Diatribes of Jay

This is a blog of essays on public policy. It shuns ideology and applies facts, logic and math to economic, social and political problems. It has a subject-matter index, a list of recent posts, and permalinks at the ends of posts. Comments are moderated and may take time to appear. Note: Profile updated 4/7/12

20 September 2013

Lloyd Blankfein, Bashar Al-Assad, and the Pope


[For an update on psychopaths in Congress, click here.]

Introduction
Blankfein
Assad
The Pope
Conclusion

Introduction

What does Lloyd Blankfein have in common with Bashar Al-Assad? And how do both differ from Pope Francis? If we can answer those two questions and use the answers to pick better leaders, we can make this century a whole lot better than the last.

To me, Blankfein and Assad are both psychopaths. They are highly educated and brilliant, but psychopaths nevertheless.

The word “psychopath” is not a generalized insult, like “soundrel” or “bastard.” It has a very special meaning. Psychologists tell us that psychopaths differ from the rest of us in a number of specific ways. But two stand out, and most of the rest follow from these two.

First, psychopaths lack empathy. They just don’t know how to put themselves in other people’s shoes. And even if they know how, they don’t use that knowledge in planning and executing their actions. Whether their lack or nonuse of empathy is genetic or learned science doesn’t yet know.

Second, psychopaths have a limited or non-existent sense of moral responsibility. They have ways of convincing themselves and others that anything bad that happens is the fault of others, not them. A good example is bankers blaming the government for their buying, packaging and selling liars’ loans.

The better educated and more intelligent psychopaths are, the more plausible their rationalizations and finger-pointing. That’s why intelligence (both analytical and emotional) is positively, not negatively, correlated with psychopathy. The smarter a psychopath is, the more easily he can convince himself and others that he is not to blame. And the more easily he can use weapons of financial or actual mass destruction without a pang of conscience.

With this background, let’s take a brief look at Blankfein and Assad and see how well each fits this mold.

Blankfein

Blankfein, you may recall, has been chairman and CEO of the investment bank Goldman Sachs since 2006, two years before the Crash. He was and is the big boss.

According to investigative reporter Matt Taibbi, Goldman Sachs was the bank that pulled the trigger on the Crash of 2008. It did so by making insistent collateral calls on the insurance giant AIG. That started the dominoes falling, or what I call the stampede by financial professionals.

When all the dust had settled, several million people were out of work, several million had their homes “under water” or in foreclosure, real estate values had plummeted between 20% and 30% nationwide, and the federal government was out several trillion dollars. Blankfein surveyed this financial mass destruction, and his own bank’s profits, and declared that he and his bank had been “doing God’s work.”

Would you say that statement lacked empathy?

Now let’s look at moral responsibility. When the SEC sued Goldman Sachs, its complaint was very simple. Goldman, it alleged, had sold packages of mortgage-backed securities to an investor without telling him that a consultant had designed the packages to go south.

Not only that. As became known later, most of the banks that sold these securities to investors knew they were garbage. The lenders that had made the liar’s loans underlying the packages had massively violated not just their own credit standards, but the standards for income and assets that had prevailed in the mortgage industry for decades.

The chance that Goldman, with fingers and contacts in every corner of high finance, didn’t also know this is minuscule. The chance that Blankfein, the CEO of Goldman and a brilliant man, also didn’t know is even more minuscule. It was his business to know things like that, and no one has ever accused him of being slow, stupid or negligent in knowing the things he needs to know to make money. That’s why Goldman made money throughout the Great Recession, and why Blankfein is still CEO.

So what did Goldman do? It settled the SEC’s suit for $550 million. But it did so upon one important condition. It did not admit (or deny) any guilt or fault.

CEO Goldman and his board, in effect, made the following public statement:
“We are paying over half a billion dollars for something, but we won’t say what it is. We did nothing wrong. We didn’t even make any mistakes. All we made was money, although we may have left the global economy in shambles.”
I don’t know about you, but to me that sounds a lot like the second prong of psychopathy.

Unfortunately, in this case the SEC was an accomplice to psychopathy. It didn’t have to settle, let alone on those terms. It had a strong case.

