Hoarding for apocalyptic luxury

March 24, 2009|By DAN RODRICKS

The decision by JPMorgan Chase to proceed with plans to spend $138 million on new jets and a hangar to house them, as ABC News reported Monday, fits right into my theory about why the corporate rich continue to indulge and reward themselves despite a public uproar amid financial crisis.

Same with the now-shelved plan at Constellation Energy Group to reward executives with about $32 million in performance benefits and retention incentives - I have a pretty good idea why such a feast had been arranged despite the company's near-bankruptcy, its layoff of some 800 employees and its demand for more money from electric customers.

And same with the whole AIG fiasco - those bonuses that went into the mail despite company catastrophe and the need for a $170 billion taxpayer-funded bailout - it, too, fits perfectly with this theory of mine, which I've kept to myself until now.

It's not just greed that drives this behavior, though greed is certainly part of it.

It's not that the smartest guys in the room are also the most obtuse or arrogant. ("When I hear the constant vilification of corporate America, I personally don't understand it," Jamie Dimon, the CEO of JPMorgan Chase, said in a recent speech. "I think it's hurting our country.")

There's something else going on. I call it: hoarding up for the apocalypse.

I have been watching the concentration of wealth in this country accelerate during the past 10 years in particular. The gap between middle class and rich has become wider and wider, and the gap between rich and poor has become so vast as to be immeasurable.

(Actually, it is measurable. The Center on Budget and Policy Priorities tracked the long-standing trend of growing income inequality and found that it had gone crazy since 1990: On average, incomes for the bottom fifth of American families declined by 2.5 percent while those among the top fifth increased by 9.1 percent. More than one in four working families are considered low-income, earning too little to meet their basic needs, according to a research project funded by the Annie E. Casey Foundation, among others. One other factoid, from the Economic Policy Institute: The ratio of total CEO compensation to average worker pay rose from 24:1 in 1965 to 262:1 in 2005.)

Knowing that it wasn't always so, I've tried to figure out why so many millionaires of the corporate class do everything within their power to become multimillionaires and even billionaires, piling on layer after layer of wealth, beyond anything most people can imagine as necessary in a lifetime.

(Various groups and agencies that study the gap between rich and poor - those "class warfare" warriors who keep bringing this sore subject up - say the richest 1 percent of Americans own anywhere from 80 percent to 90 percent of all net assets. Or, at least they did before this mess, which many of them had a hand in creating.)

Hoarding for the apocalypse calls for belief that the end is coming and that wealth will insulate the wealthy from the misery that will befall the rest of us. (The rest of us might harbor apocalyptic fears, from time to time, but we haven't figured out what to do about them. We're wage-earners, for the most part, or the owners of small businesses. We haven't all that much to hoard - not enough to make a difference, anyway - so we keep working to keep the bills paid and the kids fed.)

The apocalyptic rich have hoarded cash and assets - and they continue to accumulate as much as possible - and they've built retreats to allay a deep fear that, when the world starts to fall apart, they will be at the top of a mountain, in a secure compound with its own source of energy and potable water (and a decade's supply of cabernet), isolated from the screaming, rioting masses.

As the world's population grows, as the recession expands and unemployment worsens, as the globe continues to warm and the oceans rise, as questions about the future of energy and natural resources become graver, as civil unrest becomes a greater concern, the masters of the universe grab all they can. It's an Idaho panhandle mentality on Wall Street - hoard money and assets, and enough golf balls to ride out the coming cataclysm. There's social Darwinism at play in this, to be sure - survival of the richest - but it's the most cynical and self-centered kind, based not on enterprise or capitalism, but on a dark view of the future. Their concept of the greater good is gone, and they certainly display nothing you might call civic-mindedness or patriotism.

Of course, the cynics always existed among us, but they've grown in number in recent years, and they have more power and influence than ever. Those who work in financial markets and deal in commodities, those who watch global trends in energy and food production and population growth - those who have seen the numbers - I believe they have become gravely pessimistic about what life on Earth in the next quarter-century will become, and that's what drives them.

Certainly they would not say these things publicly, and they will dismiss my two-bit theory as two-bit pop psychology. But I think there's something to this. Why else would they keep buying and upgrading their private jets? The day will come when they need to make a quick escape to their mountain retreats, leaving the rest of us suckers on the ground.

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