The financiers at AIG were awarded millions in bonuses because their contracts were based on the transactions they completed, not the consequences of those transactions. A 32-year-old mortgage broker told me: "I figured my job was to get the transaction done…Whatever came after the transaction—that was on him, not me." A long list of business executives have reaped sumptuous rewards even though they fractured the world's economy, destroyed trillions of dollars in value, and disfigured millions of lives.
Most experts now blame a lack of regulation and oversight for this madness. Or they point to misguided incentive programs associated with the push for shareholder value that tied executive rewards to a firm's share price. These factors are surely important, but they ignore the terrifying human breakdown at the heart of this crisis.
Each day's economic news leaves me haunted by Hannah Arendt's ruminations on Nazi war criminal Adolf Eichmann as she reported on his trial in Jerusalem for The New Yorker 45 years ago. Arendt pondered "the strange interdependence of thoughtlessness and evil" and sought to capture it with her famous formulation "the banality of evil." Arendt found Eichmann neither "perverted nor sadistic," but "terribly and terrifyingly normal."
Remoteness from Reality
He was a new type of criminal, a participant in "administrative massacre" who committed his crimes "under circumstances that make it well-nigh impossible for him to know or to feel that he is doing wrong." Eichmann had no motives other than what Arendt described as "an extraordinary diligence in looking out for his personal advancement…he never realized what he was doing.That such remoteness from reality and such thoughtlessness can wreak more havoc than all the evil instincts taken together," she concluded, "…was, in fact, the lesson one could learn in Jerusalem."
The economic crisis is not the Holocaust but, I would argue, it derives from a business model that routinely...
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