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The Plutocrats Are Living It up: Larry Summers' Gilded Path to Money and Power

Larry Summers’ shuffling from Harvard to the White House is symptomatic of a new American plutocracy that keeps the gears of corruption greased.

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Words like “plutocracy”, “oligarchy”, “kleptocracy”, and even “banana republic” are quickly gaining traction in political discourse. The Fukuyama quote at the top of this article comes from a new issue of The American Interest Magazine devoted to the question, “Are Plutocrats Drowning Our Republic?”, and here’s a small sampling of other recent ones:

“Millions of Americans have awakened to a sobering reality: they live in a plutocracy, where they are disposable.” (Bill Moyers)

“Government has been disabled or captured by the formidable powers of private enterprise and concentrated wealth.” (William Greider)

“America has been busy ‘building a bridge to the 19th century’ — that is, to a new Gilded Age.” (Frank Rich)

“Never before has the United States looked so much like a country of the rich, by the rich, and for the rich.” (Andy Kroll)

“What kind of a country do we aspire to be? Would we really want to be the kind of plutocracy where the richest 1 percent possesses more net worth than the bottom 90 percent? Oops! That’s already us.” (Nicholas Kristof)

Elites still speak seriously about “public service”, but fewer people buy it. As big business feeds more top executives into government positions, floods elections with more money, and gets away with more costly and egregious crimes, it’s easy to see that public interest is being replaced by private profit as the driving force in politics. This process is a vicious cycle, since the effects it produces — concentrated wealth and political power — are also its causes.

Society’s Most Challenging Problems

“The great research universities of America are a tremendous economic resource for the country.”
—Robert Rubin, June 4, 2008

Trillion-dollar back scratching at the intersection of business and government has become one of the most widely recognized and resented problems in modern politics. You might think, then, that a Harvard research center founded to “advance the state of knowledge and policy analysis concerning some of society’s most challenging problems at the interface of the public and private sectors” would place priority on restoring some accountability to American democracy. You might think that Summers’ move to such a center would mark a turn away from the influence of money towards the integrity of critical research and debate.

Think again. Private profit is undermining the legitimacy of academic institutions as well, and recent studies of conflicts of interest and disclosure in the economics profession have demonstrated how pervasive the quiet flow of money in the academy can be. Summers is still highly respected as an academic in the mainstream, even though he has earned millions from speaking and consulting to banks in recent years. That’s partly because Summers, like most economists, doesn’t disclose potential conflicts when he publishes economic articles or opinion pieces. Of course, he has an incentive not to: his Wall Street ties, milked in private, are good for power and money, but threaten his public reputation as an intellectual and public servant. What’s incredible is that many leading economists, who spend their days thinking about the mechanics of incentives and self-interest, don’t even seem to know what a conflict of interest is. Charles Ferguson’s excellent documentary, Inside Job, illustrates this phenomenon in interviews with top economists at Columbia and Harvard who served in the White House and Federal Reserve. Ferguson’s talk with Glenn Hubbard, Bush’s first NEC director and architect of the Bush tax cuts, is particularly revealing:

FERGUSON: Do you think that the economics discipline has, uh, a conflict of interest problem?

HUBBARD: I’m not sure I know what you mean.

 
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