There’s a term I’ve used around here from time to time which I suddenly realized I’ve never defined for you. “Apparatchiks”, a Soviet-era Russian term, means “party functionaries”, generally with lifetime tenure. Whatever the nominal job of an apparatchik, the apparatchik’s real job is to advance the policies and interests of the party, regardless of their pragmatic value or benefit to the people or country.
In a recent editorial the editors of the Wall Street Journal characterize Jack Lew, who will undoubtedly be confirmed as the next Secretary of the Treasury, like this:
There was a time when you had to be successful on Wall Street to become secretary of the Treasury. Now along comes presidential nominee Jack Lew, whose only business credential is a stint at the most troubled too-big-to-fail bank.
During the darkest days of the financial crisis Mr. Lew served as the chief operating officer of Citigroup’s Alternative Investments unit (CAI). When Mr. Lew took
this job in January 2008, the unit was already infamous for overseeing “structured investment vehicles” that hid mortgage risks outside Citi’s balance sheet. It also housed internal hedge funds that were in the process of imploding.
CAI no longer exists. At the end of Mr. Lew’s first quarter on the job, the unit reported a $358 million loss. Things got much worse after that but Citi stopped breaking out CAI results in its earnings releases. The unit was eventually shuttered and many of its assets were sold.
As you can see from the chart above, Citibank’s stock collapsed during Mr. Lew’s tenure there. I don’t think he’s to blame but I don’t think there’s much evidence that he actually helped much, either. In fairness to him, characterizing Mr. Lew, a lawyer, as a banker or a financier is, shall we say, an exaggeration. A bit like characterizing me as a dog handler.
Mr. Lew, like Steve Rattner (the Obama Administration’s “auto czar”) or Rahm Emanuel (now mayor of Chicago), had jobs with banks and investment companies connected to the Democratic Party without notable credentials for the jobs. They are Democratic Party apparatchiks. They were granted what were thought to be sinecures to rake in the big bucks before going back to their real jobs: advancing the policies and interests of the party. The banks received value for their money in the form of friends in high places. Can anyone reasonably doubt that Citibank exists only because of its friends? Keep this in mind when you hear DC-types talk about meritocracy. That’s what they mean.
In my view the principle problem with our politics is not the party rank and file or even the policies that our political parties nominally support. It’s the apparatchiks. Typically, they are more rabidly and mindlessly partisan than their corresponding party members who worked their way up the ladder of electoral politics. Why not? Their fortunes depend on it.