Thursday 24 November 2011
Our own personal greed
The debate about what caused the financial crisis seems to have been settled. Greedy bankers have gambled recklessly with our money and when the bad bets came off, the people had to bail out the financial institutions. This narrative operates with the notion that bankers are motivated solely by greed, essentially placing their actions outside the realm of normal behaviour.
I have previously argued here that this strikes me as a highly simplistic narrative. It rests on the questionable assumption that bankers are somehow different to the normal population, engaging in high-risk conduct which no ordinary person would condone. My reservation about this account flows from the simple idea that human behaviour across populations at large and across cultures is fundamentally stable, which means that those who argue that bankers are profoundly different to ordinary human beings need to demonstrate how they came to be so different from everyone else.
A more plausible explanation of the banking crisis may be that reckless behaviour is taking place wherever restrictions and sanctions on what is harmful to society are either vague or absent. In other words, bankers did what they did because they could. And, arguably, few of us would probably have acted differently.
There is however another dimension to the financial disaster that is rarely discussed. It is a deeply unpopular trope because it points the blame at least partially to all of us. Kieran O’Hara hints at this point in his recent book:
‘The house price bubble, the rise and fall of credit were all engineered by bankers and financiers of course - but were only possible because very large numbers of people wished to spend money they had not earned.’ (p.255) (O’Hara: Conservatism, 2011)
This is a deeply uncomfortable truth. The desire to find better interest rates for investment, to seek out the highest return for savings or the satisfaction that many of us felt when house prices reached stellar heights, is testimony of our own personal greed. Ditto our pension funds, and how much we wanted a decent return for our monthly pension payments when we retire.
This is of course not a narrative that you are likely to hear from politicians who are only too eager to blame bankers. Yet, the fact remains that our society has lived on borrowed means and many of us were only too happy to turn a blind eye to the reckless way in which wealth was created out of thin air.
Better regulation of the banking sector may produce more stability for our financial system in due course, but unless we also come to value hard work again, and stop believing in ever increasing returns through financial wizardry, our society will be a mirror image of the greed in all of us. And for that there can be no regulation; only our moral code and common sense can protect us from seeking immoderate personal gains.