Good Morning Friends,

We have been talking about the discernible link between how the bourgeoisie are educated and how they exercise power in the real world. I have argued that the top one percent, generally, and the top level of that one percent, especially, are basically, in an institutional way, assured that they can reshape reality by declaration. I ended the last post by citing a line from The Godfather II when Michael Corleone, now the head of the "family" has a meeting with the powerful senator of Nevada about some licenses for some casinos. The senator insults Corleone first, in a most unfriendly, almost racist way, before saying yeah, you can have the licenses - for a huge fee payable to me, and so forth.

At one point Corleone said, "We're both part of the same hypocrisy, senator."

Bernie Madoff. I started flipping through a book on Madoff. But for our purposes I am interested in one tiny episode in his life.

You know, a lot investigative work, both journalistic and legal, presumably, is going into trying to figure out: Was Madoff's operation always a fraud or had it previously been legitimate before morphing into a racket; and if so, at what point did the operation become a fraud?

What I want to say is that the question, for our purposes, is rather beside the point; and this has certainly been so since the late seventies. The educational system trains the ruling block to think of reality itself as subject to their decree. One man comes out of the educational system and goes into the world and he is a prominent "law-abiding"* high-ranking government official or revered, un-indicted business tycoon, or an eventual white collar "criminal." It's almost a question of fate as which side of the line they end up on.

"In a sense, the fraud was a vast, unwitting conspiracy among Madoff, his colleagues, family, friends, and investors. The conspiracy perpetuated a fantasy. Madoff promised returns that were too good to be true, and everyone else conspired to believe his unbelievable promises. Madoff was a master illusionist (1)."

Those returns had to be true because Madoff was "gifted." Everybody said so, friends, family, colleagues, and investors. Red flags had been raised over the years, issues and inconsistencies brought to the attention of the government. But the SEC rejected those concerns, for whatever reason, said that Madoff was doing nothing illegal and that, in fact, he was "gifted." The institutional system had granted Madoff, as an individual of the ruling class, the sorcery powers of reshaping reality with a word. When those two FBI agents showed up at his door and asked him if there was an innocent explanation, the state took those powers away, and branded him a criminal.

Anyway, in the 1950s, Far Rockaway Highschool, where Madoff attended, had been considered one of the best schools in New York City (2). There, he was known as a bright guy who didn't work too hard, who was, at that time, "not going to his potential," (3) and so forth. There's a revealing espisode, while meaningless by itself, though some viewed this in connection with other episodes as ominous indicators as to how Madoff might proceed in business; we are interested in what the episode points to institutionally.

For one class in highschool, his class had to give oral book reports. As one classmates recalls the event, Bernie, who obviously had not read a book for the assignment, winged it. When Madoff's turn came he "smoothly" announced the title of the book as 'Hunting and Fishing' by "an author no one had ever heard of, Peter Gunn." Snickers emerged but the class suppressed outright laughter because "no one really wanted to see Bernie fry (4)."

We never learn what grade he got, but the feeling one gets from reading that episode, is that he "got away with it," unlike Bart Simpson.**

It is very well to cite statistics about grade inflation at Harvard and other Ivy League schools (and of course, this happens in other colleges, as the values generated at the top inevitably filter down and infect the rest of us) and highschools, but some concrete examples are called for to drive home the issue.

We'll confine our citations to Harvard. During the period, or overlapping the tenure of Lawrence Summers was president, an economics major had gotten an A on a final identifying "supply" and "demand" as two key elements in the law of supply and demand. A graduate student in classics received an A- for a paper in which he asserted that the Theban plays of Sophocles included Xena, The Warrior Princess (remember that show starring Lucy Lawless that came on after Hercules starring Kevin Sorbo?). And a history "concentrator" got summa cum laude honors for his thesis, Positive Identification of the Body in the Tomb of General Ulysses S. Grant (5).

Ross Douthat is an interesting conservative writer and he had a revealing article in a 2005 issue of The Atlantic called The Truth About Harvard. He is a graduate and he talks about the fact that despite its prestige and the difficulty of gaining admission, once there, one finds a general lack of academic seriousness pervading its halls. I was a bit shocked to read about "shopping week" and so forth. He discusses the different factors involved in grade inflation and content deflation, etc.

But what is of specific interest to us is one of the last papers he wrote while he was at Harvard. The course was "The American West, 1780-1930." The professor handed out two journal articles on the theory and practice of "material history," historical research based on the careful analysis of objects. The students were told to go to the Peabody, Harvard's museum of archeology and ethnology, where the professor had laid out three pairs of objects from the frontier era. One object in the pair was an Indian-made one and the other was made by Europeans. They had to write a ten-page paper comparing the objects and the significance, and so forth. Now, aside from the articles on material history and a general text, North American Indian Jewelry and Adornment, they were to use no sources. He chose a Sioux war club and an American revolver and carrying case (6).

