A Civilized Critic of Savage Behavior - Robert Johnson on Reality Asserts Itself

Mr. Johnson says the compulsive pressure of money in politics has led to an abandonment of rules other than rules which transfer risk onto the back of the public - June 15, 14

Bio

Rob Johnson is the Director of the Economic Policy Initiative at the Franklin and Eleanor Roosevelt Institute and is a regular contributor to the Institute's blog NewDeal2.0. He serves on the UN Commission of Experts on Finance and International Monetary Reform. Previously, Dr. Johnson was a Managing Director at Soros Fund Management where he managed a global currency, bond and equity portfolio specializing in emerging markets. He was also a Managing Director at the Bankers Trust Company. Dr. Johnson has served as Chief Economist of the US Senate Banking Committee under the leadership of Chairman William Proxmire and was Senior Economist of the US Senate Budget Committee under the leadership of Chairman Pete Domenici. Dr. Johnson was an Executive Producer of Taxi to the Dark Side, an Oscar Winning documentary produced and directed by Alex Gibney.

Transcript, snip*

Just picking up from your biography (and if you haven't watched parts prior to this, you are really going to have to to pick up on the story), you made a big play with Mr. Soros in England. You made some others in Asia. You made a lot of money. You had time to sail. You went back into finance again.

When I--as I've known--come to know you over the last, what, three years, I guess, or four we've been interviewing back and forth, you are one of the most uncompromising, savage critics of the finance sector, of the politics that that power engenders. And you speak really unhesitatingly about all of this. That ain't the same guy that made the play with the Bank of England.

JOHNSON: It's not clear.

JAY: How do you get from there to here?

JOHNSON: Well, first of all, I think I'm a civilized critic of savage behavior rather than a savage critic.

But I think that my sensibilities when I was a financial speculator are not at all different, or when I worked in the Senate Banking Committee, than they are now. I think the world of permissiveness in finance, the lack of enforcement, the deterioration of regulations, the so-called revolving door where regulators can leave and go to the private sector and make a lot more money, all of these things are in much worse condition than when I worked in the Senate or when I worked with Soros.

JAY: But the seeds of it was all there.

JOHNSON: Not entirely evident ex-ante, but it continued to accumulate, accumulate, accumulate. And it's almost like a amplifying feedback loop: the stronger it got, the more power they had, the stronger was the pressure to unshackle things, and the more egregious the behavior could become.

JAY: Was the problem then not for you a system that allows you to break the Bank of England? Is the problem that the finance sector has gotten so out of control that it threatens the system itself?

JOHNSON: I think that the compulsive pressure of money in politics has led to almost an abandonment of rules other than rules which transfer risk onto the back of the public, to socialize the risks taken by the financial sector.

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