The Road to Ruin?
Why Main Street hates Wall Street
A majority in the House voted against the financial rescue bill, in part, because they were swamped with calls from angry constituents. Kai Ryssdal asks behavioral economist Dan Ariely why Americans want revenge.
People rallying in front of the NY Stock Exchange (Spencer Platt/Getty Images)
TEXT OF INTERVIEW
KAI RYSSDAL: Maybe you disagree, but I think there's something visceral going on here in this debate about the bailout bill. There've been dire warnings from people who know pretty much all there is to know about the workings of high finance that if we don't do something, bad things are going to happen.
Politicians have been saying the same thing. Worth noting because polticians don't like to deliver bad news. Still, a majority in the House voted against a bailout on Monday, in large part because they were swamped by complaints from their constituents. Those are constituents who, it stands to reason, would be harmed by whatever bad things happen, but who seem to really want to stick it to Wall Street.
Dan Ariely's a behavioral economist at Duke University and an occasional contributor to this program. Dan, good to talk to you.
DAN ARIELY: Thank you. Nice to be here.
RYSSDAL: What is it about the human condition that just wants revenge out of a scenario like this?
ARIELY: Well, there's actually quite a few things, but let me first describe to you a little experiment that we and other people have done. It's called the trust game. Now, imagine that you and I each get $10, and you're the first mover and you decide whether to give your $10 to me or to keep it. If you keep it, we both go home. If you pass it to me, that $10 quadruples. So now I have your $10, it became $40, plus my $10, I have $50. I can split it in two and give you half and I get half and we both go home happy. Or, I can take the whole $50 and go home.
RYSSDAL: And I have nothing.
ARIELY: And you have nothing. Now, here's the kink. What happens after we do this game and I take the $50 and go home, you have a chance to take revenge against me. What if I tell you, "Look, for every dollar you spend, I will lose $2." Would you take revenge against me?
RYSSDAL: Well, yeah, 'cause you're leaving with 50 bucks and I have nothing.
ARIELY: That's right. So when you do this experiment in a PET machine, in a machine that scans people's brains, what we see happening is that the same area of the brain that reacts to rewards -- things like food and sex and heroin, to good things -- also reacts to planning revenge. Which basically means that revenge is actually rewarding.
RYSSDAL: But let me ask you this in the present circumstance with the bailout bill. Arguably, the thing was designed to make everybody's life a little bit better -- whether or not they believed that, I suppose, is a relevant question -- but by calling their congressman and saying, Vote no because we want to punish -- under your theory -- the Wall Street people, don't they sort of hurt themselves?
ARIELY: That's right. But right now what we're doing is we're willing to sacrifice money -- the same way that you were willing to sacrifice $3 or $7 to punish me -- people are willing to suffer to get this (you know, I don't know what's a polite way to call this) . . . . people on Wall Street. . . . But people are willing to lose money to get those people to suffer more. In fact, I've asked people about this. Everybody feels this anger. They have violated, in a very important way, a social contract in the same way that I would have violated the social contract of you giving me your $10 and me walking away with $50.
RYSSDAL: Given our motives for revenge, is there a way that Congress can shape a bill that's going to make it acceptable to people whose constituents really want to punish Wall Street?
ARIELY: Yes. So I think we need to include revenge in the bill. There was discussion about capping CEO salaries, which I think went a small way into revenge. But I think there are two ways to include revenge in the bill. One way is to say every time we are going to nationalize something, we are going to take the stock option of these people in these banks, right? We will make them pay for nationalizing it. That's one approach. The second approach is to build into the system future revenge. So another thing we can do is we can decide that the bill will actually force us to create a new code of punishment for people on Wall Street. And we have an opportunity here, with a meltdown that's so dramatic, that we feel that there is a need to go back and try and reshape the whole system. And that might actually be very, very useful in the long term.
RYSSDAL: Dan Ariely is a professor of behavioral economics at Duke University. His book on these sorts of things is called "Predictably Irrational." Dan, thanks a lot.
