Quite Enough of Calvin Trillin Page 12

  The ruling principle of the Alice Tax is the concept of enoughness—a concept so foreign to the current American notions of capitalism that senators are able to see naked confiscation in a tax rate that people who made over a million a year in just about any other industrialized country in the world would consider piddling. Alice believes that at a certain point an annual income is simply more than anybody could possibly need for even a lavish style of living. She is willing to discuss what that point is. In her more flexible moments, she is even willing to listen to arguments about which side of the line a style of living that included, say, a large oceangoing boat should fall on. But she insists that there is such a thing as enough—a point of view that separates her from the United States Senate.

  A congressman I saw on television being asked why the surcharge that passed in the House of Representatives was defeated in the Senate pointed out that a tremendous number of senators are millionaires—although, if I may be permitted to be fair for a change, they may not take in that amount each and every year. He was, in other words, arguing for the interpretation that the senators were loath to vote for the millionaire’s tax not because their main bankrollers would be affected, but because they themselves would be affected—that rare modern example of absolutely direct democracy.

  To be fair once again—actually, I hate being fair twice in a row, but I feel I’m representing Alice to a certain extent here—the senators would argue that they were not protecting their own incomes, but making certain that people vital to the economy were not robbed of their incentive. According to that reasoning, imposing a truly confiscatory tax after, say, an income of ten million dollars a year—a figure we can use for the sake of argument as long as Alice is not in the room—would mean that the entrepreneurial and highly motivated would stop their money grubbing as soon as they reached that level, and thus rob the economy of the expansion and activities their efforts bring.

  In the first place, Alice would argue, they wouldn’t stop. She would argue that the very fact that they devote their lives to trying to make more money than anybody could possibly use indicates that they behave that way not because they want more money but because they don’t know any better. Also, the incentive argument assumes that what most of them do is economically beneficial to the public—an assumption that flies in the face of the past ten years of American history.

  Let’s take the case of Michael Milken, who made $550 million in 1987. If the Alice Tax kicked in at $10 million, he might have continued trying to rake in the booty anyway, meaning the treasury would be $540 million richer. But let’s say he did call off his business dealings for the year when he reached an income of $10 million—which would have been on about January 6, according to my calculations. A lot of people who were laid off because merged or acquired corporations had to divert resources to pay debts might now be working. A lot of companies that went under because of the burden of truly junky junk bonds might have survived. A lot of the felonies committed by Milken after January 6 might have not been committed. A lot of people who were cheated by those felonies might not have been cheated. I rest Alice’s case.

  1990

  Economics, with Power Steering

  The Bush economists say folks with gobs

  Should not be taxed (the gospel of the eighties)

  So they’ll invest the money and make jobs.

  But that neglects the role of the Mercedes.

  That’s why this reinvestment talk is cant:

  The man who makes a bunch of money lends

  No start-up fund to some new widget plant.

  Instead, he buys a white Mercedes-Benz.

  And if you let him keep more of his pay

  He won’t finance a new assembly line.

  He’ll simply buy another one in gray.

  The rich stay rich. The Germans like it fine.

  1990

  Basic Economics

  I am faced with the problem of how to discuss the president’s new economic plan in a way that does not reveal that I have no understanding of economics whatsoever.

  For a while, I used the old method of devising one sentence that made me sound rather knowledgeable. Whenever the subject came up, I repeated the sentence in a confident tone of voice, even though I hadn’t the foggiest idea of what it meant. For discussions of the new economic plan, my sentence was “The question is: What’s going to happen when the deficit-reduction component begins to bite?”

  This is a sentence I cobbled together from a couple of different phrases I heard on the radio in a discussion between two economists who were both unintelligible in an impressive way. One expert said the key would be when something started to bite, although I didn’t catch precisely what it was. For all I know, it might have been trout. The other expert mentioned the deficit-reducing component. I stuck the two phrases together. That opening—“The question is”—was my own little contribution.

  I liked the result. It had a nice, authoritative ring to it. I’ve always thought that the word “component” alone could make you sound as if you knew what you were talking about, and this seemed to confirm that theory. For a while, my sentence was very effective. People would say, “What do you think of the economic plan?”

  “The question is: What’s going to happen when the deficit-reduction component begins to bite?” I would say, in a voice that I hoped sounded like the voice of a tweedy man with a pipe.

  “That’s a good point,” they would say.

  “It’s just one aspect,” I’d say, without bothering to include the fact that I didn’t know another. In fact, if you wanted to be absolutely literal about it, I didn’t exactly know that one.

  “Precisely,” they’d say.

  How was I able to get away with such blatant fakery? Simple: Most of the people I talk to don’t have much more of an understanding of economics than I do. They’re faking just as much as I am. They simply used another method: unfocused agreement (“that’s a good point … precisely”).

  Actually, that might be overstating it a bit. Almost everyone knows more about economics than I do. I believe that the last time I gave any serious thought to the subject was when I was about eight years old, and I haven’t progressed much since then. Listening as an eight-year-old to my parents and their friends talk about how nobody had any money during the Great Depression, I asked my father, “But where did all the money go?”

