Less than five years after bailing out the investment banks and only six months after leaving the US Treasury Department, Tim Geithner is earning hundreds of thousands of dollars giving speeches to business groups.
Three speeches have already earned him about $400,000, twice his base pay as Treasury secretary. This is not illegal, nor is it uncommon. In Washington it is called “punching your ticket”: a few years as a relatively low paid public servant, and then, upon leaving government, a well-paid sinecure at one of the firms you used to regulate.In the two years between service in Clinton’s West Wing and getting elected to the House of Representatives, Rahm Emanuel made $18m as an investment banker. Bill Clinton has earned more than $100m himself in the 12 years since he left office, speaking at conferences. Gerald Ford made his fortune serving on corporate boards. Who would have guessed that among all of their other talents, Tim and Bill would be such good speakers, Jerry would so capably understand corporate governance and Rahm (without any training or background in finance) would be such a brilliant investment banker.
It didn’t use to be this way. A New York publisher offered General George Marshall, after he retired from his long and exemplary career in government, $1m for his memoirs—that would be $10m in today’s money. The General refused, saying that it would be wrong to profit from service intended for the public good. That behavior was noble 50 years ago. Today, it is unfathomable. One cannot imagine Winston Churchill, Charles De Gaulle or Franklin Delano Roosevelt selling their good name for mere lucre, yet today, it is hard to think of a politician who wouldn’t.
Jane Jacobs wrote in Systems of Survival that governing and trading require very different moralities. She argues that merchants must shun force, since no one wants to do business with someone who might pull a gun. Rulers, on the other hand, must shun trading. Again, this makes sense, since no population would vote for a prime minister who would sell them out to the highest bidder. Jacobs deduced two complementary moral systems, one for commerce, the other for those whom she termed “guardians.”
Jacobs believed that society works best when there is a healthy balance between these two moral structures. Merchants should not bear arms, noblemen should not sell. For a long time, it was the merchants who were embarrassed by the way they made a living. The children of Manchester textile tycoons pretended to be landed gentry, striving to put distance between themselves and the trade that earned them their lifestyle. In medieval Europe as in medieval Japan, a nobleman had to prove none of his grandparents had been in trade. Today, that balance has shifted. The commercial morality has invaded precincts that had been governed by the guardian morality. The accumulation of money has become the obsession of us all.
So no one thinks it is odd that Larry Summers, economics czar for President Obama, made millions consulting for various investment banks. Perhaps these conflicts of interest for those entrusted with our governance need not be illegal. They should, however, be shameful. That, after all, is the function of morality. That they are not is a sign that the commercial morality has taken over our world. And that may be the reason we no longer trust our leaders.
I am not suggesting that Tim Geithner’s support for a bailout that imposed little pain on Goldman Sachs was motivated by anything other than his belief that it was in the best interest of his country. And yet, Mubarak’s cronies who enriched themselves at the expense of others were certain they always put Egypt first.
