Thursday, 12 March 2009

Also, the elves were bothering them a bit

One of the more fascinating points Michael Lewis makes in his fascinating story about Iceland after the crash (which I mentioned yesterday) is how closely connected the willingness to take risks is to the fact that the risk taking part of financing industry was mostly dominated by men. Apparantly, men are more confident in their ability to make rational choices, and they make riskier decisions the less women are actually involved. Consequently, Iceland now has its first lesbian prime minister (I'll just let that stand there like that, since I always feel like laughing out loud whenever an article written by a guy indicates that this is going to be the solution to the problem...)
Anyway. Apart from being written as if the author had been to the zoo and witnessed a very particular species of men, one more aggressive and primal than the average American, this is a very good explanation of what might have happened in Iceland in 2003.
This is one aspect of the crisis I have avoided so far. Of course it is an individual problem: people spending money they will never earn. And this is not just an American problem: I could pick people from my circle of friends and take them as a perfect example for this, and then just assume that this applies to the system at large as well as the individual. How come that countries such as China have enormous excess amount of money in their budget (I bet there is a better way to translate "Budgetüberschuss" - any ideas?) and therefore the ability to finance entire wars, while the standard of living in so-called developed nations increased and increases? Naturally, as a political scientist it is easier for me to suggest policies or to critisize approaches attempted by governments than to point out the underlying problem of the crisis.
I believe that the government is able to fix faults in a system. I don't believe that it can, at least not in a short-term, fix problems located in every single one of their citizens. Try to imagine being in Iceland right now: your currency is worth about one third of what it used to be worth, it's likely that it won't even exist in a couple of months, your country's debt is at about 850 % of the GDP, and the economy is based on an idea that has just lost any validity. And only half a year ago, you were the best-ranked country on the Human Development Index. So what the frack happened?
In his article, Lewis draws a parallel between the Icelandic fishing business, where taking risks is essential to success, and what later happened in the financial industry, when the very same people who had previously stood on the decks of ships to catch fish all of a sudden were traders. I felt alienated by the way he occasionally described these people like a foreign species, but on the other hand, this is exactly the way everybody who still works on Wall Street seems to me - the arrogance involved in demanding more bail-out money and then going to Vegas, or buying private jets, or getting bonuses. In short - I do not understand this crisis on the individual level, or I don't want to understand how people can become like this. And probably this would feel differently if it was more women involved in this, female Madoffs, so that it would be more difficult to link this to some kind of evolutionary male behaviour of aggressive competion and ruthlesness (although I believe that if we looked at the language previously used to describe exactly this group of high-risk traders, it would turn out to be a narrative of male domination and competitiveness). Or, as Rachel Maddow puts it: I need some talking down here.

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