  He couldn’t tell me, and nobody since has been able to tell me.

  “That’s not the point,” a businessman I know said many years later, when I asked him where all the money went during the Great Depression. “That’s not the way you’d express the economic situation that obtained.”

  “Just as I thought,” I said. “You don’t know either.”

  So a lot of people are faking it. Even so, if you employ the same sentence in four or five straight conversations about the president’s new economic plan, they tend to become suspicious. Some smart-aleck might say, “That’s what you said last time” or “What’s all that ‘component’ talk about?” or even “Are you faking it again?”

  Which means that I’m back to my old problem of how to discuss the president’s new economic plan in a way that does not reveal that I have no understanding of economics whatsoever. Sometimes I think of going back and taking all of those economics courses that I avoided so assiduously in college—although I suspect that they are being taught by people who are unintelligible in an impressive way.

  Sometimes, I dream of meeting someone who both understands economics and can explain it in simple terms to an oaf like me. I ask him what he thinks of the president’s new economic plan. He says that the question is what’s going to happen when the deficit-reduction component begins to bite. I agree (“that’s a good point”). Then I ask him where all the money went during the Great Depression. He tells me.

  1993

  Wall Street Smarts

  “If you really want to know why the financial system nearly collapsed in the fall of 2008, I
can tell you in one simple sentence.”

  The statement came from a man sitting three or four stools away from me in a sparsely populated Midtown bar, where I was waiting for a friend. “But I have to buy you a drink to hear it?” I asked.

  “Absolutely not,” he said. “I can buy my own drinks. My 401(k) is intact. I got out of the market eight or ten years ago, when I saw what was happening.”

  He did indeed look capable of buying his own drinks—one of which, a dry martini, straight up, was on the bar in front of him. He was a well-preserved, gray-haired man of about retirement age, dressed in the same sort of clothes he must have worn on some Ivy League campus in the late fifties or early sixties—a tweed jacket, gray pants, a blue button-down shirt, and a club tie that, seen from a distance, seemed adorned with tiny Brussels sprouts.

  “Okay,” I said. “Let’s hear it.”

  “The financial system nearly collapsed,” he said, “because smart guys had started working on Wall Street.” He took a sip of his martini, and stared straight at the row of bottles behind the bar, as if the conversation was now over.

  “But weren’t there smart guys on Wall Street in the first place?” I asked.

  He looked at me the way a mathematics teacher might look at a child who, despite heroic efforts by the teacher, seemed incapable of learning the most rudimentary principles of long division. “You are either a lot younger than you look or you don’t have much of a memory,” he said. “One of the speakers at my twenty-fifth reunion said that, according to a survey he had done of those attending, income was now precisely in inverse proportion to academic standing in the class, and that was partly because everyone in the lower third of the class had become a Wall Street millionaire.”

  I reflected on my own college class, of roughly the same era. The top student had been appointed a federal appeals court judge—earning, by Wall Street standards, tip money. A lot of the people with similarly impressive academic records became professors. I could picture the future titans of Wall Street dozing in the back rows of some gut course like Geology 101, popularly known as Rocks for Jocks.

  “That actually sounds more or less accurate,” I said.

  “Of course it’s accurate,” he said. “Don’t get me wrong: The guys from the lower third of the class who went to Wall Street had a lot of nice qualities. Most of them were pleasant enough. They made a good impression. And now we realize that by the standards that came later, they weren’t really greedy. They just wanted a nice house in Greenwich and maybe a sailboat. A lot of them were from families that had always been on Wall Street, so they were accustomed to nice houses in Greenwich. They didn’t feel the need to leverage the entire business so they could make the sort of money that easily supports the second oceangoing yacht.”

  “So what happened?”

  “I told you what happened. Smart guys started going to Wall Street.”

  “Why?”

  “I thought you’d never ask,” he said, making a practiced gesture with his eyebrows that caused the bartender to get started mixing another martini.

  “Two things happened. One is that the amount of money that could be made on Wall Street with hedge fund and private equity operations became just mind-blowing. At the same time, college was getting so expensive that people from reasonably prosperous families were graduating with huge debts. So even the smart guys went to Wall Street, maybe telling themselves that in a few years they’d have so much money they could then become professors or legal-services lawyers or whatever they’d wanted to be in the first place. That’s when you started reading stories about the percentage of the graduating class of Harvard College who planned to go into the financial industry or go to business school so they could then go into the financial industry. That’s when you started reading about these geniuses from MIT and Caltech who, instead of going to graduate school in physics, went to Wall Street to calculate arbitrage odds.”

  “But you still haven’t told me how that brought on the financial crisis.”

  “Did you ever hear the word ‘derivatives’?” he said. “Do you think our guys could have invented, say, credit default swaps? Give me a break! They couldn’t have done the math.”

  “Why do I get the feeling that there’s one more step in this scenario?” I said.

