Bankers are not your Friends

Would you be friends with this guy?

The paradox of thrift is a good example of the idea that in terms of economics, making intuitive analogies between countries and people doesn’t always lead to a correct interpretation. A parallel thought is that bankers are not your friends. By this I don’t mean that I don’t have friends who are bankers (I do, and Zuuko has even more!) nor that bankers are evil (some are, some aren’t). By this I mean that the moral intuition about how friends deal with lending money is not a very useful anaogy to thinking about how bankers deal with lending money. If you are a person who needs some money and a friend lends you money, they are doing you a favour. If you then betray that trust and don’t return their money, that is a personal failing on your part in terms of your relationship with your friend. But if you are a country that needs some money and a bank lends it to you, they’re not doing it as a favour, they are doing it as an investment, considering that doing so is good in the long run. But the morals of investment are not the same as the morals of lending money to your friends. Say I invest some money in Apple and then the next day Steve Jobs dies and they pick Dan Quayle as the CEO and suddenly Apple starts to suck and I lose all my money. Would you analyze this to say Apple is a moral failure in its relationship to me? I don’t think so. Apple screwed up. Additionally, I screwed up in investing my money. And yet the moral interpretation that is appropriate to loaning from friends keeps cropping up. From ethnobongo’s comment on Zuuko’s EVAT post to  the SNL skit that Zuuko pointed to in the Twilight Zone post. But (to use the last example) China keeps buying US debt not as a personal favour, but because they think it is a good idea. The US has even been on record telling China to stop doing this.

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One Response to Bankers are not your Friends

  1. Zuuko says:

    Fuck you. I don’t look like that.

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