Read me

Posted by on Mar 19, 2008 in Uncategorized | 4 Comments

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I’m fed up of simplistic explanations: this caused that. Or this will fix that. In business, in politics, in life.

It’s now a well-documented that we in the West have a strong cognitive bias> to simplistic explanations. And thus simple solutions.

This last week I’ve been thinking about the financial markets in this light, revisiting Hume’s old adage again and again: “When we look about us towards external objects, and consider the operation of causes, we are never able, in a single instance, to discover any power or necessary connexion; any quality, which binds the effect to the cause, and renders the one an infallible consequence of the other. We only find, that the one does actually, in fact, follow the other”

As ever the Economist gets it right. Read their 12 pager on why it’s a “series of risks” built by the US financial community over time plus changes in the outside world that have created the current problems. And how it’s going to take quite a while to unpick the current situation.

Sorry – I know we’d all have prefered something more headline grabbing – like it was “Bush what done it”. Truth is the world ain’t like that. Note to managers everywhere. Note to marketers. Note to myself (cause I’m just as prone as anyone else to trace simplistic cause and effect relationships

4 Comments

  1. Valeria Maltoni
    March 20, 2008

    We had a beautiful conversation last night at a World Affairs Council of Philadelphia event with guest speakers David Frum (leading conservative commentator) and E.J. Dionne (Washington Post opinion writer). One of the threads was the current economic state of affairs and the quite unpopular situation of the US right now.
    It Was heartening to have a civil, respectful and intelligent discussion with two thinkers who clearly respect each other – especially when talking from opposing sides in political persuasion.
    Nassim Nicholas Taleb calls it “The Narrative Fallaci” – this desire of the brain to make up a neat story that ties it all in. So we can understand reality, make sense of things. I could give you plenty of examples of execution of that, from junk science to using the same argument to reach opposite conclusions.
    A good fire side chat for sure.

  2. Metatone
    March 20, 2008

    It’s worth noting that The Economist has spent that period of time where that “series of risks” were being taken denying that there was anything risky about the actions involved…
    Yes, this is a complex affair, but let us not believe those who pretend that it was completely unpredictable or unavoidable. That is the financial markets main strategy for getting us to bail them out.

  3. Charles Frith
    March 21, 2008

    Great post. I enjoyed this greatly plus the subsequent post observation that professional means anything but human.
    Cracking stuff Mark.

  4. Daria
    March 21, 2008

    Very good point. Neither life nor politics can be fixed by some simple guidelines and solutions. But isn’t it what makes us feel safe and in control. I think sometimes that maybe those simple explanations are what Weber called disenchantment of the world – we dienchant complicated by simple explanations.