Saturday, August 27, 2011

Capitalism And Fraud

Recently I read Michael Lewis's book The Big Short, which tells the stories of a few people involved in the financial shenanigans that led to the economic crisis of 2008. 

It's a complicated story with a lot of parts, but one of the recurring elements is intentional deception.  I mean, cases in which banks and investment companies intentionally mislead, lie to, and try to deceive their trading partners and customers. 

This got me to thinking about lying and fraud in business in a more general way, and about why you're not supposed to do it, and about why any particular business person would be motivated not to do it.

When you're in a normal moral context, it's natural to think of morality as a kind of "looking out for the other guy."  I mean, you take other people, and their needs and desires, into consideration when you think about how to act.  From that point of view, the reason not to lie is pretty obvious, because you're in doing so you're harming someone else or their interests.

Does this normal moral context disappear when you're in a business context?  Sometimes it doesn't.  Some transactions, like selling coffee or whatever, don't seem in tension with that point of view.  If I have money, and you have coffee, and we want to exchange, we're each going to be better off after we do so, and this is consistent with each of us looking out for the other guy.  So you might have some interest in putting the best face on your coffee that you can, but there would be nothing strange about your telling me the truth about its particulars and why you want to sell it. 

But what Lewis describes in the finance industry doesn't quite seem like that, because everyone wants the same thing -- money -- and everyone's just making different and competing judgments about the best way to get it.  If your reason for wanting to sell me certain stocks for money is that you think they're going to be worth less in the future than they are now, then there's a sense in which our interests are opposed, and it makes no sense to "look out for the other guy" in quite the same way.  Why would you reveal your reasons for thinking the stock was going to go down?  Doing so would make no sense.  In this context, it would be strange for you to tell me why you want to sell.

So the prohibition against lying must have another source in that context.  And I take it it does:  the system depends on people being having good information about what they are buying; the system doesn't work when people lie; the mechanism of capitalist exchange, investment, and all the good things that come with it are only possible if people tell the truth. 

But if that's the real reason why one ought not lie in finance, isn't it really unsurprising that in the absence of meaningful oversight and punishment, people do, in fact, lie?  Because, really, even though I take it this is a powerful and good reason not to lie, it's also an awfully abstract and emotionally non-pressing reason.  A reason it's pretty hard to get motivated by.  There might be some people who might be worse off at some unspecified future time?  Whatever.

And the temptations to lie must be significant:  you're trying to keep up, and your job depends on making a certain amount of money for your company or its shareholders, and everyone else is making money, and you think that everyone else is lying.  Against these temptations you have something like: it's wrong for me to lie because if people lie the system breaks down?  You'd have to be Mr. Spock to put that sort of reasoning into action against your own immediate self-interest.

It might be thought that the motivation not to lie, even in the absence of oversight and punishment, comes from some self-interest:  that the person who lies is going to get a reputation for lying and people won't do business with them again.  But this would only be true if a lot of people had information that -- especially in the absence of oversight -- people just don't have.  Without someone looking over your shoulder, you can actually get away with it.

One of the other main themes of the book, of course, is how pathetic and weak any actual oversight is these days.  But that's another story.

Wednesday, August 3, 2011

Social Networking Anxiety

You've heard of Social Anxiety.  But what about Social Networking Anxiety?

The possibility that I had Social Networking Anxiety first flitted across my mind when I signed up for Facebook.  As I chronicled here, I felt immediately that Facebook was too much for me.  Too much information, too much immediacy, too many minute decisions to be made about how to interact with people. 

I said to myself, "Facebook, it's not me, it's you.  You're the one trying to ferret out where I went to school a million years ago -- what's it to you, Mister Aggressive?  You're the one with the conversation skills of a two-year-old -- I mean, who doesn't know that putting funny pet pictures next to reflections on national tragedies is in poor taste?  You're the one with the gall to pick on my poor friends for not having a wide enough social circle -- you think I didn't notice that plaintive and pathetic call to 'help So-and-So find his friends?'" 

I'll have you know that So-and-so is an interesting, personable, and savvy guy.  He's just not that into you.  So you don't have to act all superior.

Then I met Google Plus, or as he likes to be called, Google+.  He's like Facebook, but with a little more social tact, a little more reserve, a little more cool.  He doesn't try to push stuff down your throat, but kind of lets you take the lead.  More of a gentleman, I guess.  And we're definitely getting along better. 

