Michael Lewis gets ‘scandal’

Posted by Marc Hodak on December 16, 2008 under Scandal | Be the First to Comment

He thought the cause of the financial crisis was “simple. Greed on both sides—greed of investors and the greed of the bankers.” I thought it was more complicated. Greed on Wall Street was a given—almost an obligation. The problem was the system of incentives that channeled the greed.

This comes from Lewis’s wonderful article in Portfolio this month.

There’s something primal about our collective affinity for morality plays. Sex scandals can always be blamed on lust or envy. The most interesting murders can often be attributed to pride or wrath. Financial scandals are invariably rooted in greed. Morality tales share their religious roots in a mythical world view that attempts to provide a consistent explanation for every crazy thing that we can neither understand or control. We learned communal prayer and dance as a way of making the rains come, as if we could lash God to our desires by simple utterances and movements.

When the world seems to be falling apart as it is now, we revert to those superstitions, to the archetypes they spawned, and to the cleansing purges of whatever evil we can collectively identify. We instinctively look for the leadership that will save us from the dark forces arrayed against us. Many people seek that leadership from government.  (Others of us see that as the dark force.)

It takes a certain geeky distance from reality, some might say a dissociation, to appreciate the chaotic nature of what we’re dealing with when it comes to emergent phenomena, like global economies. It takes a studied deference to uncertainty and the huge realm of ignorance best characterized as “the things we don’t know we don’t know.” It takes a powerful discipline to focus on the negative, hidden, secondary consequences of potential “cures” when the primary beneficiaries of those cures are screaming at you to save them.

One would have to look to Far Eastern cultures to find a suitable mythology for for the unseen benefits of minimal intervention. We simply don’t have that in the West. In the West, we have a relentless search for villains.