Who's Really to Blame for the Economic Crisis?

Economist Parag Khanna leads a distinguished panel on the future of economic competition. The first topic in this series asks what really led to the recent economic crisis.
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Question:   Welcome to the Global Roundtable.  This series focuses on the future of economic competition in the 21st century.  I’m Parang Khanna, Author of How to Run The World, I’m joined by a very distinguished panel including:  Dambisa Moyo, author of How the West was Lost, Daniel Altman, author of Outrageous Fortunes, and Anand Giridharadas, Author of India Calling. We’ve all written books about the future of the global economy and prognosticated a bit about how it might look going forward, but the first thing we should ask is to step back and say, who’s to blame here?  How did it really wind up in this situation? 

Dambisa Moyo:  Well, I think that’s a fantastic question, the fact of the matter is that if you look back, in the last 50 years, we really are fundamentally all to blame.  Governments for setting inadequate policies, individuals and corporations for obviously excessive borrowing way beyond the… way beyond our abilities, and certainly the financial industry for, for approaching these situations through leverage and increasing the risks across the globe. 

Daniel Altman: I think though, that we have set a lot of bad goals for our decision makers, whether they’re in government or in the private sector.  We have got such a short-term outlook, we care about quarterly earnings, we care about elections every two years.  How are we ever going to get people to make the decisions that will require investments for the long term, 10 or 20 years down the road, if they’re focused on this very short-term decision making cycle. 

Anand Giridharadas:  Just to build on what Dan said, if you look at… it’s interesting to think about this as a cultural problem rather than just an economic problem.  I mean, I am amazed every time I turn on CNBC.  I think the people who, the Carnegie’s and Rockefeller’s who actually built this country through corporate energy a hundred years ago would be shocked to turn on CNBC today and see the kind of reduction of business to this kind of little video game of quarterly performing that whether you go a little bit higher or lower.  And that short term is in Washington in politics in almost every sphere of life.  And very clearly led to the crisis that we’re talking about today. 

Parag Khanna:  So we’ve identified this is a cultural problem, as you just said, Anand, it’s also an economic problem and a political problem.  I think though, we’ve come back to this conclusion that we have a global economic crisis but still no global political institutions that can tie it altogether.  And so despite all of the interest that there is globally in participating in globalization, we still have tremendous shortcomings in making that system stable.  Well, very interesting insights and thanks very much for joining us.  More on this and other topics at BigThink.com.