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Justice for Goldman Sachs

Yet another injustice towards Goldman Sachs is circulating on the web. It’s the publication of the fact that Goldman Sachs has financially supported Democrats over Republicans.

The implicit or explicit conclusion is that Goldman is buying pull. Some bloggers have said that the firm is known as “Government Sachs.”

This is total context-dropping. The facts omitted from consideration are:

1. The universities from which the heads of big business graduate, and the intellectual climate in which they were raised, are heavily Democratic. When I say “heavily,” I understate it. The Ivy League colleges during the time when these leaders were attending (60s and 70s) were over 90% Democratic, and pro-capitalist viewpoints were unknown. It is amazing that any of the top executives today are not leftists. The more typical case is that of Warren Buffet, Bill Gates, and George Soros. There’s no evidence that Goldman’s culture is more leftist or pro-Democratic than the average.

2. Businesses have to contribute to political parties to buy protection. At least they think they do.

Even [Hank] Rearden [a character in Ayn Rand's novel Atlas Shrugged] thought so: 

“Rearden disliked the subject. He knew that it was necessary to have a man to protect him from the legislature; all industrialists had to employ such men.”

Accordingly, business contributions tend to flow to whichever party is expected to win. When ideology (Democratic) lines up with who’s expected to hold the whip hand (in 2008, the Democrats) businesses give more to Democrats.

Take Microsoft. The site opensecrets.com has a chart claiming that for the 2008 elections, when Democrats were (correctly) expected to win both the presidency and control of Congress, Microsoft funded Democrats 73% and Republicans 27%. For the upcoming 2010 elections, when Republicans are expected to take back some or all Democratic gains, Microsoft’s funding is directed 59% to Democrats and 41% to Republicans, according to this site. 

Interestingly for the 2000 and 2002 elections, Microsoft, the site claims, gave slightly more to Republicans over Democrats. Clearly, they are supporting whomever they think will win and thus have power over them.

What about the larger financial industry, of which Goldman is a part? The Washington Post reported this in February, in regard to the 2010 election (Republican gains expected):

Wall Street Shifting political contributions to Republicans 

Commercial banks and high-flying investment firms have shifted their political contributions toward Republicans in recent months amid harsh rhetoric from Democrats about fat bank profits, generous bonuses and stingy lending policies on Wall Street. The wealthy securities and investment industry, for example, went from giving 2 to 1 to Democrats at the start of 2009 to providing almost half of its donations to Republicans by the end of the year, according to new data compiled for The Washington Post by the Center for Responsive Politics.

Notice that the average securities firm gave 2 to 1 in favor of Democrats as Obama took office.

Keep in mind the overall situation. By the nature of a mixed economy, government has favors to dispense and penalties to impose. That intervention is the fundamental fact driving firms’ contributions and lobbying activities. The guilt is on the government, not the businesses. Even when a business lobbies for favors (as opposed to preventing penalties), the primary thing to criticize is not business favor-seeking but the government’s having favors to bestow. Yes, secondarily, you can criticize the businesses, but the set-up is not their fault, and they could argue that they are being penalized in various other ways, so in seeking favors, they are still being only defensive on net balance.

The left counts on you taking the bait and directing your outrage toward the businesses, deflecting moral blame from the government intervention that creates the system. It’s the same blame-capitalism tactic we saw when mortgage-lenders were blamed as “predatory”– for using the phony credit injected into them by the Fed.

A related charge against Goldman concerns the large number of ex-CEOs who have gone into government. John Corzine (liberal Democrat), Robert Rubin (Democrat), and Hank Paulson (Republican) are prominent examples. The notion is that once former Goldman CEOs get into positions of power, they distort their political decisions to favor their former firm and personal friends. But this is a very naive view of how people on this level of knowledge and expertise function. People like Corzine, Rubin, and Paulson are not country “good ol’ boys” operating in some local venue, making backroom deals. Plus, they are well aware that being on a national stage, in the constant glare of media publicity, their every move will be looked at from just this perspective–are they placing personal ties above “the public interest”?

Such people, from both their education and their experience in running large businesses, know that shady dealings don’t pay. They are guided not by their personal ties but by their view of what is “in the public interest” and what is “smart politics.” And that view is produced by their philosophy. That philosophy is the same as that of everyone else in their subculture: it is pragmatist and left of center.

Our outrage should be directed at government intervention, and the philosophy that generates it, not at the businesses coping with the consequences. Most of all that applies to Goldman Sachs, which, because of its virtues not its flaws, was a year ago targeted by the leftist establishment as “a vampire squid wrapping itself around the face of humanity.”

Here are a few of the comments, 90% of which were of this same revolting nature, on Salon following the announcement of the SEC case against Goldman:

Has to be the tip of the iceberg [...] This can’t be an isolated incident, no way. When you consider how much effort Goldman staff probably went through to keep this illegal activity hidden, but still got caught? They must do this stuff all the time. . . .Long live Bernie Madoff! Thanks for showing us how wall street works.

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Perhaps I’m too cynical, but we have seen it too often. There are very powerful and rich people with ties to GS and US politicians who will influence the process. They may have to transfer a few millions to their lawyers, but those costs will be in the tenths or hundredths of a percentage point of their immorally accumulated wealth, and will simply be a small cost of doing business for them.

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What? Goldman is morally corrupt? So basically Goldman knew these securities were crap but created a “failure hedge” for this guy Paulson who took out insurance against the fund and then Goldman sold these securities to customers? Well duh, if you let the fox guard the hen house the fox will f*** all the hens and then eat them. I hope the regulation hammer is brought out and every one involved gets hammered big time, hard time like Mr. Madoff. 

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If I pulled a scam on some senior citizen and swindled them out of a few thousand dollars, I could end up in jail. If I had the resources and connections to pull a scam on millions of senior citizens and other people, I’d probably have friends — or at least allies — in the SEC, in the DOJ, with the WSJ or NYT, etc. So I might end up in jail, but it’d be a hell of a lot less likely. As a side note, if most of the public anger hadn’t been so smoothly diverted, I wonder how many members of the vampire squid would be dead by now.

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My bar’s set pretty high. The only “justice” that I’d actually be HAPPY to see would be a full government seizure of all GS assets. 

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These absolute creeps need to go to prison for the rest of their lives. Let them contemplate in that small space the vast implications of their crimes. Let them ponder the real implications and long term consequences of manipulating the elderly out of their pensions, of ruining small business, of foreclosing so many homes that infrastructure, itself, is collapsing, and let them spend a lifetime thinking about how their insatiable greed has maneuvered families into homeless shelters and poverty.

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Le Guillotine…Le Guillotine !

These comments capture what’s really going on now. It’s the lust to destroy, the lust generated by altruism’s hatred of life.

  • Golden Dollar

    You are seriously misguided here. GS didn’t commit fraud, but they did make some really bad choices. They should have paid for it the same way Bear, Lehman and Solly did, by ceasing to exist.