Our new SEC Chief, Mary Jo White, has a better idea. Although she had to recuse herself from the current case against J.P. Morgan Chase, she established a principle that rogue banks like Goldman and Chase have both to pay and to admit fault. Her SEC is not going to indulge psychopaths’ self- and public delusions. Score one for human civilization.

Assad

Now let’s turn to Assad and see how he compares. The fields of action are quite different: finance and war. The misery is (mostly) different, too: financial suffering, stress and poverty versus blood, gore and rotting corpses. But they do overlap a bit in the occasional suicides and murders that financial misery motivates.

What about empathy? To see that trait (or its absence) in Assad, all you have to do is watch his extraordinary one-hour interview by Charlie Rose.

Again and again, Rose reminds Assad what a charnel house Syria has become and how universal is the suffering. Again and again, Assad gives a Gallic shrug, or waves his hand, saying words to the effect of “war is like that.”

Really???!!! Let’s extrapolate. Syria’s population is less than 23 million. [Click on “People and Society”] Ours is over 307 million. If we Yanks suffered proportionate misery, we would have 1.33 million dead. That’s more than we have lost in any war in our nation’s history, including our bloodiest, our own Civil War. In fact, it’s more people than we have lost in World War II and all the wars we have fought since, put together.

And what about the seven million Syrians displaced, either internally or abroad? If we Yanks suffered proportionate misery, 93 million of us would be living from hand to mouth in unfamiliar and squalid temporary homes. The only things that could actually do that to us might be a nuclear world war, a great plague like those of the Middle Ages, or a sudden and massive climate cataclysm that raised the sea level by several meters and inundated all our coastal communities.

Sitting safe in his opulent palace, with his pretorian guard and his bunkers at the ready, Assad waves his hand as if all this suffering were routine and normal “collateral damage” of war. Empathy? I think not.

Now lets look at moral responsibility. Assad represents a tiny 12% of Syrians, the Alawites. Yet again and again in his interview, he insisted that the whole Syrian nation and its people are behind him.

What evidence did he adduce for this extraordinary claim? The fact that the war already has lasted 2.5 years. In his view, he and his 12% minority couldn’t have held out this long without the Syrian people’s support.

Really???!!! Assad’s regime has all the air power and heavy weapons. As he has now finally admitted (in an attempt to avoid military sanctions), he has chemical weapons, too, and no compunction against using them. Assad also has the financial and military backing of one of the world’s great powers (Russia) and one of the three most powerful countries in the Middle East (Iran).

The rebels have none of these. Until Assad began using brutal force to put down their peaceful go at their own Arab Spring, they were ordinary people, with little or no military training. And just like people everywhere, they took time to make up their minds about the civil war, and to grow to hate Assad and his butchery. His slaughter just helped them make up their minds quicker, whether to flee or fight. The vast majority fled.

On the field of battle, numbers meant—and mean—nothing in the face of Assad’s modern means of industrial-scale slaughter. Even now, the jihadis are making larger dents in Assad’s juggernaut than the other rebels simply because the vast majority of Syria’s people, and hence its rebels, are not fighters. If Assad had given just a few inches, they would still be baking bread, fixing cars, and curing sick people in hospitals.

So who is responsible for the butchery? Syria’s ordinary people, who just wanted a bit more say in their governance and were met with bullets, bombs, mortars, artillery and now poison gas? Or Assad, whose response to legitimate protest was brute force?

Minority sectarian or ethnic rule is inherently unstable. It’s even more so when the majority begins to assert its interest and rights and the ruling minority responds with savagery. That’s what the British wisely recognized in India, and why they gave it up. That what the whites wisely recognized in South Africa, and why they exploited Mandela’s extraordinary wisdom and talent to switch peacefully to majority rule.

This central truth is what Assad just can’t see. As the toll of death and suffering rises to world-historical records, he’s still no closer to his apparent goal. If he wins, he will rule as undisputed tyrant over a land of tombs and rubble.

So who’s at fault? Do you have to ask?

The Pope

Before we fall into a good despond, let’s quickly compare Pope Francis.

Blankfein is a top banker in a free country, with a tradition and a recent propensity to let bankers do what they want. And if Blankfein can’t do what he wants now, he has the lobbyists and lawyers, and his firm has the campaign money, to get lawmakers to let him do what he wants later. Assad can do (and does) what he wants by definition. He’s a dictator.

