Political Economy, Technocracy, and the New Gilded Age | A Conversation with Robert Johnson

In Episode 17 of Hidden Forces, host Demetri Kofinas speaks with Robert Johnson, about the political economy, inequality, and the failings of our technocratic institutions. Dr. Johnson serves as President of the Institute for New Economic Thinking and is a Senior Fellow and Director of the Global Finance Project for the Franklin and Eleanor Roosevelt Institute in New York. Robert Johnson is an international investor and consultant to investment funds on issues of portfolio strategy. He recently served on the United Nations Commission of Experts on International Monetary Reform under the Chairmanship of Joseph Stiglitz. Dr. Johnson served for many years as a Managing Director for George Soros at Soros Fund Management. Robert Johnson was part of the famous team of speculators that broke the bank of England in 1992, forcing the pound out of ERM. He served as Chief Economist of the US Senate Banking Committee under the leadership of Chairman William Proxmire, and before this, as Senior Economist of the US Senate Budget Committee under the leadership of Chairman Pete Domenici. Robert was also an Executive Producer of the Oscar winning documentary, Taxi to the Dark Side and is the former President of the National Scholastic Chess Foundation. Dr. Johnson received a Ph.D. and M.A. in Economics from Princeton University and a B.S. in both Electrical Engineering and Economics from the Massachusetts Institute of Technology.

In this episode, we will explore the history of finance. We will look to understand political economy and how money drives politics. We begin our journey at MIT, under the tutelage of Charles Kindleberger, perhaps the greatest financial historian of our time. We learn about the professor of political economy Thomas Ferguson and his Investment Theory of Party Competition. How do power and money make policy and drive politics? We take a ride through the Reagan Revolution. We contemplate financial deregulation and question some of the assumptions of Laissez Faire economics in an age of globalization, multi-national corporations and zero marginal costs. We contemplate the ways in which markets and the economy have changed in the years after the fall of communism and the rise of the Washington Consensus. We hear tales of the early days of high-finance, where Robert Johnson, George Soros, and Stanley Druckenmiller shorted the Pound Sterling, broke the Bank of England, and walked away with a 2-billion-dollar payday.

Black Wednesday was almost 25 years ago to the day. How has global finance, international trade, foreign exchange, and financial deregulation changed the landscape of speculation in the years since? How has a decline in productivity, a collapse in marginal costs, a rise in total debt, along with an aging demographic laid the groundwork for a rise in populism? What is the role of experts, and how has faith in technocrats and academics declined in recent years? How do we defend our liberal, democratic institutions absent convincing academics, trustworthy politicians, and inspirational leaders? How do we get the money out of politics when politics is so beholden to money? How do we reform a corrupted government that is in bed with wall street? A government that is beholden to multi-national corporations and co-mingled with industrial military companies whose very profitability is dependent on multi-billion dollar federal contracts? It’s time for us to become educated on the how our political economy works, because if we don’t have the knowledge to call out “the experts,” then we are powerless to effect the very changes that we seek to induce.

Producer & Host: Demetri Kofinas

Editor: Stylianos Nicolaou

Engineer: Ignacio Lecumberi

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