Classify this mashup of Miley Cyrus’ “Party in the U.S.A.” and Biggie’s “Party and Bullshit” by Hathbanger under “guilty pleasure”. Somehow Biggie’s verses make singing along to Miley’s chorus okay.
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If I were getting dumped (and also in a band), the chorus of this song, “Don’t get me wrong, I like you / but I don’t like your band”, would be the least comforting thing I could imagine hearing. Here I am in a perfectly fine, mutually affectionate relationship, and it all turns to garbage. For what, Annie? My band? I thought we had something.
I Don’t Like Your Band [MP3]
Embryonic is out, and this is on it. The album version features Karen O—no such luck for the still-lovely Conan performance:
Múm member Ólöf Arnalds’ debut, Við og Við, came out three years ago in Iceland, and finally hits the States on November 17th. Here are “Klara” from the album and a cover of John Prine’s “We’re Not the Jet Set” live in the KEXP studio.
I have a post up at Generation Bubble about embedded social relations, prompted by Oliver Williamson’s winning the Nobel prize in economics. WIlliamson’s main field is transaction-cost economics—looking at frictions in economic exchanges that in his view shape the structure firms must assume to accomplish varying purposes. In the post I draw heavily on a paper by sociologist Mark Granovetter that emphasizes the dialectical nature of social relations—they are always in process, thus they are difficult to pin down in the mathematical formulas preferred by neoclassical economists. I wanted to use that idea as a jumping off point for speculating about the ways neoclassical economics puts forward as an ideal the possibility of exchanges unhindered by social relations, depicting the absence of social ties as the essence of true freedom. This reverses the apparent human instinct for sociality, yet seems to have a tenacious hold on capitalist society, if you accept that the fetishization of convenience is a product of perfect-markets ideology.
In the process I threw out a stray thought about the necessity of regulation and the problem of finding trustworthy regulators (a primary concern of the other new Nobel laureate, Elinor Ostrom, who is known for her studies of “tragedy of the commons” problems and various self-regulating systems of resource management): Regulation is not a matter of preventing corruption but providing a conduit for predictable corruption at a socially tolerable level. Regulatory agencies serve as clustering points around which a density of social relations can build up, and through which power can be exerted to calibrate the level of exchanges that are seen as unjust.
Anyway, Felix Salmon’s point in this post about smart bankers seemed apropos:
Banking isn’t for outright dummies — conscientious underwriting, for one, is a difficult and highly-skilled job which requires good, well-paid professionals. But far too many bankers thought of that kind of income as boring money, and were much more excited by the higher rewards and sophisticated risk management being shown them by the rocket scientists on the structured-products desk. Maybe in future they’ll be more suspicious of things they don’t really understand, but I’m not holding my breath. That’s what regulators are for.
Salmon’s hope, it seems, is that future financial regulators will both understand thoroughly the complex structures banks invent often to shroud risk and at same time won’t be seduced by their understanding to want to profit by it but will instead work to rein in and discipline the intelligent and ambitious people they must square off against. But financial complexity may work as a subtle form of regulatory capture; it supplies a rarefied meeting place where regulators and bankers can collude, with the hubris of wielding formulas and structures that few can understand working to override whatever generalized morality and adherence to duty that might have restrained them. (Arnold Kling suggests something similar—a “Kool-aid factor” that has regulators buying into financial-engineer hype.)
In the banking world, we’ve learned in the past year, the mastery of complex ideas is regarded as an automatic justification for personal enrichment, regardless of whether that complexity served any useful social purpose, even when that complexity becomes an elaborate ruse to overcome investor wariness. Complexity, as Salmon’s post details, ends up confusing everyone, and rather than match money with sound projects, bankers end up in a game of secrets and lies and off-balance-sheet shadiness.
So regulators overseeing complex entities may be more at risk to use their position to obfuscate rather than disseminate information. A point Steve Randy Waldman made in this post, however complicates that hypothesis a bit:
Information is a behavioral attribute, not an attribute of the external phenomena to which it may ostensibly refer. To say that an agent is informed means she behaves differently than an uninformed agent. Her behavior is less random, more predictable. To be informed does not imply one’s information is accurate. (In general, accuracy is unknowable, both ex ante and ex post.) Information increases the volatility of outcomes, because it provokes larger and more concentrated bets than uncertain agents would take, creating large gains and losses depending on how adaptive the informed behavior turns out to be. It is often better, as a behavioral matter, to be uninformed than to be poorly informed.
But we do not always have the option of remaining uninformed. We cannot afford to hedge all of our bets. Whether via a great mis-recalculator in the sky or a political establishment largely captured by certain interests, new information will be manufactured.
Regulators obfuscate precisely by manufacturing information, by spreading unwarranted certainty. This may be precisely because they have been taken in by their own understanding, which gathers momentum. “Knowing” is ontological; it doesn’t depend on what is supposed to be known. And in a state of “knowing,” the objective reality of uncertainty is ignored. Being a “smart banker” is a dangerous state of mind, difficult to corral, impossible to regulat—we can’t force people to think they are ignorant; those who think they are smart also think they can figure out the loopholes.
UPDATE: Boing Boing linked to a writeup of a recent paper that argues complex securities are inherently impossible to regulate. Basically they argue that one can tell with structured securities whether the tranches are random or tampered with so that they are front-loaded with lemons.
UPDATE II: Free Exchange discusses the problem of too many smart people becoming bankers because it pays so disproportionately well, because it is dimly understood and poorly regulated. “To an increasing number of people, it looks as though the financial sector is recruiting the nation’s best brains and putting them to work endangering the global economy.” A paper (pdf) the blogger links to argues that “financial deregulation” is among the reasons jobs in the sector came to require more “skills”—which could be translated into: deregulation brought smart people into finance because the field had been opened up to the devising of complex money-making schemes designed to enrich them far beyond what one could make in other more carefully scrutinized professions.
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