Funds will solely depend on friday might want Quick Cash Loan Quick Cash Loan to only can either the clock.

Skip to content

Shirking responsibility, pt 2

(In which I continue to grope toward a description of agrarianism as an ideology built around the best understanding of responsibility. Go here for the first post in this series.)

A few days back I objected to this paragraph from John Holbo, which responds to Richard Posner’s comments on a podcast that regulators, and not bankers, should be blamed for the economic collapse:

As a Rawlsian, more or less, I actually sort of like the overall picture here, minus the excessive and rather perverse dogmatic-legalistic strict tidiness of the segregations of duties. It makes sense to have a market in which private actors basically look to their own interests within a system in which regulatory steps have been taken to ensure that they do not, in the aggregate, make a giant, intolerable mess of the whole world. Flawed as any regulatory system is sure to be, it’s less reasonable to expect all the individual actors to be sufficiently attentive to, hence to take individual responsibility for, the whole. We don’t need to go so far as to treat them as weirdly obliged to be totally blinkered to the whole system. But we shouldn’t make each individual responsible for solving what is, in effect, a collective action problem, and a snarly knowledge problem to boot.

I’m not sure I understand this (especially after reading the whole post).  But the paragraph is good for generating questions about our responsibility for the things we do.  Why would we want to hold the bankers responsible, or why not?  Here I’m only interested in normative or moral responsibility and not legal responsibility (which can be addressed once we’ve decided on a moral position).

Richard Posner seems to think that market actors should be responsible only for some limited subset of all the consequences of their decisions.  Bankers, for example, should be responsible for the bottom line to their firms, and should be allowed to ignore “negative externalities,” i.e., bad outcomes for other people.  If your own firm profits from risky loans that destabilize the wider economic system or lead to mass layoffs and bankruptcies, you are OK if you make the loans so long as no regulator is stopping you.  In this formulation, Goldman Sachs is blameless, but the Fed and the Treasury are at fault for failing to stop Goldman Sachs.  It’s the rule of “get as much for yourself as possible, because it’s someone else’s job to make sure you don’t screw everyone else.”

This view is ubiquitous.  It’s also very harmful.  First, it supposes that someone else can know about the consequences of what you’re doing well enough to prevent catastrophe.  This seems obviously wrong, as the case of the recent financial collapse demonstrates.  This argument is exactly analogous to the argument that a central planner can put your capital to a better productive use than you can.  Market advocates rightly reject this on empirical and moral grounds.  If you’re in the best position to know what good will come of your decisions, aren’t you in the best position to know what bad will come of them?

One response might be to say, “well, you might be the best person to know the effects of your actions on yourself, but you might not be able to see clearly the effects of your actions on others.”  I think this is true in some cases, but this only supports the idea of vigorous regulation.  It doesn’t support the idea that you should, individually, be excused from personal responsibility.

Second, and more seriously, it unleashes tremendous destructive energy as private actors compete with regulators in a war to benefit themselves as much as possible.  If the regulators win, great.  But the regulators won’t always win (especially if the knowledge differentials I discussed above exist).  The ways in which regulators can lose are myriad — they can be captured by regulated interests.  They can make mistakes about regulatory schemes that leave loopholes open for private actors to exploit.  They can run out of appropriated enforcement funds.  In each case, a few private parties reap benefits at the expense of everyone else.

In a scheme where we excuse private actors from responsibility, we significantly increase the importance of the regulatory apparatus.  Having authorized private actors to act irresponsibly, the societal importance of the regulatory and enforcement regimes is magnified.  In the best-case scenario, the surveillance of private action by the regulator becomes very intrusive as we attempt to avert large scale disaster.

But the scenario is not always best-case.  Typically, we become locked into the cycle that we’re all very familiar with — private enterprise continually chafes against regulations.  Occasionally, they succeed in dismantling these regulations in part because these are, in fact, very burdensome.  And then the underregulated private actors are set free in an orgy of self-enrichment leading to systemic suffering and collapse.  E.g., the banking crisis after the repeal of Glass-Steagall and the dismissal of pro-regulatory ideas championed by people like Brooksley Born.  People like Richard Posner cluck-cluck that the Fed and the Treasury fell asleep at the wheel, and then we enact more regulations, beginning the cycle all over again.

One problem with all of this, even if it’s true, is that it seems impossible to fix.  What would “holding private actors responsible” really mean, other than an increase in the amount and severity of government regulations and laws?  Surely it is silly to think that we could simply say to everyone “we expect you to take responsibility for your actions.”  How could this be expected to change the behavior, say, of the banker who risks being fired if his quarterly earnings don’t keep up with reckless competitors making bad loans, securitizing them, and selling them off to some chump?

One suggestion might be to systematically rewrite the laws and regulations governing duties, as in, who has a legal duty to do what for whom.  I’m sure I’ll post something about this later, because I think we need to have a conversation about the differences between responsibilities and duties.

For now, though, I’ll end with this — the familiar conservative and liberal positions that spark such heated (if tired) arguments are magnetic poles facing each other across the vicious circle that I’ve described.  They are what make the pendulum swing back and forth, and the wheel go round and round.  But they won’t help us to stop playing the game.  Why?  Because liberalism and conservatism as we commonly understand them are two viewpoints within the same industrial outlook.  They both presuppose that economic growth is always a good thing; they both are blind to the importance of particular places in relation to particular activities; they both have no intrinsic appreciation for our environment.

The way out of our dilemma is to recognize that the really important ideological division is between industrialism on the one hand and agrarianism on the other.  We live in a society dominated by the industrial worldview, and our political and economic arguments take place within this outlook.  It is a worldview built on the analogy between our economy and a giant machine, where each person is a cog within the machine performing particular functions.  Industrialism suggests that our responsibilities can be divided and apportioned between different functions.  This system of divisions is what makes it plausible to say that the responsibility for banking catastrophes are not the responsibility of bankers but of bank regulators.  Industrialism is the opposite of holistic.

Agrarianism, in contrast, is something completely different.  I’m going to try to keep posting about what I think it is.  For now, I’ll say that a person holding an agrarian worldview would not agree with Richard Posner’s statement that the bankers at Goldman Sachs aren’t responsible for the consequences of what they did.  An agrarian has stronger grounds to criticise this statement than John Holbo seems to have.

But this post is already too long, and the discussion will have to continue later.

Post a Comment

Your email is never published nor shared. Required fields are marked *