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D
Welcome to the Compact Podcast. Today we'll discuss the resignation of Keir Starmer, talks between the United States and Iran, and the death of Alan Greenspan. I'm joined by Ashley Frawley and Jeff Schulenberger. And I'm Matthew Schmitz. So, Ashley, has Britain become ungovernable once again? A British prime minister resigns. They come. The new prime minister will be the fifth that Giorgia Meloni, the Italian leader, has worked with since she arrived on the international scene. What's, what's going on? Why all the kind of, why the revolving door of British leaders?
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C
Yeah, somebody said on the radio today or yesterday, like if you had a friend that was divorced, like, what is it? Where like 7 times in the last 10 years or something like that, you would look at that person like, yeah, you've got a you problem, not a wife problem. Like, and it just seems, you know, it's, first of all, I'm, I think there's an aspect of careerism to it that these are people that get into politics as a career. They don't have histories in other kind. Not all of them obviously, but you know, you have the rise of the career politician and where else do you go you know, where else do you go? It seems like Prime Minister is a great thing to have on your cv. It's like a revolving door. Everybody wants to get a turn. You know, we want to make sure, we want to help you get your promotion. And then, you know, after you spend your few weeks there, then you might have a mid selling memoir and do the after dinner circuit and all is well in the world. Obviously that doesn't explain it.
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D
Like, American conservative groups bring Theresa May through former British Prime Minister Theresa May. It doesn't hit as hard as Margaret Thatcher or Tony Blair. I'm sorry.
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C
Yeah. I mean, for all that you would criticize Tony Blair, um, this was probably the last. I hesitate to say this because it sounds like I'm praising Tony Blair, but like the last person who comes through with a big idea, you know, And I was just thinking, like, what's. What's Burnham gonna do? So this, he's the. Andy Burnham is the person who's supposed to sort of take over. He's gonna be coronated now as the Prime Minister, most likely with very little contestation, you know, and they're holding all these meetings where they're gonna sit around and think about policy like it's an afterth. Like, what are we going to do? I don't know, let's sit down, have a little brainstorm session. Like, these are people who don't have, you know, I actually heard someone say, like, Andy's political economy is this. I was like, oh, we're using some big words there. What do you mean? And it means like, we're going to tweak the tax code by 0.24%. And that's like my big idea, my big animating thesis. And that's really the extent of it, you know. And there's an old, you know, comedy sketch in the UK that's like, these policymakers are sitting around and they're having this conversation and they're like, well, what we could do is we could get the higher rate of income tax down by 0.74% and then someone cuts in with like. Or we could kill the poor. And it's like, you know, the. One of the most prescient kind of skits you could possibly think of, because that's what politics has become. It's like very little in the way of. Of thinking big ideas. And the biggest idea is like, hey, I. How about we euthanize old people? Ah, that's. And I know I'm being flippant, but that's how it seems. So and it's, and it's a shame because we are at a point in history where it seems like thinking big ideas, someone with a sense, even if it's wrong, like, I mean, you can like hate Margaret Thatcher, but she had a sense of how the world works, you know, that you could kind of piece together that you could contest that competed with other big senses of how the world works. You need that now, we need that now. And these people don't have that. And you know, being a bit kinder to them, they can't have that. You know, you had the closest thing to it was Jeremy Corbyn, which again is giving him a lot of credit. And the electorate didn't want that. So there is this kind of perception, like you have to. You can move the party a little to the left, a little toward the center, a little here, a little there, but if you try to do anything big, you are, you will lose the electorate. So they're kind of stuck between a rock and a hard place. I do understand that, but we. There's a central contradiction between the depth of knowledge and theory and philosophy and economics and worldview that's required of governance at this moment, when the old certainties are breaking down. And the needs of what has become the electoral cycle and the needs of like PR driven governance and bureaucratic tinkering is the accepted end of politics. So what do you do in that situation? You just have endless turnover because you can't have enormous ideas. You can't have. You know, the closest we