Instant Communications and the Meltdown
David Brooks, writing in the New York Times about the financial meltdown yesterday, put forth two possible theories as to how bankers got it so wrong: “either Greed or Stupidity.” And, after weighing both sides, came down on the side of Stupidity.
He asked how so many smart people could miss that so many financial instruments — Warren Buffett’s “Financial Weapons of Mass Destruction” also known as like CDO’s and Credit Swaps — were worthless, particularly when all the bankers were in constant communication with each other?
“To me, the most interesting factor is the way instant communications lead to unconscious conformity. You’d think that with thousands of ideas flowing at light speed around the world, you’d get a diversity of viewpoints and expectations that would balance one another out. Instead, global communications seem to have led people in the financial subculture to adopt homogenous viewpoints. They made the same one-way bets at the same time.”
This raises a lot of interesting issues about our use of tools like Twitter, Facebook status updates, instant messaging, mobile Skype, etc. — and how they may distort our cultural perspective. While we are not trading trillions of dollars in world markets, we are feeding into mass culture, and then measuring it.
Are we participating in a digital/marketing echo chamber? Did the potent combination of SxSW and Twitter create a false sense of our own importance?
Technorati Tags: David Brooks, Finance, New York Times, Twitter
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