Wall Street’s Persecution Complex
In case you havenâ€™t read it yet, you should make your way over to Talking Points Memo and read Josh Marshallâ€™s penetrating analysis into the factors behind Wall Streetâ€™s persecution complex. Josh’s piece was prompted by the recent firestorm over a letter to the editor published in the The Wall Street Journal in which venture capitalist Tom Perkins compares liberals concerned about inequality to Nazis.
We think Josh is absolutely right to treat the piece as symptomatic of a much larger trend on Wall Street: namely, the emergence of a kind of persecution complex in which America’s rich imagine themselves to be under violent siege — facing a mortal threat of some kind, usually from the progressive or populist left. In this rather spectacular fantasy, the purveyors of unprecedented wealth imagine themselves to brave and heroic champions of capitalism…the innocent victims of uncontrollable populist rage always on the verge of running amok — often led by President Obama himself. Alas, our heroes profess genuine ignorance of the root causes of public hostility toward the rich, while simultaneously condemning around half the population as losers: lazy, good-for-nothing leeches who must be disciplined for their lack of effort and contribution.
Josh identifies three major factors behind the emergence of this persecution complex. In short, those factors are:
Socioeconomic Acrophobia. Living in the economic stratosphere comes with a high price: profound social estrangement and financial exposure, which can produce feelings of intense vulnerability.
Public Scorn. In the wake of the 2008 Wall Street crash, the rich have faced scathing criticism from both sides of the aisle that they havenâ€™t faced in generations (since the late 1970s by our reckoning).
Political Change. Despite their unprecedented access to the levers of power, the rich can no longer count on automatic deference from elected leaders and public officials.
Josh seems to have hit the nail on the head in terms of the rational, conscious, visible factors contributing to Wall Streetâ€™s persecution complex. However, weâ€™d like to highlight several additional psychological factors that are playing a role. If thereâ€™s a lesson you should take away from this post, itâ€™s that complex social and political phenomena almost always have psychological dimensions that are at least partly hidden from view â€“ and for that reason may not be represented in conventional reporting and news analysis. To get the full picture of whatâ€™s really going on, you have to look with the eyes of a strategist AND with the eyes of a psychologist.
To read the editorial pages of The Wall Street Journal or the rantings of right wing bloggers and professional propagandists, to indulge the talking heads on CNBC or Fox News, to listen to billionaires and wealthy investment bankers talk about the events of the past decade is to listen to a historical narrative filled with facts and conclusions that most of us would find unrecognizable. In short, Wall Street does not accept blame for the 2008 financial crisis or its ramifications. In their eyes, it wasnâ€™t their fault and they did absolutely nothing wrong…hence the posture of innocence and victim-hood.
Thanks to the combined effects of social privilege and self-sorting, confirmation bias and and groupthink, the rich rarely come into contact with people who would challenge their views. Mitt Romneyâ€™s infamous 47% remarks â€“ and the paranoid delusions of Tom Perkins â€“ hint at what the 1% sound like when talking amongst themselves. To be a rich person today is to hear constant validation of those views and other views like it.
The end result is analogous in many ways to the conservative movementâ€™s epistemic closure problem. If anything, the socioeconomic isolation of the extremely rich makes the problem even more acute. Wealthy elites only trust ideas that come from other wealthy elites. As a result, their capacity to engage meaningfully with sincere disagreement has atrophied. Even mild criticism â€“ especially if it comes from outside their socioeconomic circle â€“ may be perceived as an existential threat. Epistemic closure turns the natural and (in many cases) appropriate sense of alienation and vulnerability into a persecution complex that at times verges on paranoid delusion.
While Wall Street has representatives from at least four living generations (Silents, Boomers, Xers, and Millennials), right now itâ€™s the Boomers and a few late-born Silents who are in charge. Baby Boomers, born from 1943 to 1960, are today reaching the pinnacle of institutional leadership as well as their peak earning years. While there are clearly exceptions, most principals, CEOs, and CFOs today are Boomers. It stands to reason that Wall Street, like other sectors of American life where Boomers reign, might display more than a few classic Boomer traits: for instance narcissism, entitlement, ideological excess, polarization, and incompetence. If the rich today come off as unusually arrogant, spoiled, outrageous, and out-of-touch, it may be thanks in part to Boomer influence.
