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"They just got the optics wrong"
From: David Farber <dave () farber net>
Date: Fri, 27 Mar 2009 08:59:31 -0400



Begin forwarded message:

From: "Ronald J Riley \(RJR Com\)" <rjr () rjriley com>
Date: March 27, 2009 8:35:02 AM EDT
To: <dave () farber net>
Subject: "They just got the optics wrong"

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Dave,



Madison Powers observes about East Coast business and media elites, “They just got the optics wrong.” I don’t think we have the technology to correct their distorted vision.



Ronald J Riley



http://www.cqpolitics.com/wmspage.cfm?docid=news-000003086269



CQPolitics CQ TODAY ONLINE NEWS
March 27, 2009 – 12:01 a.m. Corridor America Vs. Other America By Madison Powers, CQ Guest Columnist A common refrain among East Coast business and media elites along the New York-Washington corridor is that President Obama’s economic team, especially Treasury Secretary Timothy F. Geithner , has a perception problem. They didn’t quite get how it might look to ordinary Americans when making the decision to protect large bonuses for Wall Street executives who drove the world economy into a ditch.

Both inside the government and among the media and business elites, there seems to be a shared assumption that nothing done by Sen, Christopher J. Dodd , D-Conn., and the staffers in Geithner’s office involved any serious policy mistakes.

They just got the “optics” wrong.

They misjudged how the rest of the country might be swayed by the appearance of doing something that continues to reward massive failure with full insulation against the negative consequences of taking outsized risks with other people’s money.

The premise of that understanding is off the mark. They don’t have a perception problem along the elite corridor. They have a reality problem.

There are two Americas: Corridor America of the elites (and honorary members residing in affluent enclaves elsewhere) and the Other America (as Michael Harrington called them 50 years ago) are worlds apart — not only in how things seem, but also in how things are for them.

Far too many people in media, business, and government alike have come to see as normal — and indeed necessary to attract and retain talented people — a system of compensation that has increasingly divided the nation into the two Americas that presidential candidate John Edwards made the centerpiece of his campaign.

Few other industrial nations — not just the much maligned French or Swedes — have permitted the massive inequalities in income and wealth to accrue so profoundly in the midst of economic prosperity.

Outsized compensation, coupled with little-known tax benefits and deliberately engineered regulatory exemptions for a minority of beneficiaries in the financial services industry is but one conspicuously repugnant element of a set of skewed economic policies that has allowed some of us to acquire wealth in quantities unimaginable to most Americans.

The predictable consequence of policies that produced a rising economic tide that never came close to lifting all boats is a sea of leaky vessels that grandstanding state governors, know-nothing congressional Republicans and frightened Blue Dog Democrats now complain we haven’t sufficient resources for their bailout.

Critics of extending unemployment benefits, doing something serious about the uninsured and underinsured in America, or incorporating President Obama’s “Making Work Pay” tax cut for low- and middle-income working Americans really must not know much about how most Americans really live — or they are indifferent.

I prefer to think that they don’t know.

One reason those in the economic elite have so little insight into the lives of the people who clean their houses, mow their lawns, serve their meals, and pick up their garbage lies in the simple fact of demography.

We inhabit separate social spheres. We live in separate neighborhoods. We send our children to separate schools. We take for granted our access to medical care, the opportunities our children have for higher education, and the security of knowing that with an economic downturn we won’t be out on the street or even have to scale back when we go to Whole Foods or Starbucks.

Our biggest complaint in Corridor America and in other segments of the economic elite is that we may have to sell the summer home or not retire as early as the financial planner and investment company pitchmen promised in those endless television ads appearing since the 1990s.

But in Other America, things have always been riskier and less rosy. It did not share proportionately, and indeed, only modestly even in the boom years of the Clinton administration. Except for brief and transitory periods over the last 30 years, real wages over time fell behind for most Americans, and they fell even further behind for Americans of color.

So too did savings rates differ among the two Americas. As affluent Americans struggled to decide among choices of granite for their showcase kitchens, other Americans struggled to pay the rent or mortgage, provide medical care with no or only intermittent health insurance, or deal with missing work and lost wages when a child gets sick and has to miss school.

The problem is that without either job security or adequate wages, the Other America might well get their chance at a flat screen television in better days, but they have neither enough personal resources nor a sufficient safety net to weather bad times.

Now that bad times are here, they are worse for those at the bottom of the economic ladder, and those on the middle rungs are climbing down faster than they might have expected.

It is little wonder that the “pitchfork” sentiment is rising, and not just among the faux populists on cable news. Real people are hurting and not enough people in power seem to recognize the utter absurdity and moral intransigence of Corridor America thinking that feels the pain of those at the top of the ladder but can’t even see what it is like for those below them.

The worst insensitivity to the brutal economic reality experienced by much of the Other America is the rhetoric that suggests, even obliquely, that we are all guilty in more or less the same way and same degree for the problems in which we find ourselves. We were all greedy. We all got into debt over our heads. We lived beyond our means.

The core of the message is that everyone is on a moral par in this crisis. It’s no time to point fingers or assign blame, they will say. The implication is that it is unreasonable to demand that those at the top should have to answer for their decisions in any special way.

Punitive sentiments, they say, are but the product of demagogues who fan the flames of a mob reaction. We in Corridor America know better. We are calmer, more judicious. We know things Other America doesn’t. They have no rational choice but to trust us. We’ll even go on cable TV and admit that it’s not fair, but such things just have to be done.

The narrative for deflecting blame also argues that now we have to impose some economic discipline. Now is the time to return to fiscal sanity. It’s for our children that we have to tighten the belt. Obama’s agenda is too ambitious. It smacks of socialism, they say, either to do more to relieve the plight of the worst-off or to take the sort of steps he’s taking with regard to distressed financial institutions.

Such baseless charges of the latter sort are leveled even as Obama seems determined not to do anything remotely resembling nationalization. Instead, he offers private market solutions to market failures by buying up banks’ “legacy assets.”

The heart of his bank plan is an arrangement that minimizes downside risk with the prospect of massive windfall rewards to those with enough resources to enter the game. Those of us in Corridor America like that approach. We demonstrated our collective joy with an almost 500-point gain on the Dow. If it’s socialism for the rich, then that seems to be more acceptable than any policy proposal that would ease the downside risk for the rest of us.

Madison Powers is Senior Research Scholar, Kennedy Institute of Ethics, Georgetown University. His column appears on Friday in CQ Politics.



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