Friday, November 13, 2009

Beware of bankers in sheep's clothing (Sunday Reflections for November 15, 2009)

The heads of the world’s major banks have discovered that they have a bit of an image problem. A lot of people don’t like them or the companies they work for very much. So the biggest bank, Goldman Sachs, has been working on a strategy to change the public’s perception of them.

The problem, in their view, is that they just aren’t appreciated. People don’t understand what great guys they really are and how important their work is to the well-being of the planet (if not the universe). In fact—and they’ve been reluctant to share this information but realize they must now make it public—they are on a MISSION FROM GOD.

This secret was revealed by none other than Goldman CEO, Lloyd Blankfein. “I’m doing God’s work,” he told The Sunday Times of London.

"I know I could slit my wrists and people would cheer," he says. But then, he slowly begins to argue the case for modern banking. "We’re very important," he says, abandoning self-flagellation. "We help companies to grow by helping them to raise capital. Companies that grow create wealth. This, in turn, allows people to have jobs that create more growth and more wealth. It’s a virtuous cycle." To drive home his point, he makes a remarkably bold claim. "We have a social purpose."

Blankfein omits a few recent bumps in this “virtuous cycle,” such as last year’s global economic near collapse. What, we might ask, is the “social purpose” of the loss of trillions of dollars in stock and real estate equity, throwing millions of people out of work, and putting governments trillions of dollars in debt to prevent the financial system from going into cardiac arrest?

Blankfein’s interview was reported just a couple weeks after a London conference on morality in the marketplace. Among the speakers was Goldman Sachs international vice president, Lord Brian Griffiths, who similarly insisted banks’ recent astronomical profits and employee bonuses were serving a higher purpose.

“The injunction of Jesus to love others as ourselves is a recognition of self-interest,” Goldman’s Griffiths said Oct. 20, his voice echoing around the gold-mosaic walls of St. Paul’s Cathedral, whose 365-feet-high dome towers over the City, London’s financial district. “We have to tolerate the inequality as a way to achieving greater prosperity and opportunity for all.” also quotes the CEO of Britain’s Barkley Bank, John Varley, speaking at a similar event at another London church. “Profit is not satanic,” he said. And lest anyone miss the point, he added later, “Is Christianity and banking compatible? Yes.”

As expected, columnists and commentators had a field day ripping into the audacity of these claims. Rolling Stone’s Matt Taibbi (who has taken on Goldman Sachs before) identified the truly scary part of this story, which is that these guys very likely believe what they are saying. Living in the rarefied atmosphere at the top of the top, you only converse with people just like you. You convince one another that you all deserve to be where you are and that it really is to everyone’s benefit.

You think that reality coincides with your beliefs because your beliefs are true, whereas in truth it’s because you spend all your time with people who believe the same nonsense you do, and generations of your cultural ancestors just happen to have built very high walls all around you fools to keep reality from getting in and spoiling things.

As a result, famously evil nincompoops like Louis XVI and Adolf Hitler were genuinely surprised to discover most people didn’t buy into their systems and actually wanted to tear them down—which they did. Marie Antoinette thought she was being genuinely creative when she advised French peasants to deal with food shortages by eating cake. All it really showed was her total ignorance of what peasant life actually was like—the result, of course, of her never actually having to deal with real peasants.

Some have said Brian Griffiths’ “We have to tolerate the inequality as a way to achieving greater prosperity” may be the new “let them eat cake.” Compensation for Goldman Sachs 30,000+ employees will average over $700,000 this year. Hundreds will earns millions and even tens of millions—this in a company which a year ago was on the verge of collapse, threatening to drag down the country’s financial system with it, and bailed out by billions in federal tax dollars. “Inequality” seems like a meager word to describe this extravagance.

It’s a long stretch from Jesus “recognition” of self-interest to his endorsement of greed and larceny. There is no question that banks perform an important social service. But as one fund manager recently wrote,

[T]he public purpose of banking is NOT to provide profits per se to shareholders. Rather, the provision of the ability to earn profits is only a tool used to support the attendant public purpose.

The Wall Street bank behemoths have completely inverted this reality. Their purpose now is first to provide obscene salaries and profits and, if it’s convenient, to provide business capital and personal finance.

Christians, and Lutherans especially, have long recognized the value of vocation. Blankfein is right: our work can indeed be God’s work, whatever it is, if it meets human needs and serves to make the world a better place. Nor does a Christian ethic require equal compensation for all. Indeed, most ethical theologians recognize the inevitability of inequality in a capitalist system and accept it for the creativity and productivity it encourages.

At some point, however, gross inequality is not encouraging but discouraging as many people rightly sense the system is rigged and their efforts are not being fairly compensated. Blankfein says his people are paid so much because they are so enormously productive—but productive at doing what, besides making lots of money for themselves and their investors? How does their astronomical pay match their contribution to the betterment of society?

It’s now obvious that the dizzyingly complex financial schemes and instruments which have made banks so much money have also made our economy unstable and have cost millions of people their jobs and their savings. The incentive of seven and eight figure salaries is not leading to productivity but to greed and fraud. It is not doing God’s work but undoing it.

Alas for those who lie on beds of ivory,
and lounge on their couches . . .
who drink wine from bowls,
and anoint themselves with the finest oils. . . .
Therefore they shall now be the first to go into exile,
and the revelry of the loungers shall pass away. (Amos 6)

1 comment:

Anonymous said...

Wall Street banks go to the front of the line for H1N1 shots
By Tom Eley
7 November 2009
With millions who need the the H1N1 vaccine unable to get it, major financial firms in New York, among them Citigroup and Goldman Sachs, have received larger distributions of the inoculation than many hospitals.

The episode demonstrates the supremacy of America’s financial elite, which increasingly dictates every policy decision and every facet of social life, and more and more takes on the trappings of an aristocracy.