strong and clear signals [to the financial markets] ... that 'anything goes'.This seems to be the conventional wisdom at the moment — that we have been living in an unusually lax regulatory environment, and that this has been a major source of the problem. Like the related theory that Thatcherism encouraged greed and 'individualism', this thesis has become so widely accepted that there is (apparently) no longer any need to produce evidence, it can simply be cited as dogma. The question is rarely posed "lax relative to what?"
The City saw a certain amount of deregulation in 1986 as part of Big Bang, but it is doubtful this had much to do with belief in free markets as opposed to an inevitable need to fall in line with modern financial practices. Perhaps there was some expectation that Labour would increase regulation when it came into power, this expectation being disappointed when it emerged that the party had grown up and was now too sensible to kill the golden goose, and perhaps this transmutes in certain people's minds into "Blair and Brown have perpetuated the Thatcherite tradition of unfettered market capitalism". To those who like to believe this convenient myth I recommend doing some research on the Financial Services Act and its various successors. You will find a good deal of government interference in investment markets which has been steadily increasing since 1986.
JR cites Nassim Nicholas Taleb as being one of the few who warned of dangers, and whose writings were ignored. But a black swan event was not the source of the crisis in this case. The edifice of loans, assetised loans and so forth did not collapse because of a single unexpected exogenous shock, but because it reached a point where it became unsustainable and started to unravel, particularly once interest rates started to rise.
JR writes that "they [the economists who allegedly ridiculed Taleb]
held fast to the official faith: that all rational analysis is of equilibriums; that what goes up must go up forever; and that the social responsibility of every firm is to maximise profits for its shareholders. Since each of these propositions has been amply refuted by ordinary human experience, the only way to describe them is as articles of a Creed.This analysis seems muddled: the beliefs cited are either not beliefs in the sense alleged, or have not been "amply refuted". JR's central thesis seems to be that there has been too much 'faith' on the part of those responsible for organising markets, and not enough objectivity. But he exaggerates the meaningfulness of this distinction and its applicability to the situation. The fact that Alan Greenspan now likes to apologise for having supposedly believed too much in markets is irrelevant: we need to look at his actions not his words. Did Greenspan's behaviour imply a greater degree of irrational belief in theories than that of Ben Bernanke or Paul Volcker? I do not think there is sufficient evidence to conclude this. Clearly each Fed chairman has a set of principles to guide him in his decisions. They could probably not do the job at all without some kind of theory to help interpret the data and determine a suitable response. And holding to a theory implies a level of belief, even if only for heuristic purposes. This is a point Richard Dawkins tends to omit in his polemics about faith versus rationality. Holding the theory of evolution to be true is itself a belief, even if one arguably backed by a greater degree of empirical support than (say) belief in the truth of the New Testament.
If I had to guess what Bernanke's key guiding principle might be I would say, "governments can and should manipulate economic cycles to produce the best outcome" (A). Comparing this with (B) "government interference is more likely to make markets work worse than better", it seems creed B has more empirical support from economic history than creed A.
If excess faith was behind the crisis, it is more likely to have been faith in trained experts, whether these were academic economists, financial mathematicians or banking analysts. Too much reliance was placed on the thumbs-up from such persons, when a bit of critical intelligence and independent thought could have suggested that there might be flaws in what looked like impressive logic and calculation.
• In an earlier issue of the Magazine Bruce Charlton2 laments the dearth of "clever crazies" in academic science. He points out that the kind of people who can survive the modern academic obstacle course are likely to be
characterized by personality attributes of conscientiousness and agreeableness [and] not likely to be the kind of awkward, abrasive and somewhat wildly-creative personality which characterized many of the greatest scientists of the past.Modern scientific 'training' does not seem particularly suited to the really able, and this is the case for other subjects as well. There is too much emphasis on jumping through hoops, and on proving you can reproduce the currently fashionable techniques. I am not sure however that BC's description for the kind of people modern academia excludes as "clever crazies" and "idiot savants" is a good idea. There is a risk of playing in with the mediocratic tendency to portray the clever as semi-autistic. There are plenty of people inside academia who could be regarded as 'crazy' (not necessarily in a good way), one just tends to register them less as such because their beliefs and behaviour are legitimated by their carrying social approval labels such as "Professor" or "Nobel prize winner".
BC thinks some of the 'clever crazies' missing from academia have found their way into editorial positions with scientific journals, where he thinks their talents are wasted. I once gathered that the (then) editor of Nature was a bit of a maverick, but have otherwise never heard anything to substantiate BC's hypothesis. No doubt he has more inside knowledge of journal editors than I do, but I find it hard to believe that an Einstein or a Darwin would rise to the top of the publishing profession. I would have thought it more likely such people now find themselves in relatively lowly positions in corporate environments, or as 'backroom boys', or just odd-jobbing dropouts.
It is difficult to rise in most professions without being conscientious and agreeable. Actually, conscientiousness is not something I would have said particularly distinguishes the modern academic, at least not the male version. Academic output may look stunningly diligent — partly because of its high level of technicality — but dig a little deeper and you find that cutting corners and sloppiness are as prevalent in academia as in the modern ethos generally. More so, in fact, since — unlike in, say, hairdressing or accountancy — no one is necessarily going to notice, or go elsewhere for their services. The only way to succeed without having to be 'agreeable' is to have a private income, or to find an individual patron who is prepared to overlook this particular requirement. Potential patrons were difficult enough to find in the eighteenth and nineteenth centuries; in a mediocracy they are more or less extinct.
