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Random Thoughts: 6

March 16, 2010 2 comments

I have been saying this for a few years, first as comments on other blogs and recently on my blog.

The Twilight of the Elites

Quotes from the article..

In the past decade, nearly every pillar institution in American society — whether it’s General Motors, Congress, Wall Street, Major League Baseball, the Catholic Church or the mainstream media — has revealed itself to be corrupt, incompetent or both.

New Priests.. Secular Religions

At the root of these failures are the people who run these institutions, the bright and industrious minds who occupy the commanding heights of our meritocratic order. In exchange for their power, status and remuneration, they are supposed to make sure everything operates smoothly. But after a cascade of scandals and catastrophes, that implicit social contract lies in ruins, replaced by mass skepticism, contempt and disillusionment.

The emperor is naked!

In the wake of the implosion of nearly all sources of American authority, this new decade will have to be about reforming our institutions to reconstitute a more reliable and democratic form of authority. Scholarly research shows a firm correlation between strong institutions, accountable élites and highly functional economies; mistrust and corruption, meanwhile, feed each other in a vicious circle.

Autophagy..

If our current crisis continues, we risk a long, ugly process of de-development: higher levels of corruption and tax evasion and an increasingly fractured public sphere, in which both public consensus and reform become all but impossible.

For more than 35 years, Gallup has polled Americans about levels of trust in their institutions — Congress, banks, Big Business, public schools, etc. In 2008 nearly every single institution was at an all-time low. Banks were trusted by just 32% of the populace, down from more than 50% in 2004. Newspapers were down to 24%, from slightly below 40% at the start of the decade. And Congress was the least trusted institution of all, with only 12% of Americans expressing confidence in it. The mistrust of élites extends to élites themselves.

Told ya! Zero sum behavior leads to a final orgy of self consumption.

That dynamic has played itself out throughout society. Look at CEO pay. In 1978, according to the Economic Policy Institute, the ratio of average CEO pay to average wage was about 35 to 1. By 2007 it was 275 to 1. Nell Minow, a lawyer and corporate-governance expert, has for decades waged a one-woman crusade against excessive CEO pay. She has watched as CEOs have found ways to manipulate the levers of governance and devise ingenious methods of guaranteeing themselves windfalls regardless of their company’s performance. “It’s like going to a racetrack and betting on all the horses, except you’re using someone else’s money,” Minow says. “You know one of them is going to win. As long as you’re not paying for the tickets, you’re going to come out ahead.”

The élites’ failures of the past decade should teach us that institutions of all kinds need input from below. The Federal Reserve is home to some of the finest economists and brightest minds in the country, and yet it still managed to miss an $8 trillion housing bubble and the explosion of the subprime market. If, say, the Federal Reserve Act required several seats on the board of governors to be reserved for consumer advocates — heck, even community organizers — it would have been harder to miss these twin phenomena.

They were just playing the same game..

This, one hopes, is just the beginning. All these new institutions are inspired by a desire to democratize old, big oligarchic hierarchies and devolve power downward and outward. That’s our best hope in the decade to come. For at the end of the day, it’s the job of citizens to save élites from themselves.

No.. the existence of elites is the problem, not the solution.