  “Because there is,” he said. “When the smart guys started this business of securitizing things that didn’t even exist in the first place, who was running the firms they worked for? Our guys! The lower third of the class! Guys who didn’t have the foggiest notion of what a credit default swap was. All our guys knew was that they were getting disgustingly rich, and they had gotten to like that. All of that easy money had eaten away at their sense of enoughness.”

  “So having smart guys there almost caused Wall Street to collapse.”

  “You got it,” he said. “It took you a while, but you got it.”

  The theory sounded too simple to be true, but right offhand I couldn’t find any flaws in it. I found myself contemplating the sort of havoc a horde of smart guys could wreak in other industries. I saw those industries falling one by one, done in by superior intelligence. “I think I need a drink,” I said.

  He nodded at my glass and made another one of those eyebrow gestures to the bartender. “Please,” he said. “Allow me.”

  2009

  Voodoo Economics Up Close

  “I don’t like the sound of those drums, dear,” Edgar said. “I think we should go back to the hotel.”

  Their guide turned to face them. “You be coming with me, kind mister,” he said. “You be seeing real voodoo-economics ritual. No touristy stuff. Plenty supply-side.” The guide nudged Edgar in the ribs with his elbow, and said in a softer voice, “You be seeing swollen bureaucracy turned into nude federalism, my mister.”

  “You mean New Federalism,” Edgar said.

  “Don’t quibble, dear,” Emily said.

  The guide continued down the winding dirt path toward a thick grove of trees—gnarled trees of surpassing weirdness, their limbs heavy with ticker tape.

  “I simply don’t like those drums,” Edgar said. “It sounds like someone’s beating the hustings. And listen to that chant!”

  In the distance, the sound of voices grew louder and louder. “Voodoo, voo-doo—trickle, trickle, trickle, trickle,” the voices droned in a rhythmic chant. “Voo-doo, voo-doo—trickle, trickle, trickle, trickle.”

  “Isn’t this all simply fascinating?” Emily said, picking her way around a pile of discarded water and sewer grants. “I hope the ceremony’s not too bloody, though. Thelma and Harry said that when they went last year, the sorceress just used some leftovers from the hot-lunch program for the gris-gris. Some people at their hotel said they heard that she could change two helpings of broccoli into an aircraft carrier.”

  “Voo-doo, voo-doo—trickle, trickle, trickle, trickle,” the voices chanted. “Voo-doo, voo-doo—trickle, trickle, trickle, trickle.”

  “I don’t like it, I tell you,” Edgar said. “It gives me the creeps. And why does our guide look so much like an oil-company lobbyist?”

  The guide turned to face them on the path, his eyes darting from side to side, his lips curled in a slight smile. “You be seeing real stuff, my fine sir,” he said. “You be seeing too, my kind young lady. Magic! White magic! Lily-white magic! You be seeing less make more, and machine tools depreciate lightning fast before your eyes, quickquick.”

  “But what’s that awful smell?” Edgar asked.

  The guide began to cackle. “We be cooking the books, mister,” he said, shaking with mirth and rubbing his hands together. “Heh, heh, heh, heh. We be cooking hell out of the books. Heh, heh, heh, heh, heh.”

  They had reached a clearing in the grove of trees, and the chant now seemed nearly deafening. “Voo-doo, voo-doo—trickle, trickle, trickle, trickle. Voo-doo, voo-doo—trickle, trickle, trickle, trickle.”

  “You be seeing now, kind mister,” the guide said. “You be seeing now poor folk bounce
on safety nets. You be seeing rich folk bounce on poor folk. You be seeing this too, my kind young lady.”

  The chanters had reached the clearing. They were wearing hooded robes of polyester. As they stood at the edge of the clearing, their chant changed: “Two-four-six-eight—what shall we depreciate?” Then one of the robed figures stepped out from the chorus, slowly walked toward the center of the clearing, violently twisted back in his own tracks at a grotesque angle, and fell, writhing, to the ground—presumably having displaced a vertebra or perhaps even broken his back. Edgar and Emily watched in horror as one chanter after another followed the bizarre ritual.

  “They be walking the Laffer curve, kind young lady,” the guide said, noticing the look of distress on Emily’s face.

  “Those poor men!” Emily cried.

  “Not for you being worried, kind miss,” the guide said. “They be suffering only short-term displacement.”

  “I’m not so sure I like this,” Emily whispered to Edgar. “Maybe we should just go back to that recreation area at the hotel and try to balance the budget on the backs of some American taxpayers. Thelma says it’s not that hard once you get the hang of it, except she kept slipping off the rich ones.”

  Just then, a new group of chanters entered the clearing, moving in a sort of jazz rhythm. Gyrating in a way that made Emily blush, they shouted, “Trickle down, trickle down—let’s go to town and trickle down!”

  “I’d like to go now, Edgar,” Emily said, but at that moment the voodoo sorceress appeared.

  “There she is!” Edgar said.

  “That be her, nice people,” the guide said. “Now you be seeing her stick pins into neo-Keynesian dollies, kind missus.”