One notion gaining in popularity among writers for publications likely to be read by members of the financial elite is that maybe this whole “finding out who’s responsible for this giant catastrophe” business is a mistake. Ross Douthat rounds up a few examples of this kind of thing from his colleagues Ta-Nehisi Coates and Megan McArdle and, indeed, Ross Douthat before plugging an article in the December Atlantic and then raising some doubts:
Henry Blodget makes a related argument in the just-out December issue of our magazine, arguing that “the interaction of human psychology with a market economy practically ensures that [bubbles] will form,” and that the mass pursuit of rational self-interest is the only real culprit for our present woes.
In one sense, I agree with these arguments, and indeed I’ve made similarly-themed arguments myself. But it’s also worth noting that saying “we’re all to blame” for what’s happened doesn’t exclude the possibility that some people, and some kinds of people, are more to blame than others – because some people have greater responsibilities than others, and all mistakes are not created equal.
Ross goes in one direction with this, but I’d like to go in another. It seems to me that we should largely concede that, yes, the failures here have to do with systems and human psychology and the nature of the world rather than the flaws of any particular individual. Replace Richard Fuld and Robert Rubin with two other people, and much the same stuff would have happened. But rather than militating in the direction of letting the financial executives off the hook and saying “massive harm, no foul” it seems to me that taking this lesson to heart should push us in the other direction. After all, the underlying premise of our finance-led rush to hyperinequality has been that the rich are very very very very different from you and me and that it’s so excruciatingly important that we maintain adequate incentives for them to ply their trade that we should ignore the immense damageimmense damage rising inequality does to middle class well-being.
One we realize that that’s not the case, that there’s no “magic” at work in the financial field and people are just mucking around I think that has quite radical implications. If nothing the CEOs and top fund managers are doing makes them worthy of taking the blame when the crash hits, then they also don’t deserve nearly the share of the credit — and money — that they got while things were going up.