One of the smartest blogs I read everyday is maintained by New York based venture capitalist Fred Wilson. Today, he has a typically thoughtful post titled, “Financial McCarthyism,” a phrase used to capture what he sees as the potentially harmful backlash and mob-mentality of a group I’m now calling Pitchfork Populists.
“The people who built the house of cards are the ones who know how to take it down without it collapsing. And by turning them into the scapegoats, taxing their bonuses at 90 percent and by vilifying them in public, we run the risk that they take their knowledge of how to unwind this mess most cost effectively and go home. Many already have…(Obama and his financial team) are allowing the financial industry to take the lion’s share of the blame and are not educating the public on why we need wall street’s cooperation in getting us out of the mess. Don’t get me wrong, I’m not arguing that we should pay millions of dollars in guaranteed compensation to each and every wall street executive. But I am arguing for a balanced perspective, rationality, and an effort from our leaders to educate and explain instead of just scapegoating.”
I’m torn on this. I agree with Fred as it relates to what a mistake it is to vilify individuals, specific companies and entire groups of people. And, at least conceptually, I can understand the need to use people who created the mess to help clean up the mess.
However, I believe the bigger problem here is the appearance to most people — even informed and articulate people — that the individuals who got rich by setting up this debacle are also expecting to get rich by helping fix the mess they helped create. Moreover, I believe some of these people are doing their cause (and Fred’s) no favor by displaying complete tone-deafness to what tax-payers (translation: “funding-source”) are feeling. With their actions, some of the executives running these companies continue to display the same type of hubris and over-sized sense of entitlement that brought their companies down in the first place.
Of course, that’s a simplistic and outside the financial world perspective. However, it’s the perspective of the majority of people I know.
What’s more, I believe Obama’s team has more critical tasks at hand than educating the public on why AIG executives are not evil. Despite that, over the past 48 hours, I believe Obama’s team has done a decent job telegraphing to the financial community that he’s not going to allow the Financial McCarthyites to string them up. But, and I praise him for this, he’s too brilliant a communicator to step in and educate 99% of the population that they’re wrong to believe what they believe.
Because they’re not wrong.
Unless and until the titans of Wall Street realize they can’t accept government bailout money with one hand and purchase corporate jets and build luxury hangars with another, no amount of educating will convince people that those are the people who are supposed to be smart enough to get us out of this.
(Sidenote: At least AIG is selling their’s.)