Wednesday, November 26, 2008
The Stupidity Explanation
Were the bankers who landed us in this mess wicked or stupid? It has to be one or another. Some are now going for stupid, see Friedman and Lewis. I think this is right, but it's a particular kind of stupidity - the stupidity of isolation. I've blogged in the past about the loathsome behaviour of City boys and hedgies at the height of their success. It was the behaviour of people without culture and without any sense of their connection to other people. They were isolated within their own phenomenally narrow set of values. Such isolation breeds stupidity because judgment is discarded as it might threaten the gamblers' groupthink. Outsiders are mocked because they 'don't understand'. And it's true, we didn't, we just thought they did and we were wrong.
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A blog about, among other things, imaginary ideas - What ifs? and Imagine thats. What if photographs looked nothing like what we see with our eyes? Imagine that the Berlin Wall had never come down. What if we were the punchline of an interminable joke? All contributions welcome.
I think they were greedy. They saw a way to make huge instant profits, drive up their stock prices, and make huge bonuses. Tell me this, how many of these men who drove their companies into near bankruptcy have themselves gone into bankruptcy? I'm sorry but I'm not prepared to say that a guy who made tens or hundreds of millions of dollars for himself is stupid. I can only assume that they didn't care what they were doing to their company as long as their bonuses were big.
ReplyDeleteI'm sure there was no shortage of stupidity bred of narrow self-interest ... but things can go spectacularly wrong without anybody being particularly stupid or wicked. It doesn't have to be one or the other.
ReplyDeleteA great many people like to crap on about how conventional economic models are fundamentally flawed etc. etc. Anyone sympathetic to those arguments certainly ought not think that stupidity or wickedness are the only options: the main candidate paradigm to replace conventional economics is 'complexity', wherein catastrophe may be both inherently unpredictable and produced by sensible and benign people acting sensibly and benignly.
They behaved like bankers and spivs always do. No surprise in that.
ReplyDeleteBut the government should have protected us from their worst excesses. But it didn't when that's the main justification for its power over us. It is there to keep the weak off the strong and the rich off the poor and it did neither.
Why?
Because this crew has a longer term wider intention to create a command economy and subsume everything under the banner of the state. This whole debacle if not created by Brown and Mandleson, is certainly now being used to further their purpose.
So ... your point is? The same could be said of 1001 groups beginning with the police and the military and ending in footie hooligans. Outsiders are mocked and civilians "don't understand". What it suggests to me is that tribal behaviour is wired in, very powerful and very dangerous. Neither greed nor stupidity nor any other blame game is needed, just human nature. And the tribe is automatically isolating: an kind of arrogant xenophobia goes with the territory.
ReplyDeleteSo one conclusion is that no tribe should ever be given enough power to bring the rest of us down. We gave that power to the bankers. Never again one thinks, but there will be an again. We can't help it.
Three words (I coined 'em two months ago to describe the bankers): "Cupidity and stupidity." They go together like apple pie and ice cream.
ReplyDeleteI could only manage two words, Bankers & W***ers; they go together quite naturally, like Edward & Sophie and Waste & Space.
ReplyDeleteThat old Geordie chestnut about two lawyers would fit nicely "Hadaway & Shite"
ReplyDelete"Were the Social Workers who landed us in this mess wicked or stupid?
ReplyDeleteIt does not help at all to talk in such terms as groups. There are good and bad bankers as there are good and bad social workers.
Its the governments job to mind the shop, the idea that when you go to work you have to save the world too is a bit far fetched, its a failure of our political culture as it is our banking culture.
For all there differences the 5 main schools in economics seem to agree that if interest rates had not remained low during the 02/05 period this super property bubble would not have happened.
This is NOT economic fundamentalism Bryan its Financial fundamentalism, they believed in the truth of their numbers and instruments, now how did that really come about?
Could it be they "Quants" looked out into the wider society and saw that we did not like risk, (from health and safety diktat to the precautionary principle)so they sought to eliminate it? and we through our politicos embraced it.
I think it was Ibn Khaldun the Islamic polymath who pointed out that as societies became more successful they become more stupid.
The more connections we make, the more secure we feel and its a false security.
Just today on the news, In my home city of Sheffield, one of the females in the incest case that is gripping the nation wanted to stop the abuse in 1998, but could not get an assurance from the authorities that she would keep her children.
The idea that the Banks are not regulated is stupid, the EU alone provides 4500 pages of it, the idea that more and more sophistication is created through a more complex web of words and micro management does not work for banks as it does not work for social services.
Speaking of stupid, Thomas Friedman himself is not the sharpest tool in the box, viz. his asinine 'the world is flat' schtick. And he looks like Dr Phil.
ReplyDeleteGreedy, stupid, arrogant, and completely lacking in conscience. For the grubby details, I suggest the entertaining book TRADERS, GUNS AND MONEY by Satyajit Das, a rehabilitated derivatizer.
ReplyDelete