Trenchant interview over at Salon that I just read, with Simon Johnson. He was from 2007-08 the chief economist of the International Monetary Fund and is currently a professor at MIT. Salon calls him “one of the most cogent critics of how the Obama administration is addressing the banking crisis.” (He gives them “an incomplete, which is allowed at MIT. Come back and finish it in the summer.”
His takeaway point? If the banks are too big to fail, don’t let that happen again. Stimulate competition and creative destruction by trust-busting!
What we are saying is very much in the spirit of the original antitrust movement. What Teddy Roosevelt and his cohorts were worried about was excessive power — political power for these oligarchs …. I am not saying throw capitalism out with the bath water. I’m saying big finance has just become too powerful and it needs to be reined in. There are some relatively straightforward technocratic steps that can be taken that will move us in the right direction.
There’s some interesting stuff later in the interview about innovation and finance and the leftovers from previous booms. I don’t agree with all of his points. He says that previous booms, like the railroad boom or the dot-com boom at least left us with usable infrastructure. But the Wall Street mess didn’t work like that:
What do we get out of the meta-financial crap? It’s not so clear that we got useful things. Did our ATM fees come down? No.
However, he does ignore that most of the “meta-financial” crap was at least partially predicated on the housing boom — and we do get to keep all those McMansions and other houses. Maybe we don’t want them, but they’re there.
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(PS. The picture is from the Winnipeg Tribune archives at the University of Manitoba. I couldn’t resist using it — plus it has meaning because each of those bags are $1,000 broken down into quarters. Symbolism! The original caption says that it is from Jan. 10, 1974: “Jayne Weetkovich (age 21) who is a remittance teller for the Bank of Nova Scotia, holds money bags of dimes and quarters.” Photographer: Jeff Debooy.)
Grant Hamilton
2 Responses to “Hey banks — too big to fail? I’ve got your solution right here”
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Hmm, that woman sure looks like Rachel Weisz.
Hmmm, I’m finding it hard to imagine that Rachel Weisz grew up in Winnipeg and spent her early adulthood working at a bank.
Perhaps twins, separated at birth?