Charles Peters … had a slogan … “If you’re not afraid of being right too soon.” But of course, everyone is afraid of being right too soon. It’s bad politics, being out of step with the herd; it looks like you’re greedy if you profit from being wise while others suffer from their stupidity. People want to be “right” at the same time everyone else is — with the result that they delay action until the crunch hits with devastating force. Take the case of Goldman Sachs, this week’s favorite whipping boy. “Goldman Sachs sought to protect itself from a collapsing housing market by selling mortgage investments that it knew were likely to fail,” read the lead of a Post story posted on the Web Monday. Scandalous! Why didn’t they wait and get cratered like the folks at Lehman Brothers, R.I.P.?
In craps, everyone hates the guy who bets "don't pass." Whether or not he wins. So you have to separate that effect and say "do people who won because they were different AND SMARTER get more or less hatred than people who just won by being different?"
Sarah, it sounds like you are talking about the idea behind Hanson's "Can Gambling Save Science?"
Matthew C, I also once believed that but apparently Goldman Sachs had no direct exposure to an AIG default.
Mitchell, you are wrong about "hidden" taxes.
I disagree with Agnostic's soy analogy. Soybeans themselves are pretty healthy. Processed soy is probably healthier than the product it replaces full of e coli and such, and soy isn't what's causing heart disease, cancer, stroke, type 2 diabetes, etc. A better analogy would be meat. I once had a doctor tell me that overall "hospitals are places for meat eaters."
In general, you are correct. I have suffered for many years because I invariably see what is coming long before unlearned academics and the vulgar mob.
My Casandra curse has of course gotten much worse, since the 1960s when any notion of truth has been silenced by political correctness. (I especially love blips and editing one's sources. There is, obviously, nothing in the least wrong with accurately quoting a source that contains the word shitty (as Carl Levin did) or the word nigger. The euphemism, "the 'N word' is just, well, stupid and vulgar.)
But your example is says precisely the opposite of what you think it says. The problem is NOT that Goldman told folk the crash was coming and thus were punished for being early. The problem is that Goldman did NOT tell anyone the crash was coming, while they were selling what they were certain was worthless crap.
The idiots from Goldman at the committee hearing kept saying "We just make markets." If that is so, then "making markets" should be outlawed and punishable by death. . In effect, they were saying, "We make markets in any thing. If someone came to us and said, sell this delicious tasting stuff that kills those that drink it a year after they drink it, we would send out salesmen to sell the stuff AND NOT TELL ANYONE ABOUT THE CONSEQUENCE.S"
I'm not completely sure what those CDS deals looked like exactly. If GS profited only from selling those likely-to-be-cashed-in bets against their own mortgage packages, rather than cashing in on them themselves, it would be indirect.
No one likes paying taxes, but they like public services. There`s a contradiction there that ordinary people never have to resolve (and when government tries to avoid confronting it the result is deficits).
I suspect the problem with introducing a VAT is both as was mentioned that the current tax regime has constituencies who benefit from it and will therefore resist change and probably more importantly simply that taxes are always unpopular, and no politician likes talking about doing unpopular stuff.
I think you are incorrect.
"SEC Charges Goldman Sachs With Fraud in Structuring and Marketing of CDO Tied to Subprime Mortgages"http://www.sec.gov/news/press/2010/2010-59.htm
The SEC's press release uses the word charge. If you still don't like it, however, feel free to replace with the phrase "filed suit against" or similar.
Goldman hasn't been charged with anything. It is a civil suit.
The biggest argument against the VAT that I know of is that it pretty effectively hides the real cost of government from the populace in the form of higher prices.
If it were up to me, there would be one tax allowed for all local, state, and federal taxes, payable every payday to the city hall in cash. That would let everyone know, in no uncertain terms, the real cost of government. I would expect a tax revolt the day it went live.
I do agree that being right too early is poorly appreciated. Think Stan Liebowitz pointing out the flawed analysis that gave impetus to lowering mortgage underwriting standards way back in the mid 1990s. he's hardly mentioned.
On the other hand, a problem with seeing things early is that it could suggest one was merely a broken clock that eventually hit the right time. Think Nouriel Roubini, who has been predicting disaster for over a decade (for just about every reason possible too--so one of them is always right). Also, Hyman Minsky got a big rehabilitation, but he too was always predicting a financial crisis, and so the fact that one happened 15 years after his death is hardly a confirmation.
The other reason the public is furious with Goldman is that the "AIG Bailout" was in actuality a bailout of GS since the money going into AIG was going right back out to pay off GS billions of dollars.
I put your retirement account in Goldman CDOs.
They told me it was a good deal.
You dudes and dudettes need to read up on complex adaptive systems, chaos theory, probability theory, human nature, sociology, psychology, political science, philosophy, random chance, self-fulfilling prophecies, a million monkeys typing, black swans, human cognitive biases etc.
Oh, wait a minute, you probably have.
So can you please use your deep knowledge to provide some real insight beyond "we ignore some people because of the confirmation and ingroup biases and then a subset of those people sometimes end up being right anyway but we can't predict which subset will be right ahead of time so we might as well just continure using our traditional hueristics and biases"? :)
"The only reward for being ahead of your time is the ridicule of your peer group".
We love the stories where the lone thinker is ahead of his/her time. But only after they have been shown to be right. And often only after they are dead and cannot compel us to question other assumptions and view points.
The sensible real-world answer, many economists argue, is a value-added tax that would encourage saving at the same time it pays down the deficit to manageable levels. But politicians are terrified of being right too soon on this one.
I thought the convention wisdom on a value added tax is that it would need to replace the income tax (otherwise, having both taxes would surely lead to even greater expansion of the federal government) but the income tax is far too entrenched because so many companies, organizations, and voter-blocks have special exemptions/benefits that they would fight to the death to protect.
Surely, the is an incredibly weak argument for this "right too soon" phenomenon.
Incidentally, “being right too soon” is an ambiguous phrase, not really suitable for your post. In investing it is usually taken to involve actually being, for a time, *wrong*. For example, it might lead one to short a stock that then continued to go up in price for a time–during which one’s opinion was wrong–before finally going down. (One’s opinion about the market value of the stock would have been, for a time, wrong; his opinion about its “intrinsic” value may have been right throughout.)
I was in this boat. I "knew" there was a housing bubble in 2000 so I did not buy a house. People who doubt a bubble to early get burned. This just adds fuel to the bubble.