Consider that just over ten years ago, America was still making its way out of another Wall Street-assisted recession. Remember the tech bubble and Dow 36,000? Remember WorldCom, Enron, and Arthur Anderson? It seems like back then most Wall Street types would have known better than to publish an anti-egalitarian screed comparing progressives to the perpetrators of the Holocaust. Something like this would have shown up in other corners of the right wing press â€“ but would have rightly been seen as beneath the dignity of capitalismâ€™s leading lights.
Perhaps that’s because ten years ago, the Silent Generation had much greater influence than it does today. Silents have a much more restrained temperament when they are in the majority. But during their rise to power and their fall from it, Silents often act more like generational helpmates — echoing and amplifying the preferences of the surrounding generations. In a Boomer-dominated institution, Silents will often act just like Boomers. We’ve observed and written about this phenomenon in Congress — and Tom Perkins’s screed (he’s a Silent) may be an example of it happening in high finance too.
Social Dominance Orientation
Itâ€™s important to understand that the ranks of the wealthy, Wall Street particularly, and the elite sectors of society generally, are filled with people marked by high social dominance orientation (SDO). Social dominance orientation is one of the two major psychological domains that contribute to ideological beliefs and worldviews.
Those with high SDO see the world as a competitive jungle characterized by a ruthless, Darwinian struggle for survival. These dominating, Machiavellian personalities seek superiority over others, value winning above all else, and believe that might equals right. They show a strong preference for social, economic, and political inequality, and they are deeply concerned with hierarchy and status. They value power, achievement, efficiency, toughness, maleness, hedonism, and aspire to control others. People with high SDO tend to lack empathy, show an interest in manipulating others, express enormous cynicism, and believe the ends justify the means.
These attitudes and behaviors are of psychological origin â€“ meaning they exist largely independently from any personâ€™s economic or financial status. Being rich doesnâ€™t make a person a social dominator. There are plenty of extremely wealthy people (e.g. Warren Buffett, Bill Gates, George Soros) who show few if any outward signs of high SDO. So when a venture capitalist compares Occupy protestors to Nazis, heâ€™s revealing a great deal about his psychology â€“ not his wealth. Specifically, heâ€™s telling us something about how social dominators respond to criticism of their extreme wealth â€“ not how rich people in general do.
Prospect Theory teaches us that a gain and a loss of the same quantitative value do not have the same qualitative value in subjective human experience. Losses are felt far more intensely than gains. Just switching from a gain frame to a loss frame can radically alter a personâ€™s preferences. People will take more risks when faced with potential losses, but curtail their risk-taking when thinking about gains. This leads psychologists and behavior economists to conclude that human beings are basically loss averse.
In the wake of the 2008 financial crisis, Wall Street has undoubtedly been in a loss frame vis a vis politics and government for exactly the reasons Josh describes. Not only have they lost publicâ€™s trust, theyâ€™ve lost a good deal of the automatic deference they used to receive from the White House and Capitol Hill. Losses like these can lead people to take extraordinary, foolish risks: for instance, spending hundreds of millions of dollars in a major national election only to generate miniscule returns. Itâ€™s likely that the threat of further losses will lead some of the richest Americans to make increasingly reckless political investments, while others will feel it necessary to make bolder public pronouncements of their increasingly radical views.
To make matters worse, there are some studies suggesting that when faced with losses or a loss frame, people with high social dominance orientation (see above) become even more aggressive, even more willing to break the rules, and even more eager to step on the backs of the less fortunate than they already are. Loss aversion may be bringing out the worst tendencies of Wall Streetâ€™s worst human beings.
There may be other psychological factors contributing to Wall Street’s persecution complex, but these appear to be the biggest ones. The most important thing to remember is that psychological motivations and influences aren’t usually part of mainstream political analysis. And that’s because most strategists and pundits don’t even know they’re there. They treat the surface reality as all that exists. At First Person Politics, we never make that mistake. We help clients understand political psychology and then use it to develop more effective strategies for change.