Would Super Rich Impress America's Founders?

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David Weidner provides a valuable public service in his insightful fictional account of Warren Buffett’s creeping (moral) blindness. Making billions — tick, tick, tick — by sleeping with the enemy is no American ideal. Seeking to prosper justly in ways constructive to the nation’s sustainable well-being and economic independence is a laudable ideal — an ideal that Buffett, perhaps, is forgetting as he tries to explain away some of Wall Street’s sins. Maybe being America’s “most successful investor” has gone to his head.

All of Buffett’s end-of-life philanthropy with Bill Gates won’t be tithe or alms enough to pay for turncoat collateral damages caused by his exoneration of an ethically defective Wall Street system in the recent Goldman “Abacus” deal or the 1991 Salomon Brothers corruption. Not long ago, Buffett had sense enough to recognize credit derivatives as potential weapons of mass destruction. Now, neither he nor Peter G. Peterson (benefactor of the fiscal stewardship foundation carrying his name) have sufficient objectivity to fight against wrongheaded aspects of Wall Street branded capitalism that helped make them rich.

Weidner is not the first to write fiction about Warren Buffett. Ralph Nader, the libertarian leaning Independent and Green presidential candidate, gives Warren Buffett opening visibility in his 2009 book, “Only the Super-Rich can Save Us!”. It appears the grass-roots organizer of independent political activism now believes the general public will not be able to recover its well-being unless a few reform-minded elites (and their entourages) take the stage as populists — Teddy Roosevelt style. Unfortunately, the Buffett that Ralph Nader imagines is not as close to reality as the one Weidner fictionalizes.

Nader’s fantasy was probably written before Warren Buffett’s Goldman investment: “Warren was shaken to his core.... He hadn’t had a clue about the ineptitude or recklessness or rottenness of the people in power.... Warren felt a wave of shame that bored through to his gut, his soul. He had to do something personally, immediately...” (page 12). So, what does “Warren” do in this imaginary world? He helps the victims of Hurricane Katina — his humanitarian virtues trumping his need to close on two large corporate acquisitions. This is the Warren Buffett that Nader portrays as more interested in the well-being of his country than the rate of assent in Berkshire-Hathaway share price. Nader has a right to daydream.

Warnings Of The Founders

The American statesmen who penned the Federalist Papers on behalf of the U.S. Constitution’s ratification were not dreaming when they argued that America’s decades of liberty were numbered unless she could maintain a meaningful remnant of honorable elites who would use their commitment to populist values, financial virtues and political leadership to ‘withstand temporary delusions’ as reliable ‘guardians’ of the public interest. Indeed, Federalist Paper No. 71 observes that the people know from experience that they sometimes err from the public good. The wonder is, however, “that they so seldom err as they do; beset as they continually are by the wiles of parasites...by the snares of the ambitious, the avaricious, the desperate; by the artifices of men....” (Granted, these people lived in the pre-entertainment era where sober reflective thought was a more likely virtue.)

In Federalist Paper No. 45, James Madison made this declaration: “[T]he public good, the real welfare of the great body of the people is the supreme object to be pursued; and that no form of Government whatever, has any other value than as it may be fitted for the attainment of this object. Were the plan of the Convention adverse to the public happiness, my voice would be, reject the plan.” This argument immediately followed another in which Madison declares that if Congress were to allow usurpers to misconstrue the Constitution so as to construct systems against the public well-being, “a remedy must be obtained from the people” — the people electing more faithful representatives who would “annul the acts of the usurpers” (No. 44).

How Both Political Parties Are Manipulated To Harm The Public

Where does this leave us if not in the valley of decision? On one side stands financial elites who have manipulated both parties in Congress to create unjust laws that allow elites to exploit the nation’s productive energies and grasp wealth that belongs in the public domain. On the other side stands the sustainable public interest: In Madison’s words, “the real welfare of the great body of the people.” For several decades now the electorate has had insufficient opportunity to protect the real public interest because whatever is gained in electing the out-of-power party as a check upon the first party’s dereliction of duty is offset when the second party serves the same globalist end game on slightly adjusted policy fronts. We’ve not found the wherewithal to “annul” the acts of the usurpers.

