Wall Street's Dangerous Power
Simon Johnson is a Professor of Entrepreneurship at MIT Sloan School of Management. He is a co-founder of the economic blog BaselineScenario.com, and the former Chief Economist at the International Monetary Fund. He is the co-author, with James Kwak, of "13 Bankers," a recent book that assesses the U.S. financial sector's role in the economic crisis.
Simon\r\n Johnson: I think at the heart of this problem is a set of people, \r\nnot a huge set of people-- and this is not anti-finance, this is not \r\nanti-Wall Street. I’m a professor of entrepreneurship. I like people who\r\n take risk and who put their own money and persuade other people to \r\ninvest money in genuine risk-taking productivity-enhancing \r\ntechnology-transforming projects. But, there's this core of people who \r\nhave become very, very powerful who can do enormous damage to the rest \r\nof society and honestly, they really don’t care. They’ve made a lot of \r\nmoney in the 2000’s, for example. Some of them have written their \r\nmemoirs. Many of them just disappear with their hundreds of millions of \r\ndollars and they leave it to the rest of us to clean it up. That’s not \r\nacceptable. That’s not fair. That’s not reasonable. That’s not how we \r\nshould organize our society going forward.
Question: \r\nAre other countries experiencing similar problems?
Simon \r\nJohnson: Other countries have many of the same problems. I think we \r\nshould look to American history for the solutions. I think we should \r\nlook at what Teddy Roosevelt did. He took on JP Morgan and he won. We \r\nshould look at what FDR did. He turned the economy around without \r\nkowtowing to the bankers. We should look at what Andrew Jackson did. \r\nAndrew Jackson, very controversial figure of course. He said the second \r\nbank of the United States in the 1830’s was too powerful and it should \r\nbe reined in. At lot of people thought that Jackson was out of control \r\nand exaggerating until the second bank of the United States started to \r\nfight back and it showed its power and it bribed a lot of people and it \r\nrestricted credit in an attempt to stop Jackson. And that, of course, is\r\n what turned public opinion against them. People said, “Oh, my goodness.\r\n Andrew Jackson is right.” That’s why his picture’s on the $20 bill.
A core group of bankers have become so powerful they can do enormous damage to society—and they really don’t care.
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