A Little Knowledge

It's a shame Megan McArdle doesn't work on the weekends. She might be missing this Big Picture post about her blogginghead video with Dan Drezner:

This is political, opinion driven debate. It is empty and foolish rhetoric that
generates heat but no light. As opposed to a discussion driven by, oh, I don't
know, let's say "facts and data?" It contributes nothing of value in terms
of identifying what actually happened. The focus is not on what went wrong, and
what can we do to fix it. Rather, its how the party in charge takes the blame,
and therefore the acceptance level of their ideology goes down.

Imagine after a jumbo jet goes down, and someone from the FAA said "We won't bother looking for the black box, we don't play the blame game around here." They would be fired immediately, and then tarred and feathered by the victims families.

Intelligent societies seek to asses blame not for political reasons, but
to avoid future jets from tumbling out of the sky again. In the current
situation, we want to know why this happened, what errors were made, and how we
can avoid it in the future.

There is also an element of cognitive dissonance to the discussion. Rather than look at the factual pattern of changes to the regulatory environment (see these comments in The Economist), it was merely a coincidence of the party in power getting the blame. Why do I suspect that if Al Gore was President, these two would not be discussing the mere coincidence of which party had the White House?

This is a similar approach that has given us one of the dumbest phrases in the
English language: "The Blame Game." (as in "well, I am not going to play the blame game).

My beef is not political, its evidentiary: There are no facts shown, no regulatory historical record dissected, no comprehension of what actually occurred -- just how to duck resposibility. This is why I hate ideologues, politics, and even political discussions of ideology -- it leads to smart people saying dumb things. Cognitive dissonance will do that to you.

So will stupidity. It's so nice to see someone else do the heavy lifting, though. I'm hampered by my lack of knowledge of economics; the development of personality and how it affects the choices one makes is my field of interest. But I read widely, so I also found this:

The Federal Bureau of Investigation is struggling to find enough agents and resources to investigate criminal wrongdoing tied to the country’s economic crisis, according to current and former bureau officials.
...
The pressure on the F.B.I. has recently increased with the disclosure of
criminal investigations into some of the largest players in the financial
collapse, including Fannie Mae and Freddie Mac. The F.B.I. is planning to double the number of agents working financial crimes by reassigning several hundred agents amid a mood of national alarm.

So much for McArdle's plea that bankers aren't crooks; they're just drawn that way.

And for some reason I thought of McArdle when I saw this article about Andrew Lahde's farewell to the hedge fund troops.

Andrew Lahde, the hedge-fund manager who quit after posting an 870 percent gain last year, said farewell to clients in a letter that thanks stupid traders for making him rich and ends with a plea to legalize marijuana.

Lahde, head of Santa Monica, California-based Lahde Capital Management LLC, told investors last month he was returning their cash because the risk of using credit derivatives -- his means of betting on the falling value of bonds and loans, including subprime mortgages -- was too risky given the weakness of the banks he was trading with.

``I was in this game for money,'' Lahde, 37, wrote in a two-page letter today in which he said he had come to hate the hedge-fund business. ``The low-hanging fruit, i.e. idiots whose parents paid for prep school, Yale and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government.

``All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other sides of my trades. God Bless America.''

Authoritarians can be depended upon to mindlessly support the Aristocracy at all times, no matter what it might cost them. Afterward they look up to the sky and say, "Why me? What happened? Who will lead me now? Who do I blame?"

It sure won't be themselves.