The Pope has no such free hand. The Catholic Church today is probably one of the least flexible institutions on Earth. It has a rigid hierarchy of leaders who measure their promotion time in decades. And it has two millennia of carefully debated and recorded doctrine. (If you think the Internal Revenue Code is complex, imagine two millennia of Church doctrine stored in the Vatican, much of it in Latin and Greek.) Apart from the world’s various armies and maybe North Korean civil society, no other human institution is so circumscribed.

Yet in his humility, empathy, and wisdom, Pope Francis sees that something is wrong. He sees things in that two-millennial tradition that need to change.

And so, in his responsibility, he tries to change them. He invites gays into his Church and invites his Church to become more welcoming to them. He seeks to downplay the vicious dispute over abortion, which has made good people do horrible things, like murder doctors. And as a great thinker, the Pope is no doubt aware of how pols have manipulated the abortion issue to put into political office some of the worst people ever to get there, including Dubya, who started two wars, both unnceessary.

With what does the good Pope hope to replace bigotry and discord? Jesus’ message, the core of the Church’s teaching for the past two millennia.

As a Jew and agnostic, I don’t believe Jesus was the Son of God. I don’t even know what that means.

But, as I’ve analyzed before, I do believe Jesus was one of our species’ best political and social thinkers of all time, probably the best. And if “prophet” means someone who sees much farther and thinks much more clearly than the rest of us, then Jesus was that, too.

Jesus invented bumper stickers two millennia before there were cars to put them on. “Love thy enemy.” “Love thy neighbor as thyself.” “Turn the other cheek.” Unlike today’s superficial and snarky stickers, his were so deep they are almost impenetrable.

They are easy to repeat, but hard to understand. Except for the second, they are counterintuitive. They are devilishly hard to follow. But where our species has managed to do so—in the Marshall Plan after World War II, in the freeing of India, in the salvation of South Africa, and in helping our African-Americans reach for justice and social acceptance—we have had astounding success. Where we have failed, as in “resolving” World War I and in Syria, we have made such horrible messes that all humanity hangs its head in shame and sorrow.

So Jesus’ nuggets of advice are not just unattainable moral desiderata. They are practical prescriptions for living well on this Earth.

The dirty little secret of Jesus’ sound advice is that it’s based on our own evolution, both biological and social. Our entire success as a species derives from our ability to empathize, cooperate and take responsibility for our acts.

Next to these traits, our brain size and opposable thumbs are minor. The traits that Jesus emphasized are what let us dominate this planet.

Even Einstein couldn’t run an airline, let alone build a Dreamliner, all by himself. And as we now know, even birds use tools, which, having no opposable thumbs, they hold awkwardly in their beaks. But as far as we know, no other animals feel empathy and can consciously accept responsibility before and to other members of their species.

So psychopaths like Blankfein and Assad lack the two most important attributes that make us human: empathy and responsibility. They elevate the individual drive to survive and dominate, which every animal has, above our uniquely human attributes. They reduce us to the level of other animals, with appalling results to match: financial or actual mass destruction.

Conclusion

For psychopaths like Blankfein and Assad, it’s all about “me.” Like most modern bankers, Blankfein just wants to get rich, by any means that won’t land him in jail. “Shareholder value” is a convenient rationalization.

Didn’t the Texas megapreacher say “Jesus wants you to be rich”? Maybe. But Jesus himself said something different, something about camels and needles. It’s too long to fit on a bumper sticker, but it’s equally memorable.

What did Jesus mean by that parable? Did he think material wealth is a bad thing?

Probably not. Otherwise, he wouldn’t have advised wealthy people to take care of the poor. He would have advised them to hold potlatches and become poor.

What Jesus meant is that he wants us to be good, not rich. If you can get rich by being good, do so. But if you get rich by laying waste the economic landscape, as Blankfein and his ilk have done and may still be doing, that’s not so good. (Jesus also meant to say that, the way society was structured then, as now, it’s not so easy to get rich by doing good. That observation, among many others, showed Jesus’ superb political and social insight.)