ARIELY: My pleasure. Thank you.
Comments
Comment | Refresh
From Houston, TX, 10/03/2008
How many companies will cease operations because they can't roll over debt? Will the bill restore enough confidence to let them stagger along farther? I'm a contractor helping a US Government outfit. We wanted to buy equipment before the end of the fiscal year. We couldn't get it because the small business retailer selling it to us was suddenly cut off by a large manufacturer. They wouldn't extend this small company the usual credit terms to sell through $50,000 of product TO THE US GOVERNMENT. You may be isolated from the growing turmoil, lucky you. But you won't be forever, or even very long. And in my opinion, this 700B is just the first installment, one of many more to come.
From claymont, DE, 10/03/2008
now that the losers got paid,,bushes big profit take on his way out of office,, everybody in america should file bankrupcy
From Miami, FL, 10/03/2008
I am truly disgusted by the fact that this bailout is going to pass without any specifics (at least that I know of) with regards to those that have lost property value, particularly with regards to tax credits for those losses. I purchased a property in good faith, one that has lost value, yet I am battling all the odds in order to pay for it. What is going to be done for someone responsible like me? I've been affected by those who've chosen the low road and stopped paying. Do I want revenge? You bet ya, particularly against those that have not acted morally responsibly.
From SLC, UT, 10/03/2008
I am upset that the Marketplace crew who I've developed trust for over the last year is buying into the Bush crisis. The world is not going to end if we don't act now. It won't even be the great depression. Bush has foisted two false crises on us in the past in the form of the Patriot Act and the Iraq War. Why should we trust him now?
Sure something needs to be done. Give Paulson $100 billion now with the requirements of equity stakes or current market value for securities, and see what he does with it. Build in revenge taking back CEO equity. But desiring responsibility and not trusting government is exceptionally rational. Buying into this boondoggle fiasco is what's irrational. If they've lied to us and hung us out to dry in their power grabs before, why should it be any different now.
Of all the agenda driven bought out media outlets out there, why is NPR falling into this trap? Maybe it's time to look for a more responsible economic new cast.
From newport beach, CA, 10/02/2008
ABS-A-Lutely mind boggling to hear this segment. It seems a forgone conclusion to you that any opposition to desparate, no-strings attached, inexorable push to go back to happy-go-lucky lending is considered "revenge" and by implication irrational. I HAD to check the dial to see if I was still listening to "Marketplace" !!!
Holy Crap KR, the world may really BE coming to an end if YOU miss the boat by that margin.
Yes, there are times when the OPTIMAL solution WILL hurt (aka finite temperature, aka real world). But in trying to explain such obvious notions, make me feel like I'm talking to the crooks in the whitehouse, the incompetent fools in the Central Bank, and/or the three year olds in congress, NOT the "Marketplace" folk.
10/02/2008
"Revenge"- call it "negative reinforcement", is a cornerstone to the rule of law. Laws and legislation are labeled impossible, or impractical, or unrealistic when some ideals are at stake, yet watch how fast the system turns on a dime when billionaires stand to have the spigots of greed interrupted. Who'd have thought it possible? So without tounge in cheek (its due to some dental work I can't afford)- let's allow this bailout this time (because they've arranged to bring us all down with them)- when we buy all those toxic mortgages from them, let's move their executive ranks and their families into those foreclosed homes and properties. Meanwhile, let some of those at the other end of the spectrum, who are footing the bill, move into Wall Street's mansions in their place, and everybody pays their existing mortgage payments. Once the mortgage markets are righted, everbody goes back home...
From troy, MO, 10/02/2008
I take exception to your use of the word revenge with regard to why I, Joe Public oppose the unprecedented $700 Billion dollar bailout, which I understand amounts to some $24,000.00 for every first mortage holder in the United States.
First: Yes, the government needs to intervene. But your story seems to imply that this is the only and or best way to do so.
Second: This is not the first time this administration has played to congress's fear before. The "sky is falling, now" style has scared the American people and Congress into you into knee jerk reactions before.
