In Defense of Bankers

Noam Chomsky on why bankers aren’t completely to blame for the giant economic meltdown:

In fairness, we should concede that they have a valid defense. Their

task is to maximize profit and market share; in fact, that’s their legal

obligation. If they don’t do it, they’ll be replaced by someone who

will. These are institutional facts, as are the inherent market

inefficiencies that require them to ignore systemic risk: the likelihood

that transactions they enter into will harm the economy generally. They

know full well that these policies are likely to tank the economy, but

these externalities, as they are called, are not their business, and

cannot be, not because they are bad people, but for institutional

reasons. It is also unfair to accuse them of “irrational exuberance,” to

borrow Alan Greenspan’s brief recognition of reality during the

artificial tech boom of the late ’90s. Their exuberance and risk taking

was quite rational, in the knowledge that when it all collapses, they

can flee to the shelter of the nanny state, clutching their copies of

Hayek, Friedman and Rand. The government insurance policy is one of many

perverse incentives that magnify the inherent market inefficiencies.

Ben Cohen is the editor and founder of The Daily Banter. He lives in Washington DC where he does podcasts, teaches Martial Arts, and tries to be a good father. He would be extremely disturbed if you took him too seriously.