As for Assad, there’s little good to say about him, except that his butchery is not (yet) as bad as Hitler’s, Stalin’s or Pol Pot’s. You don’t have to do a lot of analysis to condemn him as a psychopath. You just have to look—without flinching!—what at he has made of Syria today, and hear his flimsy justification for his crimes.

There is another path. Pope Francis doesn’t own it, but he is becoming one of its foremost exponents: humility, empathy and responsibility.

There is some irony in the top leader of a Church that fought the idea of evolution tooth and nail touting our chief evolutionary advantages. But we should ignore the irony and accept the leadership. The more we follow leaders like Pope Francis, and the more we reject psychopaths like Blankfein and Assad, the closer to our lost Eden we will get.

Footnote: See Matt Taibbi, Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America, Chapter 3, Hot Potato, The Great American Mortgage Scam (2010, available in electronic form on Kindle). Unfortunately, you have to read most of the last half of this rather long chapter to get the big picture of how Goldman’s own acts triggered the collapse of our American and the global economy. Not only did Goldman buy massive collateral default swaps from a firm—AIG—that it knew or should have known didn’t have the capital to back them up. But as the light began to dawn on the whole band of swindlers and thieves, it was Goldman’s insistent and loud demands for collateral from AIG that caused the government to bail AIG out (lest it go under and drag innumerable insureds and retirees with it) and the Crash to begin.

As CEO of Goldman, Blankfein was literally in the room where all this happened. Observers also in the room described his attitude and acts as hyper aggressive and implied they were unreasonable.

It is possible to see Blankfein as the one who saw earliest how serious the coming catastrophe was to be. But if Taibbi’s reporting is right, he did his best to save his firm, while knowing that doing so would precipitate, if not provoke, a national and global crisis with no end in sight. Rational self-preservation? Maybe. Empathetic or responsible? Definitely not.

Update: Psychopaths in Congress

While on the subject of psychopaths, what can we say about Ted Cruz and the Tea Mob?

For the nth time, the Tea Mob is playing with fire—risking shutting down our government or throwing our nation into default. (Cruz is a latecomer.) If you think the Crash of 2008 was bad, just wait. What caused the Crash was the risk of default of just a few big banks and AIG. What do you think will happen in the event of the actual default of the United States of America, heretofore the world’s safest investment, and the repository of trillions of dollars from all over the globe?

It won’t be the end of the world, at least not quite yet. But it might be the end of the rational financial structure that our nation and our allies have spent the time since the last Great War building. It would almost certainly be the end of our Yankee global economic leadership. And remember that a sea of similar economic troubles helped cause our species’ most horrible war. That’s why we spent so much time and effort trying to rationalize the global economic system after it.

So what is the excuse for this latest extortionate threat of economic Armageddon? Last time, it was ostensibly reducing the deficit, which every economist believes (and then believed) can wait until our weak economy gets stronger. This time, it’s defunding Obamacare.

Forget the fact that we have tried to rationalize our dysfunctional health-insurance system for a century, since Grover Cleveland. Forget the fact that Obamacare is the best compromise we have been able to come up with after a century of trying. Forget the fact that some thirty million people, who have no health insurance, are just about to get the chance get some on reasonable terms and at reasonable prices. Forget the fact that, as I analyzed over three years ago, reps from the states with the highest rates of uninsured people voted against Obamacare and are now trying to sabotage it. Forget the fact that—except for Texas (we’ll get to Cruz!)—those states are our poorest, least-well-educated, least developed and least productive.

Forget the fact that what they are doing is un-American. Until now, our national motto has been “do it, try it, fix it.” Shouldn’t we at least give something that took us a century to enact a try, and then tweak it and make it better, rather than kill it and go back to square one?

If it really is as bad as Fox and the right wing have got large numbers of American dupes to believe, won’t that become self-evident after it goes into effect? And can’t we repeal it then?

The right wing’s dirty little secret is that they actually think it will work rather well, and that Americans will get to like it, just as they now like Social Security and Medicare. So their last-ditch attempt at extortion is not a sign of real confidence in their position. It’s desperation.

Forget all that. Just think about the stock market. We were getting a nice rally, and now we’re about to go into a dive. If we even approach default, let alone see it, we are likely to suffer something that will make the Crash of 2008 look like a walk in the park. At very least, we may see the double-dip recession that we thought we had avoided with our weak stimulus and Ben Bernanke’s Herculean efforts.

