The finance people at AIG were awarded millions in bonuses because their contracts were based on the completed transactions, not the consequences of these transactions. A 32-year-old mortgage broker quoted, "I knew my job was to get the transaction done. Whatever came after the transaction, that was him, not me." A long list of corporate executives have reaped rich rewards even if they break the world economy, destroyed billions of dollars in value, and disfigured millions of lives.
Most experts now blame a lack of regulation and supervision for this madness. Or they point to the wrong incentive programs associated with the push for shareholder value that executive remuneration linked to parts of a firm price. These factors are certainly important, but they ignore the terrifying human breakdown in the heart of this crisis.
Every day, the economic news gives me chased by Hannah Arendt's ruminations on the Nazi war criminal Adolf Eichmann, as she reported on his trial in Jerusalem for The New Yorker 45 years ago. Arendt thought the strange interdependence of thoughtlessness and evil and tried to catch it with his famous phrase, "The banality of evil." Arendt found Eichmann, “Neither perverted nor sadistic,” but, “terribly and terrifyingly normal.” Aside from reality, he was a new type of criminal, a participant in the, “Administrative massacre,” who committed their crimes, “Under circumstances that make it well nigh impossible for him to know or to feel that he makes mistakes." Eichmann had no other motives than what Arendt described as, “An extraordinary diligence in search of his personal advancement. He never realized what he was doing to such a distance from reality and such thoughtlessness can wreak more havoc than all the evil instincts taken together.”
The economic crisis is not the Holocaust, but I would say, it arises from a business model that routinely a similar sort of distance and thoughtlessness, exacerbated by a widespread withdrawal of individual moral opinion. As we learn more about the behavior of our financial institutions, we see that almost all accepted a ruthless system that rewards transactions, denied responsibility for the consequences of these transactions. Bankers, brokers and financial specialists were all willing participants in a self-centered business model that celebrates what is good for the organization insiders while dehumanizing and distancing itself outside all else.
This institutionalized narcissism and contempt for the "other" found its ultimate expression in the subprime industry, and investment activities derived from these loans. In too many cases, it was the obvious risks for borrowers and investors simply viewed as externalities where no one will be held accountable. If there was a family forced to cede their homes in a foreclosure-crisis or a pensioner subjected to unimaginable risks to the pension her retirement-security, so be it. Their suffering was invisible to them on the inside. It was so remote, that for all practical purposes, it did not exist.
No feelings of empathy, as in war. The emotional distance made it easier to work in their own narrow interests, and the common feelings of empathy that alerts us to the pain of others and define ourselves as human beings were ignored. The narcissistic business model that today's modern "circumstances" allowed individuals to ignore the toxic consequences of their choices. This paved the way for a full-scale economic administrative massacre.
Despite Arendt's deep understanding of the Nazi system that Eichmann complied, she insisted that the central moral issue, of not only of the trial but all the hours, come down to the nature and function of individual conviction. What we have demanded in these trials where the defendants had committed "legal" crimes, is that people should be able to tell right from wrong even when all they have to guide them is their own sentence, which also happens to be completely at odds with what they must regard as the unanimous opinion of all those around them.
Eichmann trial sent a message to the world that individuals can make their judgments, even when they have "wanton" was consistent with toxic institutional factors. This message is not limited to the unspeakable horrors of mass murder. This is relevant for the relationship between individual judgments and institutional processes in any situation. This is a message that says: You cannot just blame the system for the bad things you've done. Yet, to the world's dismay, thousands of men and women entrusted with our economic well being systematically failed to meet this minimum standard of civilized behavior. They are not able to distinguish right and wrong. They either do not judge, or they did not act on their sentences. This error defines the raw heart of public outraged on each fresh disclosure of outlandish bonuses. Is less than a thirst for revenge is a revolt against this evil banal.
Public outrage reflects a sense of morality that indicates deeper and truer than the laws designed to protect the self-serving business practices. The call is now to take back our community, to return to a place where people are able to tell right from wrong, because they recognize themselves in each other. The public demands, no, commands that our leaders assert their capacity, their duty, to judge what is right, even if it means standing up to lawsuits and angry bankers.
Edward Liddy, the Paulson-appointed chairman of AIG, first recommended that the bonuses given to its employees to go forward, although he found it, “Distasteful and difficult." Mr. Liddy missed what could have been a shining moment in his career by failing to insist upon from the beginning what he believed to be right, despite the unanimous opinion of all those around him. Neither Mr. Liddy, nor someone in the Obama administration, has shown that kind of moral leadership, as they now scramble to respond to public demands that AIG employees return their bonuses.
By now the existential security of millions of people is threatened or destroyed. No one is safe from the waves of value destruction in motion by the banal evil of this self-centered business model and uncritical participant who failed to assert their own moral sense. The urgent lesson for capitalism heirs redounds through all the headings: there is no "other" and there is only us. The damage that was supposed to be "theirs" is now shared misery on a global scale.
The Universal Declaration of Human Rights adopted by UN, includes, “Promote social progress and better standards of life in larger freedom." The UN Human Rights Commission has called on businesses to take into account, stating that "Transnational corporations and other enterprises, as organs of society, are also responsible for promoting and securing the human rights enshrined in the Universal Declaration rights of man.”
The economic crisis has shown that the banality of evil hidden in a widely accepted business model can set the whole world and its people in danger. Should not these companies be held accountable to agreed international standards on rights, obligations and conduct? Should not the individuals whose actions caused such devastating consequences be held responsible for these moral standards?
I think the answer is yes. It is the crisis of 2009, where more evidence of fraud, conflict of interest, produced indifference to suffering, rejection of accountability and systemic lack of individual moral rules an administrative economic massacre in such quantities that it constitutes an economic crime against humanity.