MONEY CULTURE
Daniel Gross
Today’s ‘Culture of Poverty’
The overclass is better connected than the underclass, and it can cause more damage.
For decades, social scientists, policy wonks and politicians have studied and debated what's come to be known as the culture of poverty. The consensus: a class of Americans is set apart from the mainstream by geography, class and income. Its members adhere to norms that don't apply to the rest of society, and engage in self-destructive behavior that imposes significant costs on the nation at large. The culture of poverty has made for potent politics (remember Ronald Reagan's fictitious welfare queen?) and spawned best-selling polemics from the right (Charles Murray) to the left (Jonathan Kozol).
We don't hear as much about the culture of poverty these days. Perhaps it's because the market turmoil is making us all feel a little poorer. Or perhaps it's because a highly visible group is now exhibiting all the outward appearances of the underclass: the overclass. Forget welfare queens and the culture of poverty. Think Wall Street kings and the culture of affluence.
Wall Street types don't live in ghettos, barrios or the hollows of Appalachia, but they do inhabit environments that are sealed off socially from the rest of the world—the Hamptons on Long Island; Fifth Avenue; Greenwich, Conn. Because they rarely interact with people of middle-class means (save the odd doctor, lawyer or interior designer), they have become woefully out of touch with the solid bourgeois values that made America great.
In the underclass, unmarried young fathers don't take responsibility for their children. In the overclass, twice-married, middle-aged Wall Street daddies don't own up to the consequences of their insane financial miscues. Wall Street titans are almost incapable of seeing the problem with taking nine-figure payouts in years in which their stocks plummet. "There's just a total disconnect between the compensation and the responsibility for their actions," says William Cohan, a former Lazard banker turned author.
In his book "The Age of Abundance," libertarian author Brink Lindsey boils down the difference between the desperately poor and the blissfully rich to an ability to focus on the long term. "Members of the underclass operate within such narrow time horizons and circles of trust that their lives are plagued by chronic chaos and dysfunction," he says. By contrast, he says, elites are well-organized long-term thinkers. Riiiiight. "Modern Wall Street is a system," says Charles Morris—a former Chase banker and author of "The Trillion Dollar Meltdown"—"that rewards crazy risk-taking in the short term without regard for the long-term consequences."
Critics point to a pervasive sense of victimhood in the underclass. But listen to what Bear Stearns CEO Alan Schwartz told the troops after his firm succumbed to wounds that were almost entirely self-inflicted. "We here are a collective victim of violence," he said. Yep, just another case of the Man keeping the Man down.
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Member Comments
Posted By: $2Gas @ 05/08/2008 10:38:28 AM
Comment: When I graduated high school in 1965 America was the richest and most powerful nation on the face of the planet. It was a time when most
citizens worshiped a Christian God, the U.S. practiced Fair Trade not Free Trade, the US Dollar was the strongest currency in the world and it was
understood the basis of the 2nd Amendment was government should fear the people and not the other way around.
It was a time when U.S. Corporations employed U.S. workers and were loyal to America its people and ideals. It was a time when GE Appliance
Park, Kentucky, a manufacturing city, housed 25,000 blue collar American workers, who enjoyed a middle class life style.
Obama, not everyone can be a college graduate. Surely you understand that a nation also needs a strong back and the ability to manufacture what is
needed is a nation???s backbone.
Sovereignty/nationhood/borders mean Government and publically chartered corporations should work for the best interest and betterment of
citizens within. Instead Free Trade, One World Ideals and International Corporations have allowed entire American industries to be destroyed by
subsidized foreign competitors. ???American??? companies have built their manufacturing facilities overseas to take advantage of cheaper labor and
now are off shoring the lower paying customer service and service economy jobs.
Bottom line Obama: What has been off shored is America???s wealth, ideals, lifestyle, hopes and dreams. In my lifetime ???leaders??? like you who
mock the ???old ways??? have made America the world???s biggest debtor nation. A nation that begged allies for war plane parts during the first Gulf
War because they are no longer manufactured in the US but sends troops overseas to protect corporations that fail to repatriate international profits
in order to avoid paying American taxes and exhibit no loyalty to American families or soldiers.
Soon the world will cease to accept constantly devaluing US fiat dollars as the international currency for oil trade and America will be left utterly
bankrupt. You and the other leaders who followed the ???new wisdom??? will be brought down to those you have already destroyed. Perhaps then you
can rediscover a lost faith and an appreciation for the 2nd Amendment.
Posted By: simihir @ 05/06/2008 12:50:23 PM
Comment: Comment: Our system should have laws that ensure a balance where quick enrichment by excessive executive compensation is countered by quick "pauperization" by removal of all properties from those executives who are found to have egregiously hurt the institutions from which they got their enrichment - instead of a jail with a golf course etc.
simihir 5/6/2008
Posted By: cabgold @ 04/08/2008 12:56:45 PM
Comment: I thought today's article, Today???s ???Culture of Poverty???, was one of the most clear and succinct statements of how distorted American values have become. In my opinion one of the root causes of this distortion is tied to executive compensation. Presently, for the most part, executive compensation takes into account past financial performance (usually on a year end basis) without regard to whether that performance was obtained wisely, ethically or legally. In most cases it takes a few years to determine the true performance of a company; true performance being whether the profit obtained in year X takes into the account how that profit was obtained when looking back in year X+5. This compensation scheme incentivizes executives to be willing to overlook proper controls to guard against fraud or other unethical or illegal behavior. For example, if an executive makes $50 million for 2007 based on reported 2007 performance and it is paid in early 2008, why would the executive care about whether or not in 2010 in turns out that the decisions of the company in 2007 caused the company to go bankrupt in 2010 - the executive has already pocketed $50 million and will live nicely forever.
In my opinion the extreme amount of money paid at the end of a year solely based on the reported performance of that year completely removes and distorts any other forms of compensation aimed at incentivizing an executive to consider how present decisions will impact the company in the future. Boards of Directors have been incapable of managing these risks as most Directors are themselves executives at other institutions and reap the financial benefits of such compensation. Someone must step up and hold Directors and executives accountable on a continuing basis for how past decisions impact future company performance. At the same time, executives that do make ethical and legal decisions that stand the test of time should be well compensated because it is clear that such executives are a rare find.