Collective action

Commenters and emailers are mad because I won't take a side and join them in their witch hunt for someone to blame for all of this.  The general run of the comments seems to be that I am attempting to excuse either my personal malfeasance, or that of my shadowy corporate masters.  Sadly, the only shadowy corporate masters I have pay me a modestly generous sum to bombard you with whatever I happen to be thinking about at the moment.  And I did about as well predicting this as anyone else, which is to say that I called the housing bubble, the savings glut, and the global imbalances, but not the specific disaster that would follow from them.  I just don't happen to think that in systemic crises, looking for some person or small group who was too greedy/stupid/venal/corrupt/arrogant is much help. 

You can perhaps understand my point of view if you think of unemployment.  It is absolutely true that people are often fired because they are lazy, criminal, or stupid.  But when unemployment skyrockets from 5% to 10%, it isn't because laziness, criminality, and stupidity have suddenly shot up.  Some people in the class of unemployed people are all of these things, and most of them could probably have avoided unemployment if they had exercised better judgement about their choice of career or employer.  But just because they could, in some theoretical universe, have avoided their involuntary redundancy, doesn't mean that we should look for ways to blame them.  Systemic effects sometimes swamp personal choice.

This is how I feel about homeowners.  They were caught up in a mania to buy a home, and most of the ones in trouble were at least a little greedy.  They were desperate to buy rather than renting because they thought that buying a house was a way to make money without working, and they bought more house than they could afford because they thought rising prices would help them get away with it.  But they were also getting bad information from the system.  Home prices had been rising for two decades.  How long are you supposed to ignore your lying eyes and put your faith in economic theory?  Especially if you have two years of junior college and never really learned the theory?

But by the same token, I don't harbor any particular animus towards most of the bankers.  The mortgage brokers and the smaller number of bankers who actively conveyed fraudulent information to the borrowers about the terms of their loans, or to the lenders about the income of the borrowers, yes.  (And for all the frothing from left and right, I haven't seen anything beyond very sketchy anecdotal evidence that one type of fraud was more prevalent than the other.  But most of the bankers were getting bad information from the same crazy system that was giving bad information to the borrowers about the risk of mortgages.  If one banker, or a few bankers, make a bad bet, I think we can focus on stupidity and greed.  But when almost all of them do, then I think it's not much more helpful to ask "What did they do to deserve this?" then it is to ask that question about the unemployed.

It's not that I don't think bankers are greedy.  I'm sure they are.  I also think homeowners are greedy. I think community organizers are greedy.  I think greed is a trait fairly evenly distributed throughout the human race, though the focus of that greed varies quite a bit.  That makes it unsatisfying as an explanation for . . . well, almost anything.  It's like blaming the financial crisis on oxygen.

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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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