The Financial Crisis in Perspective (Collection)

19. Cult of Risk

As money and debt became key drivers of economies, bankers gained “juice”—influence. Related industries, like housing, also lobbied relentlessly for initiatives that increased the supply of money for a home of one’s own.

In The Logic of Collective Action and The Rise and Decline of Nations, American economist Mancur Olson argued that in democratic societies and market economies small coalitions form over time. They use intensive, well-funded lobbying to influence policies that benefit members, leaving large costs to be borne by the rest of the population. Coalitions accumulate, ultimately paralyzing the economic system and causing inevitable and irretrievable economic decline.

In the article “The quiet coup”¹ and book 13 Bankers ...