Worshipping the masters of the universe can turn you into a banana republic
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Now Johnson is sounding the same themes in "The Quiet Coup," an Atlantic piece that isn't the most exciting thing you'll read unless you stick with it. And then you realize that he's describing Wall Street's amassing of cultural capital — and that that is probably more responsible than anything else for the fix we're in now of no seeming end to the spectacle of bankers bailing out bankers with our money.
And you realize that, although Johnson doesn't say it, a worship of Wall Street explains as well as anything else how such scams as the Hevesi pension-fund scandal can take place — can even become a normal and even admired way of doing business.
So normal that even a spark from old flames like Peggy Lipton can set off a financial disaster. (See my colleague Tom Robbins's "Peggy Lipton, The Girlfriend Who Sparked the Pension Scandal.")
Here's a passage from Simon Johnson's Atlantic piece that gets to the point:
In a primitive political system, power is transmitted through violence, or the threat of violence: military coups, private militias, and so on. In a less primitive system more typical of emerging markets, power is transmitted via money: bribes, kickbacks, and offshore bank accounts. Although lobbying and campaign contributions certainly play major roles in the American political system, old-fashioned corruption — envelopes stuffed with $100 bills — is probably a sideshow today, Jack Abramoff notwithstanding.
Instead, the American financial industry gained political power by amassing a kind of cultural capital — a belief system. Once, perhaps, what was good for General Motors was good for the country. Over the past decade, the attitude took hold that what was good for Wall Street was good for the country.
The banking-and-securities industry has become one of the top contributors to political campaigns, but at the peak of its influence, it did not have to buy favors the way, for example, the tobacco companies or military contractors might have to. Instead, it benefited from the fact that Washington insiders already believed that large financial institutions and free-flowing capital markets were crucial to America's position in the world.
In Johnson's view, the U.S. has become just another banana republic in how the current crisis is playing out:
But there's a deeper and more disturbing similarity: elite business interests — financiers, in the case of the U.S. — played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.
Helpless or unwilling or, as Johnson notes, Wall Street and Washington are one and the same. See the gallery of Tim Geithner's inner circle of jerks for confirmation.
