“All Serious Economists Agree”

The most remarkable statement I heard at the American Economics Association meeting over the past few days came from an astute observer – not an economist, but someone whose job involves talking daily to leading economists, politicians, and financial industry professionals.

He claims “all serious economists agree” that Too Big To Fail banks are a huge problem that must be addressed with some urgency. 

He also emphasized that politicians are completely unwilling to take on this issue.  On this point, I agree – but is there really such unanimity among economists?

I ran his statement by a number of top academics over the past day and – so far – it holds up.  But this may just reflect the kinds of people I meet.

Still, it is an interesting claim that stands until refuted – send or post details of serious people (in economics or elsewhere) who currently think Too Big To Fail Is Just Fine (other than people in government or big banks, of course).

Originally published at The Baseline Scenario and reproduced here with the author’s permission.

3 Responses to "“All Serious Economists Agree”"

  1. PTLdom   January 6, 2010 at 1:14 pm

    … after all, what did change in the financial markets after the crash? … what keeps it floating? Was the lack of regulation overcomed? Most probably, instead of starting with the huge banks, everyone should start with the markets … or maybe with both … because they feed one each other … how much value have the financial system destroyed? How many generations in the world will have to pay the burden?

  2. economicminor   January 6, 2010 at 1:32 pm

    When there is no real leadership and you have a whole lot of powerful interest each pulling and pushing to maintain what they have, the out come is Chaos!The nicest thing I can say about Chaos is that it forces change. Change is upon the US as not seen in many generations. It is like an avalanche which starts slow and builds up energy until every thing in its wake is flattened.When Congress and the President are funded from 500 different corporate sources, each wanting a larger piece of the pie, the outcome is that every one looses.Laws have been written to benefit the corporate masters against the people. In the name of *progress*? Or efficiency and they name them the opposite of what they do to fool you.. Consumer Protection Act, the Bankruptcy Reform act, the Commodities Exchange and Stabilization act…. Reminiscent of Orwell’s 1984 or his Animal Farm?Corporations have no soul, they have no empathy, they have no mercy. They are designed to consolidate capital and to grow. Profit is their god and they demand blind faith from those who work for them and are dependent upon them. When they are to big to fail they are an extreme danger to any country where they reside. Government’s job is to harnesses this and keep it in check and use it for the benefit of society. When the corporations rule, mankind becomes irrelevant.When 500+ corporations have the power to run a country. Well, this is the outcome. People are treated like they don’t matter and the environment is treated like it doesn’t matter and society and community are diminished.Our country is being destroyed from within by hubris and greed. This will continue until it is so bad that people march in the streets and demand that Congress removes the yoke of corporate rule and again follows the intent of our Constitution.. “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence,[1] promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.” … Does not say We the Corporate Powers in order to own and control the people and the resources….Congress and our President are not following the Constitution because they need the corporate money and are afraid of the corporate whip. IMO they are traitors.Change is upon us and because change has been imprisoned for so many years, now that it is out and when it gets going, it will be an avalanche and a dam breaking taking away all those who worked so hard to prevent it.When this is over, there will be no more to big to fail institutions and no more corporate controlled Congress. But in the wake of the avalanche, there will be a lot of damage and it will take years to recover our comfortable lifestyles again. And in the end, things will be much different than they are today. Dream good dreams and have positive thoughts that things will be better for all of We the People!

  3. villager   January 6, 2010 at 8:56 pm

    Simon Johnson should not be surprised because he is the one who pointed to the corruption of government and the banking sector that is typical of a significant financial crisis. Anyone who is not part of the corruption will disagree with the Too Big To Fail.