Ben Bernanke and Modern Patronage

Ben BernankeEdmund Tylney was the Master of the Revels for Queen Elizabeth. Basically, he was the state censor; he made sure that the theaters weren’t showing plays that were going to start uprisings. As a result, he made a lot of money. All the plays had to be funneled through him. And one can say he did a pretty good job because there weren’t any revolutions during his life. Now you might wonder just what qualified Tylney for the job. And the answer is: nothing. He was well connected. Like most people at that time, he got rich by having the crown dictate it. We don’t have a crown here in the United States, but nothing else has changed.

As you may have heard, the former chairman of the Federal Reserve Ben Bernanke is now going to be a senior adviser at Pacific Investment Management Co (Pimco). And this is following on the heals of his becoming a senior adviser at Citadel LLC. He is also a Distinguished Fellow at the Brookings Institution. I don’t know if he is still a professor at Princeton. All these impressive titles don’t seem to require much work. Most people can only manage one job because, you know, they are expected to actually work. Color me skeptical, but Bernanke works more or less the same way that Edmund Tylney worked.

No one has a problem with Bernanke’s blog at Brookings — where he posts as much an article a week. (I hope he isn’t taxing his heart!) Actually, people have been fairly happy about it. No less than Paul Krugman likes what he’s reading. But as Matt O’Brien noted, the gigs at Pimco and Citadel are a different matter, “Bernanke hasn’t disclosed the terms of his compensation, but it’s safe to say that if hedge funders are willing to pay him $200,000 just to dispense his wisdom over dinner, they’d be willing to pay him a lot more to do so on a regular basis.”

National treasure Mark Thoma is a bit concerned about this situation, Ben Bernanke’s Bad Example. It isn’t just about the optics. But they are bad enough. In the next year, Bernanke is likely to make as much as his combined net worth to this point. This is cashing out big time. But Thoma is concerned that with Fed board members coming in for short periods of time and then cashing out, single presidents will get to pack the Fed with their own members, reducing the institution’s independence.

I’m not sure that it matters. As it is, the government appointed members of the board only slightly outnumber the voting members of the banking community. As corrupt as was the patronage of Elizebethan England or Great Depression Chicago, at least people complained about it. Now the basis of our entire finance system is a patronage scam and everyone thinks it is great. Or they don’t think about it at all because they are too busy looking for a job because the Fed has decided that high unemployment is far better than a tiny amount of inflation.

Dean Baker had the ultimate reaction to the news that Ben Bernanke was going to get a couple of patronage jobs, The Man Who Completely Missed the Housing Bubble and Was Convinced Financial Disruption Would Be Restricted to the Subprime Market Deserves Two Seven-Figure Sinecures? He wrote:

This incredible negligence has had a devastating cost for tens of millions of people in the United States and around the world. And for this he deserves two-seven figure sinecures? This sounds like a case of the soft bigotry of incredibly low expectations.

I talk about this all the time. There are the “right” kind of people and the “wrong” kind of people. The “wrong” kind of people are held to impossible standards and given endless lectures about how if they only acted more like the rich, they too would be rich. The “right” kind of people are never allowed to fail, and when they are rarely called out on their misbehavior, it is brushed aside as a minor thing, “Boys will be boys!” Clearly, Ben Bernanke is the “right” kind of person. Nothing too good can ever happen to him. And nothing bad will ever be allowed to happen to him. I’m sure that Edmund Tylney would have heartily agreed.

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

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