There’s a new study on how high-profile academic financial economists are paid to do the bidding of our Galtian overlords:
In this study, we showed that the great majority of two groups of prominent academic financial economists did not disclose their private financial affiliation even when writing pieces on financial reform. This presents a potential conflict of interest. If this pattern prevailed among academic financial economists more broadly this, in our view, would represent an even greater social problem. Academic economists serve as experts in the media, molding public opinion. They are also important players in government policy. If those that are creating the culture around financial regulation as well as influencing policy at the government level for financial reform also have a significant, if hidden, conflict of interest, our public is not likely to be well-served.
Felix Salmon makes the obvious point…with a telling anecdote:
It seems obvious that when you’re regularly making significantly more than the median national annual personal income from giving a single speech, you’re prone to being captured by the people paying you all that money. And the secrecy makes things much worse. I once mentioned in passing on my blog a consultancy gig which I happened to know about and didn’t think was particularly secret. The consultant in question phoned me up extremely distraught, fearful that the employer, a hedge fund, would read my post and react to it with a whole parade of nasty possible actions. There’s no good reason for such secrecy on either the employer or the employee side — unless, of course, there’s something ethically suspect about the arrangement in the first place.
Maybe I’m wrong to fixate on this so much, but I see this kind of thing as the central problem facing contemporary democracies: it’s too easy for monied interests to control the flow of information. You want a very serious economist to endorse whatever scam you’re running? Give him a few hundred thousand for speaking fees, consulting fees, whatever the term is that they’re using these days. That’s chump change, but it’s a lot to him or her, and you can probably find a respectable person who’s enough of a whore to do it, if you look around.
There’s a crazy asymmetry at work when things that are worth a lot can be bought for so little, and this is just one example. People make a big deal out $4 billion spent on an election. That’s not a lot of money to buy off the people who run a $3 trillion budget. At least there used to be transparency about that particular form of bribery, but not anymore.
The Bearded Blogger
Economic hit men
http://en.wikipedia.org/wiki/Confessions_of_an_Economic_Hit_Man
Jim Kakalios
The excellent documentary, INSIDE JOB, well worth seeking out,
addresses this very point.
http://www.youtube.com/watch?v=n9dOw37mWq0
Seriously – this film does a superb job of explaining the complex financial arrangements that led us to the present point.
DougJ
@Jim Kakalios:
I’d like to see that movie. I will post the trailer at some point.
Funkhauser
Greg Mankiw would like to point out that, were his taxes to be raised, he might stop whoring at any point. And you’d all be sorry then.
General Stuck
Before the ink dried on the founding document of this republic, as it had been so, for every quasi free market democracy that came before, there were busy little rich beavers plotting to turn monetary wealth into votes into political power. The end point being something close to what we call Oligarchy. It is a feature, not of a bug of western democracies, though other ones in the west world have to a significant degree, figured this phenom out and actively taken steps to slow it down to the point where it doesn’t destroy their real democracy of, by, and for the people.
It is as natural as water running downhill, and few flawed humans have the personal wherewithal to not get caught in that money trap, that becomes serious when the nations brain trust becomes co opted. It is all what Republicans are about in this country, whether or not they are consciously aware of the dangers posed by secret cash in the working parts of public education and public administration of the realm. The wingnuts have put us all behind the eight ball the past 30 years, and it is an open question as to our escape and survival from a two class system, where net worth offers the only avenue of self improvement for the common man or woman.
TKOEd
Was there? This is a serious question.
arguingwithsignposts
I am sad there are no names in the study. I want these folks called out by name, dammit.
DougJ
@TKOEd:
Yes, before Citizens United, there was a lot of transparency about the financing of elections.
There are other ways to bribe Congressmen under the table and I don’t claim those were transparent. I just mean campaign financing.
MikeJ
@TKOEd: I believe he means pre-Citizens United Not Timid, when campaign donations were reported.
WereBear
To mention one instance, having an “academic reputation” used to mean something worth preserving. To become known as a hack, to not be considered for publishing in the right places, and selling out for cold hard cash; this had career, reputation, and tenure consequences.
But now they just buy the title, the publication, and the tenure committee. It doesn’t matter.
The Bearded Blogger
@General Stuck: Yeah… democracy has always been in tension with economic inequality, but has the concentration of wealth ever been so massive? has traditional media ever been less independent? And has the oligarchy ever had such a cohesive and global character? At some point, quantitative differences become qualitative.
The Bearded Blogger
@Funkhauser:
@WereBear: Bernard Lonergan published a book on economics called “No thank you Mankiw”… this post has me thinking about the huge, thorough and sharp mind of Lonergan and the mediocre mind of Mankiw, and about how, nevertheless, Mankiw is the respected economist who gets to write textbooks, and Lonergan is hardly read in economics faculties
John - A Motley Moose
I’m usually not very fond of simple explanations or simple solutions, but in this case I think it is actually quite simple. Media mergers and consolidation have led directly to the current state of affairs. The media has always had an inordinate influence on our democracy, think of Hearst. However, there was plenty of competition to limit the damage somewhat. Now the media is pretty much controlled by a few wealthy individuals and corporations. Things will only get worse until we get another trust-buster like Teddy Roosevelt.
General Stuck
@The Bearded Blogger:
Maybe, at the dawn and near after, of the industrial age. But it has never been as big. with the sheer amount of wealth, and clever ways politically to promote the Oligarchy. I am not hopeful this time, like say with the Robbers Barons, or Gilded Age, when life and world economies were simpler, that we can overcome it. I still think we can, but the cards are stacked way against it, this time. We just might have to put our faith in the big Phoenix Bird that rises out of the ashes, and is benign and beautiful, instead of malignant and ugly. I wouldn’t place bets on the former.
