Recessions and depressions can have natural causes -- a real event like a drought or hurricane -- or human causes like excessive risk taking and fraud. After watching William Black speak at UCLA, I am more convinced than ever that our current economic crisis is largely the result of conformist behavior. Sure, there was fraud, lots of it in layers, but what transformed an esoteric corner of the financial world -- bonds derived from mortgages and credit contracts -- into a black hole capable of sucking in the real estate and banking industries was simple conformity.
As a glance at modern television programming confirms, our nation grows more immature each year, and this economic crisis was pure high school. The student government changed the rules so rich kids could sell their lunches. They had but one lunch to sell, so they hired some nerds to build a machine that mixed their sandwiches with cheap sandwiches and wrapped them in fancy packaging. The cheerleaders said it was the greatest thing since sliced bread, and there was more to go around. Pretty soon the dope dealer started spiking the cheap sandwiches, and everyone got hooked. The price went up, and anyone who said it tasted funny got ridiculed. When the dope dealer got busted, the whole school went into withdrawal. It was neither tragedy nor swindle so much as mass foolishness fueled by mundane manipulations.
That's the allegory. As I get the chance, I will translate the tale and show that there were really only two chances to avoid the mess: integrity of the nerds or government that refuses to do the bidding of the rich. Conformists always depend on someone else's honesty. That's a great way to get fooled.