Third: There may or may not be a recession I suspect there will be, but bailing out Wall Street is not going to fix the problem of the population being over indebted. Credit, whether this bill is passed or not, will be subject to tightened standards.
Fourth: Wall Street is a for profit business. And they have enjoyed their profits.
The former top five Wall Street firms -- Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers, and Bear Stearns -- paid their CEOs a combined $3.1 billion between 2003 and 2007, when the banks were buying up the assets that led three of them to implode. In those same five years, the five firms reported a combined $93 billion in net income. In 2007 alone, the firms paid their 185,687 employees $66 billion, including $39 billion in bonuses. (Bloomberg) They made those profits by violating many of the long established rules of safe risk taking. The borrowed short term and invested that money into long term mortgages. Good risk management teaches to match maturities. But the industry was so proud of this "new" behavior they put a name on it, "the carry trade". Wall Street purposefully and successfully, lobbied (read made political donations) to increase their risk taking with more leverage. So now instead of having 1 dollar of their own money for every 15 dollars of assets, they only had 1 dollar of their own money for every 41 dollars of assets. At a 40 to 1 ratio, if those assets decrease by a mere 2.5%, you're broke, your bankrupt. And we should bail then out? The stock and bond holders made the money on the way up and they should be protected, bailed out?
Fifth: Yes, the government needs to step in, provide liquidity and assurance to the financial markets of the world. There is another way, this can be done without "saving" the risk takers that got us in this mess. Any and all monies should be provided in a way to take a preferred position to that of the stock and bond holders. Warren Buffet knows how to do it. Dr John Hussman at www.hussmanfunds.com articulates it much better than I.
Sixth: Giving away all that free money to millionaires does not promise to prevent a recession.
Seventh: It appears that the "new revised" bill that will be voted on Friday by the house has used the tried and true method of greasing the wheel with lots of pork. More tax dollars spent as justification and a reason for our legislators to pass a poorly conceived, wasteful bill. One of these days the American Public will have to stand up and say enough is enough,
Eighth:
Here is the definition of revenge - harm done to someone as a punishment for harm that they have done to someone else.
And here is the definition of consequence. consequence noun : an often bad or inconvenient result of a particular action or situation
You decide
From McKinney, TX, 10/02/2008
Perhaps a public flogging of the executives, lobbyists and politicians responsible for this mess would in the short term make part of my brain feel better.
What makes us Main streeters really angry, is that every bailout bill that gets voted on does NOT have any calling to account of the people that caused the mess. Does NOT have any ethics reform. Does NOT ban paid lobbyists from being involved. Does not outlaw the behaviors that caused the mess. Does NOT have any help for main street. Does not prevent executives from receiving bonuses for having snagged taxpayer money in behalf of their investors. Gives a few partisan officials full power to make blank checks to their friends.
Every bailout voted on amounts to a happy hour buffet and orgy for executives, their paid lobbyists, and the politicians who get paid off by them.
That is why we need that part of our brain stimulated.
From El Paso, TX, 10/02/2008
Unfortunately, Dan Ariely's suggestions for taking revenge show a common misconception about stock options and "nationalizing" companies. Ariely said "One way [to take our revenge] is to say every time we are going to nationalize something, we are going to take the stock option of these people in these banks, right? We will make them pay for nationalizing it." The problem with this is that if the government did "nationalize" a bank, they (the government) would take over and all the shares of stock would become worthless. Since the value of stock options reflect only the difference between the "strike" or "option" price (that is the value of the stock on the day the stock option was granted) and the market price for the stock on the day the stock option is exercised (or "cashed in"), nationalizing a company would make the stock and thus the stock options worthless.
