Since the financial crisis and the related euro debt crisis, the use of the argumentum a crise has been ubiquitous. A more selective use of the argumentum a crise would improve the quality of public policy discourse.

The argumentum a crise is as simple and versatile as it is powerful and prone to misuse. It starts with ‘An important lesson from the crisis is that’ or ‘The crisis has taught us that’ followed by a statement (eg, ‘banks are fragile’), which in turn supports a policy recipe (eg, ‘the banks’ capital regime should be tightened’).

Since the financial crisis and the related euro debt crisis (together, ‘the GFC’), the use of the argumentum a crise has been ubiquitous. The argumentum a crise can in fact support any policy solution loosely related to any of the events that took place during the GFC. Because that includes anything related to anything bad that happened in a time-span of five years during which Murphy’s law happened to apply even more often than usual, there is virtually no area of financial, business, or even public finances regulation that the crisis did not teach us something about and did not prompt us to act upon with new rules.

The power of the argument lies not only in its scope but also in its very content. The GFC was such a bad sequence of events and had such dreadful consequences on Western societies that the argumentum a crise makes the precautionary principle incredibly hard to rebut. This makes the argumentum a crise an attractive rhetorical device, since its near costless insertion into an argument in support of a claim (even if conjectural) may shift the burden of proof regarding the efficiency with which a given policy may prevent some risky phenomenon, or regarding the strength of the alleged link between that phenomenon and the crisis. It doesn’t matter how small the impact of a proposed rule is on a given phenomenon, so long as it can be argued that this phenomenon may, however little and indirectly, contribute to trigger another crisis. Once a link is established, if only conjecturally, between a given policy and any of the events and circumstances of the GFC, any argument against that policy will be heavily discounted: its costs, its unintended consequences, its likely ineffectiveness.

Suspecting that such a powerful rhetorical device may be prone to overuse, we decided to conduct a small study. We searched the European Commission’s website for the phrase ‘lesson(s) from the crisis’ and found 50 documents using the expression 72 times between 2008 and early 2015.((Some of our examples below do not include this exact phrase, but were found since they were in a document which included it, for example as a section heading.))

As we did not conduct searches for similar phrases such as ‘The crisis has taught us’ or ‘What we learnt from the crisis is,’ our results are just a sample of a wider population of argumenta a crise used in EU policy making. We should also clarify that there is nothing distinctive in the use of the argument in EU documents: the same argument was used across member states and in other jurisdictions as well. After all, its use as a political tool has been theorised by Obama’s then chief of staff Rahm Emanuel back in November 2008 (see here).

The areas where lessons have been learnt are almost as widespread as the EU sphere of competence: We have come up with 37 categories (but of course one could group them into a lower number of broader ones). In addition to the obvious areas, like banking regulation, credit rating agencies, short selling, and so on, there are also some less obvious ones – from auditing to industrial value chains, from US/EU relationships to corporate restructurings.

While we acknowledge that a full rebuttal of the argumentum a crise would often require a thorough analysis of the real causes and implications of the financial crisis, we still found a number of instances where its opportunistic use has been self-evident. Here are some examples:

1. We have learnt (EU) platitudes.

‘If there is a lesson from the crisis [it] is that we are all interdependent.’ (see here)

‘[P]erhaps the main lesson from the crisis for policy makers is not to loose (sic) sight of the benefits of well-managed international economic integration and not to back out of reforms that will bolster resilience, enhance conditions for foreign investment, and help develop a strong and sustainable growth trajectory.’ (see here)

‘A lesson from the crisis is that for measures to be consistent and effective, they have to be prepared well in advance and to be coordinated at Community level.’ (see here)

‘Ensuring that public money is spent wisely and effectively in support of public policies is one of the major lessons of the crisis.’ (see here)

‘[T]he crisis has made clear that the real core issue is competitiveness, not only among Member States but also compared to other parts of the world.’ (see here)

‘[A]n important lesson from the crisis is that policies actually do make a difference.’ (see here) 

2. We have learnt things we already knew.

‘One important lesson from the crisis is not to rely blindly on outcomes of internal models.’ (see here)

‘One key lesson from the crisis has been that more attention needs to be paid to macroeconomic imbalances and divergences in competitiveness between EU countries.’ (see here)

‘Another lesson from the crisis is therefore the need for harmonised rules and good cooperation between s
upervisors dealing with different parts of the same cross-border group.’ (see here)

‘[T]he crisis has emphasized that growth and stability go hand in hand. A country cannot have sustainable economic growth and jobs creation nor sustainable social welfare if its public debt continues to spiral out of control.’ (see here)

3. We have learnt things, because you cannot avoid learning something in a five-year period; crisis or no crisis.

‘[O]ne lesson from the crisis is that many European manufacturing sectors active in global value chains depend on the timely delivery of key inputs produced by a handful of relatively small suppliers, in some instances only one or two.’ (see here)

 

4. We have learnt what we want to think we have learnt.

‘We learned that growth fuelled by debt is artificial and unsustainable.’ (see here)

‘The financial crisis had revealed that hedge funds could impact financial stability in ways that had not previously been expected.’ (see here)

5. Above all, we have learnt how to frame policy proposals as lessons from the crisis.

‘As perhaps the most important lesson from the crisis, there is a distinct need to create an enhanced culture for communication between those charged with governance and the auditor.’ (see here)

‘A clear lesson from the crisis is that Europe can succeed provided it acts collectively, as a Union.’ (see here)

‘Lessons to be learnt from the financial crisis in respect of the disclosure obligations and the Transparency Directive: towards further transparency?’ (see here)

Of course, we have cherry-picked the quotes above and used them out of context. There is no doubt that we have all learnt important lessons from the crisis((For what it is worth, the broadest lesson the crisis has taught us is, as Eugène Ionesco would have put it: ‘Markets have failed. Governments have failed. And I don’t feel so well myself.’)) and EU policymakers are no exception. In other words, we do not doubt that some, if not many, references to the crisis and its lessons are fully persuasive. Our point is simply that a more selective use of the argumentum a crise would improve the quality of public policy discourse.

(Note: Luca Enriques is the Allen & Overy Professor of Corporate Law at the Law Faculty of the University of Oxford, and Martin Bengtzen is a DPhil candidate at the same Faculty. This post originally appeared in the Oxford Business Law Blog)

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