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Stupid Like a Fox

It’s a common problem in the nooze lately.  A story is told with blank objectivity over a few minutes of radio time or a several column inches of newspaper.  It may have a decent interjection of context in the form of a short history lesson or a few juicy quotes that allow the participants to describe why they did what they did.  Yet, in the end, there seems to be something missing.  The story, despite the best efforts of the reporter, still just doesn’t make sense.

molotov-cocktail200We encountered some of this here in the USofA when the markets started to fail dramatically.  There was a daily grind of failures and bailouts reported, a constant stream of numbers theoretically relating to real money that added up to some really big number.  But how did all of this happen?  What got so pathetically out of whack that the promises made to a generation of 401k holders simply disappeared?

Most people I know have no idea how it happened.

This is being repeated in Gaza right now.  I’ll leave aside my feelings about who is to blame for what and go right to the part that no one seems to understand – how could Hamas shell Israel for months and not expect them to someday march right in and kick serious ass?  We can read about the various horrors being committed and form our opinions, but the fact remains that the horrors were more or less inevitable no matter which of the two paths of logic you follow.  Given that what is happening is indeed a horror, how can this happen?

The short answer is that events have a way of getting away from big institutions these days.  Financial companies and governments are all doing their best to surf the waves of history, but from time to time they wipe out spectacularly.  This runs counter to what we expect of the institutions since they are supposed to be part of the glue that holds a complicated world together.  The main feature of the world we live in is that we all have access to an amazing amount of individual information and, through it, power, but we rely on some sense of coherence to make it all work.  That same access to information has made life difficult for the institutions that have to compete with each other for relevance, making their roles as maintainers of status quo rather iffy.

If you think of this the way you might think of a lawyer as an “officer of the court”, it makes sense.  They have their own to look out for, first.  Over the long haul, that causes a lot of trouble.

There are reasons why these things happen.  The financial institutions failed in part because the eternal search for an edge over each other allowed things to get so complicated that no one was able to understand it anymore.  Hamas, for its part, clearly regards the Palestinian Authority as their “enemy” and consistently acts to position itself as the rightful defender of the people regardless of how suicidal their efforts seem.  In both cases, however, the institutions act out of rather narrow interests that, ultimately, seem rather dumb from a distance.  But up close and in the moment, they make perfect sense.

How can these kinds of events be reported so that the reports on the radio and newspaper make sense to us?  They probably can’t.  There’s only so much context that you can put on a story without a ton of work.  You have to find someone right there in the moment that is brutally honest about what motivates them and what therefore defines the institution that they represent.

Best of luck with that.  We’re all far better off getting a good course in what motivates people and letting it all develop slowly.  Ultimately, we have to take a very active role in the institutions that shape our lives even as we work to take care of ourselves.

4 thoughts on “Stupid Like a Fox

  1. “Institutions” are just guys — often very unsocialized guys, hence the hiding behind corporate identity.

    From the standpoint of Wall Street securities-lawyer’s spouse (and both of us “officers of the court”), I must say that the whole mess was quite dreadfully foreseeable, beginning with Sandy Weill’s virtual repeal of Glass-Steagall (followed by the real thing) over ten years ago. The New York Times began reporting on the subprime mortgage problem about six or seven years ago, from the other end of the telescope (the heartbreak of early defaulters). And why wasn’t the collapse of Enron a wake-up call? As someone who was already awake, I’m not sure that I don’t envy the sleepers.

  2. RJ, I totally agree, and I predicted this as much as two years before it happened. I did this by reading people like John Mauldin and Bill Gross. If you follow the links I gave, you’ll see this.

    But most people, unimaginably, did NOT see this coming – even people in financial institutions. Why? Was this a deliberate blind eye to the obvious? I’m starting to realize after chatting with a lot of people that, no, they really didn’t see it coming. They should have, yes, it was obvious as all Hell. But they didn’t.


    Something has gone terribly wrong. That’s all I can tell you. I agree, it’s inexcusable that so few people saw this coming. But that appears to be the truth – they didn’t.

  3. Pingback: Underwrite and Under-Write « Barataria - the work of Erik Hare

  4. Pingback: Televised no, Twittered yes « Barataria – the work of Erik Hare

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