"You have to look at the more fundamental issue. People who were supposed to be experts in finance did inexcusably stupid things, and also in the process profited handsomely. People in the political system who were supposed to hold these people accountable, and prevent them from doing these things, failed to do it.
I think in most countries we expect our politicians to steal a little money here and there on expense accounts. We expect bickering in Congress. We expect these things. But when the fundamental thing that legitimizes an elite, the financial elites ability to manage money prudently, is violated in two ways, first that they clearly can't do it and secondly that they profit from it anyways, and the politicians obligation to stabilize the system and not let people get away with this doesn't happen, you have serious problems.
So I think the problem really starts with the systemic failure of two major elites, not on minor things, not on trivial corruption, but on the fundamental thing they were hired for, and the fact that they don't seem to regard themselves as particularly having failed. This is what creates the crisis.[...]
The heart of the matter is that the integrity, the intelligence, the morality of these elites have now been called into question. Empirically because of their failure to operate, but also the way that they operated. And no one at this point is certain that they can resurect themselves, or have new leadership enforced. And this is leading to a deep moral crisis.[...]
The issue is: who are these people who are running things, what gives them the right to do so, and if that right does not flow somehow from competence, what does it flow from?"
Friday, 26 August 2011
George Friedman on the crisis of political economy.
Posted by Ryan Watson at 10:11