A Dangerous Dysfunction

By PAUL KRUGMAN

Unless some legislator pulls off a last-minute double-cross, health care reform will pass the Senate this week. Count me among those who consider this an awesome achievement. It’s a seriously flawed bill, we’ll spend years if not decades fixing it, but it’s nonetheless a huge step forward.

It was, however, a close-run thing. And the fact that it was such a close thing shows that the Senate — and, therefore, the U.S. government as a whole — has become ominously dysfunctional.

After all, Democrats won big last year, running on a platform that put health reform front and center. In any other advanced democracy this would have given them the mandate and the ability to make major changes. But the need for 60 votes to cut off Senate debate and end a filibuster — a requirement that appears nowhere in the Constitution, but is simply a self-imposed rule — turned what should have been a straightforward piece of legislating into a nail-biter. And it gave a handful of wavering senators extraordinary power to shape the bill.

Now consider what lies ahead. We need fundamental financial reform. We need to deal with climate change. We need to deal with our long-run budget deficit. What are the chances that we can do all that — or, I’m tempted to say, any of it — if doing anything requires 60 votes in a deeply polarized Senate?

Some people will say that it has always been this way, and that we’ve managed so far. But it wasn’t always like this. Yes, there were filibusters in the past — most notably by segregationists trying to block civil rights legislation. But the modern system, in which the minority party uses the threat of a filibuster to block every bill it doesn’t like, is a recent creation.

The political scientist Barbara Sinclair has done the math. In the 1960s, she finds, “extended-debate-related problems” — threatened or actual filibusters — affected only 8 percent of major legislation. By the 1980s, that had risen to 27 percent. But after Democrats retook control of Congress in 2006 and Republicans found themselves in the minority, it soared to 70 percent.

Some conservatives argue that the Senate’s rules didn’t stop former President George W. Bush from getting things done. But this is misleading, on two levels.

First, Bush-era Democrats weren’t nearly as determined to frustrate the majority party, at any cost, as Obama-era Republicans. Certainly, Democrats never did anything like what Republicans did last week: G.O.P. senators held up spending for the Defense Department — which was on the verge of running out of money — in an attempt to delay action on health care.

More important, however, Mr. Bush was a buy-now-pay-later president. He pushed through big tax cuts, but never tried to pass spending cuts to make up for the revenue loss. He rushed the nation into war, but never asked Congress to pay for it. He added an expensive drug benefit to Medicare, but left it completely unfunded. Yes, he had legislative victories; but he didn’t show that Congress can make hard choices and act responsibly, because he never asked it to.

So now that hard choices must be made, how can we reform the Senate to make such choices possible?

Back in the mid-1990s two senators — Tom Harkin and, believe it or not, Joe Lieberman — introduced a bill to reform Senate procedures. (Management wants me to make it clear that in my last column I wasn’t endorsing inappropriate threats against Mr. Lieberman.) Sixty votes would still be needed to end a filibuster at the beginning of debate, but if that vote failed, another vote could be held a couple of days later requiring only 57 senators, then another, and eventually a simple majority could end debate. Mr. Harkin says that he’s considering reintroducing that proposal, and he should.

But if such legislation is itself blocked by a filibuster — which it almost surely would be — reformers should turn to other options. Remember, the Constitution sets up the Senate as a body with majority — not supermajority — rule. So the rule of 60 can be changed. A Congressional Research Service report from 2005, when a Republican majority was threatening to abolish the filibuster so it could push through Bush judicial nominees, suggests several ways this could happen — for example, through a majority vote changing Senate rules on the first day of a new session.

Nobody should meddle lightly with long-established parliamentary procedure. But our current situation is unprecedented: America is caught between severe problems that must be addressed and a minority party determined to block action on every front. Doing nothing is not an option — not unless you want the nation to sit motionless, with an effectively paralyzed government, waiting for financial, environmental and fiscal crises to strike.

Free to Lose

By PAUL KRUGMAN

Consider, for a moment, a tale of two countries. Both have suffered a severe recession and lost jobs as a result — but not on the same scale. In Country A, employment has fallen more than 5 percent, and the unemployment rate has more than doubled. In Country B, employment has fallen only half a percent, and unemployment is only slightly higher than it was before the crisis.

