“It’s a combination of greed and ignorance of history”, he said, munching his flank steak salad, gazing out at the sparkling San Diego bay. “There’s no other explanation that works.” He had been discussing the destruction of investor value represented by the collapse of several stalwart financial institutions during the Global Financial Crisis.
“I’m sure there are books being written at this very moment, each chapter stemming from another headline, day by day”, responded his meal mate. “The opportunistic pundits will be trading on their notoriety to capture the best seller position when the devastated public begins to look for a way to understand what’s happened to them.”
I thought to myself, these two gentlemen have succinctly captured the essence of what we experienced in 2008 in the financial and capital markets. Yet again, we find ourselves aghast at the weapons of mass destruction of wealth that have been exploded in our global economy. For myself, if I have to live through another period of rampant greed, historical ignorance and (I’ll add my own ingredient to the dialogue) gullibility of the masses, I’ll probably hang up my capitalist guns and take a job as a dishwasher or customer greeter.
I don’t remember there being such huge fiascoes as what we’ve experienced since the 1980’s, during my childhood and early adult life. But as I’ve learned from reading about the “madness of crowds” in MacKay’s 1841 tome concerning such insane phenomena, there is an inherent human tendency towards immediate gratification coupled with rationalization of essentially stealing someone else’s wealth in order to augment one’s own. Humans will believe whatever allows them to satisfy their desires without guilt. If they thought for one moment that what they were doing was truly injurious to someone they loved, they probably wouldn’t sell those sub-prime mortgages to people who couldn’t qualify honestly. They probably wouldn’t package those collateralized debt obligations and sell them to retirement funds, with a phony triple-A rating stamped on the prospectus. They would likely hesitate to borrow like it was Monopoly money, leveraging the balance sheet so heavily that it would take Atlas to pull it up to even. But thanks to self-deception and rationalization, these ravenous hoarders of riches simply say to themselves, “I’ll get mine. I’m due.”
Humans are really, really good at rationalizing. We can come up with a plausible story to support just about any larcenous intention. Why, the eight Crusades were repeatedly justified by promises of eternal joy and fulfilling God’s will, in order to allow the most brutal, callous, thieving, barbarous behavior. The Nazi extermination of the Jews was justified by claims that economic threat was the primary purpose of the Judaic socio-ethnic class. And now, since the bubble of the savings and loan crisis burst over 25 years ago, we have found ourselves repeatedly visited by the Ghost of Greed Past. Is it any wonder that many countries around the world find it difficult to believe we Americans actually believe in the American Dream of equal opportunity, fair play, individualism, accountability, ingenuity, meritocracy and tolerance? Every day a headline screams the opposite is true. And those are the American newspapers. Imagine what the rest of the world prints.
To be fair, the messes we’ve made of our own yard can’t be laid evenly across the population. The few (in number), yet powerful beyond measure (in influence) have mucked it up. The problem is that those few got to where they are because the many have pretty much checked out. The vast majority of our citizenry just hasn’t been paying attention. Why?
The men at the table were pondering the same thing as they finished up their lunch and sipped coffee. One stroked his chin and said, “I call it the One Inch Theory.”
“What does that mean?” asked his companion.
“I think that about sixty to seventy percent of the population is incapable of paying attention to any one topic sufficiently to delve more than one inch deep into it”, said the chin-stroker. “And the media panders to that short attention span, providing messages that barely achieve even that paltry depth. The pandering further shortens the attention span, because we all get used to digesting one-liners and simple graphics that are as close to a true depiction of the facts as a paper bag is close to describing a tree.”
His friend mused, “So only thirty to forty percent of the population is learning anything of substance about a given issue, and the voting public reflects the One Inch Theory.”
“I think the percentage of people who do dig deeper is even less than that” Chin Stroker said gloomily. “I think only one in ten actually tries to get below the superficial level and attempt to influence decision-making based on thorough understanding. Nobody has the time, even if they have the ability and motivation.”
The One Inch Theory seems to make sense to me. It explains why so many people can be duped repeatedly by the greedy, the power-hungry and the just plain mischievous. Whether you voted for him or not, you have to admit Obama nailed one issue: intentional diversion. Any magician will tell you that if you want to fool the crowd, make sure they’re looking someplace else when you hide the gold nugget under one of the walnut shells.
Keep them so busy with shallow distractions that they don’t dig deeper than the length of a worm.