Passing the buck is one of the oldest and most often used traditions of democracy. At the annual World Economic Forum meeting in Davos, Switzerland last January, admonishment for bankers on one hand and praise for President Obama on the other were abundant.  European Central Bank President Jean-Claude Trichet applauded the Obama administration’s intervention in the U.S. banking system and blamed bankers for “generating the biggest financial crisis since the Great Depression.”

However, responsibility for the global financial crisis cannot be blamed on bankers alone. The U.S. government and homeowners played an important part in the web of high leverage, high pricing of assets, and greed that entangled the American financial system. Much of the controversy surrounding the question of who to blame arises from the objective of proportionally allocating the appropriate blame to the appropriate party.

At issue are the misleading tactics that banks used to lure first-time homebuyers. First-time homebuyers aiming to fulfill the American Dream of owning a home were not irrational in their decision to sign a contract for a home whose mortgage they clearly could not afford. The transaction occurred between the banks and consumers who were both financially dysfunctional, their financial dysfunction stemming from amassing excessive debt and experiencing mortgage aversion.  These were, at times, educated people who made poor financial decisions and miscalculated the risks involved.

President Obama, during his State of the Union address, told the country that it was going broke. But the rules of road as they are facilitated debt accumulation and high leveraging of assets. Bankruptcy laws, first-time homebuyer tax credits, and non-recourse loans all give the uninformed consumer incentive to buy a new home. Lest we as a people and as members of the largest economy in the world go bankrupt, we need to make policy decisions that bind all parties involved to a common fabric.

At Davos, French President Nicolas Sarkozy blamed globalization for the financial crisis. However, what we need is more, not less, globalization—Michael Dawson, a political science Professor at the University of Chicago, devised the term “linked fate,” a concept in which interdependence, which is similar to globalization, is key to promoting group interests above individual interest.  In determining public policy, powerful social concepts such as linked fate can be very useful for coming up with practical and sustainable solutions. To remedy the financial whooping cough Americans are going through, policy experts, banks, municipalities, and individuals should form a community advisory board. This panel would consist of respected members of the community—small business owners, local bank executives, parents, teachers, lawyers, etc.—who would strictly advise, not mandate, whether those seeking to buy a home are capable of deciding for themselves what is in their best short-term and long-term interests.

Creating multiple linked fate communities for the sake of financial recovery will be tough. But if defaulting on a mortgage hurts the local bank, which in turn hurts the local businesses and the community as a whole, then all parties will be much more meticulous when it comes to making financial decisions. Real estate agents who aim to make a profit will have less incentive to be deceptive because they will shop at the same small businesses that will require loans from the local bank to operate, which in turn will require the homeowners to be current on their mortgages to lend out more money.

What seems to be a complex web of interconnected and interdependent relationships in fact already exists in the form of globalization. The only difference is that, with globalization, activity at the microscopic level can have macroscopic ramifications if left unchecked. President Obama should emphasize increased globalization. By making people more interdependent and creating more linked fate communities across the globe, greed and excess on the part of bankers, laxity in regulation by governments, and poor financial decisions on the part of home buyers will be disincentivized, as individual interests will be secondary to group interests. The world as we know it will move toward greater cooperation and consensus and the buck will finally stop being passed around.

Patrick Jean Baptiste ’10, a Crimson editorial writer, is a biochemical sciences concentrator in Cabot House.