Financial and Cultural Change

In the October issue of Vanity Fair, Michael Lewis investigates the current Greek debt crisis (now at an astonishing deficit of 1.2 trillion) in “Beware of Greeks Bearing Bonds”. He tries to answer the following questions:Will Greece default? And who is there to blame for this extraordinary situation?

He comes up with a two-pronged response. One answer was the financial aspect; there were extremely questionable book keeping practices, statistical manipulation to even allow the country entry into the European Union, and a failure by most citizens to pay taxes. The second answer was Greek culture. A tax collector, as quoted by Lewis, states in the article,

“It’s become a cultural trait,” he said. “The Greek people never learned to pay their taxes. And they never did because no one is punished. No one has ever been punished. It’s a cavalier offense-like a gentleman not opening a door for a lady.”

As I wrote in my previous blog post, the mainstream media has focused on blaming Wall Street, not “Main Street”, for the recession. Yes, there was subprime, precipitated by lenders issuing absurd loans to risky low-income Americans. Yes, rating agencies didn’t understand the instruments they were rating, there was “credit shopping”, and faulty management. Yes, Lehman Brothers and Bear Sterns collapsed and Merrill Lynch almost did. But through Lewis’s investigation of Greece, he reveals that maybe we should start looking in other places besides finance to find the causality; he notes, “Americans wanted to own homes far larger than they could afford, and to allow the strong to exploit the weak. Icelanders wanted to stop fishing and become investment bankers.” Has it been too tempting to not accept blame at the individual or cultural level for the current crisis?

America’s current recession reveals a situation not as severe as Greece’s, but it leads one to ask, what cultural changes do Americans need to make? What have been the decisions made by Americans to help facilitate this crisis? Are there collective traits that make up the American identity that can be identified and looked at? In a nation that seems more divided, Americans need to be held responsible for past decisions. David Brooks noted in his August 24, 2010 column for the New York Times,

“Very few in public life habitually step back and think about the weakness in their own thinking and what they should do to compensate…Of the problems that afflict the country, this is the underlying one.”

While he was writing about public figures- his advice relates to all Americans. It is a necessity to evaluate our own thinking and appreciate the advice of others.

Our current crisis came about by a large number of Americans willing to take out risky loans, and then defaulting on them, and the finance world repackaging those loans into complex securities. It was not just a few number of people- many Americans were involved in this crisis. In a time when everything seemed to be going in the right direction, few were willing to really ask questions or evaluate – even an economics reporter for the New York Times, defaulted on his home. As he noted in the confessional article that created quite a buzz on the blogosphere, “If there was anybody who should have avoided the mortgage catastrophe, it was I.” As Americans we need to reevaluate, step back and think. As Lewis makes clear in Vanity Fair, cultural change is essential in order for financial changes to take hold, and for the economy to start turning around.

 

Colleen Valentine

Colleen is a former CCT Graduate Student.