came to that was Liz Truss. And now everyone just says Liz Truss's disastrous budget, like these things. That's. And that was the closest attempt to trying to create a policy that was led from a worldview. And it was utterly disastrous. It probably didn't help that Liz Truss perpetually has her mouth open. I don't know why nobody, she just always looks kind of dumb. And you're not about to kind of like follow this kind of person into the abyss. I don't know who you are, but you have been around for all of five minutes and years trying to bring us with you. There's no, like, none of the kind of spectacle that might be necessary around a new kind of a kind of figure with those kinds of ideas that we might trust. Even though Liz tried to use her last name, as in Liz we trust. No, we don't. We don't know who the hell you are. So that's kind of the difficulty of the situation. And nobody has a good answer. Even people that are trying to fundamentally change. Things seem to be confused around policy. If you look at reform, if you look at, you know, Nigel Farage, they're just kind of sitting around the same way, writing policies on the back of a postcard. Like they don't have a back of a postcard, back of a napkin that they don't have any kind of sense of, you know, any kind of coherent sense of the world. MAGA doesn't either. But they had, I don't know, some a way of getting at grievance, a way of subverting what people hate, which is the, the careful PR gloss which became necessary and they very successfully subverted it. But even they don't have a clear coherent vision. You know, they were held together by anti wokeness and now that wokeness appears to be receding to a certain extent, the Fishers begin to be obvious. And you know, you can come together against transing kids, but are you going to come together for transhumanism? As we had a peace and compact on, on Monday talking about this, you know, so politics is. It's clear that we need a return of politics, but it's not clear who will or can bring it. And you know, I think the UK is endless electoral, not electoral leadership. Turnover is symptomatic of a broader problem that lots of countries are experiencing like this constant turnover. It's constant. There are very few leaders that manage to stay in power for a very long time. I mean, obviously there are clear counter examples to that. But the trend has been for the last 30 years, 30, 40 years, almost towards this kind of constant turnover. Because we are in an in between phase. Nobody really knows. Everybody knows that something needs to be done, but nobody knows what. And it's the end of history. There is no alternative. So what can you say? You're left with tweaks to the tax code or change your leader? You know, Hungary is a good example of this as well. Their leaders in substance, how much different from. How much different from Fidej are they really promising to be but hope and change and we'll cooperate with the European Union and that's enough. But is not any kind of revolution in compact.
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D
This week we published Nathan Pankovsky's essay How Brexit Brought Back ethnic politics. We're 10 years on from Brexit now and the idea of Brexit was at least in part to restore British sovereignty, to make it so that Britons could govern themselves. And that hasn't happened. One thing that Nathan shows in the essay is the way that Brexit brought To the fore, the internal ethnic divisions of Britain. Obviously you see that with Scottish independence, that was given a kind of idea that's always had this kind of ideological valence. The Scots think of themselves as social democratic and solidaristic, in contrast to the liberal, laissez faire, Thatcherite, depraved Englishman. But in addition to that division, you've seen growing tension between the migrant descended population of Britain and native Britons. So this kind of, this rising ethnic tension is one issue. And really, in Penkovsky's telling, the problem is this. Britain doesn't have a kind of functional, kind of total control, technocratic state where it's able to totally dispense with democratic ideas and democratic forms, including that of popular will and popular legitimacy. It can't. They can't dispense with that altogether. But it also certainly isn't honoring that ideal. There's not actually a popular will receiving popular representation. You don't have proper parliamentary sovereignty. That's just not the way that Britain works today. So it's kind of stuck between two political forms failing to be either one. I mean, you could look to maybe a place like China where there's a more coherent version of sort of technocratic centralized control, or you could look back to previous periods in British history to see what a more kind of traditional British parliamentary sovereignty would look like. But instead, Britain's in between the two with rising ethnic fractures, ones reflecting ancient divides in the British Isles and ones reflecting new realities shaped by global migration. And I don't know, the solution probably is not one. Andy Burnham.
