"Enlightened Self Interest and Financial Industry Hypocrisy:
By Cognitive Dissonance
“Too often we divide the world into black and white hats on good and bad people, or left and right ideology that’s right or wrong. Absolute certainties make the process of determining what to believe, to deny or just to ignore so much easier when we don’t actually need to navigate through the cognitive fog to reach critical thinking.
Sadly this duality of extremes is used as a weapon against us at every twist and turn for the benefit of the powerful. And we fall for it hook, line and sinker every single time. I’ve wanted to dig my teeth into the subject of hypocrisy as it applies to the financial ‘industry’ as well as average Joe for several years now, but have held back because the subject is extremely divisive and triggering. Now appears as good a time as any to turn the compost pile.
First let’s get the disclosures out of the way. I was ‘in the business’ for 25 years and I recently closed a small (emphasis on small) financial advisory firm. I ran small money for a living, though that hasn’t always been the case. So while I’ll point fingers and render opinions, and I am extremely critical of society in general and the financial industry in particular, until recently I was swimming in the same cesspool and faced the same ethical dilemmas. That said, while I live in a glass house I’m still going to throw a few stones. Breaking glass is extremely satisfying in a visceral kind of way.
In addition, regardless of how you may interpret what I write below, I am very optimistic that our problems can be solved, and relatively quickly once the individual and national ‘will’ finally develops. We have the power in our hands to change everything and always have. However, as has been the case for hundreds (thousands?) of years, the sole job of the magicians who cast the nation’s economic and cultural spells is to convince us on a daily basis to surrender our power to them in return for empty promises of pain free living and delayed (if ever) consequences.
Viewed from the perspective of technical analysis, it appears we are nearing the peak in the last wave of an eighty year long insanity rally. And while there is no way of knowing exactly when it will end, we do know it will end. A careful review of world history over several thousand years shows that insanity runs in cycles of intensity (but never really goes away) and we are in the final phase of this particular cycle.
When we grow up a bit more and recognize that no leader will guide us out of our own insanity, that it is up to us alone, this leg of our maturation process will be over. I see great potential, but I have low expectations that this potential will be achieved without a great deal of pain. Empires will fall, war will explode and people will die, of this I have little doubt. The death throes of self deceit are extremely destructive as the excesses of the insane asylum are discarded, then replaced just in time to start the next cycle.
With that said, please don’t make the mistake of assuming this article doesn’t apply to all of us just because ‘we’ don’t work in the ‘industry’. What is happening in the financial industry is just a symptom of global wide narcissistic navel gazing, blatant greed and overall rot that has permeated our global society. There are no innocent bystanders in this debacle, only varying levels of involvement or passivity beginning with the ring leaders and flowing down through several layers of direct and indirect enablers. And as I will flesh out below and in subsequent chapters, I suggest it flows up as well as down in a dysfunctional and symbiotic positive feedback loop.
Ethics and ethical behavior, along with all its sub categories, including Enlightened Self Interest (ESI) and benevolent self deception, is not exclusive to financial professionals. In fact these moral concepts flow up from the individual into society in general and our institutions specifically. Thus if we declare our institutions corrupt we are clearly and unmistakably declaring ourselves corrupt as well. From a big picture point of view, in a representative form of government (and I would argue in any form of government) we (re)elect and/or support exactly the type of leaders we desire (notice I did not say deserve) but to which we will rarely admit any culpability.
For those who might strenuously object to that statement, let me give you an example. During the 2004 Presidential election cycle there was a voter survey conducted (very Orwellian that in the past year that poll has disappeared) asking about corrupt politicians. When asked what percentage of Senate and House congressional critters were corrupt in any way (an admittedly broad definition) the answer was 81%. Meaning 4 out of 5 were considered corrupt by those who elect them to office or who watch from the sidelines. When asked what percentage of the respondent’s own elected representatives were corrupt, the answer dropped to 19%.
Common sense dictates that if 4 out of 5 politicians in general are corrupt, on average the same percentage of our own representatives is corrupt. So why the large discrepancy? Well, if my elected representatives are corrupt it reflects poorly on me. Even if I don’t vote or care much about the issue I don’t want others (more specifically the poll taker) to think I ‘allow’ or ignore corruption after making such a strong statement about the large degree of corruption nationwide. Thus when answering the survey questions, which are often posed by live individuals either in person or by phone, I must cover my cognitive butt and present myself as pure… or at least more pure than the next guy who is the real idiot electing all these corrupt politicians.