Jonathan Edelfelt
Author of Who Said You Need Millions? Retirement Strategies for the Rest of Us
From Bethlehem, NH, 10/02/2008
I'm not seeking "revenge against Wall Street." Why should I? My 401K plan is tied to it? No, I'm seeking a smart solution, a well-targeted, fair solution that will not perpetuate the behavior that caused this crisis to begin with. The bailout, as presented, is a crisis response that will perpetuate unsound, unchecked banking practices that contributed to and caused the current "crisis." Worse, it sets a terrible precedent that bigger is better because "if you're too big to fail" you never will fail." If a company is too big to fail, it's too big for a democratic landscape.
Once again this administration comes to us with a "crisis" and a bigger than life fear that ultimately gives too much power to one person. I agree with another commenter , it sounds very fishy. There's some Hanky Bernanke going on.
wha
10/02/2008
What we realists on Main Street know is bailout or not, WE are going to suffer for the arrogant mistakes and outright fraud perpetrated by these Masters of the Universe. If desiring that they share in our suffering a teeny weeny bit (or at least, don't end up profiting from it as they usually do) is considered "revenge" well then I guess I'm revengeful.
From Tucker, GA, 10/02/2008
The presumption behind this piece was that anyone opposed to the bailout plan solely wants to "punish" Wall Street. There was no mention made of the current state of the U.S. economy---the size of the current deficit, the impending Social Security crisis (which neither presidential candidate is addressing, the cost of two wars with no end in site for either of them. Perhaps there are many of us who fear the impact of a plan that Rep. Boehner himself said "might work" on our already dreadfully managed federal budget.
From Loveland, OH, 10/02/2008
Revenge? No. It's one thing to fail in one's fiduciary duty by playing fast and loose with other people's money. Bringing the entire banking system to its knees is a whole 'nother kettle of fish. (And yes, it smells. Fishy, in fact.) It is unconscionable that those most responsible for the mess would be largely immune from its repercussions. If the word "revenge" makes you uncomfortable, think of it as properly incentivizing CEOs and others to behave themselves.
CEOs should be thankful that most folks are only calling for fines and disgorgement of ill-gotten gains. Other primate species deal with the ones who've endangered the tribe by killing them and their offspring or sending them to fend off the long teeth and claws of predators without the protection of the group. We're altogether more merciful in how we deal with those who have broken faith with their tribe.
From VA, 10/02/2008
I, too, was very much offended by this piece. Would Kia also say that Jefferson, Adams and the minutemen reacted irrationally just because they received pleasure from wanting to "stick it to Britain"? I agree as well with the post about Kia's delivery on the show: no matter how bad the news, he's always glib about it. This is a VERY serious matter.
From Durham, NC, 10/02/2008
I worry that the main point was not clear -- this was not about if the bailout is right or wrong -- it was about some of the barriers to moving forward.
It was also not about people being stupid -- just about our human nature.
Finally it was not suggesting that revenge is the whole story -- just a part of it
Irrationally yours
Dan
From AZ, 10/02/2008
Don't blame Kai. Blame me. I say those constituents that pressured their reps to vote no are out for revenge.
From San Diego, CA, 10/02/2008
Indeed, as most writers note, the resistance to the plan has little to do with revenge. To me, its about credibility; the administration's lack of it with respect to just about everything, and the lack of credibility of a plan which proposes to borrow 700B with little or no talk of how it will be paid off. If they had the guts to say Tax Increase, I would at least concede some credibility.
10/02/2008
I think that most of the comments miss the main point of your guest. The point is that this bail-out/rescue bill seems to ignore the huge social contract that has been violated by all the people we're supposed to trust, and asks us to simply turn our heads and walk away. This is not the only story that this 30-min show has done on this topic in the past 2 weeks, and I seriously doubt that a national public radio show would in any way attempt to insult the rationality or psychological stability of their listeners.
From Grass Valley, CA, 10/02/2008
The reward centers of my brain are tingling at the thought of my wreaking vengeance on you by telling you how insulting, condescending, and unprofessional this story was.
I am a regular listener to your show. I even make a point of getting out of the house early to catch the morning report on my commute.
I don't always agree with Marketplace, because it presents diverse views -- and, of course, that's a lot of its attraction.
