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Niall Ferguson, Defender of the 1%

Conservative historian and Harvard professor Niall Ferguson has a funny habit. He asserts himself as a timely political commentator by weighing in on a debate about a hot contemporary problem. But then he proposes policy measures so dramatically inappropriate to the issue at hand that his comments become the opposite of timely. Antonyms such as untimely or inopportune don’t quite capture it. He is willfully, stubbornly wrong at exactly the right moment—when the wrongness of his thinking could hardly be more evident. Niall Ferguson, writes Mark Engler, has the uncanny habit of being "stubbornly wrong at exactly the right moment—when the wrongness of his thinking could hardly be more evident."

I wrote of a few examples of this in a review of Ferguson’s work in the Spring 2009 issue of Dissent. Just as the United States was undertaking its 2003 invasion of Iraq, Ferguson stepped forward as an outspoken defender of empire. Then, in the wake of the most profound economic crisis in generations, he offered The Ascent of Money, which celebrated the market system, heaped praise upon Milton Friedman, and advocated the shifting of our pensions into private retirement accounts.

Ferguson has done it again with the #Occupy movement, with a commentary entitled, “Yes, Wall Street Helps the Poor.” In this piece, Ferguson discusses attending a charity poker tournament where a bunch of hedge-fund managers got together to raise money for charter schools in several impoverished New York City neighborhoods. He believes that such charity events could give “America’s financial elite...a compelling answer to Occupy Wall Street.”

Strangely, Ferguson devotes much of his article to presenting evidence that social mobility in America is declining:

Americans used to believe in social mobility regardless of the hand you’re dealt. Ten years ago, polls showed that about two thirds believed “people are rewarded for intelligence and skill,” the highest percentage across 27 countries surveyed....Yet the hardships of the Great Recession may be changing that, giving an unexpected resonance to the Occupy Wall Street movement. Falling wages and rising unemployment are making us appreciate what we ignored during the good times. Social mobility is actually lower in the U.S. than in most other developed countries—and falling.

Academic studies show that if a child is born into the poorest quintile (20 percent) of the U.S. population, his chance of making it into the top decile (10 percent) is around 1 in 20, whereas a kid born into the top quintile has a better than 40 percent chance. On average, then, a father’s earnings are a pretty good predictor of his son’s earnings. This is less true in Europe or Canada. What’s more, American social mobility has declined markedly in the past 30 years.

Could Wall Street’s excesses, its destructive speculation, and its adverse influence on our political system have anything to do with this decline in social mobility, or with the tremendous increase in economic inequality our society has witnessed in recent decades? (After all, just this week the Congressional Budget Office released new data about the rich getting richer at the expense of the rest of the economy.)

Nope. Ferguson doesn’t even consider the possibility that Wall Street might be part of the problem. He refers to the traders’ “ill-gotten gains” only in jest. Instead, he tells us, the decline in social mobility comes from a single source: “the stranglehold exerted by the teachers’ unions,” which “makes it almost impossible to raise the quality of education in subprime public schools.”

Bust the unions, promote “philanthropy, not confiscatory taxation” among America’s richest one percent, and our problems will be solved.

This stuff would be hard for lefties to make up if they tried. It’s the intellectual equivalent of the wealthy greeting demonstrations on Wall Street with a champagne toast from on high.

Notwithstanding the facts he cites about decreasing social mobility in America, Ferguson clearly believes that the top one percent has earned its station in life—that Wall Street traders have succeeded through grit, intelligence, and determination. If only we broke up the “public monopoly” of the American school system, his argument goes, more poor people would similarly have the opportunity to become winners.

Although not a direct response to Ferguson, I think Rolling Stone’s Matt Taibbi provided an important counterpoint this past week to several such strains of conservative thinking about Occupy Wall Street when he wrote, “Wall Street Isn’t Winning—It’s Cheating.” Taibbi argued:

When you take into consideration all the theft and fraud and market manipulation and other evil shit Wall Street bankers have been guilty of in the last ten-fifteen years, you have to have balls like church bells to trot out a propaganda line that says the protesters are just jealous of their hard-earned money.

Think about it: there have always been rich and poor people in America, so if this is about jealousy, why the protests now? The idea that masses of people suddenly discovered a deep-seated animus/envy toward the rich—after keeping it strategically hidden for decades—is crazy....

Success is the national religion, and almost everyone is a believer. Americans love winners. But that’s just the problem. These guys on Wall Street are not winning—they’re cheating. And as much as we love the self-made success story, we hate the cheater that much more.

Taibbi goes on to review how Wall Street has received ridiculously generous public support, has been allowed to borrow against the government’s good credit rating, manages to pay lower tax rates than most Americans, and, on top of it all, gets a “get out of jail free” card when it comes to regulation.

Does showing up for a charity event absolve the bankers for the harm they’ve done to our economy? Ultimately, public sentiment will speak for itself. Ferguson may be “hugely cheered up” by the fact that the wealthy have adopted as their slogan, “educate Harlem...with our poker chips.” But I’m not so sure his following for that one will be vast. I, for one, will take “We Are the 99 Percent” any day.

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