Before the Crash, about half of Americans owned stock. Maybe a few percent fewer do now. So the absolutely inevitable stock-market dive will rob the wealth of about half of us. And it will hurt most directly the middle class and owners of small businesses, most of whom have their own retirement plans, built around 401(k)’s. Maybe that’s why the GOP’s business wing is now engaged in a political civil war with Cruz and the Tea Mob.

Those who own stocks directly can cut their losses with stop-loss orders. The more adventurous can pick up their favorite stocks at lower bargain prices later. But you can’t put in stop-loss orders for mutual funds, and many of the best mutual funds have penalties for short-term trading. So a whole lot of wholly innocent people—approaching half of us—are going to lose money because of these cretins.

And so we come to Ted Cruz, the biggest cretin of them all. Watch the look on his face as he threatened to filibuster bills to maintain our fiscal health and international credit, if they don’t also defund Obamacare. [set the timer to 0:28, or just wait] People my age have seen that look before, on the face of another senator who almost destroyed our nation: Joe McCarthy.

It’s the look of a naughty little boy who’s discovered a secret that can get people to look at him, talk about him, and maybe (if they’re really stupid) even vote for him. In Joe’s case it was accusing innocent people, including high-level public servants, of being closet Communists. In Ted’s case, it’s destroying our ability to manage government, and maybe our fiscal health and national credit rating, in order to satisfy people who hate a new law that won’t really affect most of them, and that they don’t really understand. (The Affordable Care Act is complicated; no one denies that.)

To anyone who can judge character, watching Cruz is depressing. Not only is he a grown man—and a physically big one—with the smirk of a little boy who has found a way to make himself notorious by being really bad. He is also willing to torpedo the personal wealth of over a hundred million Americans, plus the global economy, to gather attention. You would think that if he took these things seriously he would wipe that smirk off his face.

Remember the two signs of psychopathy: lack of empathy and lack of moral responsibility. Cruz and the Tea Mob are going to tank the stock market, hit our middle class hard, kill what’s left of our nation’s global economic economic leadership, and maybe throw us and the world back into a recession much more severe than the one we’re now crawling out of.

All for political points. Empathy? I think not.

And when they’re done with their extortion and depredations, they’re going to claim that all the eminently foreseeable economic consequences were the fault of the President and the Democratic Senate, just for wanting to continue implementing a law duly adopted by Congress, which tries to cure a century-old problem of too many people suffering and dying without proper medical care in the richest nation on Earth. And they’re going to claim all this is others’ fault because they simply don’t have the votes to do what they want the right way, by debating Obamacare on its own merits in a separate bill.

Responsibility? You decide.

One thing is certain. Were Pope Francis a legislator, he would never even think of doing anything so rankly and obviously extortionate. It would remind him of the Mafia in the country surrounding the small principality (the Vatican) where he now lives and works.

P.S. A Belated Solution?

Of course there is an easy solution to all of this. When the bill or bills come back from the Senate, stripped of the Obamacare-defunding language, all John Boehner has to do is pass them in the House with both Democratic and Republican votes. It’s a sign of our political dysfunction—and our collective ignorance of history—that pundits wonder now whether this will happen. In the days before the GOP made filibusters routine, and before the Tea Mob made moronic intransigence a loyalty test for membership in the GOP, that was how nearly all important legislation passed, with bipartisan votes.

Now, of course, extremists have changed all that. Boehner may lose his speakership for doing the right thing. (And we deride Egypt!)

We will see whether he is a true American patriot, an economic Neville Chamberlain, another psychopath bent on advancing his own welfare at the expense of the nation’s, or an extortionate cretin like the rest. In the meantime, the uncertainty will drop the stock market, our international standing, and the very notion that the world should follow a neurotic, riven, indecisive nation like ours.

If Boehner were really a patriot, he would announce right now that he plans to pass clean bills with bipartisan support. By so doing he could end the uncertainty and ring down the curtain on this depraved and disastrous political theater. If he doesn’t, people in his relatively wealthy southwest Ohio district should take careful note of the resultant losses in their 401(k)’s and remember well when they vote next year.

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