Dante's Davos

Felix Salmon is in Davos:

It’s not like CEOs and billionaires (and billionaire CEOs) need any more flattery and ego-stroking than they get on a daily basis, but Davos gives them more than that: it allows them to flatter and ego-stroke each other, in public. They invariably leave even more puffed-up and sure of themselves than when they arrived, when in hindsight what the world really needed was for these men (it’s still very much a boys’ club) to be shaken out of their complacency and to ask themselves some tough questions about whether in fact they were leading us off a precipice.

What's stunning to me, and instructive, is the distinction Tom Friedman makes today between what he calls "sustainable values" and "situational values".  I think that distinction is too kind to the bankers. What he means is what human beings used to call - before "values" replaced "virtues" - good and evil.

From the time I was in college, every person who really wanted to become rich - and I mean rich - went into investment banking. In the 1980s, this was the apex of career goals. No one I knew quite understood how these bankers went on to make exponentially more dough than anyone else could, but most of us didn't much care. The idea of working with all those money-grubbers when I could eke out a living writing or reading or acting and speaking seemed horrifying to me. And I didn't envy their money, and still don't.

After all, the amounts they get become meaningless after a while. A human being can only consume so much before it becomes absurd or soul-destroying. Their vast and disproportionate wealth I thought of as a hideous prison for them. I didn't envy them - not because I am somehow moral or Christian, although I'm sure my Catholic values prodded me in that direction (how could someone whose favorite saint is Francis of Assisi really get upset at my friends becoming rich, bored suits?). I didn't envy them because I would never ever want to live that kind of life.

Now I realize, of course, that their own moral wasteland became so vast that it threatened to eclipse all those struggling to make an honest living. And that changes the equation, doesn't it?

The theories of self-regulating markets that guaranteed no collapse turned out to be profoundly flawed - as most intelligent conservatives (Posner, Bartlett, et al.) have now observed. And the oh-so-clever mechanisms the bankers invented to give themselves more and more and more turned out - surprise! - to be mathematically flawed. And those of us who'd saved for retirement, paid our mortgages punctiliously, paid our taxes without armies of accountants to squeeze every last drop from Uncle Sam, and worked to build real things ... we became their victims. That's when the temptation for vengeance comes in. But when we then rescue them and burden ourselves with more debt, and they turn around and do all they can to restore the insanity that brought us all so low, and enrich themselves some more, we enter a new period.

I have no doubt there are many good men and women working in the banking sector. But the system is so corroded with vice, with selfishness, and, most importantly, with contempt for the common good, it needs real reform. I like what Obama has proposed and what the chairman of the Bank of England is now endorsing. I think the bailouts were necessary, just as I think the stimulus was necessary. But passing the toughest financial regulation bill we can at this point seems to me to be an urgent priority. The diffuse anger out there is a function of this deep sense of injustice - and it's correct.

We need to make banking not just boring but as profitable as any other sector in the economy: no more and no less. We need to remove the mystique that led us to this morass. And we need to do it to rescue capitalism itself from its own hubris and naive belief that economics can operate in a vacuum without virtue.