The tendency in the media and the Congress has been to blame the current depression on "stupid, greedy, and reckless" bankers. I believe that that is a mistake. I know bankers. They are not stupid; most of them are smart, and many of them are brilliant. If they are "greedy," it is largely so in the sense in which most Americans (most anyone, I imagine) could be called "greedy": they like money a lot. I read somewhere recently that bankers (a word I use loosely to cover financiers in general) derive their job satisfaction entirely from their monetary compensation, unlike other workers. But that is wrong. Rich bankers derive satisfaction not only from making a lot of money but also from a sense of outsmarting competitors, and in that respect they are not unlike highly paid athletes; in both cases the money the stars are paid do not merely enhance personal welfare, but also are indicators of relative performance. Money is a scorecard of success. Richard Posner
Rudyard Kipling famously argued, If you can keep your head when all about you are losing theirs....you'll be a man. Of course, it is only in hindsight that one can be sure one is keeping one's head.
Perhaps the Bankers really are Nietzchean Supermen? Perhaps intelligence is no longer manifested by following the wisdom of Daedelus but rather by flying high like Icarus?
Then again, perhaps not.
Richard Posner, whose prose in his new book A Failure of Capitalism: The Crisis of '08 and the Descent into Depression and blog suggests a gifted and learned mind, argues the former position.
Bankers, to him, are akin to athletes richly rewarded to push the envelope- to be reckless.
I agree with the comparison, but will argue that this is NOT a sign of intelligence, but of the ignorance of youth.
When I was a bank options trader in my early 20s I chased profits as ardently I chased women- recklessly and without much thought of consequence. I was Icarus and the fear of falling was obscured by the joy of soaring.
I eventually learned that I could fall.
Our Uber-Bankers have been resistant to this lesson, ably assisted in this regard by the Cult thereof. Otherwise intelligent people cheer our Uber-Bankers on like fans in the stadium.
Mr. Posner claims to know bankers. I wonder if he knows athletes? I wonder if he has really thought through his apology for their actions?
In addition to being a banker, I've been an athlete, albeit one who was never paid. In my youth I played Ice Hockey in front of crowds of 100s and it was quite a rush. While I was never the star player when I played competitively, I know the feeling that comes from a roar of the crowd when scoring a goal or body checking an opponent into the boards. Desire for that feeling drives many athletes to actions a saner man would view as mad.
There is a term for people like this- adrenaline junkies- and while they can excite crowds of on-lookers today in much the same way Gladiators of old excited the Romans, to consider them "smart" or worse, able managers of of a vital social function seems to me a bit strange.
To wit, while we might admire the recklessness of a NASCAR driver, we wouldn't want our cab drivers to follow their lead. While we might admire the nerve of a Chuck Yeager, we don't want our commercial air pilots finding out how fast or how high a 767 can go. Should we equip all seats on commercial airlines with ejector buttons and parachutes? It would certainly extend the obligatory safety instructions- in the event the pilot decides to escape the stratosphere and fails you will be expected to hit the ejector button....please wait to deploy your chute until you are clear of all other passengers.
Banking, and finance in general, despite the efforts of CNBC et. al. is not a spectator sport.
I think the Uber-Bankers Mr. Posner glorifies are not smart, nor, in that regard at least, are those who cheer them on and apologize for their excesses as sports agents apologize for the excesses of the athletes in their "stable." They, like Icarus, don't understand that their function is to ensure a safe flight.
Sadly, they have been piloting the US$ 767 Jumbo Jet. I hope you remembered the safety instructions. The ejector button is the golden one on the right but they're not enough to go around so you might want to beat the rush.