Wall Street banks and securities firms are set for record levels of bonuses at $145 billion after creating the financial meltdown, the worst financial crisis since the Great Depression where trillions of dollars of potential income have been lost and the lives of millions have been damaged, in some cases forever, by mass unemployment. Goldman Sachs CEO Lloyd Blankfein has told the Financial Crisis Inquiry Commission that the financial mess was just an act of God ("We should resist a response, however, that is solely designed around protecting us from the 100-year storm").
When you read things like that, you really have to ask whether the financial crisis has exposed society's moral bankruptcy.
It's a point taken up by Nobel economics laureate Joseph Stiglitz where he argues in Mother Jones that materialism has overwhelmed moral commitment and that all the rapid growth is not sustainable environmentally or socially.
"Much has been written about the foolishness of the risks that the financial sector undertook, the devastation that its institutions have brought to the economy, and the fiscal deficits that have resulted,'' Stiglitz writes. "Too little has been written about the underlying moral deficit that has been exposed-a deficit that is larger, and harder to correct.
"Market fundamentalism has eroded any sense of community and has led to rampant exploitation of unwary and unprotected individuals. There has been an erosion of trust-and not just in our financial institutions. It is not too late to close these fissures."
Examples of this include runaway executive pay where executives made a fortune when performance was high and when performance was low, they still made a fortune, the way the financial services sector exploited poor and middle class Americans and the way securitization weakened trust by eliminating the relationship between borrower and lender.
Stiglitz writes: "The failures in our financial system are emblematic of broader failures in our economic system and our society. That there will be changes as a result of the crisis is certain. The question is, will they be in the right direction? Over the past decade, we have altered not only our institutions-encouraging ever more bigness in finance-but the very rules of capitalism. We have announced that for favored institutions there is to be little or no market discipline. We have created an ersatz capitalism, socializing losses as we privatize gains, a system with unclear rules, but with a predictable outcome: future crises, undue risk-taking at the public expense, and greater inefficiency."
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