Don’t you think Country A might have something to learn from Country B?

This story isn’t hypothetical. Country A is the United States, where stocks are up, G.D.P. is rising, but the terrible employment situation just keeps getting worse. Country B is Germany, which took a hit to its G.D.P. when world trade collapsed, but has been remarkably successful at avoiding mass job losses. Germany’s jobs miracle hasn’t received much attention in this country — but it’s real, it’s striking, and it raises serious questions about whether the U.S. government is doing the right things to fight unemployment.

Here in America, the philosophy behind jobs policy can be summarized as “if you grow it, they will come.” That is, we don’t really have a jobs policy: we have a G.D.P. policy. The theory is that by stimulating overall spending we can make G.D.P. grow faster, and this will induce companies to stop firing and resume hiring.

The alternative would be policies that address the job issue more directly. We could, for example, have New-Deal-style employment programs. Perhaps such a thing is politically impossible now — Glenn Beck would describe anything like the Works Progress Administration as a plan to recruit pro-Obama brownshirts — but we should note, for the record, that at their peak, the W.P.A. and the Civilian Conservation Corps employed millions of Americans, at relatively low cost to the budget.

Alternatively, or in addition, we could have policies that support private-sector employment. Such policies could range from labor rules that discourage firing to financial incentives for companies that either add workers or reduce hours to avoid layoffs.

And that’s what the Germans have done. Germany came into the Great Recession with strong employment protection legislation. This has been supplemented with a “short-time work scheme,” which provides subsidies to employers who reduce workers’ hours rather than laying them off. These measures didn’t prevent a nasty recession, but Germany got through the recession with remarkably few job losses.

Should America be trying anything along these lines? In a recent interview, Lawrence Summers, the Obama administration’s highest-ranking economist, was dismissive: “It may be desirable to have a given amount of work shared among more people. But that’s not as desirable as expanding the total amount of work.” True. But we are not, in fact, expanding the total amount of work — and Congress doesn’t seem willing to spend enough on stimulus to change that unfortunate fact. So shouldn’t we be considering other measures, if only as a stopgap?

Now, the usual objection to European-style employment policies is that they’re bad for long-run growth — that protecting jobs and encouraging work-sharing makes companies in expanding sectors less likely to hire and reduces the incentives for workers to move to more productive occupations. And in normal times there’s something to be said for American-style “free to lose” labor markets, in which employers can fire workers at will but also face few barriers to new hiring.

But these aren’t normal times. Right now, workers who lose their jobs aren’t moving to the jobs of the future; they’re entering the ranks of the unemployed and staying there. Long-term unemployment is already at its highest levels since the 1930s, and it’s still on the rise.

And long-term unemployment inflicts long-term damage. Workers who have been out of a job for too long often find it hard to get back into the labor market even when conditions improve. And there are hidden costs, too — not least for children, who suffer physically and emotionally when their parents spend months or years unemployed.

So it’s time to try something different.

Just to be clear, I believe that a large enough conventional stimulus would do the trick. But since that doesn’t seem to be in the cards, we need to talk about cheaper alternatives that address the job problem directly. Should we introduce an employment tax credit, like the one proposed by the Economic Policy Institute? Should we introduce the German-style job-sharing subsidy proposed by the Center for Economic Policy Research? Both are worthy of consideration.

The point is that we need to start doing something more than, and different from, what we’re already doing. And the experience of other countries suggests that it’s time for a policy that explicitly and directly targets job creation.

Cellphones, Texts and Lovers

By DAVID BROOKS

Since April 2007, New York magazine has posted online sex diaries. People send in personal accounts of their nighttime quests and conquests. Some of the diaries are unusual and sad. There’s a laid-off banker who drinks herself into oblivion and wakes up in the beds of unfamiliar men. There’s an African-American securities trader who flies around the country on weekends to meet with couples seeking interracial sex. (He meets one Midwestern couple at a T.G.I. Friday’s.)

But the most interesting part of the diaries concerns the way cellphones have influenced courtship. On nights when they are out, the diarists are often texting multiple possible partners in search of the best arrangement.