I am certain that this bailout is the wrong thing to do, that it won't work, that it will make a bad sitution a LONG bad situation, and that it rewards bad behavior -- by market participants and by the government that now comes to "rescue" us.
You certainly can disagree with those points, but to dismiss them, and to dismiss me, as products of some mental abberation is below you.
Shame.
I even like your show enough to say that this is an interesting topic -- brain studies and economic behavior. But if you couldn't see the subtext, then you have to consider your mental process wasn't entirely rational, either, was it?
Now, how about a story about how an admininstration that is staggering toward its ignoble end, having failed on many fronts, calls out for an unprecedented drastic action, and a majority of Americans see this for the pathetic power grab that it is -- yet a large block of politicians, opinion makers, and journalists are completely gullible. What is going on in THEIR heads?
I will continue to listen to Marketplace, because it's worth listening to. How about showing me -- us -- the courtesy of acting like we're worth listening to, as well?
From VA, 10/01/2008
I normally find Marketplace to be a relatively informative program but was deeply disappointed by this piece. While the psychological aspect of revenge is certainly interesting and informative, its inclusion and Kai's presentation of the story turned a report about the bailout into a one-sided hit piece. Kai derisively implied throughout the report that those who are against the bailout in its current incarnation were motivated solely by revenge. This is simply false.
While revenge likely plays a part in many people's resistance to the bailout, it is wrong to imply that it is the sole motivator. Kai is talking about the bailout as if it is the only possible plan. He also seems to believe that it will definitely solve the problem. Neither of these assumptions is accurate. Many economists have argued that other options should be considered. There is also the danger that the plan will not work and a strong possibility that it will make things worse in the long run.
Kai mentioned that people with financial knowledge are saying that this bailout is absolutely necessary and therefore we should listen to them. He is referring to the same group of people who were "in the know" about WMD in Iraq, who argued for the last few years that there was nothing wrong with the shadow banking system, who failed to prevent an obvious housing bubble by playing fast and loose with monetary policy, and who gave us this mess in the first place with their reckless gambling on shaky derivatives and other exotic securities. What kind of evidence does Kai need to see before he will think twice about swallowing and then regurgitating the line from a thoroughly discredited administration and its free-market ideologues?
Furthermore, it is not beyond reason to consider that Hank Paulson's background as CEO of Goldman Sachs might, at a minimum, affect his view of the world and the type of rescue plan that he would propose. This certainly seems to be the case given the total lack of support for homeowners, whose woes underlie this entire sorry tale. It is completely reasonable to consider a plan that would try to help the financial system from the bottom-up rather than the top-down.
In addition, Kai chooses to ignore the unprecedented degree of power that would be bequeathed to Mr. Paulson. Perhaps all those "revenge-seeking populists" are merely well-versed in Constitutional law?
Finally (during other points in the show), Kai gleefully latched on to any evidence that the tone of letters sent to lawmakers was changing as a result of movements in the market. Competent reporters and many non-professional observers recognize that market movements do not reflect economic fundamentals and are most certainly driven by the psychology of fear that is currently being promulgated by the administration.
Shame on Kai for his one-sided and completely simplistic presentation. I will never again listen to Marketplace without suspicion.
From Washington, DC, 10/01/2008
Kai Ryssdal insults listeners who disagree with the bailout by assuming their irrationality and by psychoanalysing them. The motivation is not revenge but concerns with the plan itself. 231 mostly Ivy League economists expressed concerns over the plan’s efficacy in an open letter to Congress which Kai has studiously avoided mentioning in favor of selectively telling us only about those who think it should be implemented. http://faculty.chicagogsb.edu/john.cochrane/research/Papers/mortgage_protest.htm
Instead of running an advocacy program, perhaps Kai should get back to being a reporter. Spare us the opinions, and get below the surface to report on the facts. Intelligent coverage which could inform our future actions might include:
1) Collusion between Freddie Mac and Fannie Mae and certain members of Congress – the lobbying and purchasing of support
2) The connection between trying to implement a social policy to increase home ownership and more recently to sustain home prices, and high-risk loans to those with poor or no credit which fed high-risk derivatives (see below)
3) The loose monetary policy and subsequent credit squeeze that precipitated the Great Depression, and how trade restrictions, the Hoover-FDR Reconstruction Finance Corporation which perpetuated bad investments, and other interventions by the government resulted in the longest and deepest recession in US history
4) The rescue of banks and why that practice led to the longest depression in modern Japanese history, and any similarities and differences with the current bailout plan.