The simplest way to avoid this cognitive dissonance is to lie to our ‘self’ under the cover of all kinds of slick and plausible excuses, such as bacon delivery, political clout or whatever. It doesn’t matter how I brush it away, just that I do. It’s OK to lie to myself, but I must not let anyone else see that my cognitive slip is showing.
If we wish to be lied to in order to hide from ourselves and any personal accountability or self awareness, that is exactly the style of leadership we will get. I can’t tell you how many conversations I’ve had with people from a variety of political and social convictions who will scream in outrage at this or that political transgression.
But when asked about their own faults and hypocrisies they are nearly always unable to look at themselves with an unbiased eye, never mind make any real attempt to provide a semi honest self appraisal. As I like to say, space aliens don’t drop our political and business leaders from the sky. They are all home grown 100% USDA certified Earthlings spawned from mom and dad, at least until proven otherwise.
Every person carries around a bucket full of lies, half truths and self deceptions to which we add to and subtract from all the time. While many will claim this is simply human nature, I suspect it is more a cultural phenomenon than a natural tendency. If one believes we are a product of evolution, while I can see the utility of some social lies to promote harmony and cooperation, self deception is not necessarily conductive to a long life, particularly when resources are scarce.
During the present era of perceived abundance that is rapidly fading in the rear view mirror, our formerly over flowing cup might have something to do with our present day insanity. Self destructive behavior requires heaping helpings of denial front and center, and only the ideologically blinded or mentally ill can take a look around and consider the present sorry state of the human race to be the result of others and not ourselves. One of the hallmarks of insanity is the personal belief that there isn’t anything wrong with me, just everyone else.
Since by definition a culture is all encompassing and totally immersive, one cannot see ourselves for what we really are unless we make an honest and sustained effort to do so. Everything looks pretty much normal (in an insane kind of way) to the non-critical eye……which is often just the way we like it. This is where the lying and self deception comes into play.
One of the most common enabling lies we tell ourselves is that because we are more (mostly) pure of mind and deed (or at least thoroughly rationalized and justified) it is those people over there who are the real problem. So in our mind we make a generous offer and declare that we might clean up our own act, what little there actually needs to be done, once the bastards who are responsible for this mess are hung from the rafters. This is the epitome of blame shifting and magical thinking, and it is the root of the problems we all face.
At one point or another we have all pointed our finger towards (or should I say given the finger to) the ‘bad’ guys at the Federal Reserve and on Wall Street, at the White House, Congress, the Judicial System and the huge multinational Corporations. And while you will get no argument from me that all these players are both compliant puppets and powerful puppeteers, they are all essentially powerless without our direct consent or passive agreement.
As well, while the game is obviously rigged to compel our participation, many of us roll over and concede defeat, taking the softer easier way out while claiming the moral high ground to enable our own victimization. After all ‘victims’ aren’t responsible for anything, including ourselves, because we are all… well, victims, right? Don’t blame me dawg, I’m just the poor trapped soul caught in the nasty spider web.
While I am sure there will be angry comments declaring that I am unfairly blaming the victim when it is clearly those lousy bastards over there that are responsible for this mess, short of putting a gun to our heads we always have choices. And to say otherwise is bordering on the infantile. What we are really saying when we claim there is no way out or that we are powerless to stop the insanity, is that all the easy alternatives have been eliminated and the only remaining paths we perceive as available involve high levels of pain, discomfort and distress.
This is an illusion we actively encourage to enable us to remain comfortably passive within the insanity, or which we use to give us the moral green light to participate in the looting under the guise of profit, saying we’re just taking care of ourselves and our own. You know, buy the f**king dip, regardless if whether it’s stocks, bonds, CRE, distressed housing, PM’s, whatever. Or one I heard just today, where the person states that it will never change so why not position ourselves to profit from the mess.
Of course, we nearly always exaggerate potential dangers or project undesirable outcomes when facing paths we don’t wish to pursue. I can always find a reason not to act, while finding reasons to act are far and few between. This isn’t human nature alone, but just as much nurture, meaning our training and conditioning beginning with our parents. Sure there are basic tendencies to procrastinate inherent in each individual, but children of proactive and positive parents tend to be the same and vice versa.