As the journalist Wesley Yang notes in a very intelligent analysis in the magazine, the diarists “use their cellphones to disaggregate, slice up, and repackage their emotional and physical needs, servicing each with a different partner, and hoping to come out ahead.”

Often the diarists will be on the verge of spending the evening with one partner, when a text arrives from another with a potentially better offer. To guard against not being chosen at all, Yang writes, “everyone is on somebody’s back-burner, and everybody has a back-burner of their own, which they maintain with open-ended texts.”

The atmosphere is fluid, like an eBay auction. This leads to a series of marketing strategies. You don’t want to appear too enthusiastic. You want to invent detached nicknames for partners. “Make plans to spend day with the One Who Cries,” a paralegal, 26, from the East Village writes. You want to appear bulletproof as you move confidently through the transactions. “I have a Stage Five Clinger on my hands,” a TV producer writes. “He asks me to hang out again this coming Sunday. I do not respond.”

People who send in sex diaries to a magazine are not representative of average Americans. But the interplay between technology and hook-ups will be familiar to a wide swath of young Americans. It illustrates an interesting roadblock in the country’s social evolution.

Once upon a time — in what we might think of as the “Happy Days” era — courtship was governed by a set of guardrails. Potential partners generally met within the context of larger social institutions: neighborhoods, schools, workplaces and families. There were certain accepted social scripts. The purpose of these scripts — dating, going steady, delaying sex — was to guide young people on the path from short-term desire to long-term commitment.

Over the past few decades, these social scripts became obsolete. They didn’t fit the post-feminist era. So the search was on for more enlightened courtship rules. You would expect a dynamic society to come up with appropriate scripts. But technology has made this extremely difficult. Etiquette is all about obstacles and restraint. But technology, especially cellphone and texting technology, dissolves obstacles. Suitors now contact each other in an instantaneous, frictionless sphere separated from larger social institutions and commitments.

People are thus thrown back on themselves. They are free agents in a competitive arena marked by ambiguous relationships. Social life comes to resemble economics, with people enmeshed in blizzards of supply and demand signals amidst a universe of potential partners.

The opportunity to contact many people at once seems to encourage compartmentalization, as people try to establish different kinds of romantic attachments with different people at the same time.

It seems to encourage an attitude of contingency. If you have several options perpetually before you, and if technology makes it easier to jump from one option to another, you will naturally adopt the mentality of a comparison shopper.

It also seems to encourage an atmosphere of general disenchantment. Across the centuries the moral systems from medieval chivalry to Bruce Springsteen love anthems have worked the same basic way. They take immediate selfish interests and enmesh them within transcendent, spiritual meanings. Love becomes a holy cause, an act of self-sacrifice and selfless commitment.

But texting and the utilitarian mind-set are naturally corrosive toward poetry and imagination. A coat of ironic detachment is required for anyone who hopes to withstand the brutal feedback of the marketplace. In today’s world, the choice of a Prius can be a more sanctified act that the choice of an erotic partner.

This does not mean that young people today are worse or shallower than young people in the past. It does mean they get less help. People once lived within a pattern of being, which educated the emotions, guided the temporary toward the permanent and linked everyday urges to higher things. The accumulated wisdom of the community steered couples as they tried to earn each other’s commitment.

Today there are fewer norms that guide in that way. Today’s technology seems to threaten the sort of recurring and stable reciprocity that is the building block of trust.

October 25, 2009

OP-ED COLUMNIST

In Defense of the ‘Balloon Boy’ Dad

By FRANK RICH

FOR a country desperate for good news, the now-deflated “balloon boy” spectacle would seem to be the perfect tonic. As Wolf Blitzer of CNN summed up the nation’s unrestrained joy upon learning that the imperiled boy had never been in any peril whatsoever: “All of us are so excited that little Falcon is fine.”

Then came even better news. After little Falcon revealed to Blitzer that his family “did this for the show,” we could all luxuriate in a warm bath of moral superiority. No matter what our own faults as parents, we could never top Richard Heene, who mercilessly exploited his child for fame and profit. Nor could we ever be as craven as the news media, especially cable television, which dumped a live broadcast of President Obama in New Orleans to track the supersized Jiffy Pop bag floating over Colorado.

