Breaking the Code of Silence

With some notable exceptions, it is rare to see lawyers, accountants, doctors and members of other groups that some might describe as professional fraternities coming out and publicly challenging the competence of their peers.

I'm not totally sure why. Among other things, I guess there must be some innate fear that criticism leveled at someone who has, in theory, received a similar level of training and who has been vetted in some comparable fashion raises the risk that the person who is shooting his mouth off will have doubts cast about his (or her) own capabilities.

There is also the possibility that others in the club may rally around the individuals being targeted in a kind of mindless, knee-jerk attempt to protect their own, thus alienating the individual who dared step out of line and leaving him exposed to the threat of blackballing or other harm.

Whatever the reasons, I admit that my ears always perk up when I catch wind of somebody who has decided to take that risk, come what may, and expose what they perceive as the failings of other members of their particular tribe.

It's even more interesting -- for me, at least -- when the criticizer and the intended targets are so-called financial experts, especially economists, who I've long railed against because of their fondness for ivory theories that have nothing to do with reality -- and who encourage others to believe in fairytales that usually end up costing them a lot of money.

Such was the case when I came across the punchy New York Times interview by Deborah Solomon that follows, entitled "Questions for James K. Galbraith: The Populist." 

Do you find it odd that so few economists foresaw the current credit disaster? Some did. The person with the most serious claim for seeing it coming is Dean Baker, the Washington economist. I saw it coming in general terms.

But there are at least 15,000 professional economists in this country, and you’re saying only two or three of them foresaw the mortgage crisis? Ten or 12 would be closer than two or three.

What does that say about the field of economics, which claims to be a science? It’s an enormous blot on the reputation of the profession. There are thousands of economists. Most of them teach. And most of them teach a theoretical framework that has been shown to be fundamentally useless.

You’re referring to the Washington-based conservative philosophy that rejects government regulation in favor of free-market worship? Reagan’s economists worshiped the market, but Bush didn’t worship the market. Bush simply turned over regulatory authority to his friends. It enabled all the shady operators and card sharks in the system to come to dominate how we finance.

So you claim in your recent book, “The Predator State,” but will President Bush actually be leaving Washington a richer man? Presidents don’t make money in office; they do so afterward. In his case, I hope he won’t. Maybe his friends will abandon him.

What do you think the future holds for Vice President Cheney? I suspect that Cheney will spend much of his life fending off legal challenges, but that is a different area. I’m quite sure that the human rights issues will follow him for the rest of his life.

Any thoughts on Treasury Secretary Henry Paulson, who engineered the bailout? He is clearly not a superman. This is the guy who had the financial crisis on his plate for a year, and when it finally became so pervasive that he couldn’t handle it on a case-by-case basis, the best he could do was send Congress a bill that was three pages long.

What’s wrong with that? Maybe he’s pithy. It shows he wasn’t adequately prepared. The bill did not contain protections for the public that Congress had to put in.

Regulation is the new mantra, and even Alan Greenspan in his mea culpa before Congress seemed to regret he hadn’t used more of it. I would say a day late and a dollar short. Greenspan blotted his copybook disastrously with his support of deregulated finance. This is a follower of Ayn Rand, an old Objectivist. His belief was you can’t really regulate and discipline the market and you shouldn’t try. I think Greenspan bears a high, high degree of responsibility for what has happened.

As a longtime professor at the University of Texas, where you hold a chair in the LBJ School of Public Affairs, what do you do with your own money? As little as possible. I am in the happy position of not having too much.

That sounds vaguely communistic. Well, maybe academic life has a touch of that, but it’s comfortable compared with the real thing.

Over the years, you’ve stayed loyal to the liberal ideas of your celebrated father, John Kenneth Galbraith. That’s right.

Did you go through any kind of Oedipal crisis when you were younger? No, I went through the non-Oedipal crisis of having a father who was always one step ahead.

Now that the economy has tanked, do you think that progressive economists will come to enjoy a new glamour? I personally never suffered a deficit of public attention.

That sounds a little smug. That’s true. Let’s add that a great many other progressive economists have basically suffered a deficit of attention, and these events should raise their profile enormously.

Comments

[Tim]

I saw Galbraith on Bill Moyer's show recently. He has no problem with massive federal spending deficits. Just another guy willing to screw future generations and not face hard choices. He seemed like a puffed up professor.

[CathyG]

He's written an insightful masterpiece in "The Predator State" which gives a complete, real time history of the deliberation destruction of the American middle class. The story isn't over yet; it remains to see whether American democracy can survive the accumulation of so much of the country's wealth by so few of her citizens, whether it can survive the terrible inequities that have built up over the last 30 years and have accelerated so dramatically under Bush.

[Average John]

I don't get it. McCain and the now defunct new monetarist camp whine and rail about spreading the wealth, yet never explicitly state their own philosophic position. I guess that position would be that they are all about seeing that the world's wealth is concentrated in fewer and fewer hands.

Maybe their reluctance is based on the assumption that if they were forthcoming, even the stupidest of gullible Americans would finally catch on that they've been snookered.

[Joe M.]

Economics is at best a quasi science. These people cannot even quantify the inflation/deflation debate. They operate on a failed model anyway. Which is, a fiat currency backed by nothing. Throughout history this model has failed and it is currently doing so again as we speak.

[gibbon1]

"Which is, a fiat currency backed by nothing."

I've been thinking about that. Essentially the currency is backed by three things.

1) The government will only accept taxes in dollars.
2) The government will only pay for things in dollars.
3) The government mandates by law that debts can be payed in dollars.

I have this vague feeling out of my butt that whats been done in the last forty years was to allow the money supply to grow massively. When that caused wage and price inflation in the US, that was dealt with by squelching middle class wages and allowing money to concentrate in the hands of the very wealthy who let it sit idle.

That said I have this idea of a Dilbert Cartoon where the company is saved because their Elbonian division has access to a line of credit through the First and Last Bank of Elbonia, a country so backwards that they are on the tin standard.

[Paul]

Something does not add up.. The subprime problem was 1.5 trillion ... The taxpayers were fleeced for about 3 trillion. (no one would disclose how much and where the trillionS went)
Solution NO MORE MONEY UNTIL FULL DISCLOSURE OF WHERE THE DOLLARS WENT.

The taxpayers are bailing out the investment banks and hedge funds for trillions of dollars worth of derivatives. One big problem.. the derivatives are a 100 trillion problem. JUST TELL THE TAXPAYER THE TRUTH. 401 ARE NOW 101 ACCOUNTS. NO MORE UNTRUTHFUL BAILOUTS.