Most hypocrites and euphemists peddle a dream world compounded of images and slogans which makes the consumer of the American Way feel he’s getting a good deal while reserving the real fruits for the privileged few. The result is that nothing gets done and nothing is changed.

There are those for whom there is more to life than compound interest. The problem is, such people usually don’t have the money with which to back up their idealism. And those with the money find the idealism a heavy burden. One day I groused at length to a plutocratic friend about the supplyside theory that eliminating the tax on capital gains will do everything from fixing the deficit to curing cancer. When I finished, he observed mildly: “Spoken like a man with no capital gains.”

Narrow fact may be on my friend’s side, but truth is on mine. Today, it seems not only just, but a matter of pressing economic equity to demand that the American overclass to take up the banner of idealism, for who else can afford to do so? If they refuse, then the public’s investment in them has been foolish, and should be – as the money men say – liquidated and redeployed.

11/10/16…Will there be life after Trump?

One interesting story that’s gotten buried by the election was John Oliver’s evisceration of Herbalife specifically, along with other period schemes (the MBA term is “multilevel marketing”). Bill Ackman couldn’t have written the script better himself.

Why we could be in deep doodoo (clue: it isn’t DJT himself):

Nothing is a bigger turnoff than the prospect of Giuliani, one of the certifiably worst people of all time, having any meaningful job anywhere!


11/10/16…Day Two of the End of the World (III)…


A dollar short and a day late….

(from Joe Pompeo – Politico Media):

Dean Baquet: “I think we need to do a better job going forward of explaining the divides that exist in America. I think we could do better writing about the people who voted for Donald Trump, understanding what drove them, their anxiety. … One of the biggest stories we all have to take on in the coming years is to understand that world better — the working class voters who feel like the forces of globalization and the rise of technology have left them behind. We need to understand that world better before there’s another election.”

Marty Baron: “I think we should have detected the depth of grievance and anxiety in America’s working class well before Trump became a candidate. It’s obviously our job to get out in the country and listen to people and to take the measure of the american public, and I don’t think we did as well as we should have, and we need to make sure we learn that lesson and make it a regular responsibility to really understand America’s working class.”

Jill Abramson: “I count myself as one who thought Hillary Clinton should win. I’ve been writing about this all year in opinion columns for The Guardian, and as someone who’s covered election nights since 1976, I thought she would win. So shame on me too. But I wouldn’t take a word of what I wrote back. … I think there has to be more attention paid to the immense gulf between elites and the rest of the country, and that’s going to be hard to report on because these [mainstream news] institutions are obviously seen as pillars of what some people see as the elite.”

Phil Boas (editorial page editor of The Arizona Republic): “The media’s failure was not understanding the popular support behind donald trump. We didn’t see it coming and we don’t understand it now. I think it will take years of reporting and academic research before we understand this phenomenon. … One of the accusations against the media in general this cycle has been that they made Trump, gave him all this free advertising. I don’t believe that. The great failure of the media this time was to not see this coming, to not do the spadework ahead of time to understand what was building up in the country, and in the world.”

Apparently this was the news that was unfit to print. It does beg the question: what are these bigtime editors getting paid for?

Here’s something pretty good:

Boola-boola – down the toilet…

Yale Professor Makes Midterm Optional For Special Snowflakes Upset By Trump Victory