Consequences are for little people
By Thoreau
Over at another forum, various libertarians are arguing over whether it is anti-market to be upset that a CEO of an investment bank was spending $1.2 million redecorating his office while people were being fired.
It is certainly true that $1.2 million wasn’t making or breaking a company that went into tens of billions of dollars of debt. Moreover, given how much an investment bank employee can make, it is certainly true that $1.2 million wouldn’t have even saved that many jobs.
However….
1)Â If you spend $1.2 million on decorations when you’re deep in debt, you’re violating the first rule of being in a hole:Â For fvck’s sake, stop fvcking digging!
2) If the CEO of a floundering company can continue to decorate his office while things are going to hell, and eventually collect a golden parachute while somebody else picks up the pieces, where, exactly, is his incentive to not fvck up? I mean, the whole argument for capitalism is that the profit motive is supposed to get people to solve problems and make stuff work. Conversely, the whole argument against communism was that with no profit motive nobody will do anything productive. I dare say that a person guaranteed a golden parachute and freed from all consequences of failure is NOT facing any incentive to perform.
Hard core libertarianism, at least in its strawman form, is supposed to be all “Greed is good! Profit is divine! Failure to make a profit is evil!” So shouldn’t we be castigating these guys who looked at $50 billion losses and said “Yeah, let’s add a few more million to that loss–why not?”
Comment by Rationalitate —
January 25, 2009 @ 6:31 pm
In my opinion, the right way to look at how “legitimate” these expenditures are is to look at how legitimately he acquired his money.First of all, there’s inflation. A lot of investment banking is just helping your clients keep up with the rate of inflation. So if you’re getting 6% returns but the rate of inflation is 3%, then half your job is as illegitimate as that of Blackwater or a Department of Commerce employee.Beyond that it gets trickier because you can’t quantify it. But ultimately, I’d guess that a good amount of what investment bankers do wouldn’t be done in a free market (or at least, not done that particular way, and perhaps not by that particular person). Then again, you can say that about pretty much any job.
Comment by Joshua Holmes —
January 25, 2009 @ 6:55 pm
Libertarianism has nothing in particular to say about this particular episode, but sensible people (even including some libertarians) can think this guy is a douche.
Comment by kid bitzer —
January 25, 2009 @ 6:57 pm
“So shouldn’t we be castigating these guys…?”
yes.
Comment by KipEsquire —
January 25, 2009 @ 7:51 pm
Strange, I always thought that “hard core libertarianism” was: “Why should I give a f*ck one way or the other what private people do with their private companies or whether or not they’re making a profit?”
Comment by Mona —
January 25, 2009 @ 9:06 pm
Kip: As a libertarian I don’t think that the big office re-do should be illegal, but I certainly am entitled to find it disgusting under the circumstances.
Comment by Thoreau —
January 25, 2009 @ 9:18 pm
I thought that the whole Randian thing was to celebrate profit.
Yes, I know, not all libertarians are Randians, but she had a big influence on a lot of hard core libertarians.
Comment by Abidemi —
January 25, 2009 @ 9:23 pm
True Free Marketeers should not have Thoughts and Opinions about things outside the sphere of political libertarianism.
Comment by fishbane —
January 25, 2009 @ 9:42 pm
I personally find this incredibly crass, and something that the shareholders should find insanely irresponsible. But, given that I think the shareholders shouldn’t be bailed out and eat the losses instead of getting welfare, I seem to be in the minority.
If the banks need saving, then fully nationalize them via bankruptcy, and we can have a repeat of the S&L days. But the worst of all possible worlds is a welfare handout to float the very people who created the problem.
Comment by Mona —
January 25, 2009 @ 9:43 pm
Dr. T sez:
Profit is, indeed, a good thing. If busineses did not make profits, they would not exist, and we would not have our cell phones, ready-to-wear clothing, ISPs, and much else.
But Rand was not a libertarian, as she was the first to insist. Nor are her followers: they are Objectivists, and would consider you “immoral” for being a practicing Catholic. (Only atheists are moral, in the Randian worldview. Even tho I am an atheist, I don’t confuse my status as a non-believer with my many libertarian confreres who are people of some faith or other, but who share a common political outlook with me.)
Rand held not to a political ideology, but rather to an expansive, all-encompassing philosophy. She despised a purely political orientation such as libertarianism.
Comment by Mona —
January 25, 2009 @ 9:45 pm
I’m Mona, and I endorse that message.
Comment by Thoreau —
January 25, 2009 @ 10:04 pm
Mona,
1) I am aware that Rand did not call herself a libertarian, and that she and her followers in the Property Owners’ Front of Judea hated the libertarians in the Judean Property Owners’ Front. Despite that, many libertarians consider her a strong influence.
2) I completely agree that the profit motive is essential to the working of our economy. However, I recall Rand turning that up to 11. I only read half of Atlas Shrugged before getting bored, but I recall a scene where somebody bragged about never making a profit and one of Rand’s heroes regarded that person as the epitome of evil.
Comment by joe from Lowell —
January 25, 2009 @ 10:31 pm
If you drew a Venn Diagram of the people who object to objections about this CEO, and the people who want to start letting billionaires hunt UAW officers on remote islands, it would be a circle.
Comment by Ginger —
January 25, 2009 @ 10:49 pm
I have no opinion about intralibertarian fights, but I did want to say that item #2 sounds like G.W. Bush’s career in a nutshell, and we all know where that went.
Comment by Thoreau —
January 25, 2009 @ 10:53 pm
Actually, joe, Venn diagrams are defined topologically, not geometrically. There’s no requirement that the shape be circular, i.e. that all points on the boundary be equidistant from the same point. What you are saying is that the two sets are the same, and that the Venn diagram would be a simply connected 2-manifold.
