Let’s step back even further from the details to ask some basic questions about our Brave New World.
What kind of person does our new financial system foster? What kind of skills and what kind of personality are required by a financial system so tied to the political machinery of the Treasury, the Federal Reserve and the FDIC?
To put it differently, to what degree does our new system promise to enhance the financial skills, knowledge and responsibility of those who are a part of it? The answer seems clear and unpromising: experience in finance and financial skills will be discounted as experience and skill with manipulating government programs appreciates in value. If the lesson of “use it or lose it” is true, we should at least take note of what we’re losing.
Maybe the crisis has proved that those skills were overvalued. Maybe we shouldn’t lament too much their loss.
But what if that’s wrong? What if the problem was something entirely different: not the overvaluing of financial skils but its undervaluing? If cheap money and easy profits lead to an underinvestment in financial smarts, we might at least warily acknowledge that we’re likely to see even less investment there. The upsides of financial intelligence, at least in our larger financial institutions, are increasingly limited as well as the downside of financial stupidity.
That’s looks an awful lot like a recipe for a dumber Wall Street.