June 16, 2012 by David K. Sutton
The State Of Capitalism: Chris Hayes – “The Difference Between Cheating And Performance”
Today Chris Hayes made a great point about the difference between cheating and performance, or that there isn’t really a difference at all, at least not anymore. The problem is that we assume people who have made a lot of money did the right things in life to earn that money, but we know that isn’t always the case. We know there are people who get into positions where they are able to rig the system. We know there are people who once they taste success are not satisfied and then begin to cheat their way to the top. At this moment, a serious problem in our society is that we look up to people who have earned a lot of money. We want to emulate them because we believe they have done well in life because they made all the right and morally correct decisions. This is very dangerous if enough people buy into it. It’s what allows the 2008 financial disaster to go on 4 years without anyone being held accountable.
Here is the entire quote from Up with Chris Hayes:
The difference between cheating and performance.
One of the things that is really morally hazardous is if you have a situation in which, if you earn a lot of money, then you must have “earned” it. If you have a big payday, then you did the right thing, because look, point to the amount money, that is the thing that justifies what you did. And if you have a system that views it that way, you are creating the conditions for people to cut corners, for people to cheat, for people to do bad things, because it doesn’t matter how it’s acquired if the actual payout itself is self-justifying, which I think in some ways when we think about these things, then you are going to do whatever it takes to get that payday.
– Chris Hayes
This attitude was on full display this past week when Jamie Dimon, CEO of JPMorgan Chase, was in Washington to offer his testimony to the Senate about his company’s huge losses on investments that were, as he put it, meant to be hedges. Dimon offered an apology but then many Senators (mostly Republican, but not all) went on to kiss Dimon’s ass. Senator Jim DeMint of South Carolina asked Dimon what he thought congress should be doing better. I’m sorry, the regulators don’t ask the regulated how they should be doing their jobs, but the problem is that we as a society assume wealthy CEOs like Jamie Dimon are the smartest people in the room. We assume their success is due to making all the right decisions in life and therefore we should defer to them when it comes to enacting laws to regulate the financial industry.
No, sorry, that’s not how it should work.
Maybe people like Jamie Dimon are the smartest people in the room but it doesn’t take extreme intelligence to properly regulate the financial industry. It’s about separating public risk from private decisions. Tax payers should not be socializing the risk so that people like Jamie Dimon can make more money with little to no personal or institutional risk. It does not take the smartest person in the room to pass sensible laws to put limits on risky bets and to separate the federally insured banking sector of the financial industry from the non-federally insured investment sector. In fact, that was done 70 years ago after the Great Depression with the Glass-Steagall Act, but congress decided they would defer to the smartest people in the room when they repealed that act in 1999. Apparently we need to suffer more pain and financial hardship as a country before we can re-learn lessons from the past.