Americans seem to take for granted the almost daily revelations of corruption in the financial industry. It’s news, of course, when the manipulation of interbank interest rates is reported or a senior executive is convicted of insider trading. But it fails to stir much outrage.
It seems different in London. As the financial reporter for The New York Times, Gretchen Morgenson, wrote about the forced resignation of Barclay’s CEO: “An American by birth, he probably thought he’d be subject to American rules of engagement when confronted with evidence of wrongdoing at his bank. You know how it works on this side of the Atlantic: faced with a scandal, most chief executives jettison low-level employees, maybe give up a bonus or two — and then ride out the storm. Regulators, if they act, just extract fines from the shareholders.”
She adds: the Chancellor of the Exchequer, George Osborne, voiced before Parliament the question that so many have asked recently in the United States. “Fraud is a crime in ordinary business — why shouldn’t it be so in banking?” In Washington, meanwhile, proposals to increase transparency in the trading of financial derivatives are being quietly squelched. (“The British, at Least, Are Getting Tough.”)
Why are Americans so inured to such scandals? On the other hand, why are the British not?
America has become like a third world country, in a way, where people expect government officials to accumulate fortunes, or routinely pay bribes to local officials to do their jobs. It is how their systems run.
But why? I suspect there are two reasons. America has always thought of it self as “the land of opportunity,” and making money on Wall Street, in a way, is just another opportunity for the up-and-coming to get ahead. So unless we are directly affected by the unethical and immoral behavior of the bankers, the victims, say, of a Ponzi scheme or mortgage fraud, we can identify with their success. We are all adversely affected by such bad behavior, but the connection seems remote.
The second reason is that we have, in effect, ceded control of the economy to this new class of financial “experts.” Following the collapse of communism, we have devised no plausible alternative to the logic of markets. Old perspectives are discredited, but until new ones come along we are in the hands of those who think they know what they are doing, who claim success, and ridicule others. And the vast sums of money they have raised increasingly stifles debate while maintaining an enormous lobbying presence in the halls of power.
England is not as far down this road. Moreover, it still has robust unions as well as civil servants more insulated from politics than ours. It also has different traditions, traditional identities, traditional practices, and traditional values that act as a break against our relentless “innovations.”
Our political debates can highlight the excesses of our “experts,” their greed, and corruption. But in the absence of alternative policies, we are forced to accept their practices – including scandals – as the inevitable cost of doing business the only way we know how to do it.