JONATHAN CHAIT JANUARY 14, 2010
-
Read Later
READ LATERAvailable only to subscribers. SUBSCRIBE TODAY
-
Listen
ARTICLE AUDIO
- Font Size
I liked this quote from Barney Frank:
He also downplayed concerns that talent would flee the industry.
"I don't know where people would go for comparable salaries," Frank said. "I guess perhaps they could star in major motion pictures."
But National Review's Veronique de Rugy sees it as an "anti-capitalist and anti-wealth mentality [that] is scary and very anti-American."
Hey, you know what else is anti-American? Being named "Veronique de Rugy."
I digress. Anyway, de Rugy offers this riposte to Frank:
if Mister Frank really believes that chasing well-paid employees to go elsewhere is a winning strategy and won't have any impact on the industry, then I suggest that next time he is sick he goes to a hospital where doctors are poorly paid and see how he feels about that.
Of course, Frank didn't say that reduced pay would have no deleterious effect on the quality of any profession, he said it about the finance profession. It's telling that de Rugy changed the subject from finance to medicine. Exactly what horrors does she think would occur if we had less brilliant people flocking to the finance industry? We'd wind up with a bunch of hacks who, I don't know, crashed the world economy because they never considered the possibility that historically sky-high housing prices might drop?
In any case, as Robert Solow suggests, reducing the incentive for talented people to enter finance might be a feature, not a bug. One of the problems of an economy where the finance industry earns 45% of all corporate profits is that it exerts a massive brain drain away from productive pursuits into inventing "ways to spot and carry out favorable transactions minutes or even seconds before the next most clever competitor can make a move."
So you can see why de Rugy changed the subject from finance to medicine. But let's stay on medicine for a moment. What if we did pay doctors less? Would it be a disaster? Well, France pays doctors a lot less, and its quality of care is so good that even hard-core libertarians go nuts for it when they actually come into close contact with its system. It wouldn't necessarily be easy to impose that system here -- among other things, you'd need to reduce malpractice fees and the cost of medical school, as France does. But it does show that de Rugy's simple free market model doesn't work as clearly as conservatives want to believe.
For more TNR, become a fan on Facebook and follow us on Twitter.
11 comments
"Hey, you know what else is anti-American? Being named 'Veronique de Rugy.'" I laughed, but I'm ashamed of it. You also should be ashamed. Making fun of people's names, and of people's presumably foreign origins, is against much of the best of liberalism.
- TARFON
January 14, 2010 at 3:59pm
TARFON: I think that you're missing one of the key benefits of being a liberal. Because your substantive positions are good, you get to make insensitive jokes. That's always been my understanding, anyway.
- jhildner1
January 14, 2010 at 4:41pm
jhildner1, I prefer to think of it as an "ironic" mocking of those who would make such a distasteful joke sincerely. However, this rationale very rarely succeeds in preventing me from getting my ass kicked.
- adaglas
January 14, 2010 at 4:49pm
yes, adaglas, and I am sorry, I keep telling my 5 year old not to beat you up.
- blackton
January 14, 2010 at 7:10pm
Barney Frank is a true American: -Gay jewish lawyer -Amusing, even funny -Never created any economic value in his life -Limited/no ethics (ask Steve) -No knowledge of economics/business In 2003, while the ranking Democrat on the Financial Services Committee, Frank opposed a Bush administration proposal for transferring oversight of Fannie Mae and Freddie Mac from Congress and the Department of Housing and Urban Development to a new agency that would be created within the Treasury Department. The proposal reflected the administration's belief that Congress "neither has the tools, nor the stature" for adequate oversight. Congress blocked the proposal. Frank stated, "These two entities...are not facing any kind of financial crisis.... The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing
- mr_rationale
January 15, 2010 at 12:11am
Rationale: What is un-american about being a Gay, Jewish lawyer? I can't recall anything in the Constitution reserving citizenship to straight, protestant bigots.
- sdemuth
January 15, 2010 at 7:55am
Of all of the legitimate criticisms one can make of Barney Frank (of whom I will confess to being a fan), blocking the transfer of yet more power to that paragon of efficiency, far sighted strategic brilliance and the lone wolf that rang alarm bells about the state of the financial system before it collapsed (otherwise known as the most recent Bush administration) does appear to be a rather weak one.
- Nari224
January 15, 2010 at 10:07am
Rationale illustrates the rule I raised before, and which adaglas expanded upon. Because his substantive positions are lousy, and because he lacks apparent irony (no doubt another un-American quality), he doesn't get to say that gay, Jewish lawyers are not true Americans. In fact, it's really disgusting when he says it. Rationale, get a shovel, 'cause you're gonna need to start digging yourself out. I hope that you, unlike Sarah Palin and the Tea Party jerks, know that no American is more American than any other. That's one of those bedrock principles of your country that you might want to reacquaint yourself with.
- jhildner1
January 15, 2010 at 12:03pm
Being a fan of Barney Frank myself, I was about to embark on a point-by-point refutation of rationale's lies, but then I remembered that rather than spending his time fighting smears, Barney's busy regulating and writing policy for the financial industry of the United States. What angry refutation could be better than that knowledge?
- janus
January 15, 2010 at 12:24pm
Actually, Mr. R did not say or even imply that Barney (whom I enjoy immensely for his humor) was un-American. He did, however, highlight the fact that Barney helped block the proposal to regulate Fannie and Freddie, which proposal might have saved us some trouble here of late. The financial mess, as usual, is a bi-partisan production. If not, why wasn't Barney regulating and writing policy in January, 2007, when he became chairman?
- butchie b
January 15, 2010 at 1:11pm
butchie: The financial mess is somewhat bipartisan, however since F&F were peripheral players in the collapse, why do they keep getting brought up? Smokescreens maybe? F&F originated very few subprime loans that subsequently went under water. They did however purchase a number that were originated in private sector to maintain their market presence (the intent of which is stability), as dictated by their mandate. How would any of the regulatory changes that were being proposed at the time have changed either that or the final outcome? Had the under-regulated (an executive responsibility IIRC) banking and mortgage sector not been fleecing investors with financially innovative products, we would not have needed to bail them out. Again, how would the changes Frank blocked (basically the transfer of F&F to the apparently not-very-watchful executive) have changed this?
- Nari224
January 15, 2010 at 4:41pm