By Arnold Kling
The Spring Issue of the Harvard Journal of Law and Public Policy is now on line, with a focus on the economic crisis. You will find many familiar names among the authors. This is also the place where I have my essay arguing that the financial crisis was primarily a cognitive failure. Taking the opposite point of view is Kevin T. Jackson, who writes,
adopt the perspective of a moral‐cultural mental model (MCMM) as well. Indeed, such a vantage point is essential for discerning the lessons for enlightened business leadership going forward. From an MCMM point of view, several causes of the present economic crisis, particularly financial innovation and complexity, excessive executive compensation, and neglect of moral hazard, are seen to be rooted in deep‐seated moral‐cultural tendencies. Most notable among these are technocratic and dehumanized economic thinking, egoistic individualism, greed, short‐termism, rejection of objective moral values, and a highly speculative culture.
He goes on to offer perspective from Aristotle and Kant, among others. I keep thinking of the typical mortgage broker, who I picture as a high school graduate trying to squeeze out a narrow profit in a cutthroat industry, and wearing a tasteless amount of that profit on his wrist or around his neck. I think that unless Kant and Aristotle are providing customer referrals, he would not care a whole lot about they have to offer. The investors who buy loans from mortgage brokers are not in an ethical bind, but they need to realize who they are dealing with. They need to understand the concept of quality control, which might have to include some of that time-consuming paperwork that provides third-party verification of income, assets and employment. Most of all, you need a regulatory environment that does not promote lending with low down payments.
Anyway, browse through the table of contents for the issue. I particularly liked the articles by Richard Epstein and Hadley Arkes. Darrell Issa, a Republican Congressman, has an intelligent piece, which I cynically assume was ghost-written by a staffer. Ron Paul also has a piece, which has a lower probability of being ghost written. Regardless of who wrote the articles, I do credit both Congressmen with understanding the substance of what appears under their bylines.