“Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.”


11 Oct 2010

In trying to explain why the economy blew up in 2008, John Cassidy’s How Markets Fail draws on a classic quote from the economist John Maynard Keynes: “Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.”

Nassim Nicholas Taleb says much the same in his books on the follies of stock and hedge traders (and most everyone else), The Black Swan and Fooled by Randomness. He tells the stories of traders who followed the conventional wisdom, either because they didn’t know any better or because it was too hard for them to fight the tide of “common knowledge” of how the market behaves.

So why is it OK to fail conventionally? One of these books—I can’t remember which—pointed out that when everyone fails together, then no ones’ reputation gets too tarnished. It’s everyone’s fault, and so it’s no one’s fault. If that’s the psychology of traders, and no one holds them to task, then it seems the rest of society is caught in a wicked trap.

bookshelf

books I've read on failure & grace

The World Without Us
The Last Oil Shock: A Survival Guide to the Imminent Extinction of Petroleum Man
Zeitoun
A Paradise Built in Hell: The Extraordinary Communities That Arise in Disaster
Hell and High Water: Global Warming--the Solution and the Politics--and What We Should Do
The Worst Hard Time: The Untold Story of Those Who Survived the Great American Dust Bowl
The Tipping Point
Three Cups of Tea: One Man's Mission to Promote Peace... One School at a Time
The Upside of Down: Catastrophe, Creativity and the Renewal of Civilization
Out of Poverty: What Works When Traditional Approaches Fail
The Little Ice Age: How Climate Made History, 1300-1850
Confessions of an Eco-Sinner: Tracking Down the Sources of My Stuff
Deep Economy: The Wealth of Communities and the Durable Future
The Geography of Bliss: One Grump's Search for the Happiest Places in the World


Mason's favorite books »

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