Merely a few years back sophisticated investors in the Western world were obsessed with ABCP, which was designed on the premise that if you put a lot of risky investments together, whirl them together nicely — removing the need to see the actual ingredients — make them tradable and hence liquid, somehow the basic risk that was right at the core of the ABCP would disappear. Alas, as can be expected, ABCP actually worsened the risk-reward situation, for now broker commissions had to be paid and the lack of risk perception encouraged an increase in the size of the higher-risk ingredients of ABCP.
How did ABCP come to be acceptable by the very best in Western society? It was a result of an irrationality that has been creeping into the society, a result of the subservience of the individual and his thinking to the institutional order, and more importantly of a corruption of the feedback mechanism by the politicization and collectivization of every aspect of life.
By suffering or benefiting from the consequences of our actions, we are enabled to align actions and beliefs to what is best for our prosperity. This we often no longer do. Institutions have interfered to privatize profits and socialize costs. This is socialism. It is also the mysticism that constitutes the very essence of backward, poor societies. For all intents and purposes, mysticism is synonymous with socialism.
In the West, there has been a significant break from individual self-responsibility. It is no longer necessary to do productive work or look after for your health or have a husband to have babies or save for your old age. The nanny state promises to look after you. This has broken the feedback system. The result is that our thinking is no longer aligned to what is best for us, what is rational and what makes for a productive society.
In the West, people increasingly believe that something can be created from nothing, the magic that either the state or God will provide for you if you pray. Rhetoric and sound-bites, accepted as universal truths, allow people to avoid delving deeper. It is now believed possible that the inherent risks of life can be eliminated through top-down management by experts. You have the same vote in political space whether you understand the issues or not, and this means mediocrity in the intellectual space. No value is found in deep exploration of a subject. Meanwhile, mysticism produces a significantly reduced sense of causality. The passion to advance one’s life and explore its possibilities has little value in a mystical culture.
In the West, people increasingly believe that something can be created from nothing, the magic that either the state or God will provide for you if you pray.
The product is an increasingly superstitious society and confused, cloudy thinking. Increased crime and loss of prosperity are the obvious consequence, because self-responsibility has taken a back seat. Dependence on thinking driven by the media and whatever is in fashion makes superstitious beliefs spread very quickly. Not many question how the printing of currency can create prosperity. Who needs to work when wealth can be created by the magic wand? Why look after your health when ultra-high-tech medical technology can take care of all ailments, perhaps making a lot of people subliminally believe that mortality can be avoided. Not many question that the world can be changed by the heavy hand of the US military. Everyone seems to have an answer for how to get rid of poverty and crime.
ABCP thinking makes people in the West worry about such things as the possibility that a certain drug might kill one in a million users. This endless worry about the smallest harm that may come from anything creates terrible regulatory problems and cost increases. Delays in drug approval kill far more people than they were supposed to save.
When 9/11 happened, a lot of Americans shouted, “How could this happen here? This is America.” Alas, there is nothing about America that makes it immune to attacks. It was not just the deaths of 3,000 people that affected Americans but their nationalistic arrogance. The steps Americans took to deal with 9/11 damaged liberty and security instead of strengthening them. Now the equivalent of thousands of lives is wasted in lineups at American airports.
As heartless as it may sound, 20 children being killed by a gunman is not a world-changing event. Many more people are killed on the roads each day in the United States. Many more are murdered in other ways. Just because a certain crime is covered by major news channels does not meant that people have to do something in a kneejerk fashion. That is superstition. Of course, one might want to explore the various reasons behind violent crimes, but putting restrictions on society without a cost-benefit analysis only leaves people with a false sense of security.
Gun control, putting metal detectors in every school, making people to go through porno-scanners at airports, is a wrong reflex. People must get some perspective on life. They also need to develop, or redevelop, a sense of responsibility for themselves. Then, after a bit of thought they may realize that shooting massacres have a way of happening in areas where guns cannot be taken in by decent people. In the end, they may accept the fact that even after all proper actions are taken, bad things will happen. This is the nature of life.
Western society must find a way back to rationality and restore a social structure shaped so that a person faces the consequences of his actions. This will be the antidote to mysticism and will likely put the West back on the path to progress.