Sunday, February 12, 2012

A Corrupt Profession

I watched the Academy Award winning documentary "Inside Job" tonight. It's pretty much guaranteed to raise one's blood pressure by twenty points or so.

One point that caught my eye was that in addition to the billions the financial services industry lavishes on lobbying and political candidates they also spend a fortune corrupting important economists. Such payoffs take the form of lavish consulting fees (Summers, Hubbard), lucrative board memberships, or more direct fee for service arrangements, like the quarter of a million dollar fees paid to a former Fed Governor and a leading British economist to praise the soundness of Icelandic banks (not long before they collapsed.) If you are a prominent economist, and speak the truth as Wall Street would like it, you should make many times as much from such fees as from your salary.