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Whither the Social Contract?

July 10, 2010

A hot, smelly day in Manhattan. Instead of working, I decided to do some writing (for myself, for a change), but this is the best thing I've read today. (H/t FrancoisT and the Big Picture blog. Full post here.)

Americans are famous for admiring success. Americans do not begrudge successful people their success, no matter how they earned it: through hard work, natural intelligence, luck, or a combination thereof. We admire Horatio Alger stories of scrappy youngsters who clambered their way out of the urban backwater of Queens, New York (for example) up to the pinnacle of the most successful, admired, and feared investment bank on the planet. We admire, at least in an abstract way, the youthful community organizer from a broken home who clawed his way into the most powerful political office in the world, even if we can’t stand his politics. We admire talent, and brains, and hard work rewarded, because we instinctively know they are not enough. Good luck matters, too.

And, as long as we can believe that we have a chance, too — that luck has a chance to find us and reward our own faith and effort — Americans will pull contentedly at the grindstone while simultaneously ooh-ing and ah-ing over the social and financial success of our betters. But central to this implicit social contract is the idea of fairness: that the deck is not stacked against the little guy, and that he or she has just as much chance of becoming the next Warren Buffett, or Lloyd Blankfein, or Barack Obama as the next guy. It is not a belief in fairness of outcome, but rather one of fairness of opportunity. There is nothing that raises the cultural hackles of most Americans more than learning that the game is rigged, and that the guys at the top are gaming the system in their own favor.

[...]

That is one big reason why the ongoing scandals rocking the financial sector are creating such outrage and upset among the American polity. Citizens are discovering that a very large percentage of people whom they used to admire and envy for mouth-watering financial success earned a large portion of that success by cheating, by gaming the system, and by rigging the rules in their favor. What seems to outrage many Americans even more is that these very financiers do not seem to recognize that they have violated the implicit social norms almost everybody else seems to accept. They hide behind a defense of arrogance, superciliousness, and moral obliviousness which makes most Americans’ teeth grind in frustration.

This is a dangerous situation for the plutocracy. For, when you get right down to it, most Americans are not really interested in supporting a system that is designed to preserve the wealth and privileges of those who have already made it to the top. Instead, they want one that will give as many people as possible a reasonably fair shot at reaching the top themselves. That is a distinction which seems to elude many of the wealthy and powerful. They misperceive the struggle as one of capitalism versus socialism, when what it really is, is a struggle for the heart and soul of capitalism in this country. On one side is a new aristocracy of money, entrenched interests, and cronyism, and on the other is an ethos of equal opportunity for all....

-- Mitch Nauffts

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Posted by Ron Stone  |   July 20, 2010 at 04:25 PM

Very well put. There is a fast growing part of the population who are just down right mad (me included). They see the big bonuses after their taxes bailed out the "too bigs" and it just makes their blood boil. And the politicians don't even seem to notice. I guess come November, they will.

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