Still, I retain a feeling that social Networking is too much Social and too much Networking for me.  The other day I saw a post by an old friend -- something innocuous and nice, and there was a comment by a person I haven't communicated with in over twenty years.  My mind was filled with highly charged emotive thoughts.  Warmth:  remembering this person and how cool they were when I spent time with them.  Guilt:  that I never do anything to keep in touch.  Fear:  that I'd be called on to say something kind and warm and thoughtful, something that could reach across the decades to show I still care.  Dread:  because honestly, I don't really like communicating with people I never see and I'm not close to, and I don't want to do it. 

All this mixed together with a longing to just log out and get back to what I'd been doing before. 

When it comes to posting, profiles, and all that, I fear being That Person.  You know, the one who posts "Just got back from my interview with MSNBC! Heading off to Nobu!"  Or That Other Person, the one who is always posting about their involvement with some super-cool, totally unknown band.  Not that I ever do those things, but you know what I mean.  And if you're not one of Those People, what are you?  Just living a boring life, out there on the web for all to see?

I used to think Social Networking Anxiety was very rare, and I was almost the only person who had it.  Because almost everyone uses Facebook.  But then I started to notice something odd. 

Because I work in a University, and go to a lot of coffee shops, I often walk by people engaged in actual Social Networking.  I mean, I catch a glimpse of their laptop screens, and more than anything those screens say "FACEBOOK" and the person is staring intently at a list of tiny pictures with tiny bits of text next to them.   

And these people Social Networking, how do they look?  Do they look happy? 

No.  In fact, their faces are often masks of anxiety.  They look pained.  They look nervous.  They look like they're measuring out their lives with the measuring tape of other people's success.  Oh, look.  So-and-So was interviewed by MSNBC.  Um, cool. 

So now I think Social Networking Anxiety isn't one of those rare dysfunctions.  I think it's more like a Silent Killer Epidemic.  What it's going to do to all of us I don't know.  But assuming we keep social networking, and I'm sure we will, whatever it is will not be good. 

Monday, August 1, 2011

Work, Money, Fairness, And The American Way

I'm always surprised at how many people seem to believe both of these two things which seem incompatible to me.

(1)  If you work hard, you should be able to have a decent life.

(2)  When it comes to economic exchanges, people should generally be left alone to do their thing without outside interference.

(1) means something like, "If you work hard, and play by the rules, you should be able to live reasonably well."  In America in 2011, "reasonably well" seems to mean something like being able to have a house, a TV, and a decent car, and to be able to educate your kids. 

I take it that in (1) the "should" is generally not the predictive "should" -- like, "the bank should be open when you get there," but is rather the normative should.  As in, if it doesn't happen, something about that is not right, or not fair.  Not many people would put it this way, maybe, but the idea seems to be a kind of basic social justice or extended social contract.  Like, play by the rules, do your thing, and you won't be screwed.

But then there's (2).  I assume (2) means that if a person or corporation wants to engage in some economic transaction, they should be free to do so on whatever terms they choose and should be free from external interference.  Most people may not draw out the implications of this fully, but I take it (2) means getting rid of regulations and the institutions that set them up, as much as possible. 

It seems to me evident that these are incompatible.  In the absence of a role for some interfering institution or other body doing all those things, in what sense could there possibly be a "should" involved in how successful you are? 

There are a million reasons you might work hard and not benefit very well economically.  What you have might not interest anyone.  What you are able to do might not be the kind of thing anyone wants to pay you to do.  You might have been born with few abilities or talents, or low intelligence, and thus not be able to do anything that is considered valuable by others.  You might have chosen poorly when you got education or training, working for years, say, to become a typewriter repair person at the dawn of the internet. 

If people get to make their own unfettered decisions, to suit themselves, about all economic transactions, then it will certainly would be, in part, a matter of luck and circumstance whether you are able to earn enough to live a decent life.  Indeed, if you happen to live in a time or place of limited resources, it might be a matter of luck or circumstances whether you even have enough to live at all. 

If you're disabled, it could easily happen that, work as hard as you might, you would be unable to earn the -- actually quite substantive -- kind of money that one needs for American housing, cars, gadgets and TVs.  For that matter, you might just be someone people hate.  People hate for all kind of famously irrational reasons:  racism, sexism, homophobia, the list is endless.  If you're hated, you aren't going to be on the receiving end of a lot of opportunities. 

Now some people who are committed to (2) seem to me to acknowledge this incompatibility and accept that  (1) doesn't follow.  Circumstances don't care about justice, and it won't be "unfair" if the way they work out sucks for you.  It will just be, well, Sucks To Be You.  

But a surprising number of people seem to believe both (1) and (2).  I don't know what kind of "should" or "fair" these people are referring to.  The correlation between hard work and a decent life only comes about by either luck or by some interference making the correlation happen.