On the Rich (James E. Miller)
Sunday March 24th, 2013
Try as he might, JP Morgan CEO Jamie Dimon will never shake the label of being an overly privileged, money-grubbing banker elite. In business and politics, used to be heralded as a man of impeccable character. President Obama once called the head of the modern House of Morgan "one of the smartest bankers we got." When asked what candidate he thought would be splendid at running the U.S. Treasury, superstar investor Warren Buffet name dropped Dimon as a "terrific" option. The New York Times, no bastion of respect for enterprise, went as far as to label him "America's Least-Hated Banker."
Following the 2008 financial crisis and subsequent bailout of Wall Street, the reputation of the banking class was forever tarnished. As traders and CEOs made off with big bonuses, the average taxpayer was stuck with the check. Two political movements arose out of the incident, both vowing to never let the midnight ransom happen again. As short-sighted as these reactionaries were, they reflected the animosity the general public had toward one street in New York City.
To exacerbate matters, a recent report by the U.S. Senate shed light on the kind of high-risk, improprietous financial dealings going on under Dimon's watch which lead to the loss of over $6 billion. No longer the golden boy of America banking, Dimon saw his salary cut in half over the affair. As Alternet editor Lynn Paramore analogizes, this was a 21st century rendition of Fitzgerald's The Great Gatsby. A tale of great wealth, exuberance, and greed, Dimon fit the narrative of man who wouldn't quit until he had everything if only you leave out the untimely and climatic murder.
At one time in America, wealth was admired instead of scorned. Large manors built in Victorian fashion were seen as an achievement of taste. Luxurious automobiles would reflect business savvy. Those who dressed in crisp suits with even finer accessories would be extolled. Above all, the men who prospered in business were admired and emulated as symbols of what could be achieved through hard work and persistence. Envy has always been a part of man's imperfection. But it was not until the emergence of the state where thievery became institutional writ.
Government has turned the recognition of success upside down. When happening upon a large residence complete with multiple car garages and front-patio fountain, I question if the the exquisiteness in front of my eyes has been earned through state privilege or in a respectable manner. In his work The State, famed sociologist Franz Oppenheimer called this distinction "economic means" versus "political means." To exchange "one's own labor for the labor of others" is economic. Political means involve the "unrequited appropriation" of the people's labor who are not one within the government apparatus. The difference lies between volunteerism and force.
Yet if you survey the average man on the streets, the line is not blurred, but flipped entirely. A lofty position in government is celebrated. An entrepreneur who makes a profit is looked to as an exploiter. To have pride in one's private accomplishments is a crime worse than murder. So rather than flaunt in excess, the rich, as Jeffrey Tucker puts it, "pretend to be like everyone else."
Being a cut above the average cloth is no longer a virtue. Thanks to government, large swaths of wealth are more like crosshairs than financial security. In electoral terms it pays to tell voters you are going to take from the few and give to the many. There exists no oppression in the buying and selling of goods; but in many ways the public exudes thoughts of villainy in the face of riches.
Cozying up to the state is how much of the wealthy find solace in their ostensibly ill-gotten gains. From advocating for higher taxes to being an apologist for the police state, the face of big business has become indistinguishable from the predator eyes of government. This insidious power collusion turned the word "capitalism" into an epithet and titans of business into a cigar smoking, monocle wearing ogres of cold heartedness. The deepness of state economic intervention made honest living into a pastime. Areas with the highest income levels are now heavily interconnected with the political class in some manner.
Recently, Jamie Dimon warned against growing income inequality while calling it a threat to social cohesion. Presumably, this was a tactic to gain favorable press in the midst of allegations of financial misdoings. What opponents of inequality fail to recognize is that equality, whether it be income or ability, is a natural byproduct of a free society. Nature does not gift humanity with homogenous aptitude. Income egalitarians find solutions in tax and spend schemes without realizing that the state is the greatest source of disparity of all.
If Dimon were a normal CEO working in an industry not so conflated with government, then I could find sympathy for the hatred thrown his way. But the banking system is far from free market and even further from operating under the basic laws of soundness. Central banking has turned banks into regulated arms of the state. The practice of fractional reserve lending turns garners a profit for the crediting institution but is done by fraud. Dimon came of age in the most politically favored trade behind defense contracting. Procuring state privilege is a skill, but not one that should be revered.
The self-made man of style and abundance was never an easy thing to come by. If becoming filthy rich were simple, everyone would do it. It is easily forgotten that under market conditions, those who see high incomes do so because they are adroit in improving the material lives of the many. Statist propaganda has tarnished the history of decadence enjoyed by the industrial class at the turn of the 20th century. Robber barons did not profit off the backs of the meek unless they schmoozed with politicians. Cronyism remains tough to discern because, as much as people may enjoy government, it reeks of unfairness and reflects poorly upon the guilty parties. So the well-connected, well-compensated hide their misbegotten fortune behind altruism and kick mud on market capitalism in the public sphere. Anyone who partakes in an above average lifestyle is viewed with suspicion. I sometimes cannot help but join in, though I wish it didn't have to be this way.
James E. Miller is editor-in-chief of the Ludwig von Mises Institute of Canada. Send him mail