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The Class War Has Begun

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Yet those demonstrators who celebrated Jobs were not necessarily hypocrites at alland no more anti-capitalist than the Bonus Army of 1932. If you love your Mac and iPod, you can still despise CDOs and credit-default swaps. Jobs’s geniusin the words of Regis McKenna, a Silicon Valley marketing executive who worked with him early onwas his ability to strip away the excess layers of business, design, and innovation until only the simple, elegant reality remained. The supposed genius of modern Wall Street is the exact reverse, piling on excess layers of business and innovation on ever thinner and more exotic creations until simple reality is distorted and obscured. Those in Palin’s real America may not be agitated about the economic 99-vs.-one percent inequality brought about by the rise of the financial sector in the past three decades, but, like class warriors of the left, they know that financial instruments wreaked havoc on their 401(k)s, homes, and jobs. The bottom line remains that Wall Street’s opaque inventions led directly to TARP, the taxpayers’ bank bailout that achieved the seemingly impossible feat of unifying the left and right in rage against governmentmuch as Jobs’s death achieved the equally surprising coup of unifying left and right in mourning a corporate god.

That bipartisan grief was arguably as much for the passing of a capitalist culture as for the man himself. Finance long ago supplanted visionary entrepreneurial careers like Jobs’s as the most desired calling among America’s top-tier university students, just as hedge-fund tycoons like John Paulson and Steve Cohen passed Jobs on the Forbes 400 list. Americans sense that something incalculable has been lost in this transformation that cannot be measured in dollars and cents.

There’s no handier way to track just how much American capitalism has changed since Apple’s divine, mid-seventies birth in a garage than by following the corporate afterlife of the American icon most frequently invoked as Jobs’s antecedent in his obituaries, Thomas Alva Edison. Like Jobs, Edison wasn’t just a brilliant fount of technological breakthroughs but a businessman as well (albeit a less savvy one). He was the official founder of General Electricknown as Edison General Electric at its inception in 1890, before Edison was strong-armed into an early merger. G.E. was created to maximize the profits of his many inventions and businesses, Apple style. And like Apple, the company flourished as an exemplar of American capitalism at its most creative and productive, even in a downtime. During the Great Depression, it produced an astonishing array of Jobs-worthy innovationsthe first commercial fluorescent lamp, the first waste Disposall, the first night baseball game, and the first television network. This was the job-creating, profit-making, America-empowering corporate behemoth, spewing out refrigerators and jet engines, that would ultimately recruit Ronald Reagan as its television pitchman in the fifties.

But the G.E. born out of Edison’s genius and synergistic with Reagan’s brand of postwar jingoism is far from the G.E. of our time. Its once minor financial-services subsidiary, G.E. Capital, metastasized over the past 30 years in sync with the growth of the new Wall Street. In 1990, G.E. Capital accounted for just a quarter of G.E.’s overall profits, but by 2007, on the eve of the crash, it had gobbled up 55 percent of the bottom line. Its sophisticated gambling strategies, like those of the big banks it emulated, amounted to an ingenious get-rich-quick scheme for high-rollers until the bottom fell out, taking shareholders and employees, not to mention the country, down with it. G.E. Capital’s dependence on short-term credit was so grave that it forced G.E. to cut back its dividend for the first time since the thirties and to turn to Buffett for a $3 billion emergency cash infusion in the dark days of October 2008.

The cheerleader for ratcheting up that risk at G.E. was the CEO, Jeffrey Immelt. These days he heads the president’s ineffectual Council on Jobs and Competitiveness, despite his own corporation’s record of job-shedding in America and the revelation that G.E. paid no American taxes in 2010 (on more than $14 billion in profits, including $5.1 billion in the U.S.). Immelt is a Republican, but that didn’t prevent Palin this fall from calling G.E. the poster child of corporate welfare and crony capitalism. (Bill O’Reilly and Newt Gingrich joined this class-warfare chorus.) On this point, once again, there is no air between the right and Occupy Wall Street. And as both camps condemn Immelt, so they are also united in the conviction that the godfather of Obama’s economic team, Robert Rubin, is likewise a poster child for corporate welfare and crony capitalism. Rubin, whose useful cronies included his former protégés Geithner and Lawrence Summers, encouraged reckless greed and risk at Citigroup during the bubble much as Immelt did at G.E. Capital, ultimately requiring the taxpayers’ rescue of TARP.


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