Hamburg – Why do traders like the exposed London UBS dealer Kweku Adoboli blow away billions? What’s going wrong at the banks, or with our young professionals? One thing’s for sure; they behave more recklessly and manipulatively than psychopaths – which is the conclusion a recent study conducted by the University of St. Gallen comes to, as SPIEGEL found out.
The cooperativeness and egoism of 28 professional traders were studied. The subjects had to play computer simulations and undergo intelligence tests. The results exceeded the expectations of the Team of Pascal Scherrer and Thomas Noll, forensics experts [“Forensiker und Vollzugsleiter”?] from the Swiss Prison of Pöschwies, north of Zurich.
“Of course we can’t call the traders mentally disturbed”, says Noll, “but the traders did behave, for example, in a more egoistical and reckless manner than a group of psychopaths who took the same test.”
Especially surprising for Noll: In total the bankers didn’t win any more money than the control group. Instead of competently and soberly pursuing maximum profit, “the traders sought only to get more than their competitors. And they put a lot of energy into harming them.”
Noll compared the situation to a neighbour having the same car, “and you go at it with a baseball bat, just so that yours looks better”. The scientists cannot explain this drive to destroy. The UBS dealer Adoboli, who blew two billion dollars, will remain in custody until further notice.
Der Spiegel (My translation.)
“Of course we can’t call the traders mentally disturbed”. Of course not. They’re professionals. They work in respected institutions and were once known as Masters of the Universe. The very last thing such people are is mentally disturbed. They know what they’re doing.
And don’t forget the Invisible Hand. Forget neither that economics is and should remain amoral. We are all, individually and collectively, far better off if we behave more recklessly than psychopaths. This is what the free market promises to deliver. The last thing we want is any of our precious freedom to accumulate wealth in a ‘Devil take the hindmost’ fashion be taken from us. As long as I could not give a fuck how well you’re doing, everything will be just fine, if you’re like that too.
On the BBC yesterday trader Alessio Rastani told his interviewer his version of the truth: “This economic crisis is like a cancer, if you just wait and wait hoping it is going to go away, just like a cancer it is going to grow and it will be too late!” He goes on to point out that national governments are powerless, and that Goldman Sachs rules the world. Alessio wants to help people though. He advises us protect our assets, have good hedge strategies, take advantage of the coming collapse. It doesn’t appear to occur to him that his advocacy is for us to be more like him. His message is that traders do not care. Or rather, the only thing they care about is making more money than their ‘competitors.’ The consequences of this are collapse. His cure is to take advantage of collapse just like traders do.
“Insanity is doing the same thing, over and over again, but expecting different results.” Albert Einstein.
“Of course we can’t call the traders mentally disturbed.” Thomas Noll.
I think Thomas Noll is doing good work, but I side with Einstein here. And I think it really is past high time we recognize that we are slaves to an insane system of perpetual pillage that cannot stop until it devours itself, and most of us with it.