In 2009, as they struggled to put the economy back together, the Obama administration faced hard decisions about how to treat bankers and banks. Many Americans were in a vengeful mood and wanted all the gambling bankers and bond traders put in the pillory at least. But Obama renounced punishment. He took the position that for the economy to recover the banks needed to regain confidence, and that meant the bankers had to regain confidence, and that was not going to happen if they were worried about being thrown in jail. So instead of taking a loud stand against the bankers – or the auto executives or any other such group – Obama's people worked with them to save as many firms as possible, get the money flowing again, and limit the economic damage.
It was a controversial decision at the time and remains so. But it was small potatoes compared to the thousands of somewhat similar but much weightier decisions faced by the victorious Allies in 1945. How many Nazis or Japanese nationalists should be punished? After all almost every one in both nations had gone along with their governments, and millions had actively worked to advance Nazi or nationalist policies. The general idea was that the top leaders should be punished, ordinary citizen and soldiers forgiven; but who was a leader? How far down the pyramid should the purges go? And which jobs were to be considered so important that former Nazis or nationalists should not be allowed to hold them? The Americans were especially concerned about teachers, but once they had removed all the German teachers they considered too Nazi, they were left with nowhere near enough to get the schools running again. It was the same in other fields; water engineers seem to have been a strongly pro-Nazi group, which meant that a thorough purge would have left no experts on hand to organize the reconstruction of shattered water and sewer systems. Of course bankers were a major focus of these concerns, but when they did jail some Nazi bankers the Americans found themselves traipsing back and forth to the bankers' prison cells to solicit their advice, and eventually all the bankers were released and "rehabilitated." They, like the civil engineers, the agronomists, the architects, and other groups were considered too important to be judged and jailed. The need to rebuild overwhelmed the desire to punish.
And this gets me to the point I want to make: cases like bankers who lost trillions and Nazi waterworks managers bring to the fore a deep conflict between two ways of understanding or evaluating society: one based on ethical judgments that divides us into good and bad, and another that focuses on expertise and divides us into those who know how and those who don't. It sometimes seems to me that these modes are fundamentally incompatible and often cut against each other; valuing expertise means disregarding moral character, and vice versa. I wonder if the conflict between these two way of thinking about society has a long and important history
In ancient Israel the leaders of the ethical judgment school were the prophets. They called down judgment on the wicked, not sparing irrigation experts because their knowledge was too important. These days, I submit, ethical judgment is the mainstay of political populism. Populists scorn expertise; don't bother trying to tell them that experienced politicians can get more done, or that we need Wall Street bankers to make the economy work. Populists tend to see all problems as moral problems, especially problems of corruption. We don't need experts in charge, we need good people in charge. To the extent that "drain the swamp" means something more than tossing out the other party, it implies that insiders have no special knowledge or expertise, they just pretend to in order to line their pockets.
In the populist mind, technical problems are trivial; what matters is having the right morality. Taken to extremes you get statements about how easy it would be to bring back manufacturing jobs, or from the other side a suspicion that we don't have a male birth control pill because of simple sexism. What is lacking is the right moral character, because to really good people what needs to be done is obvious.
To get back to 1945 for a minute, consider what actually happened in Germany and Japan. After less than a decade of austerity and rubble clearing, both nations embarked on extraordinary economic growth. The managers of that growth, by and large, were ethically and politically compromised people. It was not those who resisted tyranny who rose to the top, but those who had made horrific systems run. In western Europe many of the actual anti-Nazi resisters were communists, and they were quickly sidelined as the Cold War settled in. After a brief nervous time the old elite, which had mainly collaborated, was firmly back in charge, the rebellious rabble of the resistance put back in its place. Of course that was not entirely true, but it certainly felt that way to many anti-Nazis. What mattered after the war was what had mattered before and during: family, education, connections, political and managerial skills. Morality and especially resistance to tyranny were shoved aside.
The other question I want to ask is, how much does the expertise of elites really matter? After all the Soviets killed all the bankers and managed, after stumbles, to keep the country running and even modernize it. Do we really know that Germany needed its old bankers in 1945, or that America needed Wall Street in 2009? Or is that just an assumption shared by other people who are either also in the elite or wish they were? Some of the most notorious philo-Nazis in France were fashion designers, and they all came through the war and the vengeful aftermath in great shape, because, I guess, stylish clothes are as important to modern Europe as water systems or banks.
Here's another interesting example: recent events in Egypt. The revolution started as a struggle within the urban elite, with Mubarak's corrupt system on one side and on the other people who wanted a more open society and economy, like in the US or Europe. But when elections were held it turned out that a majority of Egyptians supported neither elite faction; they saw the nation's problems as fundamentally moral, and their solution was to bring in the Muslim Brotherhood. They wanted a clean sweep of corrupt insiders, not managerial improvements. Aghast, the pro-western intellectuals immediately turned to the Army to get rid of the Islamists, and the corrupt system was restored.
I feel muddled. I believe in knowledge and skill; it has taken me years to learn how to run a $100,000 archaeological project effectively, a simple problem compared to running a big bank. But I also believe that sometimes elites use their special knowledge to justify enriching themselves to a degree wholly unjustified by their actual importance. The elites are divided from the rest in important ways, and ordinary people are entitled to stand up for their view of the world.
How much would jailing the Nazi bankers and the Japanese economic planners in 1945 have hurt the future growth of those countries? And how important is that economic growth (and the greater life expectancy etc. it created) compared to punishing those who abet tyranny and genocide?
How much would prosecuting a bunch of bankers in 2009 have hurt the US economy, and is there some countervailing good – call it justice, or simply a sense among ordinary people that the elite have to follow the rules, too – that would have made that financial loss worth it?
How much immorality should we tolerate in hyper-competent people? And how much reduction in living standards and the general coolness and excitement of our world should we tolerate in pursuit of a more ethical world?