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C
Well, it's an excellent analysis because this is kind of where people are oscillating. You know, it's like, oh, we'll have a new leader, but people are kind of looking up like, hey, let's get back into the eu. I mean, that was seriously tabled. This was. Now's our chance. Now's our chance. We can put us back in the eu. You know, all those people that voted Brexit, they're dead now anyway. Like all this kind of ageist stuff, because it's like, well, we kind of just need the technocrats to dictate to us. We, that's what we want. And then that's where the solutions will come. We don't have to deal with this pesky democracy anymore, and we can kind of wash our hands of it and the eu. And part of what caused a lot of the upset and what brought Britain to Brexit was this constant attempt to defer enormous decisions to the eu. This predilection for technocratic control and kind of this hatred for being stuck in that middle space. So people are like, no, no, forget about it. This has all been a mistake. Things have got worse since Brexit. Obviously Brexit is the problem here. Let's not try to govern ourselves. Our governing class obviously is lost. So let's just go back into the eu. And this is, this is essentially. These are the choices that we're given.
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B
I, I disagree. I think Andy Burnham is going to save Britain. This is my, my prediction. He is going to.
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C
You can tell by the cartoon face that leads the whole campaign, which is like the most cartoonish Big Brother is watching you face possible. Like who on ear earth this little stern cartoony classes Facebook character kind of. I mean that's, that's it. That's cartoonish bureaucracy. That's the, that's their goal.
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B
There's this episode of Black Mirror from maybe the early 2010s where a car which, which is, you know, like a number of their episodes, quite prescient about certain things from the first season. It has a, like a cartoon character who wins a seat in Parliament. And it's, it's kind of a, you know, it's, it's the, it's. It's essentially a kind of troll. You know, this, this guy who's created this cartoon character does it as a, as a joke, but then he, but then the cartoon character actually wins. So anyway, it's that one. And then the, the first episode of that season is, is another good one that kind of anticipates the collapse of the British political order. So I recommend going back to those. But yeah, I'm, I mean, one thing that strikes me is, you know, you had two moments when I mean, I lived in Britain 20 years ago. Ish. And this was still under the labor government, which seemed incredibly strong and difficult to on seat at the time. And what, you know, one, one thing that seemed to change that was the. Was Tony Blair's decision to join in the war on terror and you know, war in Iraq. And you know, this seemed to really shift the politics profoundly. And one thing that seemed interesting about it, which is I, you know, I'm still sort of not, not sure about, is that it seemed like a, like an entirely chosen situation. Like he, he. There was nothing really forcing Blair to go as hard as he did on aligning himself with George W. Bush. At least that was how it seemed to me. And so it struck me that, and I, you know, I think there are many who see him as sort of having sabotaged his, you know, overall strong domestic achievements and agenda with, with this, you know, getting involved in this foreign adventure. You know, I'm not sure I'd endorse that view, but, but it does strike me as kind of interesting. And then, you know, the other seeming breaking point in British politics is the, the decision by David Cameron to hold the referendum on, on Brexit, which Penkovsky discusses in the article as Cameron attempting to do something Blair was also good at, which was this, this kind of managing democratic outcomes to achieve certain ends and attempt and, and believing that ultimately the, the demos could be, could be managed through, through media, through technology, and that this proved again and again not to be the case. And so it seems like on some level these, these two, you know, choices made by Prime Ministers which often see, have seemed in retrospect sort of self defeating and, and catastrophic. You know, they, they did suggest this ability to kind of shape outcomes, shape public opinion that, you know, was perhaps hubristic and reflected a kind of overconfidence of a certain period of governance when, when things like that were more possible. And it's interesting that the, these both seem like sort of arbitrary, not exactly arbitrary, but they seem like mistakes or errors made by these, these leaders. But then the question is, you know, why are these leaders who seem quite unassailable at a certain moment? I mean, the Conservatives, after winning in 2010, you know, won a very strong mandate and seemed quite robust in their
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D
power
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B
and you know, imposed a quite, quite a radical austerity agenda at the time, reflecting the strength of its mandate. So the interesting thing is that, you know, these leaders who seem to have a great deal of power made these choices that seem to undermine the basis of that power. And I don't know, that's, that's just kind of a fascinating thing which I think speaks in part to this deeper question Ashley raised of, you know, once you have this power, what do you do with it? Well, maybe you try to do something radical and unexpected just to see how far you can exert the power that you've been given. And anyway, it's just, it strikes me that these, these seem like maybe the two moments that, that undermined the, the seemingly unassailable power achieved by these two, you know, by all accounts extremely gifted politicians, Tony Blair and David Cameron. And you know, I don't think it's true that these were simply arbitrary or sort of unforced errors, that there's something deeper going on in the logic of governing in the 21st century. There, which I'm not sure I quite can put my finger on. But it's just striking to me that there were moments at which these two figures both looked kind of undefeatable and unassailable in their power, and yet they made choices that seemingly undermined their own ability to govern.
