The Flaw in "The Flaw"

I strongly recommend you listen to RadioWest’s interesting and informative interview with David Sington, the filmmaker of the documentary “The Flaw” (thank you RadioWest for podcasts), and I am enthusiastic to view the film. The one truly misleading and unfortunate aspect I found in the interview was the dismissive response that Sington gave when the subject of blame for the financial disaster arose. His (admittedly brief, and so perhaps not completely nuanced) interpretation seemed to be that the bankers and financiers and executives were as blameless as everyone else in this economic cataclysm, that they, too, were just helpless cogs in a system run amok.

That is simply not so. For decades some of us have been arguing that this is exactly the outcome to expect from deliberately engineered economic policies that seek to monetize everything principally for short term returns and in which no other values play a role, that place blind faith in the efficiency of free markets and their ability to magically transform unbridled greed into social welfare without recognition of the significant limitations of that model, that use circular and hypocritical reasoning to justify obscene compensation schemes and the greatest transfer of wealth to the wealthy in history, that privatize profits and socialize losses.

The “blameless meme” seems to me a way to rewrite history, really a way to silence dissent on economic policies and pretend there are absolutely no other voices than those of our current crop of economic elite. It suggests that literally everyone was swept up in the fiction of these economic policies; it is a very thinly disguised version of the increasingly popular (among the elite) “no one could have foreseen” escape clause.

But the blameless meme is just not true: Alan Greenspan (for whose quote before congress I suppose the film is named), in spite of his revisionist claim, didn’t discover “the flaw”. He was merely forced to finally admit that his many critics who already clearly understood it were right.

And similarly, those bankers and financiers and executives (and their confederates in government, academe, and media) willfully chose to ignore all the contradicting data and analysis and all their critics, elected to believe that “this time would be different” and that they were truly the masters of the universe. They willfully believed, advocated for, designed, participated in, and benefitted from the system that ran amok and those transparent fictions. It was, indeed, the banality of evil, and for this they are well and truly blameworthy.