In 1908, when she was a young teenager, Anna Freud and her father Sigmund went for a walk in an upper class neighborhood in Vienna. Sigmund Freud said to his daughter, “You see those lovely houses with their lovely façades. Things are not necessarily so lovely behind the façades. And so it is with human beings too.”
Consider these two events this past week: The trampling of a Wal-Mart employee on Long Island and Robert Rubin’s defense of his record at Citicorp. On the surface, these events would seem to have nothing to do with each other. The shoppers at Wal-Mart were rightfully labeled as “savages” as they viciously trampled a 34 year-old employee while rushing the entrance on the Friday after Thanksgiving. So frenzied were the shoppers that they tore the doors off their hinges as they entered the store at 5 a.m. When I first heard the story, I hoped I was reading something from a satirical website; tragically, this wasn’t the case.
After the tragic death in Wal-Mart, police and Wal-Mart employees tried to clear the store. Shoppers initially refused to leave. As they did leave, they were screaming, “I’ve been on line since yesterday morning.” It is easy enough to be appalled at such behavior, but we should be equally appalled at Robert Rubin’s behavior.
Robert Rubin, who has been called by former President Clinton the “greatest secretary of the Treasury since Alexander Hamilton,” has received bi-partisan acclaim as one of America’s best “public servants.” (If you read Thomas DiLorenzo’s new book Hamilton’s Curse you will see that Clinton’s comment is not exactly high praise.) Currently, Rubin is a director and senior advisor at Citicorp. Rubin probably never shops at Wal-Mart; and no doubt, he would never engage in a shopping stampede. He doesn’t have to. Citicorp has paid him $115 million in pay since 1999 for sitting on the board of Citicorp and being an “advisor.”
Yes, Robert Rubin has a lovelier façade than the Wal-Mart shoppers, but let’s open the door and look in on Rubin’s “house.” The sad truth is that stripped of his lovely façade—his station in life, if you may—Robert Rubin has not behaved differently than the shoppers at Wal-Mart. Both deny responsibility and treat other people as objects that are in the way of getting what they so rightly deserve.
Robert Rubin justified his huge salary by bragging, “I bet there’s not a single year where I couldn’t have gone somewhere else and made more.” Made more for doing what? Rubin was not responsible for operating any of Citicorp’s businesses; “he told colleagues he wanted more time for activities such as fly fishing.”
Then why would Citicorp want to pay him such sums for doing very little? Was he paid because of his expertise or his brilliant forecasting ability? Again no. About the sub-prime mortgage meltdown, Rubin claims, “There was virtually nobody who saw that low-probability event as a possibility.” Rubin is either ignorant or a liar. Many, including myself, forecasted this meltdown which, rather than being unlikely, was almost a certain event.
Even today, Rubin is unrepentant about his role in Citicorp’s decisions to allocate more of its resources to risky assets saying that they could have been successful if they had had “the right people, the right oversight, the right technology.”
This is complete nonsense. Every year, unprepared hikers in the White Mountains of New Hampshire, ill-equipped to hike given the weather conditions, put the lives of rescuers in danger. For such hikers to argue that their hike would have gone alright if it hadn’t snowed is about is disingenuous as Rubin claiming that Citicorp would have been successful, despite their irresponsible decisions, if they had the “right people.” Hiking up Mt. Washington (only Mt. Everest has claimed more lives) in a blizzard and expecting rescuers to come and save you is as irresponsible and cruel as Rubin’s Citicorp investing in toxic junk and then expecting the taxpayer to pick up the tab. Incidentally, while Citicorp gets bailed out by the taxpayer, New Hampshire sends the rescue bills to the irresponsible hikers.
So why did Citicorp pay Rubin $115 billion dollars? In the words of The Wall Street Journal Rubin is an “uberfixer”—a powerful Washington insider. The Journal reminds us that “Rubin tried to use political muscle to prop up Enron, a valued Citi client. Mr. Rubin asked a Treasury official to lean on credit-rating agencies to maintain a more positive rating than Enron deserved.”
In a free-market, there would be no jobs for deal-makers with Washington connections; Washington connections would be worthless. Rubin was overpaid by $115 million dollars; his real value was zero. As for the stampeding shoppers at Wal-Mart, they killed someone trying to score a big screen television at a bargain price. Before our unfolding economic calamity is over, the actions of the Rubins of the world will cost far more lives than the stampede at Wal-Mart. How? A depression means more malnourished children, more crime, and untold human suffering. Because of his “lovely” façade, none of these victims will ever be traced directly to Robert Rubin.
Am I being too harsh on Robert Rubin? Robert Rubin has become very rich profiting off his political connections. His actions are generated from the same egoic mindset that puts a big screen television above a human life. Let’s make no mistake, Robert Rubin should be held in the same contempt as the stampeding shoppers at Wal-Mart.