Some interesting information follows:
"These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''
-- Representative Barney Frank, 2003
A 1999 NYT article foretold all our problem today Fannie Mae Eases Credit To Aid Mortgage Lending http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=all
Extracts:
By STEVEN A. HOLMES
Published: September 30, 1999
"In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.
10/01/2008
Why on earth would you go out of your way to characterize everyone who opposes this bad legislation as uninformed, angry people who want revenge?
I oppose this plan because I don't trust the people to whom it would it give an unprecedented amount of power. I oppose this plan because, despite the earmarks recently added to the bill, there is still no provision for significant oversight from Congress. I oppose this plan for many more reasons, but your character limits don't allow for lengthy explanations.
I am truly tired of the media portraying me as a smug and ignorant fool who is about to bring down the American (and potentially global) economy because I am unwilling to do what the Administration is telling me to, without asking further questions.
I expected better from you. It will be a long time before I make that particular mistake again.
From Danville, AL, 10/01/2008
I listened to the interview with Dan Ariely with great amusement. The idea that vengence gratifies the same part of the brain as heroin is something I’ve never considered but wholely agree with. I find nothing more pleasing than seeing a parasite get his/her comeupance.
“Behavioral Economics”...I didn’t even know that job existed. Fortunately somebody is getting paid to study Tulipmania, the Soth Sea Bubble, Ponzi Schemes, the Florida Land Boom of the ‘20s, etc...maybe if such knowledge was more widely studied, “crices” such as the current one would be more infrequent.
Take a quick look at a chart showing the value of the Dow since it’s inception. Growth appears rational up until shortly before the “correction” of ‘87. In ‘94 the irrationality got balls out. Fuck those fuckin’ fucks. Never earned an honest dollar in their lives.
My wife and I moved back to her family farm last year because I saw the coming economic collapse. After seeing September 11 and Katrina, I came to the conclusion that our government cannot save us, but they can get us killed. Now we’re gardening and raising livestock and eagerly awaiting the opening of bow season for whitetail deer October 15th. “Burn Baby Burn” bitches.
From Austin, TX, 10/01/2008
I actually like and respect the show and I think the show provides an important perspective in these difficult economic times. I can't believe that this ridiculous spin on complaints from constituents. Revenge? Give me a break.
Capitalism, free enterprise, what happened to the principals of the American way? We are supposed to make decisions in fear now? Because we are all so rich? This "bail-out" sends the message to big corporations that they can be as risky and irresponsible in their quest for extreme wealth. Our government and this current administration has clearly done enough for big corporations, after this where do we draw the line? What happens when the government buys up all the bad debt for all corporations in the future? Are we then communists?
This plan will only stop the bleeding for a bit, and in the long run it will weaken our economy.
From Lancaster, PA, 10/01/2008
It has nothing to do with revenge. Wall Street is just viewed as a bad investment because Wall Street hasn't done anything to share the wealth with the vast majority of people in this country. Wealth is more concentrated within the top ten percent than at anytime since the last time the markets collapsed. The rest of the population hasn't got huge investments to lose or even $100,000 in the bank, much less $250,000. The fall just isn't that scary for them. Maybe misery would like some company.
From MI, 10/01/2008
I had just the opposite reaction than did the preceding two reader responses. Then again, I teach industrial organization to doctoral students.
The application of behavioral economics to this particular problem is instructive and accurate. This economist's explanation of why people do not support the bailout shows exactly why we need to regulate the behavior that underlies market transactions.
