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Capitalism 2.0: Intellectual Laziness

Posted on Saturday, Mar 28th 2009

Here’s another interesting discourse from John Galt’s speech which is a good lens through which to examine several of our recently discovered “bugs” in capitalism: sub-prime lending and borrowing, Madoff’s scam, etc.

“Thinking is man’s only basic virtue, from which all the others proceed. And his basic vice, the source of all his evils, is that nameless act which all of you practice, but struggle never to admit: the act of blanking out, the willful suspension of one’s consciousness, the refusal to think—not blindness, but the refusal to see; not ignorance, but the refusal to know. It is the act of unfocusing your mind and inducing an inner fog to escape the responsibility of judgment—on the unstated premise that a thing will not exist if only you refuse to identify it, that A will not be A so long as you do not pronounce the verdict “It is.”

Now, ask the question why people who were making unreasonable amounts of money off Madoff or the sub-prime scams, did not pause to think. Assuming that these people were not stupid, they must have asked the question: “Isn’t this too good to be true?”

They must have figured out something evil was going on underneath the surface, yet they did not question the goings, as long as the money kept pouring in.

Well, I would submit that not only was evil in play, so was intellectual laziness and dishonesty. People were willing to suspend their rational judgment to allow whatever was going on without questioning. So now that they have to count the consequences, why is that unfair?

This segment is a part in the series : Capitalism 2.0

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Sramana,

Its a good question why it’s unfair for those people to get punished. I don’t think anybody is saying no that they shouldn’t get punished.

Infact if it wouldn’t have touched others, most of us would have sitting by the side of the field in our closed ‘secure’ place watching the ‘game’ and commented differently.

The problem is it is touching the mass. It is touching the people who didn’t hear the name of those people even probably selling hot-dogs on the road.

The regulations will not stop people not having integrity. The regulation should target at limiting it’s effect and keep it within the circle of the event so that it doesn’t touch the ‘society’.

-Santanu

Santanu Sunday, March 29, 2009 at 1:42 PM PT

Regulations protects individual criminal behavior from having systemic impact.

Sramana Mitra Sunday, March 29, 2009 at 9:00 PM PT

Interesting post and great analysis. Well I do agree, that greed compounded by intellectual laziness was indeed the reason for Madoff’s successful ponzi scheme, one must also realize that man is a social animal at heart and often times behaves on the assumption that collective intellect and wisdom of the crowd is always superior to individual intellect. It is this inherent human behavior that intentionally ignores rationality, tries to erase any divergent thought process and succumbs to irrational herd mentality. Nobody questioned the bull run that was too good to be true, or the ever increasing home prices, that preceded the fall. Regardless of capitalist or a socialist order, I am afraid this basic human behavior is hard to change.

Sethu Iyer Monday, March 30, 2009 at 9:08 PM PT

I asked the same questions during a competitive bidding process in 2001, 2005, and in 2007. The people that made up the sub prime industry knew full well what they were doing. The appraisals, underwriters, and secondary markets. When I questioned the sanity of it, I was told in all three instances that this is the way it is or hey, they approved it. I was literally told mind my own business in one instance. The very system it self is corrupt and without corruption nothing would get done! Of course, in every instance everyone has plausible deniability. So later they can say, they were not thinking or they did not really understand what they were doing.

oneforall Saturday, November 27, 2010 at 8:54 PM PT