That all said, stretchers undermine argument.
Two, as others have too eagerly noted, the piece kills itself to put Goldman at the center of things, including the tech and mortgage wrecks, when it really means “Wall Street.” Other actors were much worse in various crises, as many have pointed out. To which, Taibbi has responded, So What? Still, there it is. The contortions create dissonance that harms the piece.
Three, it was a mistake to go back to the Great Depression. Taibbi is trying to establish a pattern of selling leveraged investments that eventually crashed, but there’s a limit. That was a different world. By collapsing the timeline into the last 10 years, the piece would have been stronger.
Fourth, Taibbi plays pretty rough, even with true facts. He says Goldman’s 2008 tax bill was just $14 million. But it was higher in the years before and will be higher in the future. Again, Taibbi might say, so what? But again, there you are.
More of a problem: he also attributes the low bill to Goldman off-shoring its income. The absolute bill was low mostly because of U.S. credit losses. And while, it is true that its effective rate that year was 1 percent, due, as he accurately quotes Goldman’s annual report, to “changes in geographic earnings mix,” Goldman spokesman Lucas van Praag points out in an email that the “geography” here was the U.S., where the losses lowered both the tax rate and the tax bill itself.
So, Taibbi was free to use the hilariously low tax bill as an indictment of the U.S. tax system, but off-shoring doesn’t seem to have been the problem he makes it out to be here:
In other words, the bank moved its money around so that most of its earnings took place in foreign countries with low tax rates. Thanks to our completely fucked corporate tax system, companies like Goldman can ship their revenues offshore and defer taxes on those revenues indefinitely, even while they claim deductions upfront on that same untaxed income. This is why any corporation with an at least occasionally sober accountant can usually find a way to zero out its taxes. A GAO report, in fact, found that between 1998 and 2005, roughly two thirds of all corporations operating in the U.S. paid no taxes at all.
In fact, foreign earnings weren’t the issue. While Goldman could have helped itself by cooperating with Taibbi, it declined to talk to him. Still, it’s a slip.
Reached on the phone, Taibbi acknowledges that the low bill may not have come from offshoring after all. He notes that Congressman Lloyd Doggett was among those in the story attributing the tax bill to offshoring and that the tax question was one of those asked and unanswered by Goldman.
Taibbi’s critics might say that it’s ridiculous to point to a small factual error if the entire thesis of the story is preposterous.
But if you believe as I do that the argument is defensible—namely that Goldman/Wall Street contributions can be found in major crackups, and that Goldman is fairly singled out as Wall Street’s leader—it strikes me that there’s a difference between using facts selectively in a polemical piece (e.g. Goldman paid a tiny tax in 2008 without mentioning it might have paid a lot in other years) and mistakenly attributing a true outrage to the wrong cause.
There are other arguable nits—one fact-crammed passage seems to imply Goldman become a bank holding company to qualify for TARP when it would have qualified anyway. But the fact is, anyone who thinks these quibbles sink this 10,000-word piece is wrong.
The main and misunderstood strength of “Bubble Machine” is that Taibbi is taking a backward look at events that we already know were problems and/or catastrophes for millions of Americans, the financial system and the economy—the Tech Wreck, the Mortgage Wreck, last summer’s oil bubble, etc.—and looks at whether and how Goldman and Wall Street fit in. In each case, he finds that Goldman and Wall Street are there and seeks to explain how they contributed. To argue that their roles might be exaggerated is one thing. To argue that these events aren’t problems or these actors played no role is not credible.
The outrage that fuels the piece is not only welcome but strangely missing from the conventional business press, which, with few exceptions, has been numb to the moral dimension of the crisis.