On so-called bureaucrats in Washington and the morality of capitalism
Every time I hear the word ‘bureaucrat’ used to make a point for or against government’s role in the economy, I cringe. I see this label as unfair and dehumanizing.
I grew up in Washington , D.C. where my parents and their friends rose through the ranks of government, often to the very managerial positions which are being used to characterize government employees as bureaucrats. So I have a lot of insight into what goes on in and around Washington that affects the decisions made by these so-called bureaucrats.
I bring this up because of my recent post “Why you won’t hear me using the word bankster” in which I talked about a similar rhetorical tool used to label bankers. I see these labels as cheap, underhanded tactics meant to elicit an emotional response rather than a logical one and bias the reader against one’s preferred whipping boy. It is akin to invoking Adolf Hitler as an analogy in any debate – something sure to elicit a reptilian response instead of a well-reasoned one.
The question I was actually looking to have answered with the bankster post was more of a philosophical one: should we assign collective guilt when we see ‘moral’ or system-wide failures of the sort we have just witnessed in the financial services industry? It is the sort of question that I am asking myself due to the five recent posts here related to greed and morality in our capitalist system.
- Greed is not good
- More on greed, regulation, Lehman and the financial industry
- Guest post: Why do bankers make so much money?
- Keep your hands off Goldman’s bonuses
- Guest Post: Did Gordon Gekko inspire Wall Street or the other way around?
Here are the questions I have been asking myself: Is “individual greed but collective progress” the underpinnings of laissez-faire ideology? Is greed ever good? Are bankers greedy? If so, should government cap their pay or is that a violation of their liberty? Is market failure a sign of collective guilt?
I think these are fundamental philosophical, political, even moral questions that cannot be divorced from the conversation about economics and markets. They go to the core of our value system and, hence, to the fundamental nature of how we want our system of capitalism to function. It seems to me it is a major cop-out to say in effect “these issues are irrelevant because individual decisions of morality are swamped by the collective whole. Large systems are inherently amoral and thus we individually can be as well.” That’s what extreme forms of laissez-faire capitalism suggest.
As far as collective guilt goes, Wikipedia has a workable definition:
Collective guilt, like guilt, is the unpleasant emotional reaction that results among a group of individuals when it is perceived that the group illegitimately harmed members of another group. It is often the result of “sharing a social identity with others whose actions represent a threat to the positivity of that identity”. Different intergroup inequalities can result in collective guilt, such as receiving unearned benefits and privileges or inflicting more extreme forms of harm on an outgroup (including genocide). Individuals are generally motivated to avoid collective guilt in order to maintain a positive social identity. There are many ways of decreasing collective guilt, such as denying harm or justifying actions. Collective guilt can also lead to positive outcomes, such as promoting intergroup reconciliation and reducing negative attitudes towards the outgroup.
The WaMu example I cited is a good one to think about:
The White House is pushing for a new consumer regulatory agency to end these sorts of abuses, but the banking lobby and even federal banking regulators are opposed. Banks say more regulation would kill innovation.
"I hated that loan," said Mary Kay Morse, a 20-year veteran at WaMu whose job was to persuade independent brokers to make option ARM loans. "It’s just not a good loan. It wasn’t good for the borrower."
That loan affected her opinion of WaMu.
"I always felt like I worked for a really honest industry that cared for the borrowers they dealt with," she said. The corporate culture changed to: "We just want to do the most we can to make money for the bank."
What blame could/should an individual like this bear for alleged predatory lending at Washington Mutual (I hate to pick on the employee in this example as her instincts seem to be in the right place)? If we individually make the wrong moral decisions, do we collectively risk a market failure like the one we saw in the recent spate of predatory lending? I think the answer is yes. But I also think it is difficult for one individual to make a difference in a system where the incentives go against doing the right thing. This is a major argument in favor of regulation.
I would love to hear your comments on these issues as I have made mine.
As for the terms ‘bankster’ and ‘bureaucrat,’ I am looking to bring a bit more civility and logic to the debate about government, regulation, the banking industry and their roles in our capitalist system. Cheap shots and emotional pandering have no role in a mature discourse about these important topics.