Finance, cont'd (an old post)

I finished this like a month ago, but never got around to finalizing the arguments and publishing it...lol, fail on timeliness.

So here's the rough draft, a reply to Lisa's post.

I do have to lament the fact that constructive arguments such as these quickly turn into deconstructionism of the other person's argument. I'm especially guilty...at first I was going to put down just my own thoughts. But the end was just purely a rebuttal of Lisa. For that...apologies.

However, since we're already in this deep hole, let's just keep digging, haha. Lisa, I do think you did my arguments relative justice. However, I do have a few beef to settle:

- Madness of Crowds, Monkey Business, Collapse of LTCM, Liar's Poker...yep, I've read them all. So I'm very well aware of excess greed on Wall Street.

I see how your attempted rebuttal as forced you into a corner with more extreme statements. This was not my intent with my original post, lol. But this means your arguments are easier break down, because you resort to using Straw Man arguments to rebutt. Let me elaborate:

1. "In my prev. entry, I have mistakenly identified "life and survival" as the sole goal of any society. Discovering new knowledge, for one, is an important value." - Yes, but no. What I argued was that you did implicitly acknowledge other values. But you primed (look that up) your arguments on only life and survival, and your judgements ended up being based on life and survival even when you acknowledge other values. And we'll see how you continue to make that mistake within this rebuttal. Yes, discovering knowledge is valuable, but that's also a simplification. What I argued is there is an intrinsically unknowable future that contain value to them, which is a broader set that contains discoverable knowledge. I used this to argue that it is inherently restricting to arbitrarily, individually, or even among small groups, to determine value to any set of action. My thoughts on this are very influenced by Karl Popper, a very good philosopher on the nature of knowledge. Highly recommend. http://en.wikipedia.org/wiki/Karl_Popper

2. "It doesn't really matter if people don't make the connection between making money and production, so long as the money connects in proportion to value, money will do the invisible thinking. And since "empirical evidence seems to show that despite how stupid people are most of the time, collective action is better than elitist judgment, money DOES connect in proportion to value." - I've said that it doesn't do a good job often times, but yes, you've characterized my stance well on this one. However, your rebuttal is weak: resorting to example sniping? Come on...do you actually think I'm not aware of the constant slew of shit that happened over the past year or so? There are so many ways the examples you give were flawed and misleading, so I won't spend too much time rebuking each and every single one of them. Unless you can question my argument on the fundamental and theoretical basis, this is gonna turn into a very trite argument over the specifics of examples, very soon. Let's look at the article as 1 example: The Iceland article.

I must say Lisa, I was a little disappointed with your response with a Michael Lewis article. Granted, he is a great writer and an excellent storyteller. But the fact that you countered a deep discussion about the value of finance with an article mocking Icelanders for believing in elves is a bit disconcerting. Mischaracterizing Icelandic males as a bunch of hormone-enraged fishermen who didn't know a rat's ass about currency trading, with some feminism undertones to satisfy Vanity Fair, is absurd when you look at it in retrospect. Amusing? Definitely. Distracting of the issues? Yes.

Because what you are implying there is that with a complete dismantlement of the financial instruments industry, the world on whole end up a better place. Because I don't think even you believe that fully. What trading ultimately is involved in dynamic pricing. Regardless of how flawed the methods are, dynamic and fluid pricing is better than no pricing at all. Speculation is that ugly and greasy cog that makes that happen.

So my conclusion: the way I've structured the debate is that I've characterized Lisa's point of view as one which the finance industry adds NO value whatsoever to the world and we would probably be better off completely dismantling it. What I've characterized it is that although there are many things the finance industry can change upon, anecdotal evidence do not provide sufficient reasoning that trade and speculation cannot add value to society. Is this a bit straw man? No, because Lisa, you phrased your original thesis as a very rhetorical question, so I implied your point was that the finance industry adds little or no value to society. Unless..of course, your entire rant was to try to conclude that the finance industry's value is only overvalued by a bit, which I suspect it's not.

Do I realize how corrupt, how messed up, how fundamentally flawed the financial industry is? Yes; I don't think you don't have to look far to establish a good case there. Heck, the finance puppy is not the most ethically sound industry out there....I'm not gonna pretend ppl in there are out there to save puppies. Can you make a case that we can improve the regulatory structure of the financial industry, bring the shadow banking system to light, and tighten corporate governance to keep wealth distribution in check? Definitely, those are issues I do hope the Obama administration tackles eventually. However, what I took issue was the fundamental, philosophical, value behind the financial service, and the derived (not derivative) mechanisms that stem from that, as a periphery social function. I still think there is a place for finance, speculation, and money management within society. And this is why understanding, and engaging with finance, is really important to me - anybody can stand on a pedestal, look at circumstantial evidence, and throw shit at the other monkeys. But I think a better step is to work to reconcile extremes and constructively make the world a better place. Just a thought...

And with that, I hope we agree to disagree on this issue. :) I'll allow you a final wrap-up: I don't plan to write on this any more soon. I've been doing a lot more reading these days.