Not My Fault

The annual world summit of the world's worthies at Davos, Switzerland is always good for some surrealist humor, and this year's (self-consciously held in the midst of economic downturn, with the organizers handing out pedometers to attending billionaires and heads of state to encourage them to walk and reduce their "carbon footprints") is no exception. I was particularly struck by this item from Federico Fubini on the Foreign Policy website:

A survey I personally conducted at Davos this year of 60 top central bankers, financial market regulators, fund managers, and industry opinion-makers gives an idea of what this shield looks like.

When participants were asked whether they think they have done something in their career which "might have contributed, even in a minor way, to the financial crisis," 63.5 percent opted for a clear "no"; 31.5 percent went for a "yes," often adding in the same breath that nobody in the industry can honestly claim otherwise; and 5 percent said "maybe."

The "yes" people were then asked to explain what triggered their wrong decisions. They had three options: "too much optimism" (68.7 percent), "I felt I had to keep dancing while the music was playing" (31.3 percent), or "greed" (0 percent).

David Rubenstein, cofounder and managing director of the Carlyle Group, expressed surprise at the results. "How strange," he said. "I thought 100 percent of them would say they had nothing to do with it."

This strikes me as unsurprising, and indeed utterly human. Few people are sufficiently self examined and honest to publically blame themselves for things that go wrong, and yet when dealing with something which we imagine to be "someone else's fault" we are usually quick to assume that their failings were grave and obvious. It's been a commonplace (especially because the economy went into freefall in the midst of an election season and thus people had much to gain through emphasizing populist answers to the problem) that our current financial problems were caused by "corporate greed" or "Wall Street greed". Yet "greed" is a motive which few assign to themselves, especially as a simple motivation for their business practices over the last decade. After all, if it works out it's usually called "wealth creation" or "financial innovation". At the height of housing/lending madness, people could confidently pat themselves on the back and explain that they were helpig more Americans than ever before own the houses of their dreams while making lots of money for their companies/customers -- and incidentally receiving a nice fat cut for themselves as well. The difference is that in this case it didn't work out, and so people are eager to figure out who was to blame.

It strikes me that saying a problem was caused by "greed" is often basically a way of saying, "caused by other people who aren't like me", which is, of course, why none of the worthies at Davos (many of whom did indeed probably have a great deal to do with how businesses were run over the last few years) saw other less dark motives as having been at work.