2 March 2009 - like Confucianism
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Finance is like Confucianism: Most of the time it promotes
a stable and harmonious society, but occasionally, due to
its own natural workings, it goes haywire. A financial bubble
happens because market participants take a short-term view,
rather than a long-term view based on the intrinsic value of
assets. And that’s because they are economically required to:
They are participating in a market that takes everything into
account, meaning that it can’t be predicted.
clue:
I’m of course oversimplifying in every direction. As I see it,
Confucianist societies tend to ideologically reject the feedback
mechanisms needed for stability in the long run, so although they
work smoothly most of the time, they also suffer occasional
violent revolutions. The working of financial markets is the
opposite: Feed everything back so that all information is
sensitively responded to. It’s ironic that the result can be so
similar, at an abstract level. Or in other words, long-term
stability is beyond the state of the art!
give me a clue so sweet and true
copyright 2009, 2024 Jay J.P. Scott
<jay@satirist.org>