MORAL DEFAULT ECONOMIC DEFAULT

MORAL DEFAULT
ECONOMIC DEFAULT

On one level, the current economic crisis is too complex for easy discussion. But on another level, that apparent complexity was the reason this crisis was able to metastasize in the first place.

I am now fully persuaded that the root cause of the ongoing economic collapse in the developed Western economies is a pervasive moral failure in the elite culture.

I’m also convinced that the path to economic recovery necessarily requires a strong measure of moral recovery.

Here is the fundamental operating moral principle:

Comfortable distance enables destructive immoral behavior.

The first time I tumbled to this simple truth was during a study of the Third Reich.

How could so many intelligent, ‘cultivated’ and superficially decent people been so thoroughly co-opted into a massively evil enterprise? Was it the complete absence of conscience? Or was it the presence of comfortable distance, the moral insulation provided by bureaucratic remove, the fairy tale denials and the recursive rationalizations of modern amoral functionaries? The pattern of toxic insulation went well beyond the janitors at Dachau. It included brilliant scientists, engineers and even physicians.

Albert Speer, the architect who became the Nazi defense minister, was by all accounts a ‘cultivated ‘man. As he later wrote from his prison cell in Spandau, “Basically, I exploited the phenomenon of the technician’s often blind devotion to his task. Because of what seems to be the moral neutrality of technology, these people were without scruples about their activities.” From Albert Speer’s diary, “Inside The Third Reich.”

[A thoughtful essay about Speer’s later moral insights is on the web at http://www.translucency.com/frede/speer.html ]

The great financial collapse of 08-09 was the consequence of a massive fraud (selling vapor assets disguised via ‘bundling’, borrowing on illusory or non-existent promises to repay.

The private sector fraud was fully mirrored in the public sector. [Read the brilliant piece, ‘Civilization’s lies’ by Hoover scholar, Victor Davis Hanson at http://www.victorhanson.com/articles/hanson020610.html.]

The widespread participation in this rampantly catastrophic fraud was enabled by the comfortable distance achieved through obscurantist complexity.

Otherwise reasonable bankers and financiers routinely sold ‘packages’ and ‘products’ the actual contents and value of which these men and women were clueless. The difference between their fraud and the blatant thefts of Bernie Madoff was exactly the same kind of comfortable distance that insulated certain physicians and medical researchers from full moral depravity of ‘experiments’ conducted on prisoners who just happened to be Jews.

This experience tells us that fundamental operating moral principle I stated earlier has two corollaries, one modern, one ancient, to wit:

Where finance is concerned, large scale and individual transactions operate in exactly the same moral environment: Trust is the currency. Honesty, full disclosure and accountability are the indispensable ingredients.

No algorithm, no matter how sophisticated, can be trusted to operate morally. If the transaction is too complicated to understand, it is too complicated to trust on any level.

The cooperating elites of faux liberal and faux conservative leaders who now uneasily occupy the chairs of power within the Beltway are deeply frightened of the Tea Party political insurgency.

Why fear the people? The angst of the Beltway elites stems not from the claims that this grassroots rebellion is ‘uninformed’ and ‘immoral’. The reality is quite the opposite. They are so deeply frightened because this populist movement is all too well informed and far too moral for their elite tastes….

JBG

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