Harvard – Bought and Paid For

September 18, 2011

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…


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