G. K. Chesterton, demonstrating his genius at the art of paradox, once referred to optimism as “morbid.” Since the moment I read that (it appears in the second chapter of The Everlasting Man, I have felt in my bones that it is true, and have accordingly nurtured a healthy repugnance for the braggarts of optimism. But as with many paradoxes... Read more ...it is difficult to explain without vitiating its power to surprise and thus enlighten. A true paradox is not a mere turn of phrase, a linguistic subtlety. It is attempt to fill a gap in man’s power of understanding. It is a rhetorical reach, a heuristic device to explain what is in the end a mystery to our meager powers of mind. The paradox is a human reflection of the mystery of being.
So in the hands of a master like Chesterton, the paradox becomes an instrument of extraordinary explanatory power. It can show us, as in a flash, a principle or precept which might by other means requires hours of lecture to impart. (There is an obscure masterpiece, long out of print, called Paradox in Chesterton, by a critic named Hugh Kenner, which lays all this out with great elegance. It ends with the astonishing claim for GKC that he be called a Doctor of the Church; and more astonishing still, the reader finds himself convinced.)
In this case of the problem of optimism, Chesterton’s paradox opened my mind’s eye to the surprising truth that optimism, being so engrossed with the potential for good things, courts ruin and despair by minimizing bad things — or, in the parlance of finance, by minimizing the downside risk. Especially when abetted by the modern doctrine of progress, optimism is morbid because of its tendency to induce blindness concerning man’s limitations.
Now I have a concrete, factual illustration of the problem of optimism, right in front of everyone’s eyes.
As I understand it, AIG was basically ruined by the wild bets of a 300-man unit out of London, the Financial Products office. This 300-man operation lost the equivalent of a big state’s budget and more, all by themselves. [Click here to read it all.]
Tuesday, March 17, 2009
Chestertonian Explanation of the Fall of AIG
From Paul Cella, on the Red State Blog:
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That theory goes rather nicely with the one I read last week that explained that because so many of the people in NYC were on anti-depressants because of 9/11 that doing really risky things with other people's money just didn't quite faze them.
ReplyDeleteSo, the economy was brought down by Prozac-induced optimism? Sounds very 21st century.
What is said of optimism can also be said of pessimism, idealism and realism.
ReplyDeleteJust as Optimism can potentially diminish bad things, so Pessimism can potentially diminish good things.
Just as Idealism can potentially diminish facts, reality and truth, so Realism can potentially diminish creativity, initiative, and hope.
It's a balance thing. ;-D
ReplyDeleteTrub: so right. Chesterton was just as vociferously against pessimists as he was against optimists; against the right as against the left; against the "liberals" as against the "conservatives". One thing I do like about him is his common sense, which seems to always place him in the center of things.
ReplyDeleteIt may be interesting to consider how immoral behavior played into their downfall. This story talks about how AIG illegally drove up the price of grain last spring. It actually says they found loopholes in the law. But I prefer words that don't skirt the truth, like right and wrong, ethical and unethical, legal and illegal.
ReplyDeletehttp://www.catholicnews.com/data/stories/cns/0900904.htm
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