We Are All Guilty


I was in New York when Lehmann Brothers collapsed and I was in Dubai when property prices fell there by fifty per cent in a week. I claim for my presence no causative relationship to these unhappy events, of course, but it did occur to me that I could start an investors’ newsletter, and charge for it, that consisted solely of my travel plans.

While in Dubai I bought and read a book about Bernard Madoff: the subject of pyramid schemes seeming only too appropriate to the time and place. Alas, Mr Madoff is a boring villain, not at all the swashbuckling type that one likes one's swindlers to be, at least in literature or when swindling someone else. I remember when he was arrested that he looked just the kind of solid, respectable, level-headed yet intelligent person to whom I (who take no interest in my own financial affairs) would like to entrust my money, such as it is.

The book was a disappointment, really: not only did Mr Madoff not appear to have any bad habits of an interesting kind, apart from malversation of funds, but at the end of 320 pages I still did not know when he started his scheme, how much exactly he had stolen and who was in it with him. The financiers around him tentatively suggested to the author different dates for the commencement of his nefarious activities, though perhaps some of them were feigning uncertainty only in order not to be implicated themselves.

Mr Madoff's originality seems to have consisted largely of offering not fabulous, but steady profits; his pretence of being indifferent whether anyone invested with him or not; and the successful creation of an impression that his fund was for an elite, not for the hoi polloi. One of the reasons for his success (if success is quite the word I seek) was his appeal to snobbery. His story is proof, if proof were needed, that in finance, as in art and science, originality is not in itself a virtue.

Like many people, no doubt, I have been reflecting of late on an economic crisis that does not yet appear to me to be quite over, since many of its causes are still in operation, and despite the recovery everywhere of the stock markets. The crisis hardly affected me personally, but no man is an island and all that; besides, crises have a habit of eventually engulfing even those who thought themselves immune from their effects. It would only take a little inflation for me to start feeling some serious anxiety on my own behalf.

In the meantime, the search for people to blame continues. This is hardly surprising, because blaming is so much more fun than the supposedly more fruitful and intellectually mature activity of explaining. However, in human affairs the two activities are often very similar or at least difficult to disentangle: explanation and blame are often like King Hamlet's funeral and Queen Gertrude's second wedding:

Horatio: My lord, I came to see your father's funeral.

Hamlet: I prithee do not mock me, fellow-student.

I think it was to see my mother's wedding.

Horatio: Indeed, my lord, it followed hard upon.

If widespread fraud, greed, stupidity, wilful ignorance and gross improvidence do not occasion censure, it is rather difficult to see what would. And if nothing occasioned censure, then the world would be emptied of moral meaning.

There can be no doubt, I think, that bankers and assorted financiers have been amply excoriated, as far as I can see quite rightly, in the press and elsewhere. Nor have governments entirely escaped their share of the blame. Both by acts and omissions they created the circumstances in which crooked, or at least less than scrupulous, practices could escape detection. Moreover, all western governments (as far as I can see) have been operating Madoff schemes for many years, the main difference between Mr Madoff and themselves, apart from the matter of scale, being that governments can coerce contributions while Mr Madoff could merely solicit them. Whether this makes western governments or Mr Madoff the more villainous, I leave to moral philosophers to decide.


Of course, there are those like the later J K Galbraith who argued that government deficits were a good thing, a sign almost of economic health and well-being. He sometimes, indeed, made it sound as if the larger the deficit, the better for all concerned, and the healthier the economy. As Galbraith pointed out, the infrastructure built today on borrowed money benefits future generations, so it is only just that they should be left with some interest to pay on the loans that made possible the things from which they derived such benefit.

In the meantime, the search for people to blame continues. This is hardly surprising, because blaming is so much more fun than the supposedly more fruitful and intellectually mature activity of explaining.

It is obvious that not all borrowing is economically burdensome, and indeed credit is the life-blood of large-scale economic activity. But it is an elementary error to suppose that if the existence of a requires the existence of b, then the existence of b is evidence of the existence of a. It is one thing to borrow money to start up a company that will soon grow and be profitable, and another to borrow the same sum to go on the holiday of a lifetime, whatever appalling thing that might be. It isn't even true that all investment is wise or profitable (communist countries long had very high rates of investment), let alone all borrowing. And the fact is that we have borrowed enormously that we might live well today, and not that we, let alone our descendents, might live better tomorrow. Future generations, I suspect, will have good cause to curse us when we are safely in our graves.

It is, of course, possible that future economic growth will render current borrowings nugatory or trivial: all one can say, however, is that in the race between growth and borrowing, the latter seems to be winning hands down. Debauching the currency might be a solution to the problem in a certain sense, but it undoubtedly has what these days people call a downside.

Having blamed the bankers and the governments, however, it is now time to turn the spotlight of blame onto ourselves: if by ourselves we mean the common or ordinary people. Here, on the whole, criticism has been much more muted or reticent, no doubt because it is not exactly bon ton in our democratic age to suggest that ordinary people are fully as capable of every human vice as those who rule over them.

