Wall Street’s Bailout Hustle
This article from Rolling Stone two weeks ago is infuriating. Absolutely infuriating. It frames the bailout and the way the banks are making record profits in terms of cons that con men have been pulling for centuries, and it is quite effective. There is a lot of technical economics information, a lot about regulatory changes since the collapse, and things like that. But the biggest insight of the article comes at the end:
Con artists have a word for the inability of their victims to accept that they’ve been scammed. They call it the “True Believer Syndrome.” That’s sort of where we are, in a state of nagging disbelief about the real problem on Wall Street. It isn’t so much that we have inadequate rules or incompetent regulators, although both of these things are certainly true. The real problem is that it doesn’t matter what regulations are in place if the people running the economy are rip-off artists. The system assumes a certain minimum level of ethical behavior and civic instinct over and above what is spelled out by the regulations. If those ethics are absent — well, this thing isn’t going to work, no matter what we do. Sure, mugging old ladies is against the law, but it’s also easy. To prevent it, we depend, for the most part, not on cops but on people making the conscious decision not to do it.
The system assumes a certain level of ethics he says, but I might go further and say that an economic worldview exists in an ethical vacuum - there is not right or wrong but profits or losses. We endorse this view on a personal level, just read every Malcolm Gladwell book and its praise for economists work in helping us understand human behavior, but on an applied, large level, it appalls us.
The banks are acting consistently within this worldview, one that most Americans seem to hold: if you see an opportunity, take it. But because they are making billions while 10% of America is unemployed, it seems wrong. But is it really, if we look at the presupposed ethics of the rational, scientific worldview that is the vast consensus in America?
