Category Archives: economics and financial policy

“Our merchants and masters complain much of the bad effects of high wages in raising the price and lessening the sale of goods. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.” Adam Smith The Wealth of the Nations: An Inquiry into the Nature and Causes of the Wealth of Nations

Let me start this essay by categorically that I do not oppose people making money, becoming rich through their genius, their hard work, and being successful. In fact I applaud people who can do that. Adam Smith who developed what we know as Capitalism understood this. Unfortunately what now is described as Capitalism bears little resemblance to the understanding of Smith, and thereby his name is often dragged through the mud by people who seeing the bastard seed of the “new capitalists” reject the truly remarkable aspects of what Smith wrote about.

These men, and the society that they desire were described by Smith:

“As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce.”

Smith understood the value of free markets, but he also understood that the value of a human being was greater than a means to a profitable end. He had a sense of social responsibility, something that those who profess to be his disciples today lack. Smith noted:

“The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities.” 

In the past week we have been witnesses of the banal attitudes of some men and the institutions that they represent toward those who they make their riches from. Tom Perkins, a now retired venture capitalist wrote a letter to the Wall Street Journal which complained that the rich were the targets of a new Kristallnacht against the rich. Later when defending his ideas, though lamenting his use of the term Kristallnacht, he boasted of his wealth including a James Bond like car which could “fly” underwater and a nearly 400,000 watch. It was a crass vulgar display or his wealth. It was almost as if Smith had wrote about Perkins in 1776:

“With the greater part of rich people, the chief enjoyment of riches consists in the parade of riches, which in their eye is never so complete as when they appear to possess those decisive marks of opulence which nobody can possess but themselves.”

Peter Schiff equated the value of a worker to what they are and not what they produce, especially in regard to the mentally retarded but an argument that can equally apply to those of lower education, those with physical disabilities or even mental illness. Of course the Wall Street Journal then had to rise to the defense of such sentiments.

I mention these men because they were crass enough to voice what so many like them actually think, thus the criticism is not of these two men, but of the lifestyle, culture and attitude that they represent, which pervades almost every part of modern American economic life. We live in a society which our news media, entertainment industry and often even religion exalt the wealthy and in which our political, social and economic elites see wealth as their divine right. Smith noted:

“This disposition to admire, and almost to worship, the rich and powerful, and to despise or, at least, neglect persons of poor and mean conditions, though necessary both to establish and to maintain the distinction of ranks and the order of society, is, at the same time, the great and most universal cause of the corruption of our moral sentiments.”

Smith makes a direct connection between the attitudes toward wealth and the near worship of the rich and powerful to the corruption of the moral sentiments of a society. One only needs to look at the great banking, savings and loan and real estate meltdowns of the past 20 or so years to see the effects of this unquestioned worship of the rich and powerful has on the society at large. Even so those who have brought our economy to near ruin on numerous occasions do not see the connection. They are so insulated by their riches and success that they feel nothing of the suffering of others.

Theirs is a condition of intense narcissism and insecurity. They boldly assert their superiority over the majority of humanity, but are so insecure that they need to ensure that the government safeguards their position in society. Smith wrote:

“Civil government, so far as it is instituted for the security of property, is in reality instituted for the defense of the rich against the poor, or of those who have some property against those who have none at all.”

Men like Perkins and Schiff and the shills at the Wall Street Journal have a profound lack of empathy, something that is common in narcissistic personalities. In fact the criteria listed for the psychiatric condition of Narcissistic Personality Disorder are present in many highly successful and powerful people, in politics, business, government, entertainment and even religion. Thus the  criteria serve well to illuminate the attitudes of such people, even if they themselves do not match enough of the criteria meet the clinical diagnosis.

*Has a grandiose sense of self-importance (e.g., exaggerates achievements and talents, expects to be recognized as superior without commensurate achievements)

*Is preoccupied with fantasies of unlimited success, power, brilliance, beauty, or ideal love

*Believes that he or she is “special” and unique and can only be understood by, or should associate with, other special or high-status people (or institutions)

*Requires excessive admiration

*Has a very strong sense of entitlement, e.g., unreasonable expectations of especially favorable treatment or automatic compliance with his or her expectations

*Is exploitative of others, e.g., takes advantage of others to achieve his or her own ends

*Lacks empathy, e.g., is unwilling to recognize or identify with the feelings and needs of others

*Is often envious of others or believes that others are envious of him or her

*Regularly shows arrogant, haughty behaviors or attitudes

Now it is possible for people to demonstrate some of these symptoms without being diagnosed with Narcissistic Personality Disorder, in fact at least five have to be present for a clinical diagnosis. That being said, the words and actions Perkins, Schiff and others demonstrate some characteristics of a a narcissistic personality, especially the lack or absence of empathy, which I think is the most dangerous narcissistic trait of all.

When men no longer can empathize with other human beings, and only see others, especially the weak, the poor, those different than them and the disabled as a means to their own riches, power or success; the stage is set for great human tragedy. It does not matter in what type of political or economic system that it takes place, it can be Capitalist, Fascist, Communist, Nationalist, Tribal or even Theocratic; the issue is not the system, but the underlying lack of empathy for others in those who rise to power in it.

The terrible result of such a lack of empathy is the dehumanization of a society.

Gustave Gilbert, who served as a U. S. Army Psychologist at Nuremberg noted something about them men that he observed and worked with during the Nuremberg Trials. The men included bankers, industrialists, propagandists, technocrats, police, party and military personnel who served the Nazi regime. Gilbert wrote:

“In my work with the defendants I was searching for the nature of evil and I now think I have come close to defining it. A lack of empathy. It’s the one characteristic that connects all the defendants, a genuine incapacity to feel with their fellow men. Evil, I think, is the absence of empathy.” 

Now before someone jumps the shark and says that I am calling either Perkins or Schiff “Nazis” or Nazi sympathizers, be aware I am not. I just feel that Gilbert’s assessment of the definition of evil, is a lack of empathy is a universal statement. Though Gilbert worked among Nazi War Criminals, I believe that the statement is true in any society where a minority of the people live in such a manner that they control the society and are incapable of having empathy for others.

There is an antidote to this, and it is not in trying to protect one’s position, but rather to be generous to others regardless of our estate and to avoid vanity. Smith wrote that “Bounty and hospitality very seldom lead to extravagance; though vanity almost always does.”  Likewise he noted something that all of us should take note of before in our attempt to climb to the top crush all beneath us:  “No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.”

So though my criticism falls on Perkins, Schiff and the Wall Street Journal it is something that all of us have to be aware of and guard against, regardless of our political, ideological, religious or economic philosophy of life; lest we sow the wind and reap the whirlwind.

Peace

Padre Steve+