Or such are the received lessons of this tale.

Certainly the “balloon boy” incident is a reflection of our time — much as the radio-induced “War of the Worlds” panic dramatized America’s jitters on the eve of World War II, or the national preoccupation with the now-forgotten Congressman Gary Condit signaled America’s pre-9/11 drift into escapism and complacency in the summer of 2001. But to see what “balloon boy” says about 2009, you have to look past the sentimental moral absolutes. You have to muster some sympathy for the devil of the piece, the Bad Dad. And you can’t grant blanket absolution to those in the American audience who smugly blame Heene and television exclusively for the entire embarrassing episode.

It would be lovely, for instance, to believe that cable audiences doubled in size that afternoon because they were rooting for little Falcon’s welfare. But as Seth Meyers and Amy Poehler would say on Weekend Update at “Saturday Night Live,” “Really?!?” Many of those viewers were driven by the same bloodlust that spawns rubberneckers at every highway accident: the hope of witnessing the graphic remains of a crash, not a soft landing.

It would also be nice to think that the “balloon boy” viewers were the innocent victims of a dazzling Houdini-class feat of wizardry — a “massive fraud,” as Bill O’Reilly thundered. But even slightly jaundiced onlookers might have questioned how a balloon could waft buoyantly through the skies for hours with a 6-year-old boy hidden within its contours. That so few did is an indication of how practiced we are at suspending disbelief when watching anything labeled news, whether the subject is W.M.D.’s in Iraq or celebrity gossip in Hollywood.

“They put on a very good show for us, and we bought it,” the local sheriff, Jim Alderden, said last weekend, when he alleged that “balloon boy” was a hoax. His words could stand as the epitaph for an era.

In this case, the show wasn’t even that good. But, as usual, the news media nursed it along, enlisting as sales reps for the smoke and mirrors. While the incident unfolded, most TV anchors hyped rather than questioned the aeronautical viability of a vehicle resembling the flying saucers in Ed Wood’s camp 1950s sci-fi potboiler, “Plan 9 From Outer Space.” But no sooner had the balloon been punctured than the press was caught in another flimflam. Reuters and CNBC delivered the bombshell that the United States Chamber of Commerce had abruptly reversed its intransigent opposition to climate-change legislation. The “spokesperson” source turned out to be the invention of liberal activists who had attempted to stage a prank press conference at Washington’s National Press Club.

Next to the other hoaxes and fantasies that have been abetted by the news media in recent years, both the “balloon boy” and Chamber of Commerce ruses are benign. The Colorado balloon may have led to the rerouting of flights and the wasteful deployment of law enforcement resources. But at least it didn’t lead the country into fiasco the way George W. Bush’s flyboy spectacle on an aircraft carrier helped beguile most of the Beltway press and too much of the public into believing that the mission had been accomplished in Iraq. The Chamber of Commerce stunt was a blip of a business news hoax next to the constant parade of carnival barkers who flogged empty stocks on cable during the speculative Wall Street orgies of the dot-com and housing booms.

As “balloon boy” played out, the White House opened fire on one purveyor of fictional news, Fox News, where “tea party” protests are inflated into a national rebellion rivaling the Civil War and where Glenn Beck routinely claims Obama is perpetrating a conspiracy to bring fascism to America. But the White House’s argument is diluted by the different, if less malevolently partisan, fictions that turn up on Fox’s competitors. On CNN, for instance, Lou Dobbs provided a platform for the nuts questioning Obama’s citizenship. When an ABC News correspondent insisted that Fox was “one of our sister organizations” in an exchange with the president’s press secretary, Robert Gibbs, last week, he wasn’t joking.

Richard Heene is the inevitable product of this reigning culture, where “news,” “reality” television and reality itself are hopelessly scrambled and the warp-speed imperatives of cable-Internet competition allow no time for fact checking. Norman Lear, about the only prominent American to express any empathy for little Falcon’s father, vented on The Huffington Post, calling out CNN, MSNBC, Fox, NBC, ABC and CBS alike for their role in “creating a climate that mistakes entertainment for news.” This climate, he argued, “all but seduces a Richard and Mayumi Heene into believing they are — even if what they dream up to qualify is a hoax — entitled to their 15 minutes.”

