Over at Princeton University Press, chapter 1 of Charles W. Calomiris & Stephen H. Haber's Fragile by Design:The Political Origins of Banking Crises and Scarce Credit:
Everyone knows that life isn’t fair, that “politics matters.” We say it when our favorite movie loses out at the Academy Awards. We say it when the dolt in the cubicle down the hall, who plays golf with the boss, gets the promotion we deserved. We say it when bridges to nowhere are built because a powerful senator brings federal infrastructure dollars to his home state. And we say it when well-connected entrepreneurs ob- tain billions in government subsidies to build factories that never stand a chance of becoming competitive enterprises.
We recognize that politics is everywhere, but somehow we believe that banking crises are apolitical, the result of unforeseen and extraordinary circumstances, like earthquakes and hailstorms. We believe this because it is the version of events told time and again by central bankers and treasury officials, which is then repeated by business journalists and television talk- ing heads. In that story, well-intentioned and highly skilled people do the best they can to create effective financial institutions, allocate credit effi- ciently, and manage problems as they arise—but they are not omnipotent. Unable to foresee every possible contingency, they are sometimes subjected to strings of bad luck. “Economic shocks,” which presumably could not possibly have been anticipated, destabilize an otherwise smoothly running system. Banking crises, according to this version of events, are much like Tolstoy’s unhappy families: they are all unhappy in their own ways.
This book takes exception with that view and suggests instead that the politics that we see operating everywhere else around us also determines whether societies suffer repeated banking crises (as in Argentina and the United States), or never suffer banking crises (as in Canada). By politics we do not mean temporary, idiosyncratic alliances among individuals of the type that get the dumbest guy in the company promoted to vice presi- dent for corporate strategy. We mean, instead, the way that the fundamen- tal political institutions of a society structure the incentives of politicians, bankers, bank shareholders, depositors, debtors, and taxpayers to form coalitions in order to shape laws, policies, and regulations in their favor— often at the expense of everyone else. In this view, a country does not “choose” its banking system: rather it gets a banking system that is con- sistent with the institutions that govern its distribution of political power.