Review by Arnold Kling

Arnold Kling of EconLog, a generally libertarian economics blog, has a flattering review of 13 Bankers. I especially appreciate it because even though we differ from Kling on many of our ideological presuppositions and political preferences, he recognizes the potential bipartisan appeal of at least some parts of the book. For example:

“Johnson and Kwak start by putting the issue of large banks in historical and international context. Although they lean left, they may shock progressives with their sympathetic treatment of Thomas Jefferson and Andrew Jackson in their suspicion of financial concentration.”

This should not be too surprising, really. Progressives and libertarians both tend to be suspicious of concentrated economic power and its ability to sway government policy, though we might differ on solutions. To simplify vastly, progressives want the government to take a harder line on big business, while libertarians want smaller government and hence less ability for big business to twist public policy in its favor. But Simon and I do not share the faith in government regulators that some progressives have, and this is why we support breaking up big banks.

Kling does raise a few quibbles. Without restating them here, I would say that #1 is a fair point (it’s a question of emphasis between ideology and exogenous historical factors. #2 is also a fair point. We weren’t trying to argue that regulation of OTC derivatives would have solved everything; it comes up disproportionately in the book in part because of its symbolic value. As for #3, we weren’t trying to say that BISTRO was the first credit default swap. It was the first synthetic CDO, at least according to Gillian Tett’s book.

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