When it comes to the economy, people desire the freedom and wealth of markets but the control of authoritarianism. Often, it is forgotten that politicians do not have their hands on every lever that moves the economy. Officials do wield considerable influence, such as regulatory power. In good times, politicians boast of their role in facilitating growth or increasing homeownership (oops). Not to be unfair âÄî many people give them credit for it. During recessions such as this, the inability to turn the beast that is the American economy around is seen as due to incompetence and corruption. The massive amounts of public money being shoveled into Wall Street appear to many as crony capitalism. Is that right? Dr. Simon Johnson certainly thinks so. He writes in the May issue of The Atlantic that Wall Street has effectively staged a coup. Politicians are helpless or complicit as bankers resist taking the losses they deserve. The United States then has become Russia, with a powerful, self-serving elite. The economy flounders as banks raid the public purse of billions. Unlike us, Dr. Johnson is no intellectual lightweight. He has spent time as the chief economist of the International Monetary Fund and now teaches economics at MIT. He co-authors a blog, The Baseline Scenario, that is a treasure trove of information for those having a hard time keeping up with the recession. His credentials demand he be taken seriously, but so does his point. The Soviet UnionâÄôs economy grew with massive extractive and capital-intensive industry. Oil and gas kept afloat the unsustainable production of military goods. When oil plunged In the 1980s, so did the Soviet Union and its illusory economic growth. The United States and its financial industry seem poised to follow the same path. The ocean of credit that had existed in recent years allowed Wall Street to become bloated. The United StatesâÄô fractional-reserve banking system, which allows banks to lend and borrow at greater amounts than they have in reserve, created massive amounts of profits. This is also what led to the infamous compensation rates that enrage so many. The manner by which gross domestic product is calculated included financial profits. Remove finance from the equation, United States economic performance over the last few years suddenly looks pretty poor. FinanceâÄôs tremendous wealth was also tremendous debt and now weighs heavily on banks. Their resistance to admitting insolvency is a direct result of it. But it is unlikely that bankers are manipulating all the strings. Politics and economics never lie well together. American culture is heavily socialized against nationalization âÄî rightly or wrongly, the idea is anathema. Furthermore, people are fed up with seeing friends lose jobs while hearing about bonuses given to bankers. Politicians just donâÄôt have the social capital to do or even admit what needs to be done before the economy turns around: Pump more money into banks. Some see this dynamic âÄî elites not wanting to admit loss, and the public hating bailing out bankers âÄî as helping Japan into its lost decade. Much of the anger over Wall Street, from pay to its culture, is a result of the discussion not being had during normal times. Finance is an integral part of the economy. Like any industry, it can get drunk on its own importance (see General Motors). But no sane person wants to risk the potential systemic meltdown that a collapsing megabank could cause. What plunged the Great Depression to its depths was the collapse of Creditanstalt, an Austrian bank that blasted Europe and reverberated all the way back home. Many see saving jobs and saving banks as separate tasks. They are the same, unless prolonged recession is suddenly acceptable. The quickest way to mend the economy is to rebuild the one that was so dependent on Wall Street. So fretting about job loss while submitting to blind rage at banks is unfortunately counterproductive. After the economy returns to âÄúnew-normal,âÄù it will be high time to put bankers in their place. St. JamesâÄô Street welcomes comments at [email protected].