The Bishop and the Butterfly: Murder, Politics, and the End of the Jazz Age
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    How To Misread Flash Boys

    By Michael Maiello on Fri, 04/11/2014 - 9:15am | Politics

    Be David Brooks

    One lesson of this tale is that capitalism doesn’t really work when it relies on the profit motive alone. If everybody is just chasing material self-interest, the invisible hand won’t lead to well-functioning markets. It will just lead to arrangements in which market insiders take advantage of everybody else. Capitalism requires the full range of motivation, including the intrinsic drive for knowledge and fairness.

    This is the reasonable sounding "just getting started" paragraph, but you no doubt see the problem...

    Second, you can’t tame the desire for money with sermons. You can only counteract greed with some superior love, like the love of knowledge.

    Ah, you see? You cannot stop these rapacious bastards you have to be holier than they are and more willing to suffer with love.

    Third, if market-rigging is defeated, it won’t be by government regulators. It will be through a market innovation in which a good exchange replaces bad exchanges, designed by those who fundamentally understood the old system.

    See?  If a market doesn't fix its own excesses through the benevolence and love of truth, knowledge and fairness of its own sainted players, it just won't fix its own excesses.  So mind yer bidness!

    It's funny because given any issue other than markets, Brooks would never say this. Hey David, people have strong sexual drives that you can't lecture or regulate away. But most people have ethical or emotional drives that outweigh the sexual impulse.  So, let's get rid of all those vice squads and anti-prostitution laws.  It will take care of itself. No?  Didn't think so.

    Topics: 
    Politics

    Comments

    Instead of the market regulating itself...

    Good markets will regulate bad markets.

    So it's still the market regulating itself.

    And who are these people who "fundamentally understood the old system" other than the people who ran and profited from the old system?

    It clearly isn't regulators.

    So who's left except the Lloyd Blankfeins of the world? And why, if the LBs are profiting so hugely, will they want to reform the system that's served them so well? And in which they believe?

    Beyond this...

    It's the invisible handedness of the market that appeals to conservatives and to which they always appeal. Fiddle with the market, and it will almost always make things worse. Sometimes, much worse.

    The market, in their view, is an organic system that moves and changes much like culture and society change organically when left alone--according to its own rules and impulses. Yes, bad things do happen. Unavoidable. But when you try to fix and avoid the problems, you aggravate a system that no one has the intellectual to fully comprehend.

    The LBs of the world may "understand" the system theoretically, but it's now so complex and vast, no one can encompass it intellectually, literally wrap their minds around it, and control it. They can make money in it, but they can't really bend it to their will beyond manipulating things to maximize gains. The market has a mind of its own and will crush people who get in the way. The rich get crushed, too; it's just that they have a lot of money to survive the crushing, and they don't have to take a lot of risk to make a lot of money. 1% of a billion is a lot of dough.

    The LBs set it in motion and keep adding new wrinkles to it which then lead to even newer and unanticipated wrinkles.

    So how, then, even assuming they wanted to, are the LBs supposed to create new good markets to control the out-of-control old markets?

    I'm reminded a bit of an eye operation I had as a child. I had a turned in eye, and they did surgery in which they detached and reattached the small muscles that control eye movements. The cosmetic outcome was good, but, as it was explained to me later, they can never put the muscles back in precisely the right spot, and that creates new vision problems. So you create new problems by messing with nature.


    by Peter Schwartz on Fri, 04/11/2014 - 9:52am

      I think you are seriously misrepresenting Brooks. He isn't saying "just accept all the crap and live with it".  It isn't clear that his preference for market  solutions over state intervention is as idiotic as you make it out to be.  There are many forms of state intervention that I like, and I also think the market does many things better than the state can. And, yes, economic behavior is driven primarily by self- interest.


    by Aaron Carine on Fri, 04/11/2014 - 3:51pm

    It's as idiotic as I say it is.


    by Michael Maiello on Fri, 04/11/2014 - 8:25pm