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[…]
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A core group of bankers have become so powerful they can do enormous damage to society—and they really don’t care.
Question: What was really behind the crisis?
Simonrn Johnson: I think at the heart of this problem is a set of people, rnnot a huge set of people-- and this is not anti-finance, this is not rnanti-Wall Street. I’m a professor of entrepreneurship. I like people whorn take risk and who put their own money and persuade other people to rninvest money in genuine risk-taking productivity-enhancing rntechnology-transforming projects. But, there's this core of people who rnhave become very, very powerful who can do enormous damage to the rest rnof society and honestly, they really don’t care. They’ve made a lot of rnmoney in the 2000’s, for example. Some of them have written their rnmemoirs. Many of them just disappear with their hundreds of millions of rndollars and they leave it to the rest of us to clean it up. That’s not rnacceptable. That’s not fair. That’s not reasonable. That’s not how we rnshould organize our society going forward.
Question: rnAre other countries experiencing similar problems?
Simon rnJohnson: Other countries have many of the same problems. I think we rnshould look to American history for the solutions. I think we should rnlook at what Teddy Roosevelt did. He took on JP Morgan and he won. We rnshould look at what FDR did. He turned the economy around without rnkowtowing to the bankers. We should look at what Andrew Jackson did. rnAndrew Jackson, very controversial figure of course. He said the second rnbank of the United States in the 1830’s was too powerful and it should rnbe reined in. At lot of people thought that Jackson was out of control rnand exaggerating until the second bank of the United States started to rnfight back and it showed its power and it bribed a lot of people and it rnrestricted credit in an attempt to stop Jackson. And that, of course, isrn what turned public opinion against them. People said, “Oh, my goodness.rn Andrew Jackson is right.” That’s why his picture’s on the $20 bill.
Simonrn Johnson: I think at the heart of this problem is a set of people, rnnot a huge set of people-- and this is not anti-finance, this is not rnanti-Wall Street. I’m a professor of entrepreneurship. I like people whorn take risk and who put their own money and persuade other people to rninvest money in genuine risk-taking productivity-enhancing rntechnology-transforming projects. But, there's this core of people who rnhave become very, very powerful who can do enormous damage to the rest rnof society and honestly, they really don’t care. They’ve made a lot of rnmoney in the 2000’s, for example. Some of them have written their rnmemoirs. Many of them just disappear with their hundreds of millions of rndollars and they leave it to the rest of us to clean it up. That’s not rnacceptable. That’s not fair. That’s not reasonable. That’s not how we rnshould organize our society going forward.
Question: rnAre other countries experiencing similar problems?
Simon rnJohnson: Other countries have many of the same problems. I think we rnshould look to American history for the solutions. I think we should rnlook at what Teddy Roosevelt did. He took on JP Morgan and he won. We rnshould look at what FDR did. He turned the economy around without rnkowtowing to the bankers. We should look at what Andrew Jackson did. rnAndrew Jackson, very controversial figure of course. He said the second rnbank of the United States in the 1830’s was too powerful and it should rnbe reined in. At lot of people thought that Jackson was out of control rnand exaggerating until the second bank of the United States started to rnfight back and it showed its power and it bribed a lot of people and it rnrestricted credit in an attempt to stop Jackson. And that, of course, isrn what turned public opinion against them. People said, “Oh, my goodness.rn Andrew Jackson is right.” That’s why his picture’s on the $20 bill.
Recorded on March 31, 2010
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