Sunday, January 04, 2015

Wow. Banking culture encourages dishonesty. What a surprise.

Scientific American is running an article to show that in tests with human subjects, the banking culture encourages dishonesty. One of the findings is that the very act of number crunching, or doing the math, tends to generate more selfish behavior with more cheating and deception. They found that even just looking at a pile of money encourages cheating and deception. In other words, when people are just thinking about the money, they tend to cheat other people.

This makes perfect sense considering what we have witness over the last 30 years with the incredible growth of the finance industry, and their growing resistance to prosecution for wrongdoing in their involvement in the financial crisis in 2008. Not only does the banking culture lead to dishonesty, but they are now "too big to jail".

In the aftermath of the crisis, journalist, Matt Taibbi researched the lack of prosecutions and convictions for any crimes committed by bankers. The results of his research were so alarming, that Taibbi has even written a book on the subject, The Divide: American Injustice in the Age of the Wealth Gap.

To research his book, he has conducted many interviews on the subject, including many prosecutors and found a major shift in culture at the US Department of Justice. His research shows that rather than going after and convicting the bankers who tanked our economy, prosecutors now try to get settlements where everyone walks out happy. This is not the kind of attitude we need or want at the Justice Department. Matt Taibbi is interviewed about his book here.

Taibbi has uncovered corruption on a massive scale, involving institutions that we need to be able to trust, but since they are so big, too big to jail, we cannot trust them anymore. They are now beyond accountability and that accountability needs to be restored in order to ensure the proper functioning of our economy.

This pattern of behavior brings to mind a very relevant question: who does the government work for? Does it work for the people who pay the majority of taxes? Or does it work for someone else? Given that so few people own so much of the wealth in this country, those are reasonable questions to ask. Not only can the top 1% buy the laws they want, they don't even have to answer to anyone else when they break those laws. This is a symptom of the corruption that has been found and corroborated by scientists and journalists alike.

I believe that the way out of this mess, and the path towards a justice system that works for all of us, is through fundamental campaign finance reform. To put it simply, if the Supreme Court insists that money is speech, and that we cannot limit campaign contributions, and that disclosure is voluntary, then we must write new laws that provide better incentives.

I believe that in the broadest sense, we need to create incentives that encourage campaign funding by small donations from thousands or millions of people rather than just a few really big donors. There are two movements right now, mayday.us and Friends of Democracy that are working towards this end.

By removing the incentives to accept large contributions, we create incentives for our leaders to appeal to a wider population, to write and pass laws that help a wider segment of the population and to hold wrongdoers to account for their actions. This problem can be solved, and it is not an ideological problem. It is a systemic problem and both sides liberal and conservative, Democrat and Republican, agree that there is a problem. This problem is a feature, not a bug.

To solve it, we must cooperate rather than remain divided. To gain any other reforms we desire, to even have a chance to be heard, we must start with campaign finance reform. Then we can all move within reach of the reforms we want when we have a Congress, a government, that listens to all of us, not just the 0.05% that control the primary elections and the general elections that follow.
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