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D
A memorandum of understanding between the U.S. and Iran has been issued. Vice President J.D. vance is currently in Switzerland negotiating with Iranian representatives. The question I have is, is, is the US and American interests, are these things better off now than they were before the start of Operation Epic Fury? Has our strategic position in the Middle east vis a vis Iran improved or grown worse?
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B
It seems hard to answer because I'm not sure that this war has shown it is, it has revealed something that everybody knew, which is that being able to control the Strait of Hormuz is, is an important strategic asset for, for Iran that allows that, that gives them a certain amount of, of leverage, perhaps less leverage over the United States than they might have enjoyed in a previous era just because of the, the shifting nature of sort of petro politic, global petro politics and the US having a much greater ability to produce its own oil and gas for its own consumption. But nonetheless, obviously it did significantly affect prices. I'm currently in California where a lot of gas stations, gases get. It has been getting up towards $7 a gallon, which is I believe, I think the first time I've seen that in my life. So that's, that's quite, quite significant. But you know, I think on some level Iran was able to show that it can just kind of make use of this strategic asset and just kind of wait out whatever the US Is doing. And second of all, clearly the idea that some sort of regime change would be forthcoming, which it seems that this administration had, or at least Donald Trump had, you know, he believed that something like what had been achieved in Venezuela could be achieved here. So it seems that that has been proven wrong, which I think, you know, vindicates what a lot of people said when this whole adventure began. And so I think, I think America looks, you know, looks like it made an unforced error. Like it, it made a mistake by getting in on this adventure and like it was overconfident based on its success, its, you know, relative success in Venezuela. But at the same time, I don't think Iran, you know, the only thing I will say is that there was perhaps a moment a number of years ago when, you know, Iran might have looked like this kind of rising regional power that could really significantly challenge, you know the US's ability to shape events in the Middle east, and I don't think that's quite true either. In fact, Iran looks, looks relatively weak. Obviously. Again, it enjoys certain, enjoys a certain amount of power just by being able to control the Strait of Hormuz. But overall it does not look, you know, like a particularly credible threat, sort of regional threat or potential rising regional hegemon. And so to that extent, I think what you end up with is two countries that actually end up looking relatively weak and neither, neither can really claim any kind of victory out of this. And so it just seems a bit like, like a debacle that doesn't have, doesn't offer any particularly clear lessons. I think one other thing that is important about this whole event is that part of Iran's ability to control the Strait of Hormuz is it's. And, and one area where it does seem relatively strong is its mastery of relatively cheap drone, drone based warfare, which does seem like overall a kind of significant game changer in terms of the ability of smaller and relatively weak powers to sheep, you know, put up a credible threat to something like international shipping lanes relatively cheaply. And that, you know, all the battleships the US deploys to the Golf aren't going to solve that basic problem that, you know, as soon as you have the ability to cheaply use a kind of kamikaze drone to, you know, attack an oil tanker or something like that, this is going to radically upend shipping because shipping companies are, aren't going to take risks and insurance companies aren't going to cover them. And so this is a problem that, you know, US power, sort of naval power and air power hasn't, hasn't really been able to solve. And this, this does show that again, even a relatively weak and somewhat crippled sort of small regional power like Iran can still do quite a bit of damage with, relative with, without having to spend too much on developing the relevant military technologies.