The Bearded Blogger
@John – A Motley Moose: And how, pray tell, will such a trust-buster manage to get elected? And once elected, to get the senate and congress to pass trust-busting laws? The election of Obama was a small miracle, and he is about a tenth of a Teddy Roosevelt; or one fortieth of an FDR… or, in the opposite direction, he is nine tenths of a Clinton
Dennis SGMM
@DougJ:
Not to mention jobs as “consultants” for friends, relatives and chosen staffers.
jwb
@General Stuck: The logic of money is powerful but also stupid. Eventually the stupid wins out over the power and the system self corrects. Only problem is that the corrections are socially extremely disruptive, disastrous for most of the population, and they often take a very long time to work themselves out.
burnspbesq
@The Bearded Blogger:
No, Father Lonergan didn’t write that book. He died in 1984.
The Bearded Blogger
@General Stuck: @General Stuck: Maybe the only comparative advantage now, as compared to before, is the internet, as long as it remains free… But if I were forced to bet, I’d say the US will be a semifascist banana republic in ten years. After that, who knows?
The Bearded Blogger
@burnspbesq: You’re right… blame it on lack of sleep and moral indignation… my point, If I had one, is how the stupid can become well paid and well respected, while the brilliant can be (relatively) obscure…
General Stuck
@jwb:
Yes, and extremely complex and interconnected. And is why Obama, nor any president, could just come in these days, and wipe away the old with some shiny new big change laws and make everything run smooth again. It is going to take time, that is not helped by a politically apathetic and ignorant public, and a co opted media by the plutocrats. Not to mention a large and well funded pol party, GOP, that is dedicated to maintaining the status quo, which in reality is our national train headed for the cliffs.
We might make it in time before the massive US and world economies collapses in a supply side heap, but it will be close, if at all. imo. as a humble, semi educated Obombie.
MattR
@The Bearded Blogger:
I have often thought about how much more money I would have if I wasn’t hindered by ethics. But in the end, I view it as a more than fair tradeoff.
(EDIT: Though I have recently been considering applying for a job with these folks who still need someone in the NY/NJ area)
El Cid
@DougJ: FWIW, the Citizens United from the ruling is not the same group as Citizens United Not Timid, the organization formed to mock Hillary with its acronym. The first was in action a good while before.
Kirk Spencer
When I was in the army, we were consistently told that most people “bought” to spy for the bad guys did it for around ten times their annual salary.
There’s just something about that line of magnitude that hits most people in the greed and shuts down their moral and ethical controls.
Calvin Jones and the 13th Apostle
@El Cid: You are wrong. They changed the name once they decided to take it to court.
mclaren
No, the central problem facing contemporary democracies is the people who comment on Balloon Juice. They’re the most craven cringing clique of serfs and goose-steppers anyone has seen since the fall of the Hittite god-kings.
The people who comment on balloon-juice are a good proxy for the population of America, and that’s scary. These people kiss the baton that beats them to death and lick the boot of the police state goon who stamps in their face. As long as the obsequious wannabe-slaves of the balloon-juice commentariat kneejerk in reflexive worship of the police state, democracy is circling the toilet bowl, and the suction is drawing it down.
In the end, the rich people need muggers with badges to enforce their edicts. If the people who comment on balloon-juice had any balls, like, oh, say, the Polish shipyard workers in Solidarity in the 1980s, the American population could bring the rich to their knees tomorrow.
But the population of America have the mentality of slaves and the instant they see some riot-armored cop beating and tasing an unarmed citizen to death, the first instinct of the American population is to cheer themselves hoarse and applaud until their palms are raw.
That’s the central problem facing contemporary democracies. Specifically, the central problem facing American democracy. In France, when the rich elites try to impose austerity, the people riot in the streets. In America, the people nod their heads with mindless servility and bow and genuflect.
mclaren
@The Bearded Blogger:
Silly rabbit. The U.S. is a semifascist banana republic now.
“Our Banana Republic,” New York Times, Nicholas Kristof, 6 November 2010.
General Stuck
@mclaren:
Now chew your goddamn foot off to get free of your own
manidjit trap.And repeat after me, I WILL NOT BE STOOPID NO MO several hundred times, and come back and tell us why you are part of the central problem facing contemporary democracies, just like the rest of us Balloon Juice dweebs on a blog. or not.
Luthe
Oooh, I smell a new tagline!
Nick
@mclaren:
Boy, you’ve got the wrong ticket here.
I think the reality is the professional left gets beat by the batons and whine no one is coming to help them.
marcopolo
Ever since I read “The Silent Coup” by Simon Johnson, I have been a firm believer that the financial/monied interests have captured our government and regulatory apparatus and as a result the vast majority of decisions that our government makes, regardless of whether Republicans or Democrats are in power, serve the interests of the wealthiest Americans/large corporations.
marcopolo
@mclaren: Yep, that’s right those French folks rioted in the streets for a couple weeks and the French legislature went ahead and passed the austerity legislation anyways. So what is your point?
I have been arrested for protesting a couple of times, and in all honesty, reflecting on those activities the protests were more for the benefit of the folks protesting than actually effectuating any change. Aside from a true “populist” leader coming forward in some way, shape or form to harness the anger and fear of the American electorate in a constructive (as opposed to say fascist or dictatorial or demogogic) way against the putocratization of our country, I really don’t see life getting better in the US for the average joe or jane. And after seeing the ease at which the monied interests co-opted all those Americans who were feeling abandoned by our economy or pissed off at the ever worsening inequality of income distribution and fed them into the tea party movement which then fed into the Republic party that really seems like a quite remote possibility.