Bystanders and Victims

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xxxxxx
Status: Martenson Brigade Member (Offline)
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Bystanders and Victims

Last Sunday (12/7/08) Nicholas Taleb and Pablo Triana wrote an interesting column for the Financial Times (http://www.ft.com/cms/s/0/4f86d422-c48f-11dd-8124-000077b07658.html ).  They used the Kitty Genovese murder in New York City in 1964 as a metaphor for the behavior of people in the current financial crisis. The attack on Ms. Genovese was particularly brutal;  her assailant came back three times over the course of a half an hour and her screams and pleas for help had to have been heard by nearly 40 of her neighbors.  Messrs. Taleb and Triana document the development of a psychological theory  that resulted from the event called the “bystander effect” which makes the claim that the larger the number of  observing bystanders the greater the apathy in responding to the plight of a victim.

 

The authors go on to exhort us all to object to the continued use of quantitative analytical models that have clearly failed to analyze much of any thing.  They point out that business school curriculum has not changed in the face of the failure of these approaches and those that continue to teach them are not challenged.  They make a case for urgent and strident actions to dispute the continued prevalence of the delusion system of sophisticated and complex financial products.

 

As someone who has been in the risk management business for fifteen years and who has repeatedly come up against the wall of mathematical certainty their argument is both appealing and validating.  The sense of being right in the end however is somewhat tempered by the suffering that we are all experiencing and likely to experience for some time to come.  Nevertheless, it’s nice to read thought pieces by experts of the reputation of Taleb and Triana that repudiate the single-minded reliance on mathematical models and their false underlying assumptions.

 

But there is something troubling about their use of one of New York’s most infamous murders as an analogy.  They suggest that the bystanders, in this case the risk managers and regulators suffered from apathy.  I would suggest that apathy is not a state of just not caring; it is actually active decision making that just feels like not caring because it is devoid of human compassion.  We seem to have convinced ourselves that our financial world is somehow disconnected from our ethical responsibilities.  We are learning that nothing could be farther from the truth.

 

The authors also suggest that the victims in our economic crisis are “the helpless retirees, taxpayers funding losses and perhaps capitalism and free society”.  I would suggest that the helpless retirees were just like I was when looking at my 401K statement; I wanted it to increase in value as rapidly as possible and I was not concerned or focused on how it happened.  As a taxpayer I may have become increasingly uncomfortable about two wars that didn’t seem to demand any sacrifice and credit cards that kept miraculously being showered on me, but again, not enough to change my behavior until the more recent past.  As for capitalism, somehow we have allowed the definition of this economic system to shift from being an environment where the entrepreneurial spirit could thrive to a defensive casino where the game was about keeping what you had and getting more.  As to our free society we choose to look the other way and be a little disturbed that a legal challenge has reached the Supreme Court that addresses the issue of whether or not the President has the right to hold a citizen in jail without charge

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Somehow, I’m not seeing a lot of victims here.  Certainly there are those who have lost a good deal but perhaps we would be better off looking at our participation in the problem rather than seeing ourselves as being betrayed by those who gladly took advantage of our sloppy attitudes.

 

But there is a more fundamental reason not to see ourselves as wounded by others.  Victims make lousy change agents.  “Scratch a victim and you’ll find a bully” my mother always used to say.  There is a broad streak of self-righteousness in those who would cast themselves on the loosing end of the greed paradigm.  Certainly there are those who never had the means to participate in the credit orgy who have been and continue to be the victims of a system that only values a certain segment of the population.  But as to the rest of us, give me someone who understands that they have behaved badly and vows to change; I’ll saddle up with them any day.

 

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ckessel
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Joined: Nov 12 2008
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Re: Bystanders and Victims
bsharon wrote:

 

But there is a more fundamental reason not to see ourselves as wounded by others.  Victims make lousy change agents.  “Scratch a victim and you’ll find a bully” my mother always used to say.  There is a broad streak of self-righteousness in those who would cast themselves on the loosing end of the greed paradigm.  Certainly there are those who never had the means to participate in the credit orgy who have been and continue to be the victims of a system that only values a certain segment of the population.  But as to the rest of us, give me someone who understands that they have behaved badly and vows to change; I’ll saddle up with them any day.

 

Welcome to the site!

I appreciate your very appropriate post Bill. Thanks

Cooper Kessel

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Ruhh
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Joined: Nov 12 2008
Posts: 259
Re: Bystanders and Victims
Quote:

... We seem to have convinced ourselves that our financial world is somehow disconnected from our ethical responsibilities...

Great to see this kind of thinking here. I think ethics is a direct relation to every aspect of the world and what it's become and where it can go.

For years now I have been preaching and subscribing to what is known as "The Dollar Vote" where basically every dollar you spend is a vote for how you want the world to be. 

this website sums it up pretty well. I also recommend watching this short video The Story of Stuff

Your money condones or boycotts the behaviour of the organizations that brought you that product.  Shopping locally (stimulating local economy) and choosing to pay more for higher quality and longer lasting products are a no brainer. When something breaks it is often cheaper to throw it out and buy a new one but what happens to that item? What also happens to the industry and jobs for repairing these items. I believe that this type of behaviour could also create an environment where capitalism can work but it would only work if it's done sustainably (growth economics don't compute). I used to be a big Adbusters fan and they used to always ask "Is economic progress killing the planet?"

When I talk about the Dollar Vote to some the argument I hear most often against it is that people can't always afford to pay more. My answer to that is strategic voting and to change your general consumption habbits. Make choices that can make the most impact. What matters here is that you are making a conscious effort.

The more you actually learn about environmental and social impacts of your favorite products it can become rather overwhelming and it even becomes difficult to shop. However if you look at it from a different angle you can feel empowered and invigorated and realize that your decisions are the fuel driving positive change.

I've taken this idea a slightly further by saying that we do not live in a democracy but that what we really live in is capitalism. When you think about it you can say that you can go to the polls every few years and think you're making change or you can realize that it doesn't really amount to much. We've all seen that politicians are in the laps of the corporate class.

Money is Power. The only 2 things that get people's attention and that's violence and money and I certainly don't condone violence. Use your power wisely.

If you want to learn more and start driving change there are several websites and books to help you make informed decisions. Simply run a search on "Ethical Shopping Guide" and you'll get tons of sites where you can search products online or oder printed guides.

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mred
Status: Bronze Member (Offline)
Joined: Apr 8 2008
Posts: 96
Re: Bystanders and Victims

Bill,

As good as the article by Taleb and Triana was, I appreciated your toughtful comments much more. The notion of the victims (all of us) as active participants in this situation is important and deep.

On a similar but shallower note, here is this article from Edge. What is interesting in this one is the naiveness of famous natural scientists in their understanding and approach to this economic crisis. They seem to forget the obvious fact that the system was created by humans, and do not even think of the possibility that the system itself is not neutral with respect to human interests or ideologies. Classic example of "scientism". Fortunately there are some good criticisms at the end, in the "Reality Club", the most exasperated one by Nicholas Taleb by the way.

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