The problem with the reset metaphor — the idea of pushing a “reset button” — is its implication that the excesses and madness and dysfunction in our complex economic systems can be fixed easily.
There’s no question that at the highest levels, executive pay has gotten badly out of whack, and was symptomatic of the bon temps rouler spree we indulged for the last couple of decades. (A typical American CEO is now paid several hundred times what his average employee earns, whereas even in go-go Great Britain the ratio is only 22-to-one.) And there’s also no question that wildly profitable but wildly risky and unproductive speculation is a big part of what drove us into the ditch.
However, while the impulse to punish attractively unattractive scapegoats — such as Andrew Hall, the speculator to whom Citigroup owes a $100 million bonus for helping to make oil prices spike crazily last year — is an inevitable first phase of reset psychology, it won’t really fix the problem. Nor will the second phase, the initial, well-intentioned legislative attempts to put reasonable limits on executive pay — such as the Corporate and Financial Institution Compensation Fairness Act, which the House passed on Friday.
But a basic post-Age of Excess idea is now on the table: if the federal government is obliged to underwrite a vastly expensive safety net to save failing Wall Street entities, then the government — we — also have a right to craft sensible and effective regulatory mechanisms to rein in extreme and/or dangerous piggishness on the part of bankers and their agents. Which is why I’m hopeful about the next phases of the reset, as the legislation is refined to better do what we mean it to do.
Our paradigm change happened pretty quickly. Figuring out how to best execute that instant attitudinal change takes some time.