Wall Street's Moral Rot Spreads To Politics, Society

There is a basic and indelicate question about the unfolding financial crisis that, to my mind, has not been asked loudly enough: Is the ethical and prudential rot so clearly on display in this historic episode confined to Wall Street and the world of high finance, or are other institutions, vocations, professions and commercial cultures similarly infected?

How worried should we be that there is, right now, similar corruption, ruthless selfishness and incompetence percolating unseen in medical care, the pharmaceutical industry, Pentagon planning, government management of Social Security, environmental regulation and planning, or air safety? How likely is it that politics and journalism are less susceptible to greed and shortsightedness than finance? Is Wall Street an aberration or a mirror? Are people only so cavalier when their salaries have six or seven zeroes instead of two or maybe three?

These aren't academic questions. How society responds to this crisis, in the end, will depend more on intuitive assessments of public character and trust than savvy insights into market regulation or mortgage-backed securities.

In the short term, we will all make certain decisions in the wake of the meltdown -- as individual citizens, consumers and investors: Obama or McCain? Incumbent senator or challenger? Scale back holiday spending or carry on? Buy, sell or hold?

Over the long haul, these decisions, like Adam Smith's "hidden hand," will shape how the nation allocates power, trust, resources and money. We like to believe our individual decisions are rational and well-informed (it's the other guy who's emotional and biased). To an extent, they are; to a greater extent, they are informed by our gut, by how we assess the character of leaders and institutions, the values and integrity of different trades and sectors. This world is too complicated for much more than that; we filter information and process it in human terms.

The Meltdown of '08 could provoke a decline in public confidence in the economic system, and perhaps the political system, that could last for decades. After all, this nation has not recovered the confidence in government that was lost in the 1970s after Vietnam and Watergate. Power has been divided between the two political parties ever since, and the essential quality of government in this period has been gridlock.

On the other hand, after the Crash of '29, the country soon entrusted the federal government, and indeed one political party, with enormous power, power that lasted for a generation. The government used that trust to act boldly and, in retrospect, wisely.

I would suggest that on a very basic level, faith in the character of our culture was challenged more deeply in the 1970s than during the Great Depression. Or perhaps it's that the character of the culture rose to the occasion during the Depression and it didn't 40 years later.

What will it be now?

I don't have a clue. No predictions.

But I do believe that this financial crisis is likely to harden judgments that we have already made about the character of our culture that are very harsh and, sadly, very well-deserved. In response to my original question: The rot on Wall Street is just part of a much wider condition.

This year's meltdown didn't come out of nowhere. Recall the names of Boesky and Milken and remember the dot-com bubble. Think back to the financial headlines of five and six years ago: Tyco, Enron, Rite-Aid, Adelphia, Global Crossing, WorldCom, ImClone, Lucent and Qwest Communications. Allow me to seek the last refuge of a pompous pundit and quote myself, writing about money scandals in 2003:

"I believe there is now a professional, well-trained elite, supported by large institutions, that is adept and willing to use corrupt practices to accumulate wealth. Despite assurances from game-theorists and anthropologists that the criminal cadre in the species remains a constant percentage over time, I believe today's mainstream, sanitized, and institutionally sanctioned financial crime rackets are being run by a new breed of crook. There have always been scandals and crooks in the history of American money, but our predator class is a distinct creation of the late 20th century. ...

I also believe that my darling baby-boom generation and our successors in gens X and Y, reared in raised-consciousness, righteousness and me-first, are probably to blame."

I am now even more firmly convinced that there really is a predator class. The people responsible for creating and bingeing on the mortgage junk bonds, derivatives and financial insurance scams that are now being bailed out are our society's most educated, highly trained and wealthiest professionals. The Meltdown of '08 was not caused by con men, crazed moguls and panicked masses. It was caused by financial bureaucrats of the baby boom generation who were paid megabucks for office jobs, who wear Patagonia fleece, $12,000 Brioni suits and read books about "reinventing the Self."

It is impossible not to be moralistic about this. Schadenfreude is rampant, but so is worry for the innocent bystanders. "In a crisis born of greed and recklessness, pity is in short supply," Time wrote this week.

