This is your economy on drugs

[nancylebov]

Here's a hypothesis that part of the financial crisis is that the financial industry was running on amphetamines, a drug which increases energy and decreases judgement.

For a while, I've been pushing the idea that the 70 to 90 hour work weeks made it harder for people to ask whether what they were doing made sense. Speed would only make the problem worse.

When I originally proposed this, I was told that, no, everyone in the financial industry was under pressures which made their behavior inevitable. On the other hand, the pressures were the result of policies and choices which were a matter of individual judgment.

"The wisdom of crowds" only applies if the crowd is composed of independent people who aren't nuts.

Link from a comment by John Emerson here. Most of the comments are interesting. I used to read Megan McArdle back when she was Jane Galt, but I got bored when she started writing for the Atlantic.

Comments

[nancylebov.livejournal.com]

I remember your theory that one of the causes of the S&L crisis was cocaine.

And I repeat my suggestion that if it makes sense to drug test bus drivers, it makes sense to drug test CEOs. It isn't just to humiliate them.

[kgbooklog.livejournal.com]

Speaking as someone who had to pass a drug test in order to be allowed to shelve books, I wholly support this idea.