James Kwak

Podcast • July 11, 2012

Chris Hayes: Smart Guy against the “Smart Guys”

Part of what makes the strange disorienting nature of our time is that the old institutions have been discredited but remain in power. The people who run them remain in power. There’s been the discrediting ...

Part of what makes the strange disorienting nature of our time is that the old institutions have been discredited but remain in power. The people who run them remain in power. There’s been the discrediting without the conceptual change, without the actual reforms on the ground, which is a bizarre interregnum to live through.

Chris Hayes with Chris Lydon at Rockefeller Center, July 9, 2012
Chris Hayes has done a 180 on Groucho Marx, who said he wouldn’t join a club that would have him as a member. Chris Hayes has rushed the media elite that he knows is sinking. He won’t save it alone, of course, but he’s a temptation or maybe a model for wary 30-somethings like himself, for people who’ve stopped listening to anyone in authority. A great deal of his book Twilight of the Elites and of our conversation is fixed on his own mixed emotions about being the “it” boy in a dubious game and a bad time — in the “fail decade,” as he calls the opening era of his adulthood. He seems to be writing and living out a warning to himself.

The cover story is that talk TV has a rising star in Chris Hayes, cast as Rachel Maddow’s kid brother, as learned and lively as she is. In a pretty sclerotic media scene full of people who got suckerered into selling the Iraq War, he’s the bright-eyed millenial kid from Brown (2001, philosophy major) and The Nation magazine who’s inspected the emperor’s new clothes and keeps talking about them. He harps on inequality as the story in 2012, plus unimaginable debt and an awful losing streak on the American scorecard. He says it all without wailing or gnashing his teeth and everybody thinks he’s a nice, cool guy. The multitudinous fans of “Up with Chris Hayes” on MSNBC are encouraged to call themselves “Uppers.”

The back story in Twilight is his judgment that the “meritocracy” that selects high-testing hard-working overachievers like him (like me in another generation) has been a big part of undoing the American Dream in the last 30 years or so. His “iron law of meritocracy” is that it becomes a smug elite that pulls up the ladder behind it, is socially isolated, prone to failure and inevitably corrupt. Not to mention that it becomes “a pathological way to live.”

This is increasingly a social set-up that’s fated to produce crisis, catastrophe, dysfunction, poor decision-making — and a lot of unhappy people. This is a model of ceaseless competition and what I call “fractal inequality,” in which there’s no top. The ladder always ascends ever upward, as if you’re in some M. C. Escher drawing that you climb rung by rung, only to see a new one come into view… It’s the way finance works, and finance dominates the American elite.

There’s a model of scarcity that’s fundamental to the conception of society as a meritocracy, which is this funnel that everything goes through. The idea is that not everybody can get into it: whether it’s schooling, jobs at the top firms, clerkships with the best judges… The model of scarcity produces anxiety and competition; and the whole way we think about where everything is headed is this model that there’s some small set of happy lives and fulfilling jobs. Whereas the social model should be: everybody’s who’s willing to work can have a fulfilling job and a happy life… That was the model of the auto workers’ treaty with Detroit. The vision was deeper than good wages. It was about who deserved a good life — and the idea that working people deserved a good life. We just don’t have that anymore. The meritocratic model is that you deserve a good life if you meet these elite criteria, if you find your way through all these funnels.

Chris Hayes with Chris Lydon at Rockefeller Center, July 9, 2012

Might Jon Stewart have smacked this guy — at least rolled his eyes — for all the hi-falutin’ stuff about the “dominant meritocratic ethos”? I wondered as I left his office: is Chris Hayes a little hung-up on himself and the vertigo of his own success? A little too smart about the cult of smartness at the top of the heap? Is he speaking truth to power, or talking his way through it? And: is it still okay to like this kid a lot for his “kind of naive earnestness”? For naming the four corners of his drive as “frustration, betrayal, disorientation and curiosity”? For his readiness to say, yes, what a “bizarre interregnum” it is we’re living through? Comments please.

