Nietzsche said ‘no one lies as much as the indignant do’, which is why one should never try to reason with an angry person, as they have left their senses in righteous anger. Emotion is one of those curious things that seemingly short circuits our reason, yet, without it we all would be ineffectual and boring (Antonio Domasio writes that people with damage to the emotional part of their brains get stuck in indecision). As Aristotle cautioned, moderation in all things, including emotion.
Anyway, here’s Elizabeth Warren, who was recently passed over for head of the CFPA, demonstrating why she was not up for the top position:
[The CFPB] still has enemies in Washington, D.C. And they have a plan…But this agency needs to have its full powers right now, and that means we need Rich in place as Director. Today, I’m celebrating — but I’m not taking my eye off those who want to cripple this agency.
Now, every politician has opponents, but to publicly describe them as conniving, crippling enemies highlights a rather naive rhetorical style. While many in politics have ulterior or selfish motives, it’s just more effective to give them the benefit of the doubt in public discussions because without superficial pleasantries like ‘my good friend on the other side of the aisle,’ it is too easy to get to the ‘bad Nash equilibrium’ where each side correctly assumes bad faith from the other side. Manners are not hypocritical, rather a way for us to become better people because pretending to be nice is often the first step to actually being nice.
I’m still confused by her statement that ‘on Thursday, we will have cops on the beat — making our first contacts with the 111 largest financial institutions in the country so we can monitor their compliance with the law.’
If you read the Dodd-Frank bill, you will see a lot of vague language that overlap other agencies (eg, the FRB, FDIC), so, anything new isn’t obvious to anyone. I tend to think they will just like having everyone give them a bunch of reports to make them feel important, and then look for something obvious, but they will find obvious improvements rare because the status quo in our highly regulated financial sector has come about because of trade-offs between powerful interests. For example, will they argue for more mortgage lending to people with low credit scores to achieve diversity targets, or less to achieve safety?
When I was in litigation I was often indignant because I thought I was being unfairly persecuted by a vindictive person. I thought the charges against me were purely a pretext to keep me from starting my own business, which at that time was to start a fund based on going long low-volatility equities worldwide, and as I had consistently argued and applied this objective my entire professional life, preposterously considered off-limits as part of my confidentiality agreement with my old employer. Yet, each time I spoke or wrote to the court or my adversary while indignant I made statements that made my case that much harder for me, leading to the following costly insight: never communicate in anger with an adversary. This is because you aren’t being fully rational, and so an opponent without good faith will cherry pick your flawed statements for a tactical advantage, which is why lawyers always tell their clients to shut up irrespective of the big picture.
Now, emotional pleas may generate sympathy and support from the masses, but often you aren’t in a situation where people who elicit such sympathy matter. I sense Warren is trying to steamroll her opponents via PR, but the problem is that anything she does will pertain to details that don’t matter to the public, such as how to trade off simplicity and some circumscription of liability. Simply casting banks as bad guys only works if your end game is nationalization, which even I doubt the Obama administration wants.