Here’s a fascinating psychological take on our current economic crisis: Journalist and cultural historian Neal Gabler’s typical beat is the entertainment industry, but in a Boston Globe op-ed column titled “The Gaggle of Economics Sociopaths” (pay-walled link here), he turns his attention to the recession and the psychological dysfunction that has been driving it. He is among a growing number of thinking people who are asking questions such as:
How can bailed-out investment houses be doling out millions of dollars in bonuses to the very executives who help to create the meltdown in the first place?
How can the credit industry be raising interest rates on credit cards to unprecedented levels?
How can the financial services industry be devising new risky investment vehicles even after all that we’ve just been through?
In response, Gabler points to the rise of the “economic sociopath,” and he cites the Diagnostic and Statistical Manual of Mental Disorders, used by psychologists and psychiatrists:
The manual describes a broad category called “antisocial personality disorder,’’ which includes those whom we commonly describe as sociopaths. According to the manual, this disorder manifests itself, among other ways, in “deceitfulness’’ as indicated by “conning others for personal profit or pleasure’’; “irresponsibility’’; and “lack of remorse as indicated by being indifferent to or rationalizing having hurt, mistreated, or stolen from another.’’
One could easily make the case that Bernie Madoff, R. Allen Stanford, the subprime mortgage pushers, the derivatives dealers, and the rest of the Wall Street gang were all economic sociopaths who were actively hostile to the interests of the American people and wholly devoid of conscience.
Gabler’s thesis makes eminent sense. These folks knew the tragic endgame that was in sight, yet they squeezed everything they could from this economy until it imploded. Many of their victims — yes, victims — are suffering now; lives have been changed permanently for the worse. In the midst of all this, people who have profited mightily from that pain continue to devise new ways to inflict it.
Gabler expresses doubts about the effectiveness of stronger regulation as a long-term solution. I believe that beefing up the substance and enforcement of regulations is a start, but I agree that the problem goes deeper than that. Sociopaths are more common that you might think; one estimate says that 4 of out 100 people have sociopathic tendencies. Unfortunately, they appear to be disproportionately drawn to vocations such as high finance, where they can inflict wreckage in the name of entrepreneurship. How do you regulate that?