But from a pragmatic angle, I want to know where else the predator class is preying? Managed care? The CIA? You get the point.

Already Americans broadly believe politics is low-rent at best, corrupt at worst. Confidence in the news media is a relic of the Cronkite era, even among practicing journalists. Americans are suspicious of lawyers, doctors and the clergy.

All this tells me we are wrong to scapegoat the I-bankers, hedge fund wizards and baby billionaires. We are right to worry far more broadly. Indeed, there is a predator class, but it is preying on a culture that is wounded and weak. That is our culture today; that is us. Sorry.

This financial unraveling appears to be a crisis of historic proportions. But American history in just the past 80 years shows that a crisis, economic or political, can spawn an inspiring, unifying response -- or not.

(This originally appeared on npr. org )

Comments

[jsarets]

In the capitalist mode of production, we allocate wealth on the basis of property. Those who do not own any productive properties must sell their labor at rates and terms agreeable to those who do. Property is exploitation, and any economic model that promotes the accumulation of property necessarily promotes exploitation.

As actors in a capitalist economy, we are forced to compete with one another and attempt to get the better end of every transaction we make with one another, regardless of whether we are morally comfortable with fleecing each other. We are encouraged to check our moral values at the door when acting in this economy, so we can only expect these values to be largely absent from our workplaces and government agencies as they act in this economic system.

The basic objective in our economy is to amass productive property and keep as much of the output as possible as profit rather than redistributing it to the workers who did the actual production. And we're surprised that so much of our society is morally bankrupt?

This is simply the price we pay for defining freedom as being able to do whatever you want with your property. Out of what I presume is our desire for privacy, we instead got a society based on great rewards for a few people who do little useful work on their own and exploitation of the masses who toil in quiet desperation.

[brenner21]

"The most successful bunch of crooks always end up running the country" - Alan Watts

[kyhillbilly]

I too am "now even more firmly convinced that there really is a predator class."

"Greed is Good" - "If you're not lying, you're not trying." - "Every man for himself." - "Only the strong survive." All of these cultural beliefs fuel the situation. Promoting the Horatio Alger mythology while denying the uneven playing field is part of the means of convincing the population that they too can be one of the 1% who own 80% if only they become a predator too. We glorify the accumulation of wealth at the expense of all else, the only score card is your bank account regardless of how you obtained it. Being ethical or honest can land you in the poor house. Society provides the greatest rewards to those who are able to dominate and take advantage of others without being caught.

Bulling has become the prevailing model. I think we have developed a culture of hate and blame. Some of this has been fueled on purpose as a way to 'divide and conquer'. The Rush Limbaugh, Bill O'Reilly, Fox News model of communications has accentuated the predator bent of our culture. It is characterized by always looking for someone to blame and hate, being morally superior, uninterested in facts, in need of simple answers, being closed minded and being quite comfortable with just talking points. This has changed the nature of how people view cultural issues and how they view anyone not determined to be one of "us".

[Bitsko]

There are a lot of posters tonight going on about our corrupt government causing this economic debacle. Government isn't at the root of this crisis, business is. How do they think politicians become corrupt, through osmosis?

[Strappo]

I've had this conviction, borne of nothing but observation and deduction, since the Reagan years. It seemed somehow protestable or reversible then. For the past decade or so it's felt like the final definition of our culture. It's nauseating. I fear for our future: ravenous, anti-social greed on one hand, the triumph of irrationality and tribalism on the other. I'm feeling like Edward Gibbon.

[Yermammy]

Colonel/Professor Andrew J. Bacevich was on Bill Moyer's Journal (PBS) talking about how this society has declined and how we are living way beyond our means. http://www.pbs.org/moyers/journal/08152008/profile2.html
This kind, intelligent, decorated Viet Nam Vet is respected by both sides in Washington. He tells it like it is, and it is not pretty. If want a reality check, watch it. (or just keep fooling yourself, if that makes you feel better).
There was another fellow that said this and tried to warn people, but he was met with ridicule and scorn. Now that the economy is in the crapper, people aren't so quick to dismiss him, I noticed. RP.

