But there is yet another factor underlying this crisis that is the broadest of all, pervasive throughout our society today. It was well expressed in a letter I received from a Vanguard shareholder who described the global financial crisis as “a crisis of ethic proportions.” Substituting “ethic” for “epic” is a fine turn of phrase, and it accurately places a heavy responsibility for the meltdown on a broad deterioration in our society’s traditional ethical standards.
This is a quote from an article by John C. Bogle. It directly faces the question of the collapse of business ethics and the role in played in the financial melt down of 2008.
Generally speaking, articles dealing with the crisis focus on derivatives, Sallie Mae, the business press, rating agencies, etc. They all share blame and a lot of it. I have always been convinced that the underlying problem was greed, self interest, the corrosive effects of Milton Friedman’s bizarre doctrine of economic utopia, and the replacement of critical scrutiny by frantic cheerleading in the financial press, and I have some more villains to name.
Bogle doesn’t dodge the ethical question. He wonders how we got here and how we can get out. He longs for the day when businessmen understood the value of trust and fair dealing. I’m not surprised to find that Mr. Bogle has no simple solution. It took four decades of worship of the financial means of production of little more than electronic impulses to triumph over the creation of actual goods. This isn’t going to be easy, and it it likely to fail subjecting this country to a chain of financial meltdowns each one of which will severely damage the lives of millions of Americans who will bear the chief cost not only of their way of life but paying for the meltdown themselves out of their “widow’s mite.”
Here’s Bogle discussing his beliefs:
Among those in the know, someone who believes in doing what is right. So, I would pay attention to this gentleman.