As the financial crisis has unfolded, I’ve heard a lot of voices loudly insisting that nobody could have foreseen this. And I’ve also heard a lot of voices wondering why nobody foresaw it. And I’ve also heard a lot of voices insisting that, hey, damnit, I did foresee this. What there’s been less attention to is what I think is the more disturbing angle to the crisis — the extent to which the people who mattered were perfectly aware that something was amiss and just didn’t really care.
Apparently, for example, Chuck Prince of Citigroup told the FT “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance.” James Surowiecki remarks: “That sounds like someone who realized that there would be a drying up of liquidity, and that things would be ugly as a result, but who decided that it didn’t matter . . .even when people recognized the possibility of dragons, they decided it was in their short-term interests (even if it wasn’t in the company’s interests), to run the risk of getting incinerated anyway.”
And, indeed, as best I can tell Prince is still a multimillionaire. Looking back, I think it’s clear that Prince didn’t exactly maximize his wealth with his decision-making. But he didn’t really blunder, either. Nobody’s perfect, and he made out extremely well in the scheme of things. If in the course of doing so he contributed to huge problems at his company and massive suffering around the world, well, that’s not really his problem. He’s a businessman trying to get rich. And he succeeded.