But the fact is that it is not only governments that have been improvident and have spent well beyond their means; millions, scores of millions, of perfectly ordinary people have done so as well, and have behaved not only as if there were no tomorrow but as if there could be no tomorrow. In so far as they thought about their debts at all, they thought they could merely walk away from them, as if to do so were of no moral or characterological significance. Another day, another default, seems to have been their motto.


It could, I suppose, be said in their defence that almost everything possible has been done to encourage them in their improvidence. In the United States successive governments encouraged, indeed required, banks to lend money to people whom the banks knew to be bad risks; in Britain, a government stood by while banks offered mortgages of 125 per cent to people in areas where unemployment was not exactly unknown, simply because its own popularity depended upon the illusion of prosperity created by the asset inflation which easy money provoked. It was not difficult, either, to find in our newspapers statements by supposedly serious journalists and commentators to the effect that we had at last entered an age of the uninterrupted virtuous circle, or rather spiral, in which growth created rising demand which called forth yet more growth which created... etc. etc. The business cycle was abolished; there would be no more downturns to embarrass those who had overextended themselves by borrowing what to them were vast sums.

Really, though, it is all quite simple. Our banks were no good; our government was no good; and we were no good. Apart from that, everything was fine.

No doubt it was very wrong of banks to offer credit to the uncreditworthy: but while you can lead a man to a loan, you cannot make him borrow. To give a feckless man a credit card is both wrong and feckless; but the man to whom it is given does not cease thereby to be feckless himself when he spends money he is never going to have.

Moreover, the figures for personal indebtedness, in America, Britain and elsewhere, suggest that fecklessness or improvidence are far from being the characteristics of a few individuals but have rather become almost normal, at least in the statistical sense. The idea of cutting one's coat according to one's cloth, or of taking pride in owing nothing (in the financial sense) to anyone, has disappeared among us.

The decline, if not the total absence, of personal providence in the general population will no doubt be the subject matter of doctoral theses of future history students -- if, that is, there are any.

Let us imagine the academic controversy occasioned two centuries hence by the appearance of the book (in whatever form books then appear) entitled The Decline of Personal Financial Probity and Prudence in the West, 1950-2010. The disputants will divide into two main camps, the materialists and the idealists.

The former will ascribe the decline to economic conditions rather than to anything that happened in the minds of those among whom the decline was evident. For example, in times of inflation (whether of ordinary goods or of assets) what counts of providence changes fundamentally. A squirrel that hides nuts for the forthcoming winter is not in fact provident if the whole forest is about to be cut down and flattened, and the earth churned over. The virtues of a previous age do not answer to the needs of a new age; providence in an age of asset inflation is, in fact, its opposite, improvidence. As Marx said, it is not consciousness that determines man's being, but on the contrary, his being that determines his consciousness.

But, reply the idealists, what happens in the aggregate is only a summation of millions or hundreds of millions of individual decisions.

How people behave is determined by what they believe; and if they come to believe that slow accretion is the policy of fools and that maximum consumption in the here and now is the only meaning of life, it is hardly surprising if what you get is an orgy of speculation combined with insouciant expenditure.

Of course, there is a wealth of question-begging in the phrase 'if they come to believe,' for how do people come to believe anything? Why do they change their minds, such that those things that once seemed to them good now seem to them bad, and vice versa? Still, enquiry must stop somewhere if we are to hold an opinion about anything; the search for ultimate or final causes of social phenomena often conceals a cowardly refusal to say anything that could possibly be contradicted by anyone or that risks refutation. And it doesn't really matter how people come to believe what they do believe, so long as it is accepted that what they believe is what causes them to behave as they do.

No doubt a twenty-third century revisionist historian will then come along and say that the whole debate is beside the point in any case, since there was no decline in the financial probity and prudence of the population in the years specified. This will be proved by a re-working of the statistics, which will show that the supposedly high levels of personal indebtedness were really nothing of the kind. Everyone layman will end up thoroughly confused and not knowing what to believe.

Really, though, it is all quite simple. Our banks were no good; our government was no good; and we were no good. Apart from that, everything was fine.




Theodore Dalrymple. "We Are All Guilty." The New English Review (January, 2010).

Reprinted with permission of the author, Theodore Dalrymple.


Theodore Dalrymple is a former psychiatrist and prison doctor. He writes a column for the London Spectator, contributes frequently to the Daily Telegraph, is a contributing editor of the Manhattan Institute's City Journal. He lives in France and is the author of In Praise of Prejudice: The Necessity of Preconceived Ideas, Our Culture, What's Left of It: The Mandarins and the Masses, Life at the Bottom: The Worldview That Makes the Underclass, and So Little Done.

Copyright © 2010 The New English Review

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