Re: STOCKS: An unnerving thought

From: phil osborn (
Date: Mon Apr 17 2000 - 22:37:41 MDT

>From: Matt Gingell <>>Subject: Re: STOCKS: An unnerving
>Date: Sun, 16 Apr 2000 02:51:17 -0400
>The pyramid-scheme analogy was made by some eminent pundit in the
>Times a month or so ago. The interesting thing though is it's an
>emergent pyramid - one that's just popped into being rather than being
>deliberately designed. I like the idea of an unconscious, collective
>Each investor acts rationally: if I think a stock with .com in the
>title but no real value will go up because everyone else is an idiot,
>then it makes perfect sense to buy. I just want to make money. Buying
>makes even more sense if I figure enough other people are reasoning
>the same way, which has certainly seemed true over the last couple of
>If enough people bid in then the prophesy fulfills itself and the same
>reasoning is yet more justified the next time round. It's a crock, and
>I _know_ it's a crock, but locally the correct thing to do is buy. The
>globally crazy result is the outcome of millions of independently
>sensible decisions - insanity emerges.
A similar kind of individual/collective betting goes on in other areas, such
as mob behavior, or in the general level of trust or morality in a society.
If you expect other people to rip you off at the first opportunity, then you
behave very differently than if you assume that everyone is honest, except
for the rare minority of criminals. Real problems occur for people
transitioning from one culture to an opposite one, whether high trust to low
or vice-versa.

This is one of the major problems that American inner city blacks have in
moving up in the largely white-dominated business and social world of
America. They have learned to respond and expect response based on an
extremely low-trust society. The whites - and other blacks who are in
transition - have also probably been burned or know people personally who
have been burned by the large crew of professional con artist blacks who
have used their fund of knowledge of crime to take advantage of the higher
trust society.

Thus, the former ghetto black finds himself not trusted in the high trust
society, plus he misinterprets much of what goes on in terms of his prior
experience. On the other hand, the naive white who operates as if in a
high-trust society in the ghetto gets a very swift and expensive lesson, if
he or she lives long enough to learn it.
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