In “Greed or Stupidity”, David Brooks suggests that it wasn’t greed, as Simon Johnson suggested in “The Quiet Coup”, that has brought on the economic crisis we are facing. Instead he believes that the fundamental problem is stupidity.
He suggests that “we didn’t get into this crisis because inbred oligarchs grabbed power. We got into it because arrogant traders around the world were playing a high-stakes game they didn’t understand.”
He may have a point. Fretting about oligarchical conspiracy may be over the top when the much more familiar combination of arrogance and stupidity at the root of many big problems is a perfectly good explanation.
I am less convinced than he is that there is a simple narrative to explain the current economic mess. I believe the causes of our economic problems are far deeper than either greed or stupidity can explain. Rather the root causes of the current crisis are based on complex interrelated issues best explained at Chris Martenson’s Crash Course.
But the bottom line on the banking problems that need addressing is to focus on Brook’s solution:
“Both schools agree on one thing, however. Both believe that banks are too big. Both narratives suggest we should return to the day when banks were focused institutions — when savings banks, insurance companies, brokerages and investment banks lived separate lives.”
Is there anybody left that hasn’t had a senior executive position at Goldman Sachs that still doesn’t believe it is past time to break up the big banks?