None of this absolves Heene of blame for the damage he may have inflicted on the children he grotesquely used as a supporting cast in his schemes. But stupid he’s not. He knew how easy it would be to float “balloon boy” when the demarcation between truth and fiction has been obliterated.

There’s also some poignancy in his determination to grab what he and many others see as among the last accessible scraps of the American dream. As a freelance construction worker and handyman, he couldn’t find much employment in an economy where construction is frozen and homeowners are more worried about losing their homes than fixing them. Once his appetite had been whetted by two histrionic appearances on “Wife Swap,” an ABC reality program, it’s easy to see why Heene would turn his life and that of his family into a nonstop audition for more turns in the big tent of the reality media circus.

That circus is among the country’s last dependable job engines. More than a quarter of prime-time broadcast television is devoted to reality programs. And so, with only a high-school education, Heene tried to reinvent himself as a cable-ready tornado-chasing scientist. Robert Thomas, a Web entrepreneur who collaborated with Heene on a pitch to ABC for a science-based reality show, saw the “balloon boy” stunt as a sad response to his economic plight. “I think in this case the desperation was too much for Richard to bear,” Thomas said in an interview with Gawker.com. (It’s no less desperate a sign of the times that Thomas insisted on being paid for his interview.)

Heene is a direct descendant of those Americans of the Great Depression who fantasized, usually in vain, that they might find financial salvation if only they could grab a spotlight in show business. Some aspired to the “American Idol” of the day — “Major Bowes Amateur Hour,” a hugely popular weekly talent contest on network radio. Others traveled the seedy dance marathon circuit, entering 24/7 endurance contests that promised food and prize money in exchange for freak-show degradation and physical punishment. Horace McCoy’s 1935 novel memorializing this Depression milieu was aptly titled “They Shoot Horses, Don’t They?”

In 1939, the year that John Steinbeck published “The Grapes of Wrath,” his Depression classic about dispossessed Dust Bowl sharecroppers migrating to California’s Salinas Valley in search of work, Nathanael West published “The Day of the Locust,” about those equally destitute Americans who traveled to Hollywood hoping to land in the movies. “They have been cheated and betrayed,” West wrote. “They have slaved and saved for nothing.” He could have been describing Americans who lost their jobs, homes and 401(k)’s in our own Great Recession.

The role models for today’s desperate fame seekers are “Jon & Kate Plus 8,” not Gable and Lombard. But even if they catch a break, as Heene did on “Wife Swap,” they still may end up betrayed by a stacked system. As The Times reported in August, many reality shows are as cruel as the old dance marathons. The usual Hollywood workplace rules allowing breaks for rest or meals often don’t apply. Nor, sometimes, does the minimum wage. Let ’em eat fame.

If Heene’s balloon was empty, so were the toxic financial instruments, inflated by the thin air of unsupported debt, that cratered the economy he inhabits. The press hyped both scams, and the public eagerly bought both. But between the bogus balloon and the banks’ bubble, there’s no contest as to which did the most damage to the country. The ultimate joke is that Heene, unlike the reckless gamblers at the top of Citigroup and A.I.G., may be the one with a serious shot at ending up behind bars.

October 21, 2009

OP-ED COLUMNIST

The New Untouchables

By THOMAS L. FRIEDMAN

Last summer I attended a talk by Michelle Rhee, the dynamic chancellor of public schools in Washington. Just before the session began, a man came up, introduced himself as Todd Martin and whispered to me that what Rhee was about to speak about — our struggling public schools — was actually a critical, but unspoken, reason for the Great Recession.

There’s something to that. While the subprime mortgage mess involved a huge ethical breakdown on Wall Street, it coincided with an education breakdown on Main Street — precisely when technology and open borders were enabling so many more people to compete with Americans for middle-class jobs.

In our subprime era, we thought we could have the American dream — a house and yard — with nothing down. This version of the American dream was delivered not by improving education, productivity and savings, but by Wall Street alchemy and borrowed money from Asia.

A year ago, it all exploded. Now that we are picking up the pieces, we need to understand that it is not only our financial system that needs a reboot and an upgrade, but also our public school system. Otherwise, the jobless recovery won’t be just a passing phase, but our future.

