debating high finance


It is a brave man these days who rallies to the flag of finance. Robert J. Shiller, who teaches Economics at Yale, is one of the few academic commentators who can find a good thing to say about finance theory and financial engineering, and who is even disposed to defend the extravagant sums bankers are paid (one hesitates to say “earn”). He maintains that the financial sector is a crucial component of the infrastructure we need for a “Good Society”, and we should be reinforcing its skills, and extending its reach, rather than cutting it down to size. In so arguing, he is swimming against a strong tide. The Masters of the Universe are having a bad decade. In the 1980s they shrugged off an imaginative assault from Tom Wolfe in The Bonfire of the Vanities. The ugly and rapacious villain Gordon Gekko, in the film Wall Street, became a cult hero. In 1990, Barbarians at the Gate by Bryan Burrough and John Helyar, a racy tale of debt and duplicity, did little to dent the reputations of the dramatis personae, who continue to run one of the most successful private equity funds. No matter how unsavoury the story, it failed to change the public mood.

more from Howard Davies at the TLS here.