Harvard – Bought and Paid For

Inside Job is an excellent documentary about the financial crisis of 2008.  The basic point, very well documented, is that an extremely small group of people with lots of money managed to tweak the economic system of the country, to divert huge sums of cash their way.  Some timely deregulation legislation, carried forward by a thirty-year drumbeat of intellectual support from influential economists, made it happen.

In the end, the vast collective wealth of the United States, and much of the world economy, became the gambling stake of these people, and when it all crashed, they walked away with their loot, and were free from any consequences.  The people in charge now, under Obama, are the same ones who made it possible, and who made it happen:  it’s a Wall Street administration, as one critic in the film says.  As Mr. Rosewater says in Kurt Vonnegut’s novel, God Bless You, Mr. Rosewater, getting rich in America is largely a matter of positioning yourself to get your straw into the money stream:  These people had very big straws.

Towards the end of the film, there is a section in which various heavyweight academic economists are interviewed about the possible conflicts of interest inherent in consulting and publishing articles for firms that were pursuing extremely risky behavior.  These firms crashed and burned, despite the intellectuals’ assertions that they were sound, a good idea, helping stabilize the economy, etc.  The opinions of these people, from Columbia, Harvard, and other schools, were extremely influential.

In one stunning sequence, the chairman of the Harvard Economics Department, John Campbell, is asked if he thinks it’s relevant that people like Larry Summers, Obama’s economic advisor and a Harvard economist, made tens of millions of dollars from finance firms while he was writing papers and pushing policies extolling their virtues and efficiency.  “No, I don’t see why it’s relevant at all.”  The interviewer asks a hypothetical question:  What if a medical researcher published and spoke about the importance of using a certain drug, and then it was found that 80% of his income was from the company that manufactures that drug?  Is that relevant?  What follows is a series of ums, aahs, and hmms… as Campbell looks away from the camera and finally offers in a mumble, “Well, I think this is very different…

5 Responses to Harvard – Bought and Paid For

  1. Tincup says:

    Great post and I will check out the documentary. If you haven’t see “The Smartest Guys in the Room” (Documentary on Enron scam) and “Too Big to Fail” (film on our recent brink of collapse), I highly recommend them.

  2. pancime says:

    In the days of the people I am studying this was termed the ‘sinister interest’ of those in power. This sinister interest is why the laissez faire economy was introduced. In my country we see a role for government, but I think this acceptance must always be tempered with the threat that if things go bad, government will be reduced and, effectively, those who have put their noses in the trough will lose their influence and access to privilege. The alternative of increasing government to monitor and control behaviour simply makes the situation worse. It’s a difficult balancing act, which ultimately must be adjudicated by the free flow of information, coupled with the ballot box. I look forward to seeing the various shows mentioned by Tincup and yourself.

    • Lichanos says:

      In the USA, the ‘progressive’ notion of government is that it smooths out the rough spots of the market economy, and prevents the great beasts of capital from running roughshod over everyone else. Right now, the government is the tool and puppet of those beasts, so there is very little check on them.

      The depressing and ironic thing is that so-called conservatives rail against government power, and how it gets in the way of their prosperity. These people are are either cynical and dishonest (congress, the academics) or seriously mistaken (the Tea Party.)

      I know that Adam Smith famously remarked that whenever more than two merchants got together, their conversation infallible turned to the best means to gull the public (not quoted often here in the USA, where Smith is praised but not read) – is that the same as the ‘sinister interest?’

    • Tincup says:

      Nice post. The white collar crime, whether detected or not, is in my opinion up there with murder and treason and the punishment should equal the crime. Those that have attended the best institutions the country has to offer and then turn and manipulate an “open” system to take what they can makes my blood boil.

      I would like to string them up in the public square, but their punishment is their rotten soul. Imagine what illusions they conjure up in their minds to gather the strength neccesary to look at themselves in the mirror with any sense of self respect.

  3. Lichanos says:

    …to gather the strength neccesary to look at themselves in the mirror with any sense of self respect.

    I don’t think they find it all that difficult. They are very smart people. I’ll settle for some rules and laws that just make it hard for them to do this sort of stuff – it’s inevitable, and anyway, people like that have their uses. It takes all kinds to make a world, but we shouldn’t let those types run it for their own good.

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