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C
Yeah, it goes to show that the philosophy that seems to govern Trump's understanding of geopolitics, of the way that politics works on a global scale, I should say, where going back to what, the 80s and 90s? Well, I would just bring in the military, I would just bring in the military, I would just bomb them, I would go hard on. Well, they've not imposed a new order on Iran by any means. And if anything, it's demonstrated you can kind of destroy a country or not destroy a country, you know, inflict an enormous amount of damage and then realize that that doesn't really do anything to produce compliance, necessarily. It doesn't get you what you want. That that show of military might is not enough. But, you know, I think sometimes there's a temptation to imagine, and maybe there is, but, I mean, I'm sure there must be, that there's some kind of deep attempt anyway to understand this conflict and then kind of to act strategically. But there have been all these sort of New York Times reports of the inner workings of the Trump administration in key meetings. And one thing that struck me is the degree to which everyone seems confused and shocked by the way things are going does not inspire confidence. You know, like, the New York Times reported that apparently the US And Israel wanted to install Ahmadinejad after killing Khomeini, and they bombed his compound. And I think the idea was to free him by killing the guards or something like that. And they thought that they killed him, and they were like, oh, what are we gonna do now? But they only injured him, and then he didn't go along with the plan, just kind of disappeared. And so that whole idea of, like, regime change just kind of fizzled out. And so what do you wind up with? You know, you don't have this kind of coherent project of regime change. You, you, you don't have a situation that looks a great deal better than where things started. And it seems like, you know, as I said, I, I, I assume that there's some deeper thinking going on, but the degree of confusion that seems to characterize such an enormous campaign is deeply shocking and worrying. I mean, I suppose that's an obvious thing to say. Maybe it's like a wet liberal thing to say, but, I mean, even I, like, I'm always. There are people in there who know what they're doing. You know, even if they're wrong, there's. What's the logic at play? And just the more that I read about it, the more shocked I am that I'm not sure that there is one or there is a coherent one at play. And everyone just seems kind of confused about how to deal with something as big as this. And yet they still have all this. Yeah, guns blazing. That'll do it. It's, yeah, scary.
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D
The deal is still coming into focus, but you're. One of its very important elements is that it ties in, you know, Israel and Hezbollah to the kind of negotiations between Iran and the United States. So we saw Hezbollah kill four Israeli soldiers in recent days. Israel then responded with attacks, and Iran shut down the strait in response to that. And then the United States applied pressure to Israel to, you know, kind of stand back and take it easy in its response. I mean, one thing that we're going to see here, to the extent that the American leadership becomes invested in maintaining peace with Iran, any kind of escalation from Hezbollah toward Israel will result in an Israeli response. The Israeli leadership will feel a need to respond to Hezbollah and the ultimate dynamic is going to be to Dr. Wedge, I think, between Israel and the US And Iran funds Hezbollah. So one thing, it has control over its actions to a great degree. So I think Iran has a very real opportunity here to kind of drive apart these two allies that were collaborating very closely in Operation Epic Fury. So that's maybe the most kind of interesting element of this deal is just the potential it has for kind of unsettling a long established alliance. So Alan Greenspan, the man blamed for destroying social democracy, solidarity and decency in the United States, has followed all those things to the grave. Have you come here to praise him or bury him?
