The Quiet Coup

Simon Johnson argues in The Atlantic:

The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.


  1. Johnson is one of the small number of credentialed economists who regularly points out the clotheslessness of the emperor. This essay is in fact from 2009, and while we've muddled along since then without another big crisis in the US, there hasn't been any substantial job growth, but banking sector profits and pay are back to pre-recession levels. And now that we're watching a slow unraveling of what one might call the "government-financial-complex" in Europe, in which bond-holders are being bailed out and citizens fed an austerity diet even tougher than the one our own JSCDR* is planning, it's easy to imagine that at some point the US banks will take another big hit, and the bailout will trigger the rise in bond prices that we've so far managed to avoid. And the response will still be decided by the oligarchs who created the crisis. At least this time there's a bit of organized public dissent to change the balance of power - thank you OWS (and Simon and colleagues)!

    *JCDR=Joint Select Committee on Deficit Reduction, aka "Supercommittee". Only 11 shopping days left till its report is due (conveniently you can now shop 24/7 on the Internet, to stock up on the supplies that may become unavailable if there's another credit freeze-up).

  2. Although scary enough, the piece does seem to speak of growth as the goal.

    "From long years of experience, the IMF staff knows its program will succeed—stabilizing the economy and enabling growth—only if at least some of the powerful oligarchs who did so much to create the underlying problems take a hit. This is the problem of all emerging markets."

    But growth is either not a viable goal, or only a short-term goal. The whole point of P3 is that a planet is a finite system, and limits to growth cut in eventually. A big question, though, is how soon those limits really apply.

    My question remains whether there is enough room for "growth" left in the system that we can repair the old system and pause to catch our breath before instituting the radical social change toward global zero growth, which amounts to a controlled contraction (at least in resource intensity) in the west.

    Or do we have to skip that step entirely, and just try to redirect our decline into something tolerable and well-organized. Either way it seems like a tall order, but it we don't decide between them, won't we be pulling at cross purposes?

  3. > Or do we have to skip that step entirely, and just try to redirect our decline into something tolerable and well-organized.

    Thought experiment: If a metropolitan area was effectively cut off from fossil fuels (very possible with climate catastrophes acting along with empty government coffers), would it naturally "drop down to a lower energy level" into something tolerable and well-organized?

    If you define "tolerable" to include decimation of the most vulnerable in society, I think the answer is "yes".

    [My value judgement follows... When the libertarians/glibertarians stand by, idly and possessively, and watch the most vulnerable die, I wonder if progressives will get an apology for glibertarian accusations of "eco-worshiping fascism impoverishing the most vulnerable"?]

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.