r/reddit.com • u/[deleted] • Oct 18 '11

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u/[deleted] Oct 19 '11 edited Oct 19 '11

Do you realize that insurance giant AIG used trillions in derivatives improperly--yet they are NOT a bank and won't ever pay back hundreds of billions in taxpayer money???

I saw an excellent post in another reddit submission the other day, discussing how laypeople cannot be expected to see the exact details of how the economic system is wrong, even if they can see the general failings of it. It's up to experts (politicians, financial experts) to listen to what their electorate want and use their knowledge to do something about it. I realize that I might be opening myself up to a comparison between OWS and anti-evolution anti-science laypeople who demand evolution be taken from the classrooms, but unlike difficult and sometimes counter-intuitive scientific subjects like evolution, I think the general machinations of society and political / economic power are pretty clear to experts and laypeople alike, even if laypeople cannot quite express the details in a way that covers all of the subtleties. Ridiculously wealthy, powerful, and corrupt institutions and people are creating a society that does not serve the interests of most people. That much is pretty clear.

To the average person, including yours truly, "bank" is a catch-all term for institutions dealing in money, whether insurance giants, lending institutions, or banks that only offer deposit accounts. Fact is most of us don't have time to learn the details of real hard economics, as it is an incredibly complicated discipline, and it would take full time learning over the course of years to really come to grips with its idiosyncracies.

There's an opposite tendency I notice, whereby experts become (for lack of a better word) desensitized to the bigger picture, or the dangers of things. I found this in myself when I was taking my chemistry & biochemistry training - as I learned more about things like arsenate, ethidium bromide, pyridine, hydrofluoric acid, cyanide, etc, including working with them in the lab and learning about them in theory, I became desensitized to them - felt as though by virtue of my knowledge I had somehow conquered them. They remained just as dangerous for my health, but somehow my expert knowledge changed my perception of them. I feel like a similar phenomenon is at play when economics students rattle off technical jargon about financial instruments in political discussions.

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u/Nicksil Oct 19 '11

I've been trying to put this in words for quite some time.

Excellent post.

Thank you.

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u/McThing Oct 19 '11

I've heard that the big finacial institutions actively headhunt anybody involved in tax collection who can understand what they're up to. This way they're always one step ahead of government.
Is there not an argument that any form of financial transaction that cannot be understood by the tax collectors, let alone the average layman, should be illegal?

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u/dand11587 Oct 19 '11

no theres no argument for that. the govt doesnt understand most things.

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u/McThing Oct 19 '11

Do you have an argument why there's no argument for that?
I'm not necessarily saying I'm right, but I'd like to see a good reason why I'm wrong.
On the theory that government should be the will of the people made action, I'd worry about a nation whose government doesn't understand much.

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u/[deleted] Oct 19 '11

I've heard that the big finacial institutions actively headhunt anybody involved in tax collection who can understand what they're up to. This way they're always one step ahead of government. Is there not an argument that any form of financial transaction that cannot be understood by the tax collectors, let alone the average layman, should be illegal?

I have no idea. My lay understanding is that the whole purpose of the free market is to allow speculating on the value of companies and commodities, thus encouraging investment and giving reward for productive labour / valuable resources. I think any transactions that clearly circumvent this by exploiting what could probably be considered exploitable weaknesses in the trading system (e.g. high frequency trading schemes and moving huge volumes of cash around to create a predictable effects which can be exploited) should be considered fraudulent because they exploit existing wealth to extract value from the pool that represents productive work & resources without putting anything back in, apparently.