Shared by JohnH
Links to entire article which is available to non-subscribers until 6/13/11. HatTip to Dave Lull.
Take, for example, the recent celebrated documentary on the financial crisis, Inside Job, which blames the crisis on the malfeasance and dishonesty of bankers and the incompetence of regulators. Although it is morally satisfying, the film naively overlooks the fact that humans have always been dishonest and regulators have always been behind the curve. The only difference this time around was the unprecedented magnitude of the hidden risks and a misunderstanding of the statistical properties of the system.
What is needed is a system that can prevent the harm done to citizens by the dishonesty of business elites; the limited competence of forecasters, economists, and statisticians; and the imperfections of regulation, not one that aims to eliminate these flaws. Humans must try to resist the illusion of control: just as foreign policy should be intelligence-proof (it should minimize its reliance on the competence of information-gathering organizations and the predictions of “experts” in what are inherently unpredictable domains), the economy should be regulator-proof, given that some regulations simply make the system itself more fragile. Due to the complexity of markets, intricate regulations simply serve to generate fees for lawyers and profits for sophisticated derivatives traders who can build complicated financial products that skirt those regulations.
«Take, for example, the recent celebrated documentary on the financial crisis, Inside Job[…]Although it is morally satisfying, the film naively overlooks the fact that humans have always been dishonest»
I guess this moron needed a disclaimer at the beginning of the movie saying :
“While this movie focuses on group of individual, around a particular event, please don’t misconstrue that as denying the part of human nature that are condemned in the 10 commandments.”
As for:
“and regulators have always been behind the curve. The only difference this time around was the unprecedented magnitude of the hidden risks and a misunderstanding of the statistical properties of the system.”
They allowed fraud because they thought or pretended to think that the market could take care of itself. That’s the ideological backdrop, not that they were under “the illusion of control”. Instead, they voluntarily handed over control.
There are no regulators to blame, because they were regulators only in appearance.
If you remove authority, chaos ensues. Whether it is in Irak or Wall Street.
Call it hidden risk or misunderstood statistical properties, if helps you get your head around that self-evident truth.
And I still read plenty of buffoons’ comments all over the internet who worship this civilization denier?
The following link appears to actually work for the content for non-subscribers:
http://www.foreignaffairs.com/articles/67741/nassim-nicholas-taleb-and-mark-blyth/the-black-swan-of-cairo?gp=67606:5274422a4df7d314