Why It Matters That Madoff Is Jewish
Journalist J.J. Goldberg on Jews and the Money Culture
In the aftermath of the revelation that Bernard Madoff’s investment fund was a tremendous Ponzi scheme, the Jewish community adopted a customarily defensive pose. Afraid that Madoff’s religious affiliation would encourage anti-Semites, community spokesmen worked to disassociate him from the Tribe. David Harris, the executive director of the American Jewish Committee, complained to the New York Times in a December 13th letter that their coverage of Madoff had placed “a striking emphasis on his being Jewish,” and pointed out that no one was talking about the religion of Illinois governor Rod Blagojevich, who had been accused of corruption the same week.
The tendency to see the event in terms of anti-Semitism was matched by a similar communal instinct to avoid discussions of the problems within the community that Madoff had exposed. At a January panel discussion in New York organized by the YIVO Institute for Jewish Research, The New Republic editor Martin Peretz was met with boos from the audience when he asked whether the affair was cause to take another look at the Jewish culture of ostentation. No one wanted to talk about what expensive Bar Mitzvah parties had to do with Bernard Madoff.
To discuss this fear of criticism and the real meaning of Madoff, we visited J.J. Goldberg at the brand new offices of the Jewish Daily Forward in downtown Manhattan. Goldberg was the editor of the Forward from 2000 until 2008, and now serves as the paper’s editorial director. He is the author of Jewish Power: Inside the American Jewish Establishment (Addison-Wesley, 1996).
What is the answer to David Harris’ implied question? Why does it matter that Madoff is Jewish? And why don’t Jews think that it matters?
First of all, it matters because he operated through a network of Jewish associations. His Jewish communal involvement was part of his scheme. In a larger sense, [it matters] because of the long association of Jews and Wall Street and finance. It figures into anti-Semitic mythology. His being Jewish is relevant in some way that I think most people can’t put their finger on. It’s relevant because his story seems to be a fairy tale come true. It’s exactly what everybody has in the back of their minds. Jews and polite gentiles don’t want to talk about it because it reinforces anti-Semitic stereotypes. Stereotypes are exaggerations of truth, frequently unfair but very rarely unfounded.
[At the YIVO event,] Martin Peretz mentioned that there’s something in the American Jewish subculture, with the million dollar Bar Mitzvahs and the lavish Viennese table, there’s something built in-even the fact that lower middle class Jews feel compelled to bankrupt themselves on these elaborate Bar Mitzvahs.
That was the most fascinating part of the YIVO panel-when Peretz was booed for raising the issue of expensive Bar Mitzvah parties. Why are people so resistant to having a conversation about Jewish ostentation?
Jews don’t want to hear about negative stereotypes. If you talk about what Jews do wrong as Jews, as an outgrowth of their Jewishness or as part of their association with Jews, they don’t want to hear it. It’s interesting-when Jews spoke Yiddish, [negative attributes of Jews] were discussed all the time. You can’t talk about it in English because “they” can hear.
Pope John Paul apologized for the role Catholics [played] in perpetrating anti-Semitism. The World Jewish Congress and other groups wanted him to apologize for the Church’s role. And he couldn’t do that, because the Church can’t do wrong. Catholics can do wrong. Employees of the Church can do wrong. But it is impossible for a pope or anybody else to apologize for the Church, because the Church is holy. It can’t be wrong. We are sort of the same way with Judaism. It can’t be wrong. There can’t be anything wrong with it. If something goes wrong that seems associated with Judaism, it’s a perversion of Judaism.
This is a defense against anti-Semitism?
No. It’s because we hold Judaism so dear, we don’t want to think it’s capable of creating problems. In 1993, there was a wave of Pell Grant fraud cases where people were setting up phony schools to apply for Pell Grants and then keeping the money. [The Senate Permanent Subcommittee on Investigations] had two days of hearings. [Anti-Defamation League National Director] Abe Foxman wrote a letter [to John McCain] complaining that all of the witnesses that had been called up represented yeshivas. He said, the way this has been set up it could create the unfortunate impression that this is some particularly Jewish pattern of crime. And McCain wrote back and said, it is. Yeshivas were this huge network of institutions where people study full time. They had been mainly supported by the billionaire Reichman family from Toronto. [The Reichman family] went bust, and all of a sudden there are all of these cases of fraud and money laundering. Anything to support this impossible system. But you can’t talk about Judaism leading to wrongdoing. It can’t be. Judaism is only good.
The less involved you are in daily Jewish life, the more inviolate it has to be. Think of Superman and [the city of Kandor] in the little bottle in his Fortress of Solitude. It has to be preserved because there’s nothing you can do with it. Flowers that you press into a Bible. The less you can do with it the more you need it to be perfect.
