Wake Up, Wall Street and Washington

Steven Pearlstein has a good take in the Washington Post on the reckoning that’s starting to dawn on the power elite, smartly tying together the fall of John Thain with the demise of Tom Daschle.

Pearlstein writes about the entitlement and hubris that led to the $1.2 million office renovation, the $18 billion in bonuses Wall Street still think it deserved, and shows how that mentality has infected Washington, too.

Tom Daschle’s problem wasn’t that he didn’t pay his taxes. It was that he — along with those who vetted his nomination as health and human services secretary and many of his colleagues in the Senate — found it perfectly ordinary and acceptable that he would be able to cash in on his time in the Senate by earning more than $5 million over two years as a law-firm rainmaker, equity fundraiser, corporate director and luncheon speaker, all the while being driven around town in a chauffeured town car. Not exactly Cincinnatus returning to the plow.


For the American public, Daschle became the latest symbol of everything that is wrong with Washington — the influence-peddling and corner-cutting and sacrifice of the public good to private interest. Now that this system has let them down, and left them poorer and anxious about the future, people are angry about it and no longer willing to accept the corruption of the public process and the whole notion of public service.

This is right, of course, but it’s also just an example of good column-writing, tying Daschle to Thain as the (current) leading example of rot in the culture:

This goes beyond mere greed. As with Daschle, it springs from a deeply felt but rarely articulated sense of entitlement that now warps the judgment not just of those on Wall Street — from top executives to hotshots on the trading desks — but of those throughout the upper reaches of corporate America. And over time, it has filtered out to law firms and consulting firms, where freshly minted MBAs and legal associates came to expect starting salaries of $150,000 and partners thought it their God-given right to draw $1 million a year.

All that is history. It turns out that those inflated pay stubs weren’t really a measure of genuine economic worth but manifestations of the mirage that was the bubble economy. Economically, they are no longer sustainable; socially and politically, they are no longer acceptable.

Unfortunately for focus, the column doesn’t end right there. It goes on to make some suggestions of how other folks need to change, but doesn’t convincingly show why he’s tying them to Thain and Daschle.

Is it too much to ask those college presidents who are about to be the beneficiaries of big increases in student aid and tuition tax credits to use this crisis to finally embrace the productivity revolution and find a way to use technology and new teaching techniques to lower the cost of education?

Huh? Where’d that come from?

But forget about the last four paragraphs. The top stands alone.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.