Institutional Decay and Renovation

Institutional Decay

In "The Quiet Coup," Simon Johnson draws remarkable and shocking parallels between the United States and emerging market economies. The current monetary and debt crisis in the United States bears resemblance to similar crises that have occurred not in Western Europe but in places like Russia, Ukraine, India, Indonesia, and South Korea. Tracing the economic crisis to bad political decisions, and a culture of corruption, the author shows how the financial elite in the United States have got a stranglehold on the government. Financiers -- bankers -- have created what Johnson calls the "most advanced oligarchy" in the world (p. 2). The financiers in the United States have become so nefariously entwined with government that it seems nearly impossible -- or would be too messy and shocking -- to detangle the two. The situation has reached crisis level, and if nothing concrete is done to reduce the power of the banking elite, a new Great Depression will be practically guaranteed.

Johnson was a former chief economist for the International Monetary Fund, making the author highly credible. His arguments are logical and supported by substantial references to events and situations. Yet the article is also written for a general audience and therefore presents the complexity of issues in a way that most readers can understand without having any kind of specialized background in economics, political science, or finance.

What Johnson does to make his argument highly effective is to explain how and why the oligarchy has gotten out of hand. The author traces the situation to the very values that are at the heart of the American consciousness and national identity. As Johnson puts it, financiers capitalized on basic marketing tactics to help the American public connect General Motors, for instance, with the heart and soul of America. The mystique of Wall Street is pervasive enough that it has even seduced academia: which helps also to promote an ideology and worldview that supports, rather than dismantles, the oligarchy.

In "Democracy and Debt: Has the Link Been Broken?" Michael Hudson also refers to the United States as an oligarchy. Oligarchy, according to Hudson, emerges from within democracy. This enables the sources and generators of wealth to also be the generators of political power, but the motives of the wealthy elite were far from benevolent. As Hudson points out, oligarchy and democracy go hand-in-hand because democracy is after a safer and more stable environment for creditors. To prove his point, the author cites from ancient history. The connections might seem spurious until it becomes clear that history does indeed repeat itself. From the Egyptian pharaohs, to Roman emperors, the United States can basically analyze its current situation by studying history. Similarly, the United States can predict what happens next by tracing the rise and fall of other great civilizations.