Now, there’s another thing that needs to come out about the Madoff affair, which is that not only can you not admit that Judaism had anything to do with what he did, but you can’t admit that capitalism had anything to do with what he did. He’s a villain. He’s a monster. He’s a sociopath. I mean, he was doing things that are illegal, but not that different from everybody else. He was thinking, I’m going to put money into nothing, but if I keep on collecting more and more of it then it’ll never collapse. Which is exactly what the American economy’s been doing-spending more than we make and then borrowing more and more from China. In his testimony, he said at a certain point he felt trapped. He must have made a bad deal somewhere, took in a bunch of money he couldn’t cover hoping he would make it back, and it became this beast that he had to keep feeding. He lost everything, including the rest of his life. Everybody else lost money. Which is a lot better than the people at Bear Stearns and Bank of America, who took the whole world down with them. The big difference between him and them is that the things that they were doing weren’t illegal anymore.
So if that’s what capitalism had to do with Madoff, what was it about Jewish culture that created Madoff?
I’ve done a little bit of thinking about it. Certainly the fact that Jewish culture is so exhibitionist. Conspicuous consumption has something to do with it. That’s at the heart. Now, where does that come from? In the 1930s, the ADL had what they called a Bureau of Jewish Deportment. They put out booklets advising people how to behave in Miami, which was mainly gentile then. You don’t wear furs in the summer on Collins Avenue. They wouldn’t have said it if it wasn’t being done. Why would somebody wear furs on Collins Avenue in the summer? What are they trying to show? They want to show that they’re successful, they want to show that they’re not their grandfather the tailor in Russia. Jews went into finance in the Middle Ages, Jews invented international trade. So it’s in the tradition-it’s in the culture. Maybe because it’s a portable culture, it’s an urban culture, it’s a culture that was not rooted in physical labor. It was entirely survival by wits. And if it’s entirely survival by wits, and if everybody’s against you, then a whole lot of things become imaginable.
And this culture survived the generations of poverty? People who are wealthy now, their grandparents were destitute, and their great-grandparents were destitute. I’m not sure when poverty hit the Pale, but-
The 1600s. It was a long time. So, you know, there’s a mystery here. It’s worth solving. But I don’t know anybody who studies it. I know a historian who wanted to write about Jewish history. Their first book was about Jewish gangsters. Dropped the topic. Took too much heat. Because nobody wants to hear about it.
How has wealth affected the Jewish community?
There’s been exponential growth of Jewish wealth, partly because there’s been exponential growth of wealth. The top marginal tax rate under Eisenhower and Kennedy was 90%. [Today,] America’s got the lowest taxes in the industrial world. It all changed in the mid 1970s. People blame Reagan, but it really started under Carter. Along with deregulation came the lowering of the taxes. You removed the rules for getting rich, and you let people keep more of that money. And the sky was the limit. The Jewish organizations, for a bunch of reasons, grew and grew and grew during those years. There was always a myth that the richer Jews were more assimilated. Nowadays, the poorer Jews are more assimilated because they can’t afford [Jewish life]. The Jewish community grew by the graces of the donations of the wealthy. And then it built up this infrastructure that was dependent on the donations of the wealthy. It became harder and harder to act independently of the interests of the wealthy.
In 1994, when Newt Gingrich took over the House of Representatives, [the Republicans] introduced the Balanced Budget Amendment, which was nonsense. After years of unprecedented deficits under Reagan, they decided that Congress couldn’t control itself, so they wanted a constitutional amendment to prevent themselves from spending. The Council of Jewish Federations said it was going to really damage Jewish institutions. The Jewish community probably raises $2 billion a year for the schools, synagogues, and hospitals. It probably spends $8 billion. The rest of it is government money. So the Balanced Budget Amendment was really going to damage the Jewish community. The way I heard it, five families in three cities said, I’m a Republican, and you lose my gift if you lobby against the Balanced Budget Amendment. After 1994, the Jewish community stopped offending Republicans. Quite suddenly.
Before the modern age, Jews lived in ghettoes. They could tax themselves. Tzedakah was not voluntary. Shabbes wasn’t voluntary. The first synagogue in America, Shearith Israel in New York, adopted a rule saying that if you violated Shabbes you got fined. It didn’t work. People just resigned from the synagogue. [The community] had lost enforcement power. And once you’ve lost enforcement power, you’ve got to ask for it. And once you’ve got to ask for money, you become dependent on the wealthy. Rabbis now depend on the goodwill of a few rich people. And so the balance of power between the moralists and the hedonists shifts. There used to be a check. The moral authority of the Jewish community had enforcement power. Now it’s around for entertainment. Instead of scolding Jews, now they scold goyim. They have no authority to scold the Jews. None. Rabbis lose their jobs for being moral scolds. So there is no more moral authority.