Kevin Drum and Paul Krugman dream of limiting the pay of people in the banking industry, limiting the size of the industry itself, and making banking “boring.” Presumably, if the work is interesting, we are all going to Hell in a handbasket.
There is no causal connection, of course, between work excitement and the travel to Hell in a handbasket. But that doesn’t matter to Drum or Krugman. I have met Kevin, he is a nice and smart guy, we correspond swimmingly from time to time, but the over-regulation that he and Krugman dream about reeks of madness. Unless he is prepared to show me how bankers bounding out of their beds in the morning, with smiles on their faces as they contemplate a sixteen hour day at work are more likely to bring us a financial meltdown and that the meltdown would be directly related to the amount of work satisfaction and enjoyment the bankers are deriving from their jobs, I’m not prepared to trust these recommendations any further than I can throw them.
And why should I? Stripped to their core, this is yet another manifestation of class warfare in which people on the port side of politics launch rhetorical artillery shells against the rich for the sole reason that their targets are rich. We all know that banking was and is a heavily regulated industry, and yet, this heavily regulated industry helped drive us on the way to the current financial crisis. At the same time, lightly regulated hedge funds generally called things right, and did not contribute to the financial crisis and the recession. This doesn’t stop people like Kevin and Krugman from calling for further regulations on hedge funds, of course. Nor did it stop people like Nicolas Sarkozy from calling for further regulations when the G20 summit took place. But since there is no connection between hedge funds and the crisis, since banks were already heavily regulated–and yes, that included the investment banks as well–and since there is no connection between bankers liking their jobs and the recession, no one in their right mind should accept the proposition that what we need here is (a) more regulation, and (b) less fun. These aren’t arguments. These are assertions. There is a difference.
Oh, and no one seems to have an answer for the concern–which is being proven valid day by day–that top-flight talent will leave the American banking industry and go overseas to get paid and treated better, and even (gasp!) enjoy their work. And no one seems to have an answer for the argument that at the end of the day, the paychecks and benefits given to people like bankers amounted for rather little in the grand scheme of things; banking institutions did not get bailed out because people made eight figures. The losses were a lot more than that. Do Kevin Drum and Paul Krugman read the same newspapers that the rest of us read? It would help if they did; if the new Masters of the Universe want to prove themselves to the rest of us, they need to remember that while they are entitled to their own opinions, they certainly are not entitled to their own facts.