Bell Curve The Law Talking Guy Raised by Republicans U.S. West
Well, he's kind of had it in for me ever since I accidentally ran over his dog. Actually, replace "accidentally" with "repeatedly," and replace "dog" with "son."

Tuesday, December 02, 2008

A little more about the Sociology of the Financial Crisis

After being pilloried for my prior post on this subject, I was pleasantly suprised to read that Michael Lewis,whom I was pointing to, is actually writing very similar things right now, just as I rather predicted he would. Of course, he gets paid for his writing so does a better job. And I am mindful of Samuel Johnson's comment that "no man but a blockhead ever wrote except for money." The point to be made is that people, character, and culture mattered a great deal in what happened on Wall Street. Reductionism - blaming it all on Fannie Mae and Freddie Mac (McCain) or on deregulation (Obama) - is dangerous. I hope Geithner and Volcker know not just what they are dealing with, but who.

1 comment:

USWest said...

From Philip Delves Broughton's "Ahead of the Curve" mentioned in my comments on LTG's previous thread.

"The MBAs who run these big companies are responsible for more than profits and losses, their own compensation and returns to shareholders. They set a cultural tone that affects everyone. Their disrespect for people's time and personal lives has enormous consequences. The world is not simply the apparatus to be used by MBAs to buff up their personal brands. It is not just a stage for them to display their decision-making prowess or leadership skills."

Broughton was struck that HBS was very good at teaching students, including himself, how to count things, track things, deal with the quantifiable, but that it left them bereft of any other "soft skills". It gave them professional networks. Yet every CEO that visited the school mentioned with regret that despite their success and their wealth, their personal lives were permanently damaged. Some CEOs had children that didn't know their names anymore. Broughton pointed out that Hank Paulsen himself said that it was up to the individual to make time for family and friends. But that was a disingenuous of him because he headed a company, Goldman Sachs, that is known to drive its employees so hard that their ability to make such a choice is taken from them. You either dedicate yourself to the almighty dollar, or you get out. No wonder the "markets" loose perspective. No wonder there was no "correcting mechanism" in this version of capitalism.

He points to the danger of overemphasis on that which can be counted by siting the numbers game that HBS trained Bob McNamara played in the Vietnam War with body counts. He created a reality based on faulty data because the training and the culture that engendered said data was king. And guess what? That is exactly what happened this time, too. That data was faulty. The credit agencies gave a thumbs up. But the man an the street knew the whole things was turning to shit.

Culture matters. It influences the types of choices we have and the types of choices we get to make.

It is not the be all or end all, but either is anything else.