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Paved with good intentions: Misdirected idealism in the lead-up to 2008’s GFC

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  • Anthony M Gould
  • Milène R Lokrou

Abstract

Irresponsible lending practices on the part of financial institutions and proliferation of tradable derivatives were key causal agents of the 2008 financial crisis. However, it is less clear why, historically, loose credit arrangements were so widespread. Somewhat misleadingly, much conjecture has laid blame at the feet of financial institutions themselves. While it is true that duplicitous and even corrupt lending practices were consequential antecedents of the crisis, a legacy commitment to certain – laudable – elements of New-Dealism created context for these elements to become established. To understand really what went wrong, it is necessary to look back before the 2000s and appreciate the interaction that was occurring between a long-term policy commitment to neoliberalism and piecemeal/fragmented application of approaches that aimed to assist financially disadvantaged people. Using the analogy of heart-attack pathology to guide some of its analysis, this essay argues for better policy-integration. JEL Codes: G01, G2, F66, H12, J52

Suggested Citation

  • Anthony M Gould & Milène R Lokrou, 2018. "Paved with good intentions: Misdirected idealism in the lead-up to 2008’s GFC," The Economic and Labour Relations Review, , vol. 29(4), pages 394-409, December.
    • Handle: RePEc:sae:ecolab:v:29:y:2018:i:4:p:394-409
    DOI: 10.1177/1035304618810974
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    References listed on IDEAS

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    More about this item

    Keywords

    Business cycle; collective bargaining; economic stimulus; employment conditions; global financial crisis; globalisation; industrial relations; Keynesian economics/theory; labour markets;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G2 - Financial Economics - - Financial Institutions and Services
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation

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