Questioning the standard diagnosis of the financial crisis

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Yesterday the Cornell Book Store organized a book signing for Collateral Knowkedge. I talked about some of the themes in the book and then we had a great discussion. What made it so fun was the mix of disciplines represented by the participants–economics, sociology, philosophy of law, anthropology–and the surprising points of agreement and mutual interest emerging across the disciplines. One of the themes was whether transparency is always a good thing, or even possible at all in financial regulation (a topic I have written about on this site here). Another was whether the crisis was caused by a greedy individuals, as many commentators suggest, or by much more haphazard and much more systemic glitches in the day to day systems–evaluation mechanisms that don’t mesh from one office to another, people who can’t reach each other because they can’t speak the same language literally or figuratively, and so on. The economist Levon Barseghyan thought that both institutional factors and individual moral culpability were responsible but he pointed out how different our conception of the regulatory fix would be, and how harder it becomes, once we accept that the crisis is not just caused by individual greed.

2 Comments

  1. You bankers only lend a man an umbrella when it is a fine day. ~Author unknown, quoted in The Accountant, Vol. XXXII, 1905, a later variation of this (“A banker is a fellow who lends you his umbrella when the sun is shining and wants it back the minute it begins to rain”) has been commonly attributed to Mark Twain (Thanks, Garson O’Toole!)

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