Daily Human – Anthropology and the Financial Crisis of 2008 – 28/8/21
I am reading this fascinating book by Gillian Tett about how anthropology explains both business and life. Today I read the chapter about the financial crisis and I was amazed by the insights offered by the writer.
The anthropological lens involves studying people in their natural habitat without any pre-conceived notions or hypotheses. With an open mind. Like a child or an alien. It helps in understanding how culture and social patterns develops.
It has two parts. One, it helps in making sense of strange things. Most people get this. The great central banker Alan Greenspan understood this when we asked the writer for a book to learn anthropology. He wanted to understand why the Greeks ( a strange culture for him) were behaving so weirdly.
But most people don’t get the second part. Which is to step out and point the lens inwards. To objectively understand what’s strange or odd about us. We become so familiar with ourselves that we stop noticing anything.
In the case of the financial crisis, there were many internal factors which were not understood. Like the finance people believed that they were innovating to change humankind with their new derivative products but they had no idea how their work was impacting real humans. One financer who ended up meeting a pole dancer with multiple mortgages ( which she had no hope of repaying) had a light bulb moment and start taking contrarian calls. Most of his fellow brethren weren’t so lucky.
Similarly, the media failed to report what what was happening with the exotic securitisation products like CDO’s because they couldn’t see a ‘story’ there. Their training (of always looking for a story) prevented them from doing their job properly.
A combination of these factors ( plus a few more. Please read the book) also contributed to the financial crisis.
This book has been an eye opener for me. I never knew anthropology was so fascinating and had so much potential when it came to figuring out why people did what they did.
It also made me realise that there is still so much I don’t know. I read a lot of books and I am fascinated by human behaviour. As a result I read a lot of psychology. But till I read this book, was clueless about anthropology.
Got a dose of humility.