[kaski]

Let the meltdown begin. The private bankers have been trying to get control of our central banking system since we won the Revolutionary war. The Robber Barons finally succeeded when they convinced Woodrow Wilson to sign the Federal Reserve Act of 1913. "Permit me to control the money of a nation, and I care not who makes its laws." --Mayer Rothschild. These families that own our central banking system ( Federal Reserve) own America, our government, makes our foreign policies, creates wars under false pretenses and uses Freidman economics, fear, greed, threats and paranoia to control nations and America. Many Presidents have known this fact and a couple of them (JFK and Lincoln) tried to rid America of their strangle hold on our government. They own us thru debt.
A few years after signing the Federal Reserve Act President Wilson wrote "I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefor, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men." Woodrow Wilson

[Zeje]

You are absolutely right. We don't have a democracy, we have an oligarchy -- a blood sucking oligarchy and we are slaves

[schatsie]

Check out STIGLITZ on the Nations website NOW!!!

[Halsey]

"This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great Nation will endure, as it has endured, will revive and will prosper ...

"In such a spirit on my part and on yours we face our common difficulties. They concern, thank God, only material things. Values have shrunk to fantastic levels; taxes have risen; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income ... More important, a host of unemployed citizens face the grim problem of existence and an equally great number toil with little return. Only a foolish optimist can deny the dark realities of the moment ...

"The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of that restoration lies in the extent to which we apply social values more noble than mere monetary profit ... If I read the temper of our people correctly, we now realize, as we have never realized before, our interdependence on each other; that we can not merely take, but we must give as well."


President Franklin D Roosevelt 1933

[ljwink]

Well said. While being faithfully distracted by celebrity culture and our spoiled self absorbed naval gazing, the increasing inability to look beyond narrow self interests for the good of the community, and a slow but sure march toward corporate fascism has been creeping into our national DNA. Have you noticed how this has been reflected in what characters in hit TV shows of he last fifteen years obsess over? Do any of those Grey's anatomy doctors give a crap about anything else excpet their interpersoanl hang ups and infantile crushes? Did the Sex and the City gals ever grow beyond narcissistic analysis to social or political contemplation? Did the Sienfeld characters ever take much of a break from scheming how to screw each other?

[Erdgeist]

Looking at Kohlberg's six stages of moral development, Wall Street is in stage 1, "preconventional morality". It asks the questions, "How can I avoid punishment?" and "What's in it for me?" Stage 1, by the way, pertains to children.

[freshnotbitter]

I am so glad somebody wrote this article. It is about time. It isn't so much about greed anymore. It is about the feeling that one can do whatever one wants and get away with it because the people don't care and the politicians know it and will go with the money.

Has it always been this way? I think the answer is that since the time of the monarchies we have been progressing in a positive direction and recently we began goind backwards, but mostly in the fashion of a banana republic.

When Argentina had its last meltdown which left the currency worthless and the country completely bankrupt, the congressmen in Buenos Aires got out on the floor of their capitol and waved Argentine flags and yelled "Argentina, Argentina". There must have been some explanation for their odd behavior.

My grand-daddy used to say "Folket skal bedrages" translation: "The people will be swindled".

[jcorrington]

Alas...I fear you are right, it is all so broken, including managed care most of all! Michael Moore's "Sicko" revealed alot of what some of us already knew.

I do find it hard tho to blame the boomers for the whole mess.

[francoise]

I can't believe that everyone lies and steals for a living in America. Most people work honestly and aren't vultures making money on the expectancy of their competitors' death.

However if one wants to make much money fast, it's a solution to sell fast at a high price the cheapest crap while pretending it's good stuff.

There are rules and there's a judiciary system to keep these dishonest people from preying on honest trustful other ones. There are jails to keep them from destroying our organized civilized societies.

[schatsie]

Good question, and after you read David Kay Johnson's book FREE LUNCH, you will have the answer...If you want to know how we got to this disastrous point read Kevin Phillips last 2 books..

God Bless America, God SAVE AMERICA from itself!