Geez, do they teach nothing in logic courses these days?
Comment by Gene Callahan —
January 26, 2009 @ 1:08 am
‘Strange, I always thought that “hard core libertarianism†was: “Why should I give a f*ck one way or the other what private people do with their private companies or whether or not they’re making a profit?‒
No, this is being “stupidly indifferent”, not “hardcore libertarian”.
Comment by MM —
January 26, 2009 @ 1:39 am
Kip,
Just because one doesn’t want something to be illegal doesn’t require one to not “give a f*ck one way”. I can say that a private golf club has the right to allow white males only on their grounds, but that doesn’t mean I can’t express distaste, ask them to change their policy, or try to dissuade any white males I know from golfing there.
Comment by joe from Lowell —
January 26, 2009 @ 10:08 am
Shut up. It a circle.
Comment by Picador —
January 26, 2009 @ 10:20 am
The fact that the moral valence of behavior like this is the topic of lively debate among “libertarians” is yet another reason why most sane people consider “libertarians” to be irredeemable douchebags. Just saying.
Comment by Barry —
January 26, 2009 @ 10:23 am
Venn diagrams by long, long custom, are always defined by circles. There is flexility in drawing them freehand, by compass, using drafting templates or convenient cups and bottles, but the circle is
sancro-syncrenot to be tampered with.Comment by Jon H —
January 26, 2009 @ 10:56 am
It’s my understanding that Thain was new as CEO, and was only hired a year or so before everything went kablooie.
Not to defend him, but I imagine he felt compelled to mark his territory and remove traces of the former CEO.
Had Thain stayed on for ten years, and not redecorated again, the amortized cost of the remodeling would be negligible.
That said, at least the redecoration bought the bank some assets with actual market value.
Comment by kid bitzer —
January 26, 2009 @ 11:16 am
i’m sorry, thoreau, but joe’s #17 constitutes the most devastating refutation in mathematical history.
or at least since russell’s demonstration that frege’s system was inconsistent.
which, as i recall, went “axiom of comprehension? dude–no comprendo, kay? that shit’s fucked up! good luck with that, gottlob!”
Comment by joe from Lowell —
January 26, 2009 @ 12:08 pm
i’m sorry, thoreau, but joe’s #17 constitutes the most devastating refutation in mathematical history.
Moreso because I forgot the s.
Comment by kid bitzer —
January 26, 2009 @ 12:23 pm
“it a circle” trumps “it’s a circle” every time. i mean, from the standpoint of mathematical demonstrations.
this is one of godel’s results.
for instance, the consistency of arithmetic is unprovable.
but without the ’s’?
shut up. it provable.
and that’s about qed.
Comment by dhex —
January 26, 2009 @ 12:55 pm
part of the reason this particular case is so attractive (or at least attracts strong feelings) is because it’s on a scale that’s understandable.
billions upon billions lost, transmitted, spent, “spent”, gubmint’d, bailed-out, etc…that’s hard to understand, to comprehend, or to wrap one’s head around.
but “87k for a fucking rug?” is far more comprehensible.
Comment by albatross —
January 26, 2009 @ 1:35 pm
Along with the added expense (which is dumb to take on, but not really relevant on the scale of their losses), spending this kind of money this way sends a signal to your employees: it says “I’m getting mine, and you’d better worry about getting yours rather than trying to save the company.” It’s lousy leadership.
Comment by joe from Lowell —
January 26, 2009 @ 1:36 pm
kid blitzer,
hut up, you.
Where’s my Nobel?
Comment by kid bitzer —
January 26, 2009 @ 1:40 pm
you don’t get it ’til you ask right:
where my nobel?
Comment by MrDuncan —
January 26, 2009 @ 1:48 pm
I’m going to be forced to use the “G” word. John K Galbraith, in the New Industrial State, showed that none of these companies belongs to the market system. (He called their sphere, the planning system.) So to say that the compensation of their officers is “pro-market” or “anti-market” is irrelevant. They my be either reasonably compensated or not, but it’s not about market incentives.
Comment by joe from Lowell —
January 26, 2009 @ 1:59 pm
I hath been outdone.
Harumph.
Comment by Charles Hueter —
January 26, 2009 @ 4:36 pm
Picador, that might be because “most sane people” have about as much understanding of morality as I do about the correct ignition timing be on a 1955 Bel Air Chevrolet with a 327 cubic-inch engine and a four-barrel carburetor.
Lots of people routinely mix up “distasteful behavior” with “immoral.” Pointing out that the actions of some people do not qualify for the latter label does not make me a douchebag. It makes the accuser an excitable dolt.
By the way, Thoreau, I disagree in principle to your #2.
Comment by Mona —
January 26, 2009 @ 6:46 pm
Dr. T writes:
Yeah, I figured you knew this. But I’ve never been a Rand devotee, and found her fiction awful. It is thoroughly polemical, replete with one-dimensional characters, and leftists are invariably portrayed as craven, evil people.
Some Western Communists in the 20th century wrote equally indigestible bilge, under Party discipline. Same church, different pew.
Comment by Bighank53 —
January 26, 2009 @ 9:31 pm
hate nobel.
taste bad and hurt teeth.
Comment by Phil —
January 27, 2009 @ 8:14 am
See, here’s the thing: A company whose stock is sold on the open market and is probably heavily invested in by peoples’ retirement funds is not a “private company” by any stretch of the imagination.
Comment by Jon H —
January 27, 2009 @ 1:19 pm
“Moreso because I forgot the s.”
It was a masterful use of negative space. The lack made the ’s’ all the more emphatic. It was more present in its very absence.
I bow.