Brooks sums up what Niall Ferguson said about modern financial crises in The Ascent of Money:
"Too many people were good at math but ignorant of history."
Where you fall in the two schools of thought is important to what policy you'll prescribe. I agree with Brooks, financial CEOs aren't as smart or as well-organized as Simon Johnson (and the Left generally speaking) make them out to be.
The greed narrative leads to the conclusion that government should aggressively restructure the financial sector. The stupidity narrative is suspicious of that sort of radicalism. We’d just be trading the hubris of Wall Street for the hubris of Washington. The stupidity narrative suggests we should preserve the essential market structures, but make them more transparent, straightforward and comprehensible. Instead of rushing off to nationalize the banks, we should nurture and recapitalize what’s left of functioning markets....To my mind, we didn’t get into this crisis because inbred oligarchs grabbed power. We got into it because arrogant traders around the world were playing a high-stakes game they didn’t understand.Always makes me happy when I'm reading (or have read) the same thing that others are reading and find important to pass along.