BC dares to suggest that some not-so-noble motives may be at work within academia, arguing that "modern scientific leaders often elevate the requirements for very long periods of tedious make-work ...". Questioning the motivations of highly trained and respected professionals is liable to provoke hostile reactions, one of which (by Peter Matthews FRS) appears in the following issue. Matthews argues that the Royal Society
has already done much to alleviate the situation with its University Research Fellowships which have long supported some of our brightest to do their own thing as individuals early on in their careers ...I am not familiar with the RS's URFs but doubt they target the really exceptional, given that such individuals typically have difficulty convincing committees of sensible people that they should be supported, and indeed tend to arouse disapproval or irritation. Matthews adds that Charlton's "implicit denigration" of those who remain in science is "unacceptable". This is a rather feeble line of argument, and reminiscent of the one trotted out at the annual round of scepticism about grade inflation, when it emerges that the proportion of pupils gaining an 'A' has increased by another 2 percent. ("How dare you try to devalue the sense of achievement of those who have worked so hard!")
• I caught some of BBC4's Christmas season on progressive rock, in particular the programme Timeshift: Prog Rock. Ostensibly an affectionate look back at bands like Yes, Pink Floyd and Genesis, it seemed unable to resist being sneery. (Poor Jon Anderson: referred to, sarcastically, as "a former milkman from Lancashire".) Pop music, like fashion, will always seem faintly ridiculous when viewed from a distance. Eighties music and fashion are also fodder for ridicule by now. It seems harder, however, to catch the mediocratic elite being rude about punk rock, presumably because it expresses the correct anti-bourgeois attitudes.The late John Peel was shown referring to "middle class pratts" whom he encountered at an ELP concert, though he also apologised for being one himself. But could the same insult not be hurled at much of punk rock? The Clash, with their designer proletarianism (most of the band were middle class, Joe Strummer went to Freemen's) comes to mind. Peel's contributions, steeped in some kind of chippiness — not clear whether real or fake — were illuminating given how influential a figure he was. During his heyday I was a fan myself, and thought he had a remarkable knack for distinguishing good pop from mediocre before other people caught on. A shame therefore that he had to contribute to the fashion for resentment-as-political-philosophy. In the programme he went so far as to accuse Genesis of being socially divisive. Allegedly it was a cruel taunt at the time to accuse lesser minds of failing to understand their music. No doubt there are 40-somethings today still bearing scars ...
Former Yes drummer Bill Bruford said of people attending their concerts:
You knew what [the audience] was going to be like ... almost to a man between 16 and 20 ... young, white, affluent kids of the particular town you're in; they're all going to have long hair; they're all going to be wearing slightly tattier clothes than they need to wear.Apart from the hair, plus ça change, even if the audience's pose at a concert by a currently fashionable band would be more proletarian, and presumably less offensive to people like Peel.
• A reader writes to say that he thinks a certain conservative journalist has changed her position on the concept of individualism from hostile to sympathetic, perhaps (the reader suggests) as a result of reading this blog. She was sent a complimentary copy of the Mediocracy book on publication, so the hypothesis is not that farfetched. When I wrote the book, I thought: "if I can change only one thing about the current cultural landscape, it would be that the Right (and the Left) stop blaming 'individualism' for our ills, when the real problem is something more like the opposite, i.e. anti-individualism." So if I have had some influence in this area, that is good as far as it goes.
It would be nice if the journalist in question acknowledged my contribution to the issue, since I might then derive some benefit for my largely unpaid work, but it appears she has not. This surprises me, for is not journalism meant to be an honourable profession?
I am being facetious, of course. Realistically, one has to consider incentives. A journalist may wish to adorn his work with references to Harvard economists or Booker-winning novelists, but what incentive does he have to cite someone with no significant social status? Only a moral one. In other words, none.
Another reader says, à propos my previous post, that he quite likes the Gherkin. So do I, considered as a work of art, but I think I would find it irritating to have to work there every day. In general, I find pomo culture amusing and even stimulating in small doses and for short time periods. I get a temporary buzz out of the revamped Doctor Who, I find some of Damien Hirst's work provocative or even mildly inspiring, and I used to enjoy watching Eurotrash. I even consider some pomo art profound — e.g. Jeff Koons; though not Hirst, who never seems to move beyond the superficial. The trouble with pomo stuff, like anything which trades on being subversive, is that when it gets too dominant it becomes boring and oppressive.
• Finally, a reader who is clearly not a fan writes:The symptoms you list [at the top right of the blog] are a perfect description of what we have been experiencing under the Bush administration, more intensely, for the past 7 years but something that started under Ronald Reagan and Newt Gingrich. But they don't quite match the label 'pseudo-egalitarian'.In my experience, modern intellectuals fall into two classes in relation to mediocracy. They either (a) deny it is happening, making questionable counter-claims of the type that everyone is getting cleverer, or that more books are being sold, or that attendance at museums and galleries is up. Or they (b) agree that things have deteriorated, but blame it on markets, capitalism or right-wing ideology. It is true that a certain strain of populism has infected modern Conservatism, and so in that sense 'conservative' governments contribute to the rot as well as leftist ones. In an egalitarian world the Right apparently has no choice but to appeal to the democratising instincts of the mass; appealing to pro-elitist instincts has become difficult given a pseudo-egalitarian* media that pumps out anti-bourgeois culture. But to claim that the Right has had a worse effect on culture than the Left requires a set of really enormous blinkers.
1 'Faith and reason in the mathematics of the credit crunch', Issue 282.
2 'Why are scientists so dull?', Issue 281.
* pretending to be egalitarian, while perpetuating a mediocratic elite