life and puppies

In a recent post, I used The New York Times’ piece on the business that is law school to rail against the predatory nature of law schools. I told you, Dear Reader, that I would have a post to come about the students who attend law school. This is that post.

Well, this is that post with a bit of a twist. You see, yesterday Aaron and I saw Inside Job, the documentary about the global financial crisis that hit in 2008 and continues to be felt around the world. While watching Inside Job, I thought a lot about that Times article. The article features a guy, Michael Wallerstein, who must be nominated for Biggest Ass Ever to Come Out of Thomas Jefferson Law School. I’m pretty sure he’s the favorite for the win.  The kid is annoying at best, completely slapworthy at worst. Wallerstein calls himself part of the “Bailout Generation,” which is a totally new term for me. He seems to think that because Washington bailed out Wall Street, they may do the same for him and his student loans. His loans, by the way, may be $200,000, they may be $300,000. He doesn’t really know.

That attitude drives me crazy. Let someone else clean up my mess! But then after seeing Inside Job, I realized that it drives me crazy for another reason as well: it’s completely delusional. There is no Bailout Generation. At least not for people like me. Or even people like Wallerstein. The bailouts were, and always will be I fear, for the rich. And there will be no repercussions for those who receive them. Those folks go on to run other companies, run universities, run parts of the government. They go on to buy yachts and more houses in the Hamptons. They go on to write the tax code and financial laws. The repercussions of the pernicious actions of the rich, and of the government’s bailouts of the rich, don’t affect the rich, they affect the rest of us. They come in the form of an avalanche, hurting no one at the top of the mountain, but everyone on the way down and piling the most amount of damage on those at the very bottom. [I know the analogy isn’t perfect because, obviously, anyone in an avalanche’s path is going to be destroyed, but let’s just pretend it works.] Washington is not going to step in and help Wallerstein with his massive debt. It’s massive to Wallerstein, but it’s just one person’s debt and it’s meaningless to Washington. [In fact, Aaron told me recently that the interest paid to one’s student loans won’t even be tax-exempt as of 2013. As college and graduate school prices soar out of control compared with personal income, Washington has decided to get rid of the teeny tiny thing they did to help graduates out after accumulating massive loans to pay for an education.] Paying off Wallerstein’s debt — or any middle class or poor person’s debt — is not a priority for our government. There will be no bailouts for those who need the help.

Inside Job is a really great movie. It’s full of great footage of what the economic crisis really did — there are people living in tents in Florida, there are thousands of houses that sit empty and boarded up, there are people waiting in line for food stamps. There is great footage of the decadence and hedonism and arrogance that led to the crisis — Lehman Brothers’ six private jets, prostitution and cocaine, estates with acres and acres of land. But what really makes the movie so great is its simplicity. Over and over we hear that the financial world is far too complicated for us poor, pathetic lay people to understand. Economists laugh at reporters, as if their questions are cute or silly. And while I know that there are all sorts of things in this universe I do not understand, it does not take a genius, or even a BS in economics, to understand what went on here. It was greed.

The movie contains dozens of interviews of economists – some who had warned that the economic climate was becoming increasingly unstable and some who still pretend that they could not have seen this crisis coming. There are so many delicious bits in this movie! Some of the super fun ones come when the director, Charles Ferguson, interviews Frederic Mishkin, a professor in Columbia’s Business School, who also happened to be on the board of the Federal Reserve from September 2006 until May 2008, when he resigned. When Ferguson asks Mishkin why he resigned just as the world needed the most help, Mishkin answered that it was because he had a textbook to edit. Brilliant. Documentaries are so great when a director can get moments like that on film – it’s better than anything scripted. There’s also a perfect moment in the Mishkin interview in which he discusses his paper on the stability of Iceland’s economy. [The movie had started with shots of Iceland and a brief summary of how Iceland’s economy was a total house of cards. For more on Iceland’s nuttiness, I highly recommend this article in Vanity Fair from 2009.] Of course, Mishkin had taken money from Iceland’s Chamber of Commerce to write the puff piece. What may be even more interesting, though, is that his current resume cites the paper as a piece on the INstability of Iceland’s economy. When asked about the change, Mishkin dismissed it as a typo.

There are so many other great moments in the movie; moments when you laugh to keep yourself from crying. Ferguson is a polite, but tenacious, interviewer, which strikes an absolute perfect note, I think. My favorite thing in a documentary like this is when the director can get a previously cooperative subject to ask that the camera be turned off, which happened during part of the Ferguson interview with former Under Secretary of the Treasury during Bush 2, David McCormick. You can almost feel the satisfied grin of the movie’s crew. Zing!

Over the past couple of years, I have heard people state, or at least imply, that the homeowners who bought more than they could afford caused the economic crisis. I am now asking myself why I never felt that way, but why I am quick to blame Wallerstein for his behavior. Both groups of people have been swindled, really, and both groups of people could have known better. Of course part of why I blame Wallerstein is because he comes off as incredibly arrogant and entitled. And the poor homeowners highlighted in Inside Job did not speak English and were literally preyed upon by unscrupulous lenders and brokers. But both of those groups are probably extremes. Most people who have gotten themselves in over their heads are most likely in between. They maybe could have done better due diligence (what does this paperwork really say? how much do we really bring home a month? what kind of jobs are actually out there for recent law graduates? etc.), but both groups are clearly the Little Guy caught up in a savvy, greedy, well-oiled machine. So, while I am all for personal responsibility and owning up to your mistakes, we are talking about money-making practices that are designed to prey upon and chew up and spit out the person who is just looking for their little part of the dream. We aren’t talking about greedy kids or greedy working-class people. We are talking about folks who want to further their education or to put their family in a house. Those aren’t money-crazed people looking for a bailout. They were looking for a loan.

So while I put some responsibility on the students in this law school game, I put the bulk of the responsibility on the schools. The law schools, afterall, are supposed to teach ethics.