Most of you have heard about this notion of ‘the efficient market,’ usually used in discussions about laissez faire economics. The core of this notion is that if we just let the markets ‘do their thing’ then it will all come out for the best. I’m sure many of you now expect me to talk about whether the currently proposed $700 billion dollar bailout is a good idea. That’s not where I’m going at all.
Just so we can dispense with any such misconception: I have no idea if the bailout is good, or if we need more regulation etc. I’m not talking about that at all. If you think I am then you are about to completely miss the point of what I’m going to say.
I used to believe in that notion of ‘the efficient market’ and also the idea that efficiency leads more quickly to what is inevitable. Now, I’m not so sure. I’m not saying I disbelieve in the efficient market; just that I don’t know either way. But here is what I do know.
The idea of an ‘efficient market’ that acts rationally is premised on the idea that people are at all times acting in their own self-interest. Greed is okay, because it simply represents a form of self-interest that leads to efficiency. Free flow of information also leads to efficiency, or facilitates it. This is built into the theory of ‘efficient markets.’ And this is the part that I no longer buy into.
I believe that people are largely motivated by self-interest, and I believe that if they have good information about the state of things that they will use that information to their benefit. The problem is that most people are stuck at a certain level of perception, and most people have trouble advancing beyond the level that they are currently in. Most people cling to arcane beliefs, even when doing so is detrimental to their self-interest. Most people follow the herd, even when doing so is detrimental to their self-interest. In short, most people have trouble actually seeing how to benefit themselves.
Sometimes helping other people first is the best strategy. But this requires a subtle sense of how things work, and it requires patience. Oh, and it requires ‘deferred gratification.’ These are the skills that most people lack: sense of subtlety and deep patience. And these skills are under-developed in any community that fosters hair-trigger debates, and which discourages thoughtfulness.
Why is it that we now find so many people diagnosed with ADD? How did this happen? Is it possible that our society promotes this? And how does ADD keep people from understanding what their self-interest is?
Today, I called a lawyer who I really like a lot. She’s my ‘opposing counsel’ but we have a good relationship for the most part. I have found, however, that she is really bad at returning phone calls. I don’t take it personally because I can see it’s a system-wide problem for her. And when I say ‘system-wide’ I mean it. I called to today at 10:00 am to follow up on our last phone call (she was going to talk to her client ‘and get right back to me’), but no one answered. Remember, this is 10:00 am on Monday. So here is what the answering machine said:
“You have reached the offices of ________. Our offices are open from 9:00 am to 5:00 pm. No one is available to take your call now. Please leave a message and someone will return your call during normal business hours.”
Incidentally, this is not the first time I’ve gotten this message when calling a business during ‘normal hours.’ But let’s not condemn other people. We all make mistakes. The biggest ones are the ones where we fail to help ourselves by being insufficiently aware. And so, once again, I ask: how is that we become more aware of how to help ourselves (and those around us)?
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