Guest Piece: Finance Capitalists and Scapegoats

By Bruce Walker

The doctored outrage at AIG executives raises one of the ugliest specters in modern political history:  mindless fury directed at “Finance Capitalism.”  The profits of men who create goods and services is easy to defend.  Bill Gates gave us Windows.  T. Boone Pickens and Ross Perot drilled for oil.  Sam Walton retailed consumer goods at very low prices.  People grasp the value to society which these men produce.

Sports figures and Hollywood stars provide an even more instant gratification to society for what they produce.  That is why no one is demanding that NBA stars have all of their income above $1,000,000 per year taxed at a ninety percent rate or that actors pay a “windfall profits” tax when a film becomes a blockbuster.  What these celebrities give us, really, has very little value, but what value it has is immediately understood by ordinary people.  So sports and entertainment are politically safe ways to get rich.

People can always be stirred up against the rich, the industrialist, the businessman, but most people understand that ordinary businesses produce something of value.  Investment, finance, and banking have an even greater value to us. Economic markets can only work efficiency when financial market is fluid and free.  But making money with money has a value which most people cannot understand.  When the bank gives them a mortgage, well, the value is grasped, for awhile anyway.  But the free buying, selling, and trading of financial instruments, insurance policies, and securities seems, somehow, unsavory.

It is not, of course.  The free movement of money to useful locations in the economy insures that the value of money is maximized.  The miser who stashes cash in his mattress deprives the economy of lubricants that it needs to function smoothly.  The investment bankers, underwriters, Wall Street traders, and others who handle smoothly the flow of capital in our economy perform a vital service, but an almost invisible service, to our prosperity.

This makes such businesses vulnerable to rabble rousers.  William Jennings Bryan gave his famous “Cross of Gold” over one hundred years ago, he was talking – in one sense – about the gold standard.  But there was a more nefarious allusion as well:  Bryan was also talking about the “oppression” of Jewish bankers. When Nazis talked about their hatred of capitalism, they often referred specifically to “Finance Capitalism,” and this was directly tied to noxious Nazi myths of Jewish conspiracies.  The Nazis also used financial irregularities to persecute the Catholic Church, prosecuting nuns and monks for “currency violations” that were manifestly trumped charges intended to enrage Germans.  The Ku Klux Klan is rightly seen as a group drenched in hatred for other races and other religions, but the Ku Klux Klan also was an outspoken foe of “bankers.” 

When politicians start to torment men who make their living dealing with investments, banks, currency, and securities, the rest of us should worry.  FDR, who Obama feigns to imitate, understood the importance of private banks.  Roosevelt declared bank holidays, to allow banks to remain solvent.  He tried to get angry and frightened Americans to calm down.  He did as little for capitalism as any president, but FDR understood that no president can lead a lynch mob or be perceived as being indifferent to a lynching.

Presidents cannot be like Hitler.  They cannot seek in American society classes of scapegoats to blame for national problems.  Not all presidents have done that, of course.  FDR blamed Herbert Hoover for the Depression long after Hoover left office.  Clinton demonized his political opponents and also honest citizens, like Ken Starr, who were simply doing their job.  But what Barack Obama is doing today is much worse than these morally challenged presidents of our past.  He is taking a class of Americans, people who may well have been his supporters, citizens who have not tried to obstruct him or his policies, and Obama has made these innocents into “The Enemy.” 

AIG executives have become the “Kulaks” or the “Jews.”  Expropriation of their wealth is the boasted goal of his minions.  Intimidation, contempt, pogroms – these thinly veiled government supported actions are intended to make other people responsible for what Obama and his court do.  Medieval monarchs quickly found scapegoats for their failures and turned the mobs on them.  Stalinists and Nazis did the same.  Klansmen in the South could also “find” a black man who raped some white girl. 

Fevered frenzy is not the unintended consequence of this sort of evil.  Fevered frenzy is the deliberate result of the creation of enemies of the people.   Men who stir the masses to fury and to terror against official “enemies” are not good.  They ape the crimes of bigoted Medieval rulers, of Klansmen and racists, of Nazis and Stalinists.   They embrace the heart of darkness.  They luxuriate in displaced pain.  They are not fit to lead free men.

                        © 2009 Bruce Walker—All Rights Reserved