The founder of AQR Capital Management, Clifford Asness, has sent along by e-mail an early version of his latest commentary to be published on his Stumblingontruth.com Web site. This one replies to President Obama's attacks on the bankers. Some highlights: "When a failing government with totalitarian impulses needs help, it's pretty standard strategy to call down a pogrom against an unpopular class of citizens. The bankers are nothing if not unpopular. Unfortunately for this President, he will, I hope, find the financial community not cowering from his Cossacks on a shtetl in the Pale of Settlement (Greenwich, CT), but meeting his accusations with logic and patriotism."
And: "Although the stated reason for punishing banks is the false accusation that they wrecked the economy all on their lonesome, much of the populist resonance of this libel springs from the inconsistent argument that bankers are socially useless parasites skimming money from real transactions. This doublethink is very old. The belief is moneylenders and speculators are powerful enough to cause all our economic problems, but not useful enough to deserve a share of our economic successes. Where this power without usefulness derives from is never clear. In fact, highly skilled bankers (in the broad sense, including lenders, traders, asset managers and deal makers) are essential to an efficient modern economy and some of them will therefore earn very large amounts of money. What they create is as real as a shoemaker, as a modern economy would produce a lot less shoes if instead of banking we relied on something closer to the barter system. If you penalize these services, or legislate away the freedom to innovate and to get rich by doing them better than anyone else, you destroy both a fundamental economic freedom and a key component of economic growth."
Some people will say Mr. Asness is over the top in comparing Mr. Obama's proposal of a 0.15% tax on liabilities of firms with assets of $50 billion or more to a pogrom, in which Jews were thrown from rooftops, raped, and had their homes looted. And they may be correct. Still, something about the way the term "bloodsucker" is being thrown around in this discussion has certain people familiar with Jewish history (like, well, me) just a little bit sensitive.
Anyway Mr. Asness is worth reading on far more than just the Jewish angle. He doesn't let his Ph.D. get in the way of clear writing: "So, how do you fix too-big-to-fail? Well, this is complicated, give me a moment. I got it. You let them fail." Mr. Asness says he opposed the bailout, differing with the many writers and officials who spoke of how fragile the global economic system was. "I think Capitalism is very robust," he writes.
Update: Welcome Atlantic/Jeffrey Goldberg readers. Please check out the rest of the site, sign up for the email list using the box toward the upper righthand side of the page, bookmark this Web site, or subscribe to the FutureOfCapitalism.com RSS feed using the button on the righthand side of the page.