At first he agonized over the assignment, he explains. How in the world was he supposed to crank out ten pages with such thin gruel? But then, sitting at his desk two weeks later, he realized that he had been wrong. The paper turned out to be "pathetically easy" to write." And this was "not despite the dearth of information but because of it. Knowing nothing meant I could write anything. I didn't need to do any reading, absorb any history, or learn anything at all." You should read the article, where Douthat gives an excerpt giving a clear indication of the kind of folderol he was allowed to get away with, and indeed, far more than that. He got an 'A' (7).

I wish a serious survey would be done cataloging all the nonsense test question answers and term paper balderdash, but I think the implication of this mini survey is pretty clear: the ruling class not only survive but thrive, even as they spout reams of literal nonsense and they learn from the institutional structure of the education system tells them that reality is what they say it is. I think one can draw a straight line of connection between what we've reviewed here and this:

On the trillion dollars a day of currency trades on the global markets of the late 1990s (of which only 2 to 3 percent had to do with actual trade in goods or services), done obviously with the aid the Internet. "Partially real and partially unreal, with day-to-day balance simply guesswork, the profits of these digital dances seeped into the real economy, and by the mid-1990s, the financial sector - finance, insurance, real estate - for the first time moved ahead of the manufacturing sector in U.S. national income and GDP measurement (8)." Reality is what we say it is! Now, we're talking about legal activity here.

You know, one has to think that one effect on young people who matriculate through the system of elite education, is to produce cynicism within them. They must come to be convinced that nothing is real, nothing matters, and that there are no lasting values; everything's negotiable and flexible. A certain amount of contempt for the world must be bred as well, even as the next generation of bourgeoisie leadership are given their powers and takes the field.

Bernie Madoff is described as a smooth guy with a crooked grin. We have a lot to learn but it seems clear that a lot of what his operation was about his asserting and getting all kinds of other people to believe that reality was what he said it was, and for a long time the state approved of his powers. We might ask the question: Why didn't he invest the money?

But why didn't Madoff read a book for that book report? Remember (and you should read his article) Ross Douthat did his Harvard assignment precisely to the specifications laid out by the instructor; but these guidelines provided so little foundation, that he, and no doubt everyone else in the class, found themselves largely having to bluff their way through the assignment.

Again, why didn't Bernie Madoff read a book for that book report?
Answer: Why should he? There was no need. They say hard work never killed anybody, but why take the chance?

I'll just leave you with this. After all the trouble we've had with derivatives, after all the trouble we're having sorting out the "toxic," derivative-based assets, after all the risk they had accumulated (not spread as the propaganda went) and after all the damage they've inflicted and may continue to inflict, as they explode like land mine traps; state governments are using derivatives to try to get their books in shape (9).

In addition to that, there is at least a twenty year history of "the warping, since the 1990s, by some arguments, intentional, of the collection and presentation of U.S. economic data to make it more market-supportive (10)."

We're both part of the same hypocrisy, senator.

wingedcentaur

1) Arvedlund, Erin. Too Good to Be True: The Rise and Fall of Bernie Madoff. Portfolio. Penguin Group, 2009. p.8

* This is not a new thought, but Bernie Madoff was a criminal because of the system empowered him in a certain way. He didn't invest the money in the stock market like he was supposed to; and yet even following the rules there is something predatory about the stock market itself - I'll talk about that in the next post, in which we'll invoke the case of Martha Stewart.

2) ibid, p16

3) Arvedlund, Erin. p17

4) ibid, p.18

** I'm talking about an episode of The Simpsons. You know, the cartoon? Bart Simpson tried to fudge his way through a book report. He wasn't nearly as "smooth" as Bernie Madoff, and so Simpson failed.

5) see article harvardmagazine.com/2002/03/grade-inflation-resolved.html The article is written by humorist, Andy Borowitz, and he was being ironic, of course, but I don't think the examples he gave were fabricated.

6) see Ross Douthat's article www.theatlantic.com/magazine/archive/2005/03/the-truth-about-harvard/3726

7) ibid

8) Phillips, Kevin. Wealth and Democracy: A Political History of the American Rich. Broadway Books. New York, 2002. p.138

9) This was reported by NPR (WNYC) the other day. Just Google the words state, governments, derivatives, and you will be sent to many relevant articles. But I heard this on the radio.

10) Phillips, Kevin. Bad Money: Reckless Finance, Failed Politics, and The Global Crisis of American Capitalism. Viking, 2008. pp.79-80.