The humiliation of Alan Greenspan last week in publicly admitting his fallible perception of the housing bubble prompts David Brooks to see a larger meaning:
“This meltdown is not just a financial event, but also a cultural one. It’s a big, whopping reminder that the human mind is continually trying to perceive things that aren’t true, and not perceiving them takes enormous effort.”
It’s also a reminder of what has always been the motivation, aside from greed, of not only the so-called experts but the run-of-the-mill stock market investor–the psychic need to be “in the know,” to be able to see more than anyone else and profit from it.
In the era of 24/7 cable financial news, it’s not just the talking heads but the watchers who are constantly trying to confirm their superior perception–a modern version of the traditional gambler’s search for grace in the roll of the dice or turn of the cards–the need to feel superior to the rest of humanity.
“My sense,” Brooks writes, “is that this financial crisis is going to amount to a coming-out party for behavioral economists and others who are bringing sophisticated psychology to the realm of public policy. At least these folks have plausible explanations for why so many people could have been so gigantically wrong about the risks they were taking.”
Maybe so, but all that social science may end up just staring at that primal urge that drives human beings to prove themselves special by being “in the know.”
Cross-posted from my blog.