Our Financial Stockholm Syndrome
Felix Salmon writes today that the power of the financial industry goes beyond mere lobbying:
One of the themes running through Noam Scheiber’s new book is the idea that professional technocrats have a tendency to take at face value much of what they’re told by Wall Street. Bankers are very good at capturing/flattering mid-level political operatives.
Yep. But this goes beyond mere regulatory capture. Here's a blast from the past: my take on regulatory capture in "Capital City," two years ago:
[The story of the finance lobby is] about the way that lobby—with the eager support of a resurgent conservative movement and a handful of powerful backers—was able to fundamentally change the way we think about the world. Call it a virus. Call it a meme. Call it the power of a big idea. Whatever you call it, for three decades they had us convinced that the success of the financial sector should be measured not by how well it provides financial services to actual consumers and corporations, but by how effectively financial firms make money for themselves. It sounds crazy when you put it that way, but stripped to its bones, that's what they pulled off.
....Their real power lies in the fact that they've so thoroughly changed our collective attitude toward financial regulation that sometimes they barely need to lobby in the traditional sense at all....Unlike most industries, which everyone recognizes are merely lobbying in their own self-interest, the finance industry successfully convinced everyone that deregulating finance was not only safe, but self-evidently good for the entire economy, Wall Street and Main Street alike. It's what Simon Johnson, an MIT economics professor and former chief economist for the IMF, calls "intellectual capture." Considering what's happened over the past couple of years, we might better call it Stockholm syndrome.
More here from me and David Corn at about 5:00 mark. As near as I can tell, not a lot has changed since then.