Who should most influence the creation and intepretation of our laws?

Where did our laws go wrong and help create the current financial crisis?  My own experience over the 28 years since I began law school has been that at the intellectual level we have become more and more enamored of the idea that the free market is the best measure of all value and that at the professional level we have become more and more obeisant to the financial industry.  Markets do a lot of good, but it boggles my mind when complex legal problems involving competing values and belief systems are in facile ways reduced to a weighing of measurable quantities.  And the investment bankers I worked among during my years as a lawyer in New York City were bright, but they were no smarter than the lawyers, painters, non-profit fundraisers, contractors, social workers, doctors, nurses, teachers, writers, and engineers I knew.

As Simon Johnson, a Professor at MIT’s Sloan School of Management and former chief economist of the International Monetary Fund, points out in the Atlantic, it might precisely be our willingness to defer politically to the people we referred to as financial “wizards” that got us in this mess:

Top investment bankers and government officials like to lay the blame for the current crisis on the lowering of U.S. interest rates after the dotcom bust or, even better—in a “buck stops somewhere else” sort of way—on the flow of savings out of China. Some on the right like to complain about Fannie Mae or Freddie Mac, or even about longer-standing efforts to promote broader homeownership. And, of course, it is axiomatic to everyone that the regulators responsible for “safety and soundness” were fast asleep at the wheel.

But these various policies—lightweight regulation, cheap money, the unwritten Chinese-American economic alliance, the promotion of homeownership—had something in common. Even though some are traditionally associated with Democrats and some with Republicans, they all benefited the financial sector. Policy changes that might have forestalled the crisis but would have limited the financial sector’s profits—such as Brooksley Born’s now-famous attempts to regulate credit-default swaps at the Commodity Futures Trading Commission, in 1998—were ignored or swept aside.

The problem is that, as Joan Walsh points out, the Obama administration’s efforts to “fix” the financial industry seem to perpetuate the misplaced reliance on the financial industry that the Democratic Party started back in the Clinton administration and that continues, unabated, to this day in the actions of Tim Geithner and Charles Schumer, the Democratic senator from New York.

Perhaps, though, we’re in on the beginning of a trend in a direction other than the one we’ve taken in the 30 or so years of my professional life.  With the demise of investment banks we’ll no longer see the best and the brightest of our college graduates flowing into investment banking and financial consulting jobs.  At a recent job fair at Columbia University, Kevin Long, a recruiter for Environ, which provides international consulting services on environmental sustainability, cleanup and other issues, was quoted as follows:

We’re delighted. In the past, we have had to compete with investment banks, hedge funds people that were pulling the best engineers and scientists out of these schools. And this year, because of the conditions of the economy, we’re getting an opportunity to go after those students.

Who knows?  If the people we consider the smartest are engineers and medical providers and social workers, maybe we’ll pass laws that enrich them rather than laws that enrich investment bankers.  And maybe that will be better.  Certainly it will bring in a broader range of views.  I don’t mean we should ignore the financial industry, but we should realize when someone tells us by making laws and policy that are intended to directly enrich them we will indirectly be doing ourselves the greatest good, we should perhaps start checking our wallets.