When foxes guard the chickens, the chickens get noticeably nervous.
Such is the thesis of Craig Ferguson’s documentary film, Inside Job (view trailer), on the 2008 financial collapse. He claims that there was a systemic collusion between government regulators, private rating agencies (Moody and Standard & Poor’s), Ivy League academics, and Wall Street firms. It amounted to a consensual fraud. It was a system motivated by greed and designed to make profit for a few, even when it failed for the many.
Most Americans are not economists and know little about derivatives, collateralized debt obligations, credit default swaps, or synthetic collateralized debt obligations. Few Americans are conversant about the reasons the G20 nations are scolding President Obama and Federal Reserve Chairman Bernanke for financial easing.
What we do understand is that America’s financial system is broken, and that those who broke it made huge amounts of money in the process. What we do understand is that few have been held accountable for the chaos wrought on the global economy. Confidence in our fiscal leaders—whether the policy wonks in Washington or the corporate tycoons in New York—is at an all time low.
There are good reasons for the ongoing distrust. Those in Washington charged to fix the problem remain closely allied with those in New York and London who caused it. (Washington’s policies were also a causative factor.) In many cases, the fixers are the very architects of the system that collapsed. In addition, little has changed either in personnel or regulations since the crisis. The bailouts have only shifted the burden of mismanagement from corporate to government balance sheets, crippling the financial future of coming generations with a deficit equal to about a $150,000 debt obligation for every American. There may have been a political and economic rationale for the bailouts to avert a total financial meltdown, but the short-term benefits have only delayed the long-term costs—we have leveraged America’s economic future.
Most Americans feel the consequences of the global recession as unemployment, even while its causes remain shrouded in financial mysteries beyond their grasp. On a global scale, the irresponsible actions of the financial service industry have slipped 50 million people back into poverty. The poor always pay the greatest price.
This was not an inevitable crisis. It was a crash caused by pilot error. The unchecked excesses of Wall Street executives, the unjustifiable executive compensation and bonus packages, and the reckless risk-taking with other people’s money are a sobering tale of moral decay and civic disregard.
This is the story told in the documentary film Inside Job. It is a sobering tale of head-in-the-sand investments and bogus insurance coupled with inflated egos. It is a story of self-interest run amuck. Only a small dose of common sense would have mitigated much of the crisis. But common sense is in short supply.
In a complex crisis of this nature, it is both difficult and somewhat unfair to cherry-pick a single villain. Governmental policies and regulators were just as guilty as Wall Street investors and bank executives. It was a perfect storm of myopic thinking and expansive greed. The guys who wrecked the train cannot get the train back on the track. The same knaves are involved, and amazingly, they are still at it. This is not meaningful reform.
What makes Inside Job especially chilling is that so little has been done to correct the causes that led to the crisis. Many expect it to happen again, but with even greater devastation the next time. If there is a case study of America’s moral and cultural weakness, this is it. The ongoing fragility of our financial markets both at home and abroad is sure evidence that America is a civilization in decline. The populous remain largely ignorant and the politicians indolent. It is a system perfectly designed for the results that it produced. Nothing has been fixed. America’s financial house remains in disarray and the ripples from our irresponsible choices are bouncing around the global markets like a pinball-style wrecking ball. At the same time, Washington’s partisan paralysis is marked by high-octane rhetoric with few tangible results.
What is particularly poignant in those interviewed in Inside Job is their continued defence of the actions taken and the failure to acknowledge obvious conflicts of interest and degrading lapses in moral judgment. Business integrity is central to the success of democracy. But corrupted business is a life-threatening cancer to our civic soul.
One can be strongly pro-business without feeling the need to justify the culture of corruption that led to our fiscal collapse. Corporate capitalism has come increasingly under fire. And yet it is not capitalism per se that is at fault, but the prostituted version currently in play. As Mark Twain once said about France, “The French are very agreeable, though you don’t want to ally with them in war and they are usually run by prostitutes.” Ours is a prostituted form of capitalism.
If capitalism is going to survive as a vibrant means of wealth creation and as an agent of shalom, then it will need to address the systemic corruption that lies at the heart of this story. Some may complain of the leftward shift to state capitalism, but such complaints can only be justified if one first faces squarely the self-inflicted wounds caused by corporate capitalism practiced without conscience. Another financial collapse will happen again, unless these moral causes are given the attention that they deserve. An ongoing fiscal culture of nihilism will exact a high price if left unchecked. There are no easy solutions. But candour about the causes of this crisis is long overdue. The film Inside Job is a good place to start a national conversation.
The general audience reaction to the film has been anger, betrayal, helplessness, ignorance, and revenge. It is well past time to mount a constructive response. Inside Job is an imaginative first step.