Hard Truths Have Replaced Age of Lying

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

euros?

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.