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C
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B
Well, I will say his, his trajectory was, was noteworthy in part because he was an acolyte of Ayn Rand and part of her strange and somewhat cultish inner circle, which is a fascinating episode in American intellectual life, which I won't go into. But the fact that someone who started out in that milieu ended up being a figure who coalesced kind of bipartisan common sense about economic management is, you know, maybe the clearest indication of the, the broader rise of the sort of neoliberal paradigm as, as over, as overused as that term is just that these views that were very much outside of the mainstream in, you know, when, when Greenspan was coming of age, really became the mainstream. And so to go from the Ayn Rand circle, which is kind of this eccentric bohemian world of free market fanatics opposing sort of Keynesian economics and very far from the corridors of power, to becoming somebody who was really seen as America's kind of shadow president during the Bush and Clinton era. The dual Bush and Clinton presidencies is, is a, is an interesting development. You know, I think Greenspan, so I, I do remember this just coming of age politically, this, this idea that, you know, he was the real sort of power behind the throne. He was the guy who kind of kept, kept the economy chugging along. Obviously, you know, he on some level, I think was, you know, see, I mean, ironically, he was sort of presented as the steady hand, this sort of, you know, just kind of wise technocrat and, and figure who, you know, was ultimately kind of nonpartisan, even though again, he started out as a, a highly ideological figure coming out of this Ayn Rand circle and was seen as just somebody who kind of embodied this kind of post political technocratic management of the economy as something that could happen outside of the political process and that the political process would not disturb. So it was important that he remain, you know, it was a significant fact that Bill Clinton kept him in power as chairman of the Fed after the, you know, after, after he not only won election, but one reelection, you know, signaling to, to the markets, these sort of anthropomorphized markets, that he was, you know, that he wasn't going to disrupt the fundamental settlement that had come out of the Reagan and Bush era. So I'm not sure if Greenspan was the one who destroyed social democracy and decency. That credit probably goes to his predecessor, Paul Volcker in fact. But he was somebody who embodied the sort of triumphant reign of the neoliberal paradigm for as long as it lasted, which was really up until the 2008 crash, which was when he subsequently said he had discovered a flaw in his models that basically reality didn't quite behave like the economic models that he had spent his life studying that, that, you know, I believe he had some remark about how, you know, his assumption that people were fundamentally rational economic actors had been unsettled. And so then he's succeeded by Ben Bernanke who's, you know, a kind of a figure who comes in to revive a certain form of, I suppose, kind of chastened Keynesianism through, you know, these new techniques like quantitative easing. And so that, that does really usher in a different, a different paradigm. But you know, I think he really, he does represent the most kind of triumphant moment of the neoliberal order. And he obviously, his passing is, is another symptom that we are, you know, in this in between era entering into a new phase. And interestingly, I think the fact that we, we now have A new Federal Reserve chairman in Kevin Warsh, who Donald Trump appoint, appointed. Notably, Trump is very, you know, again, Greenspan, his, his tenure signaled the kind of depoliticization of the Fed and of sort of monetary policy and really of the economy more broadly as something that could just be managed technocratically and not subject to changes imposed by the democratic system. Trump, on the other hand, seems to be wanting to subordinate the Fed to politics in the crudest possible way, which is to essentially demand that the Fed producer policies that will ensure his, he and his party are popular and win reelection. And so it's not even a sort of ideological project so much as a project of let's see if we can juice the economy to help us, you know, to make line go up and thus help us win. And, and so that's obviously a striking contrast with Clinton's choice to keep this stalwart sort of Ayn Rand Republican on the, at the chair of the Fed. And it's also interesting to know that Kevin Warsh himself was something of an inflation hawk and interest rate, you know, sort of interest rate hawk in his earlier career. But he has acceded to Trump's view that high interest rates are bad because they make me and my party unpopular, and therefore we need to have low interest rates because that will help me win. And so, you know, Warsh is kind of in this odd position of having to accede to this, you know, completely unprincipled and just sort of blatantly, you know, political in the most, in the, in, again, in the kind of crudest sense vision of economic policy. And so the question of what he actually thinks and how he actually thinks about the economy sort of has to be sidelined or kept under wraps because he has to ensure that the man who is his benefactor, you know, sees him as, as, as helpful to his own political enterprises. And so I think that that does represent a really significant shift from the depoliticization which Greenspan represented. And by depoliticization, you know, Greenspan was an ideologue. He did have a clear political vision, but part of that political vision was that the economy should be insulated from, you know, the democratic process. In, in some fundamental ways, Trump is introducing a situation in which, you know, the management of the economy through the Fed is, is subject to the, the desires of elected officials in a very direct way. Again, even though in this case, those desires do not seem particularly ideological. They're just sort of, we need to juice the economy so that people like, so that people give me higher approval ratings. So it's, you know, clearly we've. We've undergone this very strange paradigm shift. And Greenspan's departure from this world is just the latest reminder of those developments for me.