“Our education failure is the largest contributing factor to the decline of the American worker’s global competitiveness, particularly at the middle and bottom ranges,” argued Martin, a former global executive with PepsiCo and Kraft Europe and now an international investor. “This loss of competitiveness has weakened the American worker’s production of wealth, precisely when technology brought global competition much closer to home. So over a decade, American workers have maintained their standard of living by borrowing and overconsuming vis-à-vis their real income. When the Great Recession wiped out all the credit and asset bubbles that made that overconsumption possible, it left too many American workers not only deeper in debt than ever, but out of a job and lacking the skills to compete globally.”

This problem will be reversed only when the decline in worker competitiveness reverses — when we create enough new jobs and educated workers that are worth, say, $40-an-hour compared with the global alternatives. If we don’t, there’s no telling how “jobless” this recovery will be.

A Washington lawyer friend recently told me about layoffs at his firm. I asked him who was getting axed. He said it was interesting: lawyers who were used to just showing up and having work handed to them were the first to go because with the bursting of the credit bubble, that flow of work just isn’t there. But those who have the ability to imagine new services, new opportunities and new ways to recruit work were being retained. They are the newuntouchables.

That is the key to understanding our full education challenge today. Those who are waiting for this recession to end so someone can again hand them work could have a long wait. Those with the imagination to make themselves untouchables — to invent smarter ways to do old jobs, energy-saving ways to provide new services, new ways to attract old customers or new ways to combine existing technologies — will thrive. Therefore, we not only need a higher percentage of our kids graduating from high school and college — more education — but we need more of them with the right education.

As the Harvard University labor expert Lawrence Katz explains it: “If you think about the labor market today, the top half of the college market, those with the high-end analytical and problem-solving skills who can compete on the world market or game the financial system or deal with new government regulations, have done great. But the bottom half of the top, those engineers and programmers working on more routine tasks and not actively engaged in developing new ideas or recombining existing technologies or thinking about what new customers want, have done poorly. They’ve been much more exposed to global competitors that make them easily substitutable.”

Those at the high end of the bottom half — high school grads in construction or manufacturing — have been clobbered by global competition and immigration, added Katz. “But those who have some interpersonal skills — the salesperson who can deal with customers face to face or the home contractor who can help you redesign your kitchen without going to an architect — have done well.”

Just being an average accountant, lawyer, contractor or assembly-line worker is not the ticket it used to be. As Daniel Pink, the author of “A Whole New Mind,” puts it: In a world in which more and more average work can be done by a computer, robot or talented foreigner faster, cheaper “and just as well,” vanilla doesn’t cut it anymore. It’s all about what chocolate sauce, whipped cream and cherry you can put on top. So our schools have a doubly hard task now — not just improving reading, writing and arithmetic but entrepreneurship, innovation and creativity.

Bottom line: We’re not going back to the good old days without fixing our schools as well as our banks.

Wall Street Smarts

By CALVIN TRILLIN

“IF you really want to know why the financial system nearly collapsed in the fall of 2008, I can tell you in one simple sentence.”

The statement came from a man sitting three or four stools away from me in a sparsely populated Midtown bar, where I was waiting for a friend. “But I have to buy you a drink to hear it?” I asked.

“Absolutely not,” he said. “I can buy my own drinks. My 401(k) is intact. I got out of the market 8 or 10 years ago, when I saw what was happening.”

He did indeed look capable of buying his own drinks — one of which, a dry martini, straight up, was on the bar in front of him. He was a well-preserved, gray-haired man of about retirement age, dressed in the same sort of clothes he must have worn on some Ivy League campus in the late ’50s or early ’60s — a tweed jacket, gray pants, a blue button-down shirt and a club tie that, seen from a distance, seemed adorned with tiny brussels sprouts.

“O.K.,” I said. “Let’s hear it.”

“The financial system nearly collapsed,” he said, “because smart guys had started working on Wall Street.” He took a sip of his martini, and stared straight at the row of bottles behind the bar, as if the conversation was now over.

“But weren’t there smart guys on Wall Street in the first place?” I asked.

