Getting Away With Murder (and More)

When I was a kid, my parents would watch a TV show called Murder, She Wrote, starring Angela Lansbury as a mystery writer. She would just happen to be somewhere when a murder occurred, and would help the (usually clueless) local police solve the crime. I figured if she came to my town, I would either leave or kick her out, because someone was going to get killed. Every week, wherever she was, someone would get murdered, and she would be close enough to get involved.

In the real world, this would not happen. If every week you were near to a murder, the police would be hauling you in for some serious questioning. You would be in tabloid headlines ("Murder Magnet!") and people would avoid you like the plague. Unless, of course, you are near the top of the social elite, like Larry Summers.

If you don't know Larry Summers, as a high official in the Clinton administration, he was part of a unified effort (also including Alan Greenspan and Robert Rubin) to quash Brooksley Born's efforts to regulate derivatives markets. (For a short summary, check out: http://articles.businessinsider.com/2009-10-21/wall_street/30087500_1_brooksley-derivatives-market-stock-market.)

He also was instrumental in the repeal of the Glass-Steagall Act, enacted in the wake of the last great stock market crash, and designed to keep banks from getting too big, too powerful, and too speculative. (This is an interesting account: http://www.nytimes.com/1999/11/05/business/congress-passes-wide-ranging-bill-easing-bank-laws.html.)

By most accounts, these were two major factors that allowed for and exacerbated the 2008 crash and our current recession.

Larry Summers was also a supporter of Enron, willing to lean on California on Enron's behalf. (http://www.thedailybeast.com/articles/2008/11/12/larry-summers-and-enron.html.)

After Clinton left office, Summers became president of Harvard. His tenure there was marred by accusations of racism, sexism, and conflicts of interest, a faculty no-confidence vote, and huge investment losses. (http://en.wikipedia.org/wiki/Lawrence_Summers#President_of_Harvard.)

So what happens to Summers next? Does he slink off into obscurity somewhere? No, he is chosen to be Director of Obama's National Economic Council.

And this is not unique to Obama - there is also Gen. William Boykin, who played significant roles in the failed Iranian hostage rescue attempt, the Waco tear-gas-attack-turned-firebombing, and the "Black Hawk Down" fiasco in Mogadishu, only to be made Deputy Undersecretary of Defense under Bush and get his fingers into the Abu Ghraib torture scandal.

Summers, Boykin, and others at the top levels of American society have been relieved of the burden of having to do a good job. No matter how badly they perform, they continue to be rewarded, and even given higher positions.

The same is true in American business, with top executives being rewarded with "golden parachutes" of millions of dollars when they have failed dismally. Alan Fishman got close to $20 million for running the failing Washington Mutual for 17 days. Leo Apotheker got over $7 million in severance, plus a $2.4 million "bonus," after unsuccessfully heading HP for all of 11 months. Peter Darbee got a $35 million severance from Pacific Gas & Electric despite an expensive failed ballot initiative and a fatal gas pipeline explosion and fire. There are numerous other examples of executives getting obscene payouts for utter failure.

It must be great to be at this Angela Lansbury level - no matter how many dead bodies you leave in your wake, they still want you back, and will even promote you. So how do you get up to this level, where you can get paid huge amounts and get offered ever-higher positions despite spectacular and repeated failure?

The classic American answer is that you do it through hard work and determination. We love those rags-to-riches stories, like Steve Jobs and Oprah Winfrey. And yeah, hard work and determination help. But the best way is to know someone already at the top, who can pull you up.

Let's look at the new Chief Operating Officer of Facebook, Sheryl Sandberg. She is likely a smart and hard-working person. But she got to her exalted position in large part because one of her professors at Harvard took her under his wing, and helped promote her. That professor? Larry Summers. (Check it out here: http://www.newyorker.com/reporting/2011/07/11/110711fa_fact_auletta?currentPage=all)

There were and are undoubtedly other students out there who are as smart and hard-working as Sandberg. But if they did not get to hang with Larry Summers (maybe they were at Northeast Texas Community College or Cal State Bakersfield instead of Harvard) their odds of getting to the top 1% are not so good.

In the real world that most of us live in, failure has serious consequences - we lose our jobs, and perhaps our ability to earn a living. For those lucky enough to get to the very top, despite the huge impacts that their failures have - people dying, thousands losing their jobs, multi-billion dollar costs - they get to walk away with payouts that most of us would associate with winning the lottery. And they get another plum job. And, perhaps most galling of all, they get to choose - like Larry Summers chose Sheryl Sandberg - who gets a shot at getting to the top next.

So maybe Murder, She Wrote was not so unrealistic after all. After all, reality looks even worse. Not only can some (but only a few) people get away with murder (figurative or literal, your choice), they get rewarded for it, and can set up their friends and toadies to be rewarded for it as well. Eat your heart out, Angela Lansbury.