Nassim Taleb: NYT- End Bonuses for Bankers:
“Banning bonuses addresses the principal-agent problem in economics: the separation between an agent’s interests and those of the client, or principal, he is supposed to represent. The potency of my solution lies in the idea that people do not consciously wish to harm themselves; I feel much safer on a plane because the pilot, and not a drone, is at the controls. Similarly, cooks should taste their own cooking; engineers should stand under the bridges they have designed when the bridges are tested; the captain should be the last to leave the ship. The Romans even figured out how to deter cowardice that causes the death of others with the technique called decimation: If a legion lost a battle and there was suspicion of cowardice, 10 percent of the soldiers and commanders — usually chosen at random — were put to death.”
The motto “captain should be the last to leave the ship” applies not only to the cowardice of the religious, political or financial captains. It might actually be the problem in the larger economic context. During the current collapse of the outsourced and the downsized corporations, the captains are in fact the last to leave the ship, except for a different reason. The corporate captains are aboard the ships long after they thrown all the sailors overboard to lessen the burden on the sinking vessels. The effect is the same though, the risk is massively redistributed down to the 99%. The trite analogy with a casino comes to mind, the house always wins.
Further reading:
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There is an interesting essay in the LRB on Vladislav Surkov. It outlines a situation in today’s Russia where there is a disconnect between what people know and say openly, and what they do. I was wondering what you thought of the article, and whether you thought America was essentially different?
http://www.lrb.co.uk/v33/n20/peter-pomerantsev/putins-rasputin
ej, I am out of the loop of the contemporary Russia. But after reading the 1st paragraph this appears to be another attempt to reduce the unbearable random chaos to some order, specially a single hand that animates the entire machine. You should know better, I have been dismantling this very delusion for years. The journalism at it’s cheap sensationalist worst. Same blueprint as here:
http://benatlas.com/2011/05/politics-and-religion-as-a-conspiracy-theory/
Yes, it does seem to treat Surkov as the grand puppeteer of the system. I picked up on the post -modernism connection where what’s real doesn’t have the same impact as it used to be.
In an American context, everyone seems to understand how inequality has grown exponentially, how the banking credit system is rigged, how so many are in trouble financially, and yet passivity is greater than ever. The Gallup poll shows 42% of the population thinks of itself as conservative, a major increase from a decade ago. I think this internalization of a failure of a system as a private problem needs an explanation.
“everyone seems to understand”? My impression is that only people who are actually impacted understand. Given that the wealth cushion in US is significant it takes some time for the system to circle down.