Paul Krugman: The Madoff Economy

The revelation that Bernard Madoff - brilliant investor (or so almost everyone thought), philanthropist, pillar of the community - was a phony has shocked the world, and understandably so. The scale of his alleged $50 billion Ponzi scheme is hard to comprehend.

Yet surely I'm not the only person to ask the question: How different, really, is Madoff's tale from the story of the investment industry as a whole?

The financial services industry has claimed an ever-growing share of America's income over the past generation, making the people who run the industry incredibly rich. Yet, at this point, it looks as if much of the industry has been destroying value, not creating it. And it's not just a matter of money: The vast riches achieved by those who managed other people's money have had a corrupting effect on our society as a whole.