By Arnold Kling
Charlie Rose interviews Michael Lewis, and the interview just gets better and better as it goes along. Here are some of the phrases that are used to describe the Outsiders, the money managers who were right about the subprime bubble:
“socially cut off”
“not hearing the signals”
By the same token, they could not be heard by the Insiders, who Lewis describes by saying “people see what they are paid to see.”
In 1999, I was a partner in a Dotcom that I had founded. We sold to a company that went public. At the time, I was profoundly convinced that Dotcoms were a bubble. In effect, selling our company amounted to shorting into the bubble. Meanwhile, while a lot of the proceeds from the sale were tied up in restricted stock (so that we had to hold onto it for at least twelve months), I started my first blog, which I called The Internet Bubble Monitor, to joke about and warn readers (not that there were many readers) about the bubble.
In fact, even before the deal to sell our company was put together, I wrote Arithmetic in a Bubble, which was cited after the bubble popped in Hal Varian’s New York Times column (of course, he was one of very few readers).
It is hard for those of us perceived as rude, blunt, and socially cut off to be heard by the financial establishment. It is much, much harder to get our views in play in the political establishment.
I should point out that Lewis spotlights the following quote from Tolstoy, which should please Robin Hanson and Jeffrey Friedman:
The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of doubt, what is laid before him.