Moral judgement and systemic risk

It's funny to compare the criticisms against the Chinese government corruption and the American financial crisis. The former, some say, is because of systemic failure, not moral failure. You have to change the entire system in order to eradicate corruption. Therefore, rule by virtue or moral education on the officials will not work, and even if someone is morally upright, he is doomed in the system that deeply flawed. When it comes to the American financial crisis, the argument is 180 degrees reversed. The system is OK, though it needs some patch works. It is the wall streeters that are morally corrupted and they should be responsible for what happened. President Obama's solution is filled with such moral judgement while left systemic problem out of the question.

Indeed, the new plan called for more power concentration in the hands of the Feds, which is by the way a private institution in essence. The Feds is a professional organization for sure. It's filled with Chicago/Princeton/Harvard educated economists. But as Greenspan pointed out in his interview, the Feds answers to no one in politics. Of course, it has to answer to the economic leaders, more specifically, bankers themselves. Giving Feds more power sounds like giving more supervising power to a financial guild to look after its members. True, there will be more regulations, more forms to fill, more bars to cross and one more agencies to answer, but at the end of the day, except the Wall Street gain and main street loose, what else is coming out of this government?

The corruption in China won't stop until some systemic reform is done to make those corrupted accountable, and the crisis will happen again even if all WS managers are morally clean. This whole system of educating, placing, cultivating money speculators will continue, if the opposite of actually creating and making stuff is not rewarded as much as the financial CEOs. So much for American democracy....