On Saturday, Aug. 18, The
New York Times published a piece on the hasty forced resignation-or, as we
used to call it before Ronald Reagan cut the golden ribbon and officially
opened the Age of Euphemism, the firing-of former Whitney Museum director David
Ross from his position as director of the San Francisco Museum of Modern Art. I
am no admirer of Mr. Ross, and this news not only gladdened my schadenfreudliches Herz , it rang a bell.
I went back into the archives and found the following (from my column of Feb. 26, 1999):
“Here’s a prediction. My guess is that the Internet is not
the only bubble brewing in the Bay Area. I wouldn’t be surprised to see an Art
Bubble, too. Word is that money is ‘just pouring in’ to the newish San
Francisco Museum of Modern Art headed by David Ross, the eminence flambe who
made the Whitney the laughingstock of the art world. His first move was to
spend some $40 million on a bunch of paintings that included a job lot by
Rauschenberg, the most overrated artist of our time, who did a handful of
promising things back in the early 60′s, and since then: bupkis. Not that this
matters in an era that believes that if the career is successful, as measured
by the box office, the quality of the output is beside the point.
“Anyway, what distinguishes the Internet ‘bubble’ is that
investor enthusiasm simply disregards traditional yardsticks like business
fundamentals, earning power, vulnerability to competition, competence and
experience of management. Buzz is all. The art world equivalent emphasizes
trendiness, jargon-speaking and eliminates what my old mentor, the late
incomparable Sydney Freedberg, called ‘Eye Q’ (thanks, Carter Brown, for
reminding me) as a basic standard for running a museum. Both types of bubble
celebrate that miraculous conflation of ignorance and surplus wealth, inside
and outside our great institutions, that make this
such a great age to be alive in.”
The Times report
hinted at a certain profligacy in Mr. Ross’
directorial style as a primary cause of the trustee conflicts that culminated
in his departure.
In the past three years, this space has compiled a pretty
good record of calling the shots before the pain of the bullet has actually
been felt. The Internet dot-com bubble was a no-brainer, as was the collapse of
the Ross regime-at least if you believe, as I do, that character is destiny.
The wrenching aftereffect of a bubble, as we are feeling
right now, is the consequence of a wholesale conversion of liquid assets into
relatively illiquid assets and what collectors of books and printing call
“ephemera”: worthless or discounted-to-the-bottom shares of this dot-com or
that. At least there’s this: The dot-com bubble converted a substantial savings
pool into an agglomeration of Aeron office chairs, Cisco servers and EMC
data-storage equipment (much of it vendor-financed), trophy wives and Silicon
Valley real estate, and the cash money raised in I.P.O.’s that paid for this
stuff hasn’t completely disappeared, even if the symbolic money (in the
portfolios of those who bought the paper) has. It was spent, and passed along
from hand to hand in bits and pieces back up the economic chain. It relocated,
in other words, just like the swaggering Montgomery
Street cyberati who’ve relocated from Russian Hill
floor-throughs to the back seats of their leased Beemers, Mercs and Range
Rovers. A reader informs me, incidentally, that every parking-lot attendant
south of Market Street has been furnished with a list of tag numbers and the
promise of bonuses by the repo firms, so it’s tough to find a safe place to
halt for the night.
Bottom line: Every dollar spent is somewhere saved. It’s
where it’s saved that matters. Remember that, students.
This is the kind of home truth we do well to consider when
trying to sort out the present economic mess in Year 1 of W.W.W-the World Without Welch (I’ll be reviewing his book next week). Or
next year, which I expect will be Year 1 of W.W.G-the World Without
Greenspan. To a starstruck world, the withdrawal from center stage of these
paragon wizards of The Way We Used To Live-a world commercial order based on
misreadings and misperceptions of statistics that appear, in retrospect, to
have been confected more in accordance with the alchemist’s manual than the
accountant’s handbook-is going to bring home hard the fact that things are
different. We have lived through a Golden Age of Lying (William J. Clinton,
Liar in Chief) and now may have to live through a Leaden Age of Hard Truth,
though the past 20 years have most likely atrophied our ability to do so. To
regain the straight way, we’re probably going to have to do some radical
rethinking and rebehaving.