Super-elites play for one group of wins when the GOP is in power. They play for another type of wins when Dems are empowered. The electorate is hemmed in because each attempted correction of course brings a new set of hazards and losses for the public good. Just as Goldman Sachs took positions opposite to the interests of its buyers of mortgage securities, elites gain power by shorting the power of the general public. (Every change of party power is like a stock market cycle.) When the GOP has power, elites induce it to expand government in various ways on behalf of elite interests, thus extracting power from the people. When the Dems are given the public trust, other parts of government are expanded on behalf of elite interests. Increasingly, the people must support the evils of their government no matter what because the actions of certain devious elites and ignorant leaders have made government too big to fail.

The people cannot afford a revolution to close out a corrupt government and start anew (as the American Founders advocated) because the nation’s private commerce system and much of the national income is predicated upon the continuity of government power. Thus, when the U.S. government does arrive at a place of economic insolvency (i.e., inability to roll forward its massive debt as treasury securities mature), the public will have to take whatever financial and policy terms international central banking kingpins offer, even if it means collateralizing public lands (e.g., think about Greece’s future). A public that could not accept a prolonged recession in 2008 to enact justice with “too-big-to-fail” Wall Street financial institutions will be unprepared to uphold justice and economic independence when the economic sovereignty crisis arrives.

The Grip Tightens

Moral hazard is now our mantra. The fast money is made by elites. Populist interests are losing the class warfare struggle. Wall Street creates money out of derivatives. Plutocracy strengthens its grip on society. The government has its hands in over half the economy. We’ve known of these dangers for decades but have chosen to ignore the risks. How foolish!

This is why Ralph Nader dreams of a group of ideologically recovered financial elites who could organize the great body of the people against both parties and for the sustainable public interest. Yet, the super-rich cannot save a foolish nation so distracted by pleasures and fantasies that it cannot elect representatives who will pass a balanced budget amendment, let alone read a moral compass or jail dishonest bankers. (As some argue, in an age of fiat currency the U.S. has no need of a balanced budget: Just print more money and let a financially unbounded federal government plan society, turn states into dependencies, and create jobs for special interest constituencies.)

Nader is dreaming if he thinks elites bearing appropriate corrective medicine would gain power on the campaign trail: Wayward societies tolerate false prophets and give little ear to the truth. That’s why post-sovereignty crisis reforms will not burst forth from the intellectual offspring of the American Founders. No, what we will see is a continuation of devious machinations from the surreptitious who dissemble in asserting that recovery and growth are more important than market justice and financial soundness.

Granted, it is possible that Buffett is defending Goldman Sach’s derivatives business because he wants to gradually own the firm and use it as a foothold in re-Americanizing Wall Street. If so, Buffett is out-of-his-depth as surely as Saudi elites were when they bought Citibank stock at Wall Street’s invitation prior to the 2008 debacle. In 1980 the Hunt family of Texas suffered multi-billion dollar bruises (they lost oil properties at a deep discount to developed value) as the result of an extended attempt to muscle in on the Chicago and New York silver futures game that belonged to other hands. (The history of the affair is now sanitized so as to make the Hunt family the primary villains. The real story is more complex.)

Warren Buffett — laudable charitable pledges aside — will either serve the interests of globalists or find his financial power broken. To prove Weidner’s perceptions wrong and Ralph Nader’s dreams right, Buffett would have to reorient his pledged philanthropy (as admirable as it is) and get serious about supporting the American public interest James Madison described. How likely is that? Hence, help will have to come from somewhere else. Anyone interested in the intervention of a Higher Power, like America’s first president, George Washington, thought possible as expressed repeatedly in his First Inaugural Address?