In The Big Short, Michael Lewis paraphrases Charlie Munger, a former partner of Warren Buffet: If you want to predict how people will behave, look at their incentives.
So the stupidity of Wall Street can be explained by the stupidity of its incentives. In effect, the employees of Bear Stearns were paid to not know what they were doing. What should have been plainly obvious was precisely what they refused to see.
In the short term, their stupidity made sense: it was making them rich. But in the long term, it destroyed their company, and a lot of other companies, and deeply wounded the economies and the stability of world civilization.
Yes. But idiots like all of us.
Idiots like the ideologues on the right and on the left who simply refuse to listen to anyone they might disagree with. They have sacrificed their curiosity in pursuit of incentives which, as they see it, their ideology protects.
Idiots like the religious folks—including the atheists—who won't listen to a scientist or an historian or a theologian who might challenge their own convictions, for fear of what they might learn.
Idiots like all of us, sacrificing our curiosity on the altar of our incentives.
This type of sacrifice is easy to explain. I lived it, and live it still. Like the millionaires on Wall Street, I've guarded my incentives by refusing to learn anything that might threaten them. For more than half my life, for example, I didn't want to learn the truth about Mormon history. I was aggressively incurious about it.
But consider my incentives! Love and acceptance by family and friends, membership in a (now) global community, intensive schooling, the years of my youth given to the cause . . . those incentives were my identity. Together they made up a concept of myself that discouraged me, even forbade me, from learning things that might threaten it. Then who would I be?
For the first 25 years of my life, those incentives were decisive. I clung to my incuriosity—the same kind of incuriosity Lewis discovered on Wall Street—and I enjoyed formidable benefits. Only now, too late, can I see that I suffered uncounted losses.
In my late twenties, when the incentives changed, I changed with them, and I changed what I learned to justify the pursuit of my new incentives.
Voilà: a fews hours with some original Mormon documents (now available in seconds online) showed me that much of what I'd learned about early Mormon history was either an outright or radically distorted. A few months studying evolution and physics transformed my ideas about my body and the universe. A few years spent reading history's great theologians (and not a collection of goodhearted provincial businessmen) reconstructed my understanding of religion, ethics, and the nature of faith.
The point's made easily enough. Friends and family members don't read this blog because it says things they don't want to hear. They have, as they see it, no incentive to listen, and many incentives not to listen. I'm guilty of the same incuriosity. I have no interest in their religious literature, their political emails, in the accounts of their children's baptisms.
In the end, the idiocy of Wall Street is our idiocy. The only way to overcome it is to ask ourselves: Are the incentives we're pursuing worth the death of our curiosity?
For the gamblers on Wall Street, the cost is now easy to assess. For us? Perhaps more difficult.