Of them any virtues bestowed upon us by curiosity, the desire to understand root causes must be considered one of the most consequential. For it has driven us to tease out the secrets of our universe, from the composition of the stars that shine in our skies to the meaning of the lives we live here on Earth. And it is precisely this desire to know, to understand, that has lead civilization on a steady march out of the ignorance of our past and into the hopeful promise of our technological future. But is this relentless search always to the good? For instance, does it guarantee us the right answer, or just an answer? And if it's just an answer, might we not be mislead by our conclusions, seduced into looking past the obvious to fixate on the data we've unearthed? I fear that this is precisely what Mr. Coates has done in this, his scientific analysis of the 2008 Financial Crisis.
Sparked by fears the world's largest banks might be holding billions of dollars worth of nearly worthless subprime mortgages, the 2008 Financial Crisis nearly dismantled our modern-day financial system. As fear of these bad securities spread through Wall Street, the credit markets, upon which investment banks depend on to make payroll each night, froze, causing the collapse of Lehman Brothers, the shock waves of which further churned up the already white-capped waters of the financial sector. Within a matter of months, the cancer spread not only to other American industries, but across the globe, a metastasization that would eventually lead to controversial federal bailouts of industries from insurance to automotive. This dour outcome has not only lead to the electoral overthrow of governments, it not only lead to the ignition of political movements like the Tea Party and Occupy Wall Street, it has fostered a widespread distrust of the financial sector which is no longer viewed as operating in the interests of society.
So just how did this problem come about? What lead bankers to securitize -- that is to create a tradable commodity from -- dubious mortgages? Moreover, what caused otherwise self-interested traders on Wall Street to believe in these securities to the extent that they bet their fortunes and their futures on their longterm health? Mr. Coates, a Wall Street trader turned scientist, grapples with this consequential question of human behavior in The Hour Between Dog And Wolf, concluding that man is far from the commanding creature he considers himself to be. Drawing upon several studies, some of which he himself authored, Mr. Coates reveals the extent to which stock-trading causes humans to rely upon primitive fight-or-flight responses that, having evolved to help us survive the assaults of predators like bears and wolves, is poorly engineered for coping with the strange vicissitudes of financial markets. Instead of promoting prudence while on winning streaks or injecting confidence when on losing streaks, this primitive wiring fills winners with irrational and reckless confidence while imprisoning losers in the paralysis of indecision. Either outcome is, to say the least, far from ideal.
While The Hour Between Dog And Wolf is both thorough and learned, while it intensively speaks to the potential impact hormones have on human behavior, it is necessarily a defense of the conduct of the many men, and some women, who, having surrendered to the seductions of greed and selfishness, nearly drove the global economy off a cliff. The author summons every tool of scientific investigation to try to understand and explain the biological forces acting on these individuals, but with each justification, with every passing page, it becomes unavoidably clear that this attempt, for all its nobility, fails to state the obvious.
However much we are influenced by our biology, we remain in control of, and responsible for, our actions. No amount of dopamine or testosterone changes the fact we own all of what we do. For to deny this fundamental truth of human conduct is to call into question the fundamentals of personal responsibility. It is to excuse the actions of anyone who commits what society considers to be a crime. Imagine if Mr. Coates had set out to write a book explaining the biological, neurological and genetic underpinnings of pedophilia. We would have to acknowledge the science, but we in no way have to acknowledge the degree to which, by implication, the science exculpates pedophiles from the harm they selfishly do to those members of society who are too young to make their own choices. The pedophile, like the trader, might well try to argue that the science proves they were being seduced by their own wiring into committing crimes, that they are not responsible. But they must be! TO think otherwise is to not only allow them off the hook, it is to diminish the noble conduct of everyone who resists the urge to commit crimes even though they to are subject to the same wiring.
There can be no doubt that Mr. Coates has penned a fascinating analysis of stress and how humans operate under its influence, but the implication, however subtle, that this liberates them from owning the damage they've selfishly done is on the brink of being offensive. More importantly, it gives the next generation of traders a license to take the same foolish risks their forefathers did, a pattern which, at some point in the future, will force a systematic re-imagining of the financial trading system.
Fascinating but flawed work... (3/5 Stars)
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