What Keeps Simon Johnson Up At Night

The economist remembers a famous Theodore Roosevelt quote: “Fear the emergence of a financial aristocracy.”
  • Transcript


Question: What keeps you up at night? 

Simon Johnson: I worry about the financial system and worry that people are going to forget. Attention is hard to sustain, particularly these days. You get a lot of focused attention, that’s an advantage of the Internet, and people grab onto issues and I think people have been very worried about these massive banks. But it will pass. Other things come up. The baseball season is just starting, always a great distraction. Many other issues will come to the fore and people will forget. And of course that is exactly what these masters of the universe and the fascists are counting on. As long as they can keep their positions and hold onto what they have, the public anger and the frustration will drift away and they can go back to doing what they were doing before.

And that is really very dangerous. That is dangerous toward democracy, frankly. That’s what Thomas Jefferson said, correctly, at the beginning of the Republic. He said, “Fear the emergence of a financial aristocracy,” and we’ve had a few episodes, we’ve had some fights with them along the way. And Andrew Jackson won, Teddy Roosevelt won, FDR won. Now we have to do it again, but we have to do a modern version, right? The world is more complex, attention is more fleeting, politics are different, campaign contributions are massive. The Supreme Court says they can give as much money as they want. This is going to be quite a fight. 

Question: Are you an optimist or a pessimist? 

Simon Johnson: I’m an immigrant. I’ve been here 25 years. I became an American citizen. I thought about it long and hard and I studied for the test and I did well on the test, the citizenship test... and I believe in this American project. I think it has survived for 200 years for a reason. I think it’s a Republic that was well designed and while some of its structures and some of the initial language might seem anachronistic, it is actually a framework within which you can deal with big problems that come up and one of the biggest problems is because we’re very innovative people, because we’re very dynamic, we build new things fast and we allow new people to come to the fore, we also allow massive wealth to develop and a great deal of capture. At the end of the 19th century, the so-called gilded age, there was enormous income inequality in the United States. There were huge monopolies and Teddy Roosevelt said it was out of control. He decided to take JP Morgan’s railroad monopolies called Northern Securities to the Supreme Court. J.P. Morgan came to see him at the White House and he said, “If we’ve done anything wrong, send your men to see my men and we’ll fix it up.” And Roosevelt said, “No. We’re going to go to the Supreme Court. We’re going to see this through,” and he won five to four and from that came the anti-trust movement and from that came the breakup of Standard Oil and all the other massive companies. 

The consensus, the view we have—big is beautiful, big is high quality, big is great—does not apply to the financial sector. We need a new Teddy Roosevelt. We need political leadership that can take that message, build an alliance, seize the moment and put us all on a path to a better century.

Recorded on March 31, 2010