Now that we appear to be emerging on the other side of the great worldwide economic upheaval of the past year it is time to begin the process of studying, analyzing and defining how we got ourselves into this mess that came so close to a real financial meltdown with probable catastrophic consequences for the world economy. If we don't understand and resolve the conditions that contributed to that calamity we will be back in it's grip a few years from now. This effort will need the collective will, courage and honesty of all parties involved including each one of us who were cheering on from the sidelines for so long. Otherwise we cannot get to the crux of the problem and understand where the responsibility lies. We know that greed, self-interest and power were major contibutors to the events that created this near disaster. This exercise might be about assigning blame but not about punishment or retribution; instead about a process that will teach us all a lesson we so sorely need to understand. The need for sacrifice and the creation of a uniform and worldwide system built on trust is an imperative which will be difficult to attain.
The issue of bonuses for executives and financial wizards is an obvious example. The commonsense argument is that when successful the agents that created that success should be compensated handsomely as a reward for allowing all of us to profit from a stellar economic climate. But the other side of the arguement says that when failure, risk and incompetence create a serious downturn and a huge loss of investment worldwide then those responsible for the calamity should pay the price similar to what the rest of us face in our daily work lives: loss of job, income and reputation. The present system has an adequate response to success but none to failure. The spoils of success go disproportionately to the few but failure is spread evenly. The people who run and operate our financial system need to appreciate that they have a responsibility to all of us and that means that they take the loss if they gamble and risk our hard-earned money. Right now they win no matter how the game is played. They need to have the same risk we take so they will learn to be more cautious and prudent in their decisions.
We need to clean the proverbial Augean stables with the bright light of honesty and fairness. We need to get back to a system that rewards success but has consequences for irrational and venal behaviour. Then we will need to take a hard look at ourselves and realise how material gratification and greed play too central a part in our daily lives. We all enabled the problem to get out of control. We were eager and complicit partners in crime.
This could be one of those teaching moments.