Podcast • April 14, 2010

James Kwak: The Problem is Bank-o-cracy

Click to listen to Chris’s conversation with James Kwak. (42 minutes, 19 mb mp3) James Kwak extends Michael Lewis’s point and feeds my fascination with apocalyptic hysteria and helpless torpor as the twin markers of ...

Click to listen to Chris’s conversation with James Kwak. (42 minutes, 19 mb mp3)

James Kwak extends Michael Lewis’s point and feeds my fascination with apocalyptic hysteria and helpless torpor as the twin markers of American politics these days. He makes it believable that the angry Tea Party wackitude in the far countryside and the smug sleepiness inside the Beltway and the media mainstream are both symptoms of the same “quiet coup” that James Kwak and his writing partner Simon Johnson diagnosed in The Atlantic last Spring.

To Simon Johnson, former chief economist at the International Monetary Fund and now professor of entrepreneurship at MIT, the deeper condition of the American republic looks all too familiar. The essential problem — easily recognizable if we were looking at, say, Thailand or Korea or Russia — is known in the trade as “state capture,” meaning the accretion of overwhelming political power by a financial elite, an oligarchy, known in our case as Wall Street, or in the title of the riveting analysis by Johnson and Kwak, Thirteen Bankers. The idea of “capture” extends by now past the political parties, Congress and the controlling agencies of the executive branch. James Kwak, in conversation, quips that “capture” encompasses “media capture,” too, and “ideology capture.” And the same oligarchy seems to be working its will in foreign as well as domestic misadventures:

JK: One of the parallels between the financial crisis and the Iraq War is that despite all the things that have gone wrong we still have largely the same people. We see the same people on TV, the same people in Congress telling us how we should understand the crisis and what we should do next. And during the Bush Administration people were saying, “Why didn’t anyone get fired for the Iraq War?” And the same question applies now: Why hasn’t anyone been fired because of the financial crisis?

I think there’s another parallel as well, which is that, again, the cover-up that’s going on by Wall Street today is this idea that the financial crisis was an accident, that it was a lot of people making mistakes—it was lenders making bad lending decisions, and homebuyers making bad borrowing decisions, and rating agencies making bad decisions when they rated these toxic securities, and unbelievably these investment banks holding onto their own toxic assets, and then regulators being asleep at the switch.

CL: Perfect storm.

JK: Yes, exactly. It’s the perfect storm theory. And what they’re trying to do is they’re trying to analogize the financial crisis to a natural disaster. How do you blame someone for a natural disaster? And you hear the same language from the Administration. You hear Timothy Geithner saying, “Well, do we want to protect against a hundred-year flood or a 30-year flood?”

I think this is all deeply wrong, and it’s an exact parallel to the Iraq War. Because you know, as we all remember, we invaded Iraq, we didn’t find Weapons of Mass Destruction, and what did people say? They said, “Oh, it was bad intelligence.” So people gathering the intelligence made mistakes, people analyzing the intelligence made mistakes, people brought the intelligence to President Bush and Vice President Cheney and they made an error of judgment because of the bad intelligence, and then a majority of the Congress went and voted for this war because they had been misled. It’s the same idea. It’s the same idea that it’s all an accident, it’s not our fault, it’s somebody else’s fault and it was just a big mistake. And in both cases that is just fundamentally wrong. I mean, we invaded Iraq because our political leaders wanted to invade Iraq, and our Congress voted for it because they did not want to be seen as voting against a war in the run-up to an election, and that’s all there is to it.

And with the financial crisis: I’m not saying that bankers wanted the financial crisis, but they engineered it. They engineered a climate of deregulation and non-regulation that allowed them to invent whatever products they wanted to, sell them to anyone they wanted to, increase their leverage so that they could make larger and larger profits, and they engineered that consciously. This was the product of intention, and it was bound to blow up. And it finally blew up. And that is the message that Wall Street does not want people to hear. They want people to think it was all a colossal mistake made by well-meaning people who had mistakes in their models. That is not what happened.

James Kwak in conversation with Chris Lydon in Boston, April 12, 2010.