Great Perturbations: On George Packer
The overriding mood of The Unwinding isn’t one of betrayal or populist anger, but rather epic disappointment. The basis of our material prosperity is vanishing beneath our feet—people who had once placed their faith in the institutions of power are now being thrown back on their own woefully inadequate resources—and it’s desperately sad. Moreover, on the handful of occasions that the book’s characters try to stand athwart the crushing forces of institutional dismay, they’re either promptly stripped of their pitiable illusions or simply shunted aside. For example, Packer follows a pair of Occupy Wall Street activists through the heady months of protest in the center of finance capital. We take leave of one—a charismatic organizer from Brooklyn named Nelini—after she’s locked up in jail following Mayor Michael Bloomberg’s vicious dismantling of the Zuccotti Park encampment in November 2011; the other movement figure, an aimless, fiftysomething tech worker from Seattle named Ray, is left homeless and bewildered, hiding from the cops on a remote spot south of the Brooklyn Bridge. Indeed, to judge by Packer’s account of the protest, you’d never know that the Occupy movement remains very much a going concern, organizing inventive “jubilees” of debt forgiveness and mounting new campaigns against the predatory explosion of the student loan industry.
These characters don’t much exercise the narrator’s interest, it seems, because he’s already plotted out the bitter failings of political advocacy. Even at the highest levels of power, Packer observes, “the establishment was much bigger than any president.” The occasion for this rueful observation is President Bill Clinton’s reversal on the question of endorsing tighter regulation of securities trading. When the issue initially surfaced in his administration—via the Private Securities Litigation Reform Act, a phony “tort reform” measure cooked up by the first Gingrich Congress in 1995—the earnest liberal Jeff Connaughton, then working as a special assistant to White House counsel Abner J. Mikva, personally made the case for Clinton to veto the bill. In a heady, informal, morale-boosting exchange with the embattled president, Connaughton reassured him that he was doing the right thing. As we already know, by the end of his second term, Clinton had completely shifted course on the issue, enthusiastically presiding over the riotous deregulation of the financial sector. Without any hesitation, he signed the 1999 Gramm-Leach-Bliley Act, which disastrously repealed those provisions of the 1933 Glass-Steagall law that banned financial houses from engaging in both investment and commercial banking, as well as the no less catastrophic Commodity Futures Modernization Act of 2000. This latter measure, which abolished most meaningful restraints on derivatives trading, was endorsed over the strenuous—and prescient—objections of the head of the Commodity Futures Trading Commission, Brooksley Born, who warned that unloosing government controls of the volatile derivatives market was a recipe for systemic risk on Wall Street.
Dissents like Born’s are ready refutations of the sweeping claim that “the establishment” somehow towered over the cringing figure of maximum executive power on the American political landscape. Clinton had access to ample countervailing information at these critical moments of reckoning for the country’s financial future; he simply found it personally and politically expedient to ignore it, and to follow the daft counsel of his own crony-capitalist roster of economic advisers, such as his last two treasury secretaries, Robert Rubin and Lawrence Summers. These two trustees of the banking elite should, by rights, be bitter punch lines, in the same way that Herbert Hoover’s liquidationist head of the Treasury, the robber baron Andrew Mellon, retired from public life as a virtual laughingstock.
Instead, Rubin is granted a surreal, adoring chapter of his own in The Unwinding. We learn, for instance, that after a tour as a low-key technocrat in the 1980s boom on Wall Street, he became the co-chairman of Goldman Sachs in 1990 “by maintaining the modesty of his ambition and the calm of his daring.” While Rubin, like most New York financial titans, “stood in the political center,” he was also a lifelong Democrat “because he was concerned about the plight of the poor.” Indeed, this compassionate titan of finance seemed to physically morph in appearance as the overleveraged debt piled up around him: “As Rubin aged and grayed, his…hooded, pouched eyes got sadder and more skeptical. As Wall Street became an ever larger and more volatile juggernaut, he stayed steady and whippet-thin. As financial services were deregulated, he remained well regulated.”
Steering the economic policy of the Clinton White House, Rubin was, in Packer’s telling, wiser still. After he’d scotched plans for the economic stimulus plan that Clinton campaigned on in 1992 in favor of spending cuts to appease Wall Street, Rubin sternly cautioned the president to abandon even the populist rhetoric of his successful presidential run: by all means, he advised Clinton, shun “polarizing, class-laden terms like ‘the rich’ and ‘corporate welfare’”—and as Packer solicitously notes, this advice did not arise “out of class solidarity, but in fear of undermining business confidence in the president.” After all, Rubin was merely passing along “his best economic advice, always disinterested and on the merits. (If it happened to be Wall Street’s view, too, well, the economy had become dominated by the financial sector, and any Democratic president would be destroyed if he lost its confidence, especially after the party began to raise most of its money on the Street.)” Oh, Rubin would fret sometimes: “he continued to worry about the risks of derivatives as Treasury secretary, the way they could entangle financial institutions and magnify excesses in the market. He had no objection in principle to derivatives being regulated—just not by Brooksley Born—though he never got around to doing anything about it because of the opposition he would have faced from Wall Street.”
And when the president signed the Commodity Futures Modernization Act and Gramm-Leach-Bliley into law, Rubin could bask—after the formal expiration of his tour at Treasury—in that most blessed of Washington dispensations: deniability. To be sure, he went on in October 1999 to serve as the “in-house consigliere” of the newly merged Citigroup, which had to wait for the repeal of Glass-Steagall’s restrictions in order to do business, and he pulled down a cool $15 million a year, plus stock options galore, for his trouble. But, hey—Rubin had “nothing directly to do with [Glass-Steagall’s] repeal and no one could justifiably accuse him of being paid back handsomely by Citigroup.”
It’s roughly at this point in the saga of Wise Man Bob that the reader realizes that Packer, drunk on the Dos Passos method of the multi-perspective “camera eye,” is offering this sympathetic portrait of Rubin as a sendup. The most essential thing to note about the culmination of Rubin’s tenure at Treasury is that it was singlehandedly driven by his need to get out and cash in big time at Citigroup. Rubin had technically left office by late 1999, when Gramm-Leach-Bliley became law, but he and the other apparatchiks on the Clinton economic team (including Rubin’s own deputy, and later successor, Lawrence Summers) had feverishly spent all of the preceding year lining up the basics of the Glass-Steagall repeal with the lords of Wall Street—so much so that Rubin’s future Citigroup overseer, Sandy Weill, openly joked that the measure should be known as the Weill-Gramm-Leach-Bliley Act.
But Packer’s narrative ploy is too clever. If one aims to deliver a coherent account of the calamities that pitched the aspirations of the American middle class into history’s dust bin, it makes no sense to treat someone like Rubin as one in a series of collateral casualties of the breakdown of public trust in American institutions. And Packer doesn’t supply any strong corrective account, in the Rubin chapter or elsewhere, that elucidates just how epochally destructive the sweeping deregulation of the financial sector proved to be—a policy that Rubin is directly responsible for (to say nothing of profiting from it in the ugliest fashion imaginable). To use him as the chief de facto narrative authority on the critical policy miscues of the Clinton economic team is akin to praising Charlie Sheen as sobriety counselor of the year. Likewise for Packer’s similarily pseudo-puckish account of Colin Powell’s rise through the military and his mendacious tour of duty as George W. Bush’s secretary of state—a portrait of an “institution man” that’s especially discomfiting coming from Packer, because it so readily doubles as a rationale for the author’s own supremely ill-advised support for the 2003 Iraq invasion.
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