Magazine article The Christian Century

AIG Scapegoats

Magazine article The Christian Century

AIG Scapegoats

Article excerpt

A lot of outrage, including threats of physical violence, has been directed at executives of the American International Group and other financial-services firms. The executives are perceived as having triggered the worldwide economic crisis by their reliance on subprime mortgage-backed securities and on credit default swaps (something few people understand even after hearing them explained). And they are seen as having escaped the crisis unscathed--and in some cases with millions of dollars in bonuses.

The depth of the outrage, and the violence Of the expressions, suggests that there is something to anthropologist Rene Girard's theory of scapegoating. Girard argues that societies attain cohesion by periodically identifying scapegoats--socially approved targets of violence. At least for a time, conflicts in society are suppressed as people's rage is directed at the designated scapegoat. It is easy to forget, amid the outrage at these executives, that they were doing what their directors and stockholders wanted them to do--maximize short-term profit. This does not absolve them, of course. But the notion that markets are self-regulating and can do no wrong, and that they simply need to be freed from regulation to create more wealth that benefits everyone, was not confined to Wall Street executives. It was repeatedly touted by politicians, taught in schools, celebrated on talk shows and endorsed by voters over several decades.

In the same period, universities and business schools sent their top graduates off to investment banks, hedge funds and private equity firms, where they were employed in creating and selling innovative financial products. …

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