Occupy Wall Street protesters are not alone in asking, “How did it come to this?” Frustration about the economy is palpable, and crosses every area code of the political spectrum. Tea Party candidates fill television screens, Libertarians are calling for a return to the gold standard, and Democrats look more anxious than normal at Sunday morning farmers markets. Three years after the financial crisis, we’re still craving a narrative that explains stagnant growth, high unemployment, and median household income has dropped 9.7 percent since December of 2007.
Michal Lewis’s new book, Boomerang: Travels in the New Third World, does not disappoint. “One of the hidden causes of the current global financial crisis,” writes Lewis, “is that the people who saw it coming had more to gain from it by taking short positions than they did by trying to publicize the problem.”
In the ensuing months, politicians and policymakers have provided little clarity; devolving, at times, jargon (i.e. “quantitative easing”) that would turn George Orwell’s stomach. As a recent article in Vanity Fair charged, “getting the facts out to the public—was at odds with [Treasury Secretary Tim] Geithner’s perceived conviction, shared by the Wall Street establishment, that the details of the banks’ TARP rescue should be hidden from public scrutiny whenever possible in order to give the banks time to recover…”
Nor, it seems, has he been particularly eager to chase a sizable paycheck (although as a recent profile in New York magazine points out, paychecks seem to follow him). Lewis left Solomon Brothers in the late 80s to write Liar’s Poker, a semi-autobiographical memoir that has become “recommended reading” at Morgan Stanley. In the past two decades, Lewis has produced a number of volumes—including bestsellers like Moneyball and The Big Short—each distilling otherwise opaque subjects like bond trading and credit default swaps into stories that read more like Elizabethan drama than an economics textbook. Boomerang, his latest stab at the global debt crisis, is no exception.
With its penchant for social critique (“It’s the sort of place bankers stay because they think it’s where artists stay.”), political incorrectness (“The sounds from the other side of the wall are roughly those made by the Stoor hobbit in Lord of the Rings… Then I realize: it’s just Icelandic.”), and scatological humor (“There’s a popular German folk character called der Dukatenscheisser (The Money Shitter), who is commonly depicted crapping coins from his rear end.”), Boomerang does not disappoint.
To simply blame banks or government policies… is to deny what Salman Rushdie once called “the basic idea of all morality: that individuals are responsible for their actions.”
Somehow, Lewis was able to weave economic portraits of Iceland, Greece, Ireland, and Germany into a tome that is as edible as grandma’s challah bread and is, at times, as crass as an episode of South Park. Numbers and footnotes do not get in the way, nor are many names disclosed, but by the time you realize this you’re too far down the rabbit hole to care. Truth here—that “somewhere between 30 and 40 percent of the activity in the Greek economy that might be subject to income tax goes officially unrecorded” or that Ireland is more likely to default than Iraq—is stranger than fiction.
Which doesn’t mean that truth is particularly comforting. Lewis’ journey through what he calls the “new third world” is not so different from Joseph Conrad’s Heart of Darkness. Riding this river of economic decline does not lead us into the wilds of Eurozone negotiations; it leads us to ourselves. Like Dorothy’s ruby slippers, it takes us home.
“The polls show,” Mark Paul, author of California Crackup: How Reform Broke the Golden State and How We Can Fix It, tells Lewis in Boomerang’s final chapter, “is that people want services and not to pay for them. And that’s exactly what they have not got.” According to a study by the PEW Research Center, the unfunded retirement liabilities for public sector workers—police officers, firefighters, teachers, municipal workers—tops out at more than a trillion dollars.
Yet, this problem, Lewis writes, “isn’t a public sector problem, it isn’t a problem with government; it’s a problem with the entire society… It’s a problem of people taking what they can, just because they can, without regard to the consequences.” To simply blame banks or government policies, as so many have done, is to deny what Salman Rushdie once called “the basic idea of all morality: that individuals are responsible for their actions.”
In this respect, and in others, the United States differs significantly from other nations facing economic turmoil. We are still the richest nation on the planet. We have an abundance of natural resources, a collection of outstanding universities, and an innovative sprit that is unparalleled. “It’s not that we’re insolvent and can’t pay our bills,” San José Mayor Chuck Reed told Lewis, “It’s about willingness.”
Faced with a public debt crisis, layoffs, unemployment, unfunded pensions, mounting student loan debt, an unpopular congress and president, and a cadre of protesting hipsters, it might be an apt time to follow the advice of a man who turned a small technology company into one that this summer had a larger cash reserve than the U.S. Treasury: think different.