He looked at me the way a mathematics teacher might look at a child who, despite heroic efforts by the teacher, seemed incapable of learning the most rudimentary principles of long division. “You are either a lot younger than you look or you don’t have much of a memory,” he said. “One of the speakers at my 25th reunion said that, according to a survey he had done of those attending, income was now precisely in inverse proportion to academic standing in the class, and that was partly because everyone in the lower third of the class had become a Wall Street millionaire.”

I reflected on my own college class, of roughly the same era. The top student had been appointed a federal appeals court judge — earning, by Wall Street standards, tip money. A lot of the people with similarly impressive academic records became professors. I could picture the future titans of Wall Street dozing in the back rows of some gut course like Geology 101, popularly known as Rocks for Jocks.

“That actually sounds more or less accurate,” I said.

“Of course it’s accurate,” he said. “Don’t get me wrong: the guys from the lower third of the class who went to Wall Street had a lot of nice qualities. Most of them were pleasant enough. They made a good impression. And now we realize that by the standards that came later, they weren’t really greedy. They just wanted a nice house in Greenwich and maybe a sailboat. A lot of them were from families that had always been on Wall Street, so they were accustomed to nice houses in Greenwich. They didn’t feel the need to leverage the entire business so they could make the sort of money that easily supports the second oceangoing yacht.”

“So what happened?”

“I told you what happened. Smart guys started going to Wall Street.”

“Why?”

“I thought you’d never ask,” he said, making a practiced gesture with his eyebrows that caused the bartender to get started mixing another martini.

“Two things happened. One is that the amount of money that could be made on Wall Street with hedge fund and private equity operations became just mind-blowing. At the same time, college was getting so expensive that people from reasonably prosperous families were graduating with huge debts. So even the smart guys went to Wall Street, maybe telling themselves that in a few years they’d have so much money they could then become professors or legal-services lawyers or whatever they’d wanted to be in the first place. That’s when you started reading stories about the percentage of the graduating class of Harvard College who planned to go into the financial industry or go to business school so they could then go into the financial industry. That’s when you started reading about these geniuses from M.I.T. and Caltech who instead of going to graduate school in physics went to Wall Street to calculate arbitrage odds.”

“But you still haven’t told me how that brought on the financial crisis.”

“Did you ever hear the word ‘derivatives’?” he said. “Do you think our guys could have invented, say, credit default swaps? Give me a break! They couldn’t have done the math.”

“Why do I get the feeling that there’s one more step in this scenario?” I said.

“Because there is,” he said. “When the smart guys started this business of securitizing things that didn’t even exist in the first place, who was running the firms they worked for? Our guys! The lower third of the class! Guys who didn’t have the foggiest notion of what a credit default swap was. All our guys knew was that they were getting disgustingly rich, and they had gotten to like that. All of that easy money had eaten away at their sense of enoughness.”

“So having smart guys there almost caused Wall Street to collapse.”

“You got it,” he said. “It took you awhile, but you got it.”

The theory sounded too simple to be true, but right offhand I couldn’t find any flaws in it. I found myself contemplating the sort of havoc a horde of smart guys could wreak in other industries. I saw those industries falling one by one, done in by superior intelligence. “I think I need a drink,” I said.

He nodded at my glass and made another one of those eyebrow gestures to the bartender. “Please,” he said. “Allow me.”

Calvin Trillin is the author, most recently, of “Deciding the Next Decider: The 2008 Presidential Race in Rhyme.”

Welcome to my profile. I was born in the city of Boston and raised in the town of Maynard , Massachusetts. I joined the United States Navy and served two years sea duty on the USS Rowan and with great honor was a member of the Apollo 17 spaceship recovery team. After my Navy hitch I attended and graduated from Fitchburg State College, Portland State University, The Fielding Institute , and completed professional development programs in organizational transformation at MIT and still attend annual research seminars and conferences there. I currently teach Human Resource Management classes at Portland State University School of Business . I've spent most of my career in HR doing EAP types of work. My professional areas of interested area Human Resources Information Technologies (HRIT) and sociology within the workplace. I spend way too much time following the Boston Red Sox and wine tasting . Really all you need to know about me is I love to teach, think, and analyze social systems