Very early in my career I was told by a wise mentor that successful people do the things unsuccessful people don’t want to do. I was then challenged to demonstrate this with the understanding that words without action accomplishes little other than verbal and mental masturbation. This applies so well to life in general. Bottom line, if we don’t want to do something we will find every excuse in the book not to do so. Rather than closely examine our part in this slow dance of socioeconomic death, we paper over our own involvement in the very system we claim we want radically changed or even destroyed.
Time to take a closer look at what’s really going on here because this game is exactly what many of us want to play in order to avoid dealing with the very collapse or change we say is desirable. Many of us are junk yard dogs with absolutely no desire to bite except maybe each other out of impotent frustration.
If you give it some thought, to say that we wish to see our corrupt and patently unfair financial system collapse in order to rout the bastards from our house is the functional equivalent of wishing someone would burn down our uninsured home to rid ourselves of a severe cockroach infestation. Or better yet hiring (or electing) someone(s) to do the job for us.
Yes, when all is said and done the roaches might be gone, but there were less destructive ways of removing them. Sometimes we select bad choices to hide from even more frightening ones, a personal and collective insight we carefully conceal from ourselves in order to continue with our benevolent self deception.
Alas, we will find less damaging cockroach extermination methods only if we are willing to explore all avenues, including the emotionally, physically and economically painful. In reality we don’t wish to collapse our economic system. What we desperately desire is for the thieving and insanity to end (or at least to greatly diminish) and for a return to the mythical land of the Norman Rockwell lie of milk and honey.
Can’t say I blame us, though it appears to be time to short unicorns and fairy tales and go long courage and cooperative collusion. Aside from possibly preparing ourselves for the coming collapse, what are we doing to prepare our nation, state and community for this new beginning? Is it a matter of each of us waiting for everyone else to go first? Yeah, that will work wonders when the unrest goes local.
Since we aren’t especially willing to look too closely at all aspects of the insanity for fear it might implicate us nearly as much as the bad guys, we declare we would rather watch the entire stinking mess disintegrate and then wash away with the evening tide. This allows us to individually and collectively wash our hands of the enormous social disintegration that will result from economic collapse while emotionally and intellectually shielding us from any danger, real or imagined, that we may encounter if we were to work towards other less destructive ‘solutions’, or to help prepare our surrounding community for the storm we are forecasting.
It’s so much more comforting to suffer misery as part of the collective herd than to suffer alone while feeling vulnerable. This is one of the reasons we latch onto the “It’s just impossible to change” or even “It’s not me, it’s those damn idiots over there who aren’t doing anything about this” excuses. The list of reasons why we should not act is as varied as our imagination. So how convenient it is that if everyone says the same thing, everyone has a wonderful excuse not to do anything yet still remain blameless. This is the collective self deception that is ostensibly benevolent to both the individual and the group, or so we wish to think.
Essentially this is a Bizzaro World Catch 22 that works to our advantage over the short term, but destroys our souls and our neighborhoods quicker than we think. However, in a world of short term thinking this doesn’t look like such a bad deal when my focus is squarely on what’s in it for me, myself and I.
Make no mistake about it though, denial, both individual and collective, is so overwhelmingly powerful that not only will tortured souls self destruct and commit suicide while in its throes, but nations will rush head long into the dual abyss of self destruction via war, civil or otherwise, and economic self immolation. However, a nation doesn’t self destruct because its land and buildings are consumed in the fires of economic hell. Nope, it is the citizens of a nation that wither away on the vine, eventually taking the physical and economic infrastructure with them into the bottomless abyss of insanity.
The only saving grace is that who can really say what is or is not insane when we are all on the same glide path to hell? That’s our own special theory of insanity relativity. The same insanity that drives nations into competing rounds of destructive currency devaluation also drives us into feeding off each other’s delusions and delirium tremens.
When a sovereign state’s currency and credit system, its blood and circulatory network, depends entirely upon the faith and belief of its captive and captivated population, stability for the most part can be manufactured simply by believing in the system. Understand though that in this case ‘belief’ can mean active or passive participation and/or dependency. This ‘belief’ also includes ignoring potential dangers to the system, especially terminal dangers of the mind numbing variety.