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C
Greenspan is. I sort of came of age politically during the 2008 financial crisis, as a lot of people did, I suppose. And so that famous congressional committee meeting statement where he says, I found a flaw. I don't know how significant or permanent it is, but I've been very distressed by that fact. It's like it plays in repeat on my mind when something goes wrong. It's like I have found a flaw. So this is what always sticks in my mind with Greenspan. But, yeah, I mean, I agree with your assessment. But also what is interesting about Greenspan is the way that the flaw, as you said, was kind of relocated within human nature. Although I'm not sure that he. I hadn't personally seen him talk specifically about rationality, but I wouldn't be surprised. So you have people like Joseph Stiglitz talking about how there was the myth of homo economicus, and they sort of put themselves forward as these, you know, renegade thinkers, but in actual fact, long before the 2008 financial crisis, this idea that the subject of capitalism is this rational, calculating actor in terms of that's how people actually behave was long questioned because if that were the case, then you wouldn't have all these crises. And because there isn't any other competing ideology, competing sort of understanding that anyone takes seriously for how the economy works, except as these, like, rational, calculating people sort of rationally making sense of their risks and, you know, calculating the amount of enjoyment that they're going to get from one move versus another. This doesn't actually exist in society. And that's the reason why we have all these problems. That's been the kind of like, consensus that actually, no, the model is right. It's just too good for people. It's too good for people. And even if Greenspan didn't, as far as I know, explicitly say this, this has been. That was the consensus around the 2008 financial crash. It was like, what is it caused by greed? People just got really greedy. And it's always like something within the human is the cause because you can't look outside the system. And that's a shame. It's a. It's a. Probably one of the saddest kind of legacies of that crisis was that it drove another nail in the coffin of the kind of rational human subject that we believed animates our liberal democratic Societies, I don't know if we ever truly believed it, but that it was there in the ideology. And slowly, slowly as problems come up and there's no systemic understanding of why they come up, then we just drive another nail into the coffin. And, you know, but I think the, the what should have become the consensus, which it never would have done because end of history and all of that, but that Greenspan may have located a flaw in the sense that he thought that bank self interest would prevent them from taking reckless risks because they would naturally be custodians of their, of, of, of their own shareholders. They wouldn't, you know, that the system would discipline itself. He was wrong in that sense because they would, they found all these different ways to make all these different profits and insulated themselves from that risk. And everybody just assumed, oh, someone else down the line is going to hold the risk or exit before things get bad. But I think the deeper kind of thing that he was wrong about and what everybody was wrong about is that the 2008 financial crisis was caused by the housing crash. This was just a symptom. And all of these behaviors that people were engaging in were indeed rational. Anybody in that situation would do it. That is why everybody was doing it. Because if you're not, if you're not, if it is not profitable to invest in something secure and productive in terms of the good stuff of our lives, you're not going to, because you're not going to invest out of the kindness of your heart. You're not going to invest to protect the economy. You're going to invest to maximize your profits and you'd be stupid not to. And so the question really ought to have been, why was there such a powerful drive to put money into debt, credit bubbles, instead of, you know, actual sort of productive stuff in the economy? And why are we still doing that? Because, like, why would you, like, why are you gonna put a whole bunch of money in, I don't know, shoes or something like that when you have to compete against Nike, who's been in the business for a really long time, has all these really complex factories you're just gonna outlay. Or like, you know, maybe Nike is a bad example because they're just using sweat, sweat, sweatshop labor. But anyway, you know, you're going to compete with these people that have been in the business for such a long time, who've been like, whose margins are already so low, who've tweaked absolutely every aspect of this, you're going to have this huge outlay and who knows if you're going to be successful? Why would you do that? It is way more profitable to just give people debt that they have to pay you back. So do that instead. Go into crypto. Of course the whole thing is going to come crashing down. But you're not going to invest for the kindness of your heart or the goodness of the economy. So the, the problem isn't, you know, what's the cliche, the call is coming from inside the house. You know, it's not you and me, it's the system itself and the incentives that it, that it offers. And the people are acting perfectly rationally. And that is the in, that is the lesson that we should have learned from the financial crash. Not that, oh, there's something wrong with human beings. No, something wrong with the system. Human beings are doing what they do and actually they're quite smart about it.
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