Voice

Does Big Finance = Big Tobacco now?

Analysts are trying to decipher the content and implications of the Senate's financial regulation bill. Noam Scheiber and James Pethokoukis have surprisingly similar takes, in that the bill doesn't directly address the "too big to fail" problem, though Scheiber thinks it does address the problem indirectly. 

Both takes are worth reading. Touching on a point I have made previously, however, I was struck by this Pethokoukis point: 

Wall Street has an enduring PR problem. Yes, big banks are unpopular. But it has gotten so bad that they may not be able to so easily counter their image issues with campaign cash. Getting Wall Street money now has a stigma attached to it like oil and tobacco money. Candidates like Meg Whitman in California and John Kasich are getting hammered for their Wall Street ties. The industry’s continued unpopularity will no doubt spawn further attempts to tax, regulate and restrict the sector.

If the public stays this outraged for this lomg, then Pethokoukis is right. The political problems of finance are becoming so great that we could be talking about a shift in social norms with regard to what is considered "honorable" work.  

Of course, paradoxically, this could serve to increase the salaraies of those still willing to go into finance. As Adam Smith pointed out in Wealth of Nations

[T]he wages of labour vary with... the honourableness or dishonourableness of the employment.... Honour makes a great part of the reward of all honourable professions. In point of pecuniary gain, all things considered, they are generally under-recompensed, as I shall endeavour to show by and by. Disgrace has the contrary effect. The trade of a butcher is a brutal and an odious business; but it is in most places more profitable than the greater part of common trades. The most detestable of all employments, that of public executioner, is, in proportion to the quantity of work done, better paid than any common trade whatever.

Question to readers: Will the social stigma against Big Finance persist or fade as the economy bounces back? 

Daniel W. Drezner

What I learned at the National Security Forum

I spent the last two days in the great state of Alabama, giving a talk on the financial crisis and national security at the Air War College's National Security Forum.  The audience consists of Air Force colonels and community leaders. 

In theory, I was there to impart wisdom, but I always find that I learn more from these experiences than my audience.  Now, most of what happens in Alabama stays in Alabama, but I can say I learned the following four things: 

1)  The rooms at the Air Force Inn on Maxwell Air Force Base are charming -- and they come equipped with clubs and golf balls for guests to practice putting.

2)  It's a really big ego rush when you walk into the lecture hall and everyone stands at attention for your entrance -- until, of course, you realize that they're not standing for you, they're standing for the base commandant

3)  I would describe my audience as somewhat right of center -- so it was surprising to me that, when I gently suggested that the War on Drugs might be the most counterproductive policy in existence, there was some robust support from the audience. 

4)  It's going to take a lot longer for the public's anger at the financial sector to dissipate than anyone in either Washington or New York realizes.