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By Don Phillips | 05-28-2009 05:36 PM

Bogle: The Capitalists Failed Us

The Vanguard founder and former chairman says a bandwagon mentality drove bankers to make decisions they presumably should have known better than to make.

Don Phillips: As a card-carrying capitalist, how do you feel about--or what lessons are there about capitalism from what's happened here, and how do you feel about the increased and expanded role of government?

John Bogle: Well, business brought it on themselves. This is certainly a crisis in capitalism. Judge Posner blames it all on the capitalistic system. He's the great Chicago School man everybody knows. University of Chicago Law School, Chicago Business School all teach us this.

The markets have to clear. They will produce great gains for us. Competition, free markets unimpeded.

So capitalism has basically failed us, and I think even worse--although Judge Posner does not agree with this--I think capitalists have failed us as well as capitalism.

I blame the capitalists actually more than capitalism, which gets to, Don, the endemic part of the system, which means that the idea that capitalism brought this crisis upon itself is even more acceptable, more understandable, in the whole scheme of things.

That is, these businessmen--take the bankers. All the other banks are doing these low loans, so their earnings are growing faster than ours are. So our directors and the analysts on Wall Street say, boy, you better get on the bandwagon and follow.

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