I just finished reading The Big Short, Michael Lewis's account of the subprime mortgage crisis from the perspective of the few rare people who saw it coming and bet on it, shorting the market and eventually making lots of money. It is brilliantly written and fun to read, highly recommended. Listen to this passage, in which he describes one group of those rare investors starting their investigation:
"Typically when they entered a new market - because they'd found some potential accident waiting to happen that seemed worth betting on - they found an expert to serve as a jungle guide. This market was so far removed from their experience that it took them longer than usual to find help. ... Eventually they figured out that language served a different purpose inside the bond market than it did in the outside world. Bond market terminology was designed less to convey meaning than to bewilder outsiders. Overpriced bonds were not "expensive"; overpriced bonds were "rich", which almost made them sound like something you should buy. The floors of subprime mortgage bonds were not called floors - or anything else than might lead the bond buyer to form any sort of concrete image in his mind - but tranches. The bottom tranche - the risky ground floor - was not called the ground floor but the mezzanine, or the mezz, which made it sound less like a dangerous investment and more like a highly prized seat in a domed stadium. A CDO composed of nothing but the riskiest, mezzanine layer of subprime mortgages was not called a subprime-backed CDO but a "structured finance CDO." "There was so much confusion about the different terms," said Charlie. "In the course of trying to figure it out, we realize that there's a reason why it doesn't quite make sense to us. It's because it doesn't quite make sense." ... The subprime market had a special talent for obscuring what needed to be clarified."
If the secret peace were half of a vast historical Manichean struggle, that paragraph would be a perfect description of its evil dark half. In the book, I claim that the main force pushing civilization closer to peace is the snowballing spread of information. If that's true, then theoretically anything that hinders the free flow of information is detrimental to the cause of peace. And here we see a perfect example. The obfuscation described above was a huge contributing factor to the entire economic crisis.
Other examples abound. My wife and I are constantly surprised at how difficult it is to navigate the health insurance system; that's a sign that it was intentionally created that way. For the same reason, some stores make it hard to find prices on products, and some web sites make it hard to unsubscribe from newsletters. These are, sadly, often not accidents or signs of bad design; they are signs of skillful design, at least from the point of view of evil.
But the whole theory of the secret peace is that the good news is outweighing the bad. And that means there are more instances now of people sharing information and being transparent than in the past. So I'll leave you with two quick examples from the NY Times:
Sharing of Data Leads to Progress on Alzheimer’s
By Gina Kolata
"In 2003, a group of scientists and executives from the National Institutes of Health, the Food and Drug Administration, the drug and medical-imaging industries, universities and nonprofit groups joined in a project that experts say had no precedent: a collaborative effort to find the biological markers that show the progression of Alzheimer’s disease in the human brain. Now, the effort is bearing fruit with a wealth of recent scientific papers on the early diagnosis of Alzheimer’s using methods like PET scans and tests of spinal fluid. More than 100 studies are under way to test drugs that might slow or stop the disease. And the collaboration is already serving as a model for similar efforts against Parkinson’s disease."
In a Twist, Nonprofits Review Technology Failures
By Stephanie Strom
"Technology’s potential to bring about social good is widely extolled, but its failures, until now, have rarely been discussed by nonprofits who deploy it. The experience in Guyana might never have come to light without FailFaire, a recurring party whose participants revel in revealing technology’s shortcomings. ... Behind the events is a Manhattan-based nonprofit group, MobileActive, a network of people and organizations trying to improve the lives of the poor through technology. Its members hope light-hearted examinations of failures will turn into learning experiences — and prevent others from making the same mistakes."
