We had to struggle with the old enemies of peace–business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.

They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.

Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me–and I welcome their hatred.

Franklin Roosevelt re-election speech.  Speech at Madison Square Garden (October 31, 1936) – Miller Center of Public Affairs.

Was the vitriol against FDR (who started Social Security, threatened to pack the Supreme Court, and was “radical” by most definitions) greater than the vitriol against Obama? Probably, but with modern communications media it’s easier to see it today. And I can’t imagine Obama saying “and I welcome their hatred!” It’s too much like “Bring it on!”

What’s interesting about this is not the limit to outside compensation (a  $5000 per day limit!), but how bad the conflicts have gotten. For a broader analysis of this, check out Beatrice Golomb’s research e.g. a talk she gave.

Harvard Teaching Hospitals Cap Outside Pay

By DUFF WILSON

Published: January 2, 2010

The owner of two research hospitals affiliated with the Harvard Medical School has imposed restrictions on outside pay for two dozen senior officials who also sit on the boards of pharmaceutical or biotechnology companies. The limits come in the wake of growing criticism of the ties between industry and academia.

Medical experts say they believe the conflict-of-interest rules at the institution, Partners HealthCare, go further than those of any other academic medical center in restricting outside pay from drug companies. The rules, which became effective on Friday, impose limits specifically on outside directors who guide some of the nation’s biggest companies.

via Harvard Teaching Hospitals Cap Outside Pay to Top Officials – NYTimes.com.

Brad DeLong on the linkage between the real world (where people make things and provide services) and the financial world (where people move pieces of paper around). The linkage has always struck me as overly strong, although intellectually I understand it. (I studied economics at MIT when Bob Merton and Fisher Black were active instructors there. I was required to believe it makes sense.) He provides a good reminder of why the linkage exists, and its effects in setting off the current recession. An excerpt:

This crash in prices of risky financial assets would not overly concern the rest of us were it not for the havoc that it has wrought on the price system, which is sending a peculiar message to the real economy. The price system is saying: shut down risky production activities and don’t undertake any new activities that might be risky.

But there aren’t enough safe, secure, and sound enterprises to absorb all the workers laid off from risky enterprises. And if the decline in nominal wages signals that there is an excess supply of labor, matters only get worse. General deflation eliminates the capital of yet more financial intermediaries, and makes risky an even larger share of assets that had previously been regarded as safe.

via Project Syndicate – The Fairness of Financial Rescue.

(More discussion in DeLong’s blog