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Thomas Rekdal

I have no idea whether the total quantity of unethical behavior in government and industry is now greater than it has been in the past. I do not even know how I would go about trying to assess such a claim. But I do find Judge Posner's examples of greed-plus-organizational imperfection both plausible and scary. They remind me of nothing so much as the Hellfire-and-damnation sermons I encountered as a young man, which also assembled a convincing list of failings that were certain to lead to damnation unless reformed as soon as possible.

Judge Posner's form of reformation would involve more governmental regulation, a solution I would find more appealing if it could be shown that such regulation as we have had has been more inspiring than I suspect. In the absence of such a showing, I shall rely, as best I can, upon the true but uninstructive advice of Proverbs 17.12: "Let a bear robbed of her whelps meet a man, rather than a fool in his folly."

Terry Bennett

I'm not sure additional regulation is the answer; more likely, it's verification. We have plenty of rules of things not to do, in the financial sector for example, but we did not discover that those things were in fact being done, until it was too late. Secondly, we need consequences for violation. Bank of America's stockholders are taking a hit, but the actual actors have skated, with their ill-gotten wealth and freedom intact. The 2008 crisis was not a failure of markets, or finance, or capitalism. It was a failure of law.

Friedman was wrong in his conception of market mechanisms, not because they aren't self-regulating - to a very large extent, they are - but rather because they are not perfectly elastic, even when perfect information is available. The reason is, per Judge Posner's point, that the self-interest of the individuals actually doing the work is not perfectly aligned with the interest of the organizations they serve. In the years leading up to 2008, somebody somewhere on Wall Street must have realized that credit default swaps were riskier than the conventional wisdom was allowing. (This fact was obvious to me at the time, and I'm an outsider.) I am thus confident that some of these guys did know they were trading dookie. One of them might have said to himself, I should get my bank out of these grossly underappreciated risks, and 5 years from now I'll be a hero when we are solvent and everybody else is in the tank. In an elastic (and ethical) market, this would have happened, but the peculiar phenotypical quirks of the Wall Street man overrode any such tendencies, and the self-regulation didn't occur.

Inherent in the concept of fiduciary responsibility is the premise that, after all, this is the money we're talking about, and there are people in the world willing to go to extreme lengths and even break the law to acquire it. Banks are supposed to be careful. There is something structurally wrong with the financial sector, but I personally think a few public hangings would go a very long way toward correcting the problem.

Thomas Rekdal

Judge Posner's comments, in this blog and in his most recent books, have been quite helpful (at least to me) in understanding the causes that have fed into the financial crisis. His latest argument--that capitalism is not, in fact, self-correcting, and that without effective regulation we are doomed--seems less persuasive to me. Surely one of the great lessons of the financial crisis is that central bankers are no more likely to anticipate threats to the finacial system than command economies are likely to match up supply and demand. The economy is just too damned complicated.

I am not sure how we allow failures to occur without touching off massive ruin, but it seems to me that economists like Roubini who are moving in this direction are on a better track. We need somehow to allow the losses to take place and to focus the pain of
them primarily upon those who made them possible.


Business Ethics? Is there a special class or category of Ethics that applies only to "Business" men and the "Business" world? I always thought that Ethics were a Universal that apply to any environment or situation and much like Aristotle, a science of most practical value. Such that, it is the study and analysis of the issues and relationships of Good and Evil, Right and Wrong, Virtue and Vice and their practical applications in regards to human action in any situation. Whether it is "Business" or anything else.

But since we're all backsliders in one way or another, such is the need for Law and Regulations - hopefully with teeth...


Illegal immigrants aren't hiring themselves. That is one that you forgot. Greed is really at the root of our problems.

Christopher Graves

I agree with Judge Posner on the social as well as economic benefits of an aristocracy to offset the callous and often anti-social tendencies of business. Aristocrats have a vested interest in maintaining the social mores of a civilization as well as its folkways that provide and sustain their own influence. Businessmen have a much less obvious and direct connection to the cultural foundations of a society. Of course, they too are dependent on these structures, but it might not be as obvious to businessmen in the moment.

When aristocracies wielded more power and influence, many successful businessmen desired to join their class as best they could, so they followed the lead of the aristocrats in taste, morals, and a sense of noblesse oblige to gain entry into the upper class. This made for a more civilized version of free markets such as we saw in England and the American South.

David Glenn

The richer becomes richer and the poorer rarely gets the chance to climb up.

And yes I agree with Terry Bennet, we need consequences for the violations.

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