So who’s to blame?

Thoughtful list by Timothy Garton-Ash.

On the evidence we have so far, the following could plausibly be asked to interrogate themselves on their share of the responsibility. With the exception of the first and last categories, the words “some of the” should be inserted before each heading. My list is, of course, merely indicative.

Crooks. Bernie Madoff was (it appears, subject to the finding of the courts) a crook, a fraudster and a confidence trickster. His like will always be with us. The relevant question is how he was able to get away with it for so long and on such a scale.

Bankers. Some highly respected and law-abiding bankers took huge gambles and made horrible miscalculations at our expense, themselves walking off with multimillion bonuses while leaving shareholders and taxpayers to pick up the tab. Others did not.

Regulators. There’s a lot of failure to go around in this category. “Is that a typo?” one official at the US Securities and Exchange Commission was said to have asked, when faced with the $50bn estimate for Madoff’s losses. “Isn’t that number meant to be $50m?”

Politicians. It’s all very well for politicians to rail against “Wall Street” and the “banksters”, but this happened on George Bush’s and Gordon Brown’s watch. “The cheerleaders of finance,” writes the Economist’s Edward Carr in his report, “were unwilling to admit that houses were too expensive and risk too cheap.” Yes, but so were the cheerleaders of British and American politics.

Economists. Here’s a guild from which we might usefully hear a little more self-criticism – especially from the quantitative economists whose mathematical models helped to lead investment bankers astray. In what sense can economics still claim to be a science if its predictive capacity is so low? Imagine Newtonian physics when apples start going upwards.

Journalists. Yes, a few warned, as did a few exceptional economists like Nouriel Roubini; but it’s only now that your average reader of the business pages is in a position to understand how risky his or her investments were. Did business journalism fail us?

We, the people. Some of us, anyway: piling up household debt, especially in Britain and America, on the back of inflated house prices that gave the illusion of security; not asking sufficiently probing questions about where our pension funds were invested.

The system. Blanket charges against some denatured, depersonalised “system” usually betray incoherence wrapped in indignation. But there is a sense here of a global financial system that had become so large, complex and untransparent that it was beyond the capacity of even the largest actor in the markets to understand, let alone control. And one in which apparently rational decisions by most individual participants produced a result collectively damaging for all.

That just about covers it. Garton-Ash’s argument is that the temptation to kick ‘Davos Man’ because he got us into this mess should be resisted. Why? because Davos Man was a globaliser — a “ruthless cosmopolitan”. But he may have been the lesser of two evils. “Now we are at a crossroads”, concludes G-A.

One road leads back to economic nationalism, protectionism and beggar-thy-neighbour policies. Another leads forward to more international co-operation, including more regulation and transparency. Without a conscious effort, the dynamics of both democratic and undemocratic politics, which remain national, will lead us down the former road. Inside Davos Man, there is his predecessor and possible successor always struggling to get out. If you don’t like what you’ve seen of Davos Man, wait till you see Nationalist Man get to work.

Nice column.