This explains perfectly why as the system gets closer to the edge, people can continue to go nervously about their lives. Truth be told, on some basic level most of the population already knows things are in very bad shape, but we chose to ignore it. The level of governmental and corporate corruption, the rise of the surveillance/police state, chronic unemployment, rising food and medical costs and the escalating taking of rights and freedoms are not unseen by the population at large, just desperately ignored.
What does one do and how does one act when the myth can no longer be sustained and we find out our protectors are actually the predators and our torturers? What would we do if we suddenly discovered our father was a child molester or our brother a mass murderer and we were next on the list if we attempted to expose him?
For most of us the drill would be duck and cover baby, duck and cover, then head even deeper into the mind numbing embrace of denial. Without question most of us would move to the center of the herd and act like there’s nothing wrong in the suburbs. Only we would do so quietly and with baby steps. After all, you don’t want to alert the wolves circling the herd that you are injured and ripe for the taking.
Just as the world is beginning to recognize that the efficient market theory was efficient solely in snowing people into believing logic and reason ruled the market, we should understand that much of our individual decision making process is subconscious and totally illogical. So is it really surprising that ‘We the People’ have made a mostly subconscious decision to carry on as if nothing is wrong and hope for the best? This is the childishly adult equivalent of covering our ears and repeatedly screaming ‘I can’t hear you’.
As long as the government is successful in keeping the wolves at bay, at least for the ever decreasing majority, we will happily ignore the growing desperation in the streets in exchange for some make believe ignorant bliss. Just leave me and mine alone and I will avert my eyes and hurry about my business. Of course, this can only be accomplished if we discard critical thinking and independent thought and stick to binary input and output. If no one wishes to recognize the full insanity, all it takes to accomplish this in a leveraged fiat system is a collective and unspoken understanding to ignore the ugly truth and move along. What you don’t make ‘real’ by specifically acknowledging it just can’t hurt you, at least for today and hopefully a few more tomorrows.
As nonsensical as this might sound, we make our own emotional and intellectual reality fresh on a daily basis. While doing so, we mold our physical world to fit our belief system as we have conceived it. Do this, don’t do that, deny those, ignore them, focus of this and before you know it our world begins to conform to how we denied it. Multiple our individual effort by two or three hundred million, or two or three billion, then conjure up several hundred trillion of Federal Reserve electronic ones and zeros while casting a collective self propaganda spell of ‘all is well’ and temporary stability is created out of thin air.
The only problem is this huge edifice has no foundational support and can easily be toppled by a small percentage of bolting members of the unsettled herd. Panic is easy to generate among the hard core deniers because deep down we all know it is just a lie. All but the truly clueless stand around with their hands in their pockets, trying to look innocent and unconcerned while memorizing all the exits and escape routes. Only a fool or the hopelessly self deceived will actually drink their own Kool-Aid mix, though I am constantly amazed how many do. Mine is cherry banana by the way.
Sure the fundamentals are slowly deteriorating (again) and the second (third?) plunge appears just around the corner. Real reality will eventually re-assert itself with a vengeance because it’s not nice to fool with Mother Nature. But (sadly) not before several more revolutions of the fiat paper around the toilet bowl have been completed.
After all, to some degree or another we are all engaged in group psychological can kicking, if for no other reason than to keep the inner boogieman at bay. Binary thinking doesn’t allow for long range planning or constructive positioning, just blame shifting and avoidance, something we do with typical American arrogance and excellence.
We all have a tendency to exaggerate the value of our prior investment in our jobs, our family and ourselves. So when considering what to do or not do, often the decision we make is to make no decision at all, to go with the flow and to make no waves. We never really acknowledge that making no decision is actually a decision in and of itself, an affirmation of the status quo and the present day insanity. “Hey, it wasn’t me that made that decision. I’m not responsible.”
The more out-of-control we feel our life and world is becoming, the more we will seek to avoid making any decision we (want to) believe might endanger our life or position in the social order regardless of its present state of advanced decay. Misery is always relative to those who are around us. I can be the happy king of the soup kitchen or just another miserable nobody in the corporate cafeteria.
In addition we will avoid any responsibility for decisions (or non decisions) made by ourselves or anyone else. We learn this behavior early in life, first from our family, then from our social interactions in school and later corporate life. Cover our ass begins and ends in the familiar warmth and comfort of our duplicitous mind."