The News: When Failure Is Not an Option
Wednesday's Child Is Full of Woe
Last week, as I stewed over the thought that Elon Musk could raise $44 billion in order to buy a moderately functional social media platform and proceed to destroy it through a spectacular combination of insouciance and incompetence, without apparent fear of going bankrupt, I ventured the thought that we lived in an era where billionaires were uniquely protected from the consequences of their actions, and as a result, were free to be toddler-like monsters who did and said as they pleased. In Musk’s case, for example, X marks a career of capricious lies, ridiculous braggadocio, routinized payouts for defamation and harassment settlements, and casual violations of employment and securities regulations, all without meaningful risk to Musk’s wealth or freedom.
But one of my best readers was skeptical about my hasty historicization, and now that I’ve looked into it, I am too. Sort of.
As with so many things that involve a claim that our present moment is much worse than the past, it pays to be specific about the past you have in mind. And like many people who have that feeling, it turns out that I was really thinking about an incredibly narrow and specific time period, roughly 1955-2000, which many older people in the U.S. are inclined to reference, consciously or otherwise, as if it was a long-standing norm rather than a rather exceptional period. I’m much less certain than I was whether the status quo right now is markedly different than in much of the economic history of the United States.
In terms of legal and financial risks incurred directly by the wealthy, by corporate executives, and by corporations themselves, the period I was mentally referencing in thinking about the spectacle of Musk is perhaps even more specific, essentially 1960-1995 or so. There were three things about that moment in time in the United States that were different: less wealth inequality and a higher tax rate on the wealthy; a much stronger regulatory framework aimed squarely at restraining corporate malfeasance and risk-taking; and much stronger enforcement institutions that were much more likely to pursue prosecutions for white-collar crime, tax evasion, or violations of fiduciary responsibilities.1 In addition, however, this was also a period where a striking number of major American corporations failed, needed bailouts, or were acquired in unfriendly mergers, though the 21st Century has seen its share of corporate failures and bailouts as well.
It’s a bit harder to quantify (and so far I haven’t found a scholarly analysis that offers a strong comparative quantification) but I do think that the personal and financial consequences for corporate failures were more severe for leadership teams prior to 2007—Gerald Levin, CEO of Time-Warner who led the plan to merge with AOL, was pretty well wiped out by his mistake; Enron’s leadership were targeted for prosecution, just for two examples. (On the other hand, most of Arthur Andersen’s senior partners seem to have landed on their feet pretty well, including CEO Jim Wadia.) One thing that does seem pretty well documented is that since 2012 or so, prosecutions for all forms of white-collar crime are down very significantly, and took an especially sharp dive during the Trump Administration.
I’ll keep exploring this topic for a while—I’ve long found the history of business failure and loss of wealth an interesting subject, and so far it feels to me like it’s under-researched with a couple of notable exceptions in terms of particular periods. It’s tricky like the history of failure generally, because you’re trying to track an object that by its nature draws less attention. Read up on various panics, crashes and depressions, and most of the subsequent attention is on the individual biographical histories of business owners who managed to survive the disaster and flourished afterwards. Trying to figure out what happened to everybody else is a big challenge, especially comparatively over time.
But one other thing immediately leaps out at me at this interim stage, which is that whenever we’re talking with the exception of that 1955-1985 time period, the risk of being wiped out, of suffering financial ruin from a place of relative comfort, has always been vastly more acute for the middle and upper-middle classes. That’s not just visible in long-term socioeconomic data, but in fiction and day-to-day reportage: going broke suddenly due to bad investments, bad decisions, hidden liabilities, and so on is the nightmare of bourgeois life. So part of the political landscape around risk, failure and exposure has always been about the relative insulation of the wealthy from catastrophe, even in the worst of times. For every stockbroker who took a dive off a skyscraper in the Crash of 1929, there were plenty of very rich Americans who lived through the Great Depression unperturbed. (Recall the famous Peter Arno cartoon about going down to the Trans-Lux to hiss at Roosevelt.)
This explains a lot of why figures like Musk and Donald Trump inspire such rage within the educated, cosmopolitan, upper-middle class bourgeoisie. I’ve talked about Trump as a kind of blasphemy before, and it’s this cultural world that he particularly profanes. That’s precisely why his voters continue to favor him: it’s not his policies, it’s not what they expect him to do as a leader, it’s not even the specific views that he holds, not exactly. It’s that he is all the more spectacular a blasphemy as his legal troubles accrue. His people would love to successfully elect a convicted felon, not because of specific love for his felonies or disdain for the legal system, but because we would be so out-of-our-minds outraged about it. As George W. Bush put it about the 9/11 hijackers, they hate our freedoms. Or just us.
It’s why Musk’s continuing sycophants love him still. He’s lost a few of the people who saw him as Tony Stark, the daring techno-futurist doing whatever polite society was too scared to do. But his die-hards love him for the hate and derision he inspires so predictably. And that begins and ends not with the content of his character—vulgarian techno-bro scumbags are not particularly rare and most of them inspire no special loathing—but his invulnerability, his ability to escape the consequences. Bourgeois life is laden with danger from transgressions of manners and finances alike. Not, mind you, the kind of danger to life, security and possibility that people living in poor communities face from cops, crime, pollution, etc. There’s threat and there’s certainty, and most of the threats get avoided or softened if they come to pass. But the 21st Century bourgeois live as their forebearers have, in a condition of heightened anxiety, of constant gnawing attention to risk.
You could argue that the hatred that many people in that world feel for Trump, for Musk, and for others like them is also envy. A frequent part of lottery dreaming among the middle and upper-middle class who buy the tickets just to indulge the fantasy is that it would be fuck-you money, that the first thing to do after putting the jackpot in the bank is to drop a bomb of unguarded scorn in the middle of the fragile web of manners, reputation and probity that normally requires repair each and every night. But I also honestly think that the lottery dreamers imagine that as a single and final catharsis, after which point they’d live a classy life that was nevertheless free of financial and cultural fear.
Yes, I know, that isn’t what actually happens to most winners of really big lottery prizes. But very few people who live lives of carefully tended incremental accumulation buy tickets as a serious financial plan. I think at least some of them—me included—would settle for the re-establishment of a relationship between risk, failure and consequences where the biggest failures, if following from voluntary risks, should at least reap the same consequences. I don’t know what $44 billion worth of failure ought to look like when it comes to rest on a single person’s head, but it ought to be the scariest thing we can imagine. I don’t know what multiple indictments for numerous crimes including the attempt to seize power in a democracy ought to look like, but I’m pretty sure the consequences should include “cannot possibly be President of the United States”.
Image credit: "Great Depression Bread Line" by aprilandrandy is licensed under CC BY-ND 2.0.
See for example Bennett, Robert S., et al. “From Regulation to Prosecution to Cooperation: Trends in Corporate White Collar Crime Enforcement and the Evolving Role of the White Collar Criminal Defense Attorney.” The Business Lawyer, vol. 68, no. 2, 2013, pp. 411–38. JSTOR, http://www.jstor.org/stable/23526770. Accessed 2 Aug. 2023. This same literature also points out, however, that even at the high-water mark of regulation and attention by law enforcement, most forms of white-collar crime from CEOs down to middle managers generally were treated more leniently than so-called street crimes unassociated with work or with wealth management.