“The test of a first-rate intelligence is the ability to hold two opposing ideas in mind at the same time and still retain the ability to function.”
-F. Scott Fitzgerald
Fascinating article in The Chronicle of Higher Education about the duality of Yale behavioral economist, professor Robert Shiller (One Economist’s Mission to Redeem the Field of Finance).
The article posits that there are actually two Bob Shillers, and many of their ideas appear, at least at first blush, contradictory:
A) Warned about bursting of dot-com bubble and the subprime mortgages;
B) Believes Finance is a powerful and necessary tool to keep society running.
A) Believes we should not restrain innovation or to discourage invention of new financial instruments;
B) Finance should be tied to a larger goal of making finance more humane, democratic, and inclusive.
A) Greedy financiers were the cause of the financial crash;
B) Finance is a powerful and necessary tool to keep society running
A) Finance is a system that he argues rewards people of moral purpose;
B) Unpredictable human choices can muddy rational thinking and render economic models less predictable.
A) Shiller is “wonderfully persuasive” in refusing to play down Wall Street’s problems;
B) He assumes that financial innovations automatically help to improve society.
A) Financial sector drives much of the world economy;
B) Bubbles exist.
This is what happens with nuanced, complex ideas. They cannot be easily reduced to a bumper sticker slogan, and its unfortunate that we have devolved into a society that governs itself by slogans. I have Shiller’s new book, Finance and the Good Society, but I have yet to get to it
The entire piece is a long discussion about Prof Shiller, and well worth your time to read in full
One Economist’s Mission to Redeem the Field of Finance
The Chronicle, April 8, 2012