For example, another home truth is that there was never a
better time to be rich in this country than the Depression. What applied in the
1930′s seems likely to apply in the 2000′s. Nothing redistributes a nation’s
wealth more rapidly and inequitably than a good stock-market-driven slump.
Don’t forget that the plutocrats tend to be on the sell side of every boom;
they’re used to getting off at the penthouse. God knows what’s going to become
of Amazon, but even if the stock goes to a dollar, Jeff Bezos is still worth a
bundle, and Larry Ellison of Oracle-perhaps the most unattractive tycoon
Mammon’s ever seen fit to mint-will hang on to this Forbes 400 perch as long as his
stock stays somewhere north of zero.
So the inescapable conclusion drawn from the foregoing home
truth has to be that, whatever we do, we don’t need to do any more for the
rich. Here is where the President can-and should-be playing a part of which he
may or may not be capable. The perception is that he’s in thrall to the big
corporations and the top-bracket fat cats. I’m not sure I really believe that,
but the perception is out there-which calls for countermeasures. Overseas, we
can start with the I.M.F., which has got
to get out of the investor-bailout business, probably by insisting on a
dollar-for-dollar matching of write-offs to infusions. And speaking of the
dollar, why not pay our troops stationed in Europe in
I think a tax cut is a good idea, though not as a
return-of-capital rebate of the surplus, which is one way it’s been sold. A tax
cut ought to be a confidence-builder and a capital freer-upper, especially to
the people lower down. The $600 rebate should have been $1,200 to anyone making
$30,000 a year or less, and zero to anyone making more.
It probably would help to eliminate tax on the first $50,000
of capital gains, which is bupkis to the rich but could help the middle guy.
Why not declare a tax holiday on some floor number ($10,000? $25,000?)
of 401(k), etc., withdrawals? And cut a special break
on termination payments to people who are laid off? And isn’t it about time
anyway for the President to jawbone against massive layoffs in industries
experiencing a downturn that isn’t going to be fatal? This habit of firing
people to protect the stockholders’ bottom line has got to be ended! I don’t
think it’s socialistic to say that. And I haven’t given up on an initiative to
get banks to cut, for a year or two, their usurious credit-card rates, which
make it all but impossible for small debtors to get out of hock. I looked at my
credit-card boilerplate recently. After seven Fed rate cuts-and with people
talking about the clearing rate possibly going to as low as 2 percent-the bank
is still charging 18.15 percent on unpaid balances! They say they need the
spread to cover delinquencies, but mightn’t the delinquency rate shrink if the
rate dropped to under 10 percent?
To be hitting credit-card balances with 18 to 20 percent
interest rates is not only disgusting; at a time of relative financial crisis,
especially a crisis of investor and consumer confidence, it is tantamount to
treason! The point of banking-at least before Walter Wriston came along in the
60′s with an ambition to turn Citibank into a fee-driven growth stock-was to
make loans that got repaid. A return to this cardinal principle ought to be a
centerpiece of the administration’s policy.
It seems to me we can put this computing power that’s had
Alan Greenspan all a-tizzy to better uses than we have. Computers make it
profitable to chase down infinitesimal fractions of money, which has made
American life for any of us who have to deal with a Verizon, say, or a Visa all
but unendurable. The Great Men among us call that “productivity.” Perhaps
there’s a better way to be productive; perhaps we can use this same formidable
number-crunching power in a happier direction: to tailor solutions so that various
economic segments can be given precisely the kind of incentives and umbrellas
they need, with reasonable preservation of equity all around. Tax policy is not
like a pair of sweat socks; one size does not fit all.
This is all in the President’s lap. Whether he’s up to it, I
can’t say. Exhortation isn’t his natural mode. But he is a Texan, and Texans
are haters, and that does give some hope. Because if I had the kind of
feckless, bloviating enemies the President has, I’d move heaven and earth to
prove the sonsabitches wrong!
It shouldn’t be all that hard.
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