I would argue, however, that people are not "irrational" (the inference from the title of his book) but they do not follow the assumptions of economic rationality on which the standard neoclassical model is based. In other words, they are not profit maximizers. They are rational, but behaviorally so; they choose to exact revenge on those who violate social norms. That is why we pay so much to put cheaters in prison; not (as the Quakers claimed) to reform them but to punish them and set an example of others who might violate social norms.
Wall Street financiers have enriched themselves at the expense of "Main Street" and people are angry and will pay to punish them. Professor Ariely's suggestion that we build future retribution (for these and future greedy charlatans) is absolutely rational for two reasons. It satisfies our behaviorally rational need to punish transgressors, and it builds punishment designed to discourage them from doing more of the same. Up to now, with a deregulated environment, it has not made economic sense for them to act prudently, and their imprudence led us to the abyss. We need to build rational disincentives into the system and certain punishment for violations of social norms.
Indeed, it might get us back on the road to being a nation of laws, rather than a nation of men without respect for law and without social responsibility.
From CT, 10/01/2008
I too was offended by this segment which seemed to imply that a US taxpayer who is against the bailout plan is nothing but a back-biting, petty, big corporation ‘hater’ bent on revenge. If you and your behavioral economist guest, Dan Ariely, really believe this – you are sorely mistaken.
Not quantifying and understanding the real problem of this ‘financial crisis’ and suggesting throwing good money after bad is the real issue that should be studied by your behavioral economist. Behavioral psychologists would term this ‘panic’ or a fight or flight reaction.
What has happened in this economy is nothing more than a behavior of excess and has been experienced before whether it be reflected by buying stock on margin (as had happened prior to the 1929 crash) or buying real estate ‘on margin’ as has happened in this latest debacle as well as the late 1980’s.
Perhaps instead of looking for scapegoats and excuses for why your portfolio is in the dumpster and not rebounding fast enough because pathetic stupid ol’Main Street dweller is not voting for the ‘blind’ bailout plan, I suggest you make more sensible investments from now on.
As far as “Marketplace” goes, how about some ‘real’ facts instead of the conjecture that is driving our congressmen to vote for a $700B Wallstreet Welfare Plan? Oh, right…your listeners may be too dumb and petty to understand.
From Portage, IN, 10/01/2008
This segment was ridiculous and deeply offended me. I do not oppose this bill becuase am angry at Wall Street; I am angry at my fellow citizens who are to damn stupid to pay attention to what is going on. Perhaps action needs to take place to shore up confidence, but this plan concentrates to much power in unelected, compromised, and corrupt officials and it is apparent that other plans may be more effective and economical.
Yeah, lets give the ex-CEO of Goldman Sachs a blank check; thats about as ridiculous as making John Rowe the future Secretary of Energy. Lets just declare the Fed the new government and get on with the show...
From IA, 10/01/2008
Kal - I have never been much of a fan of your show. It is so simple minded, and jingoistic.
I actually called a local NPR call in show today and mentioned how you hyperventilate about the coming Super Duper Depression and how I sometimes think you are joking, and then realize you are not.
You clearly know nothing about this Bailout Plan or how it is expected to work. Or, you would not be so glib.
The question you should be asking, but apparently are not bright enough to ask, is how does this plan assist the economy?
The key is will the US be buying assets at, above, or below market prices. Bernanke and Paulson have both said they expect to pay above market.
So, if the plan is to pay above market, it increases the cost of the Plan. If it is at or below market, as Buffett has described it, it is hard to understand why investors would sell at that price, and how it would help them.
A simple minded alternative, one that might appeal to simpletons like you who think something just has to happen this week or life will end, would be to buy preferred stock in companies which "need" to be shored up, as Buffett has done with Goldman and GE.
A thinking person might suggest we spend $700 billion on fixing the nation's infrastructure, and let Main Street revive Wall Street.
A free spirit might realize the world won't end even if we don't spend $700 billion at all.
Even your comment box is stupid, too small to write a coherent message.
Cheers! Hate your show!
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