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Posts Tagged ‘incentives’

Two Michaels help elucidate how market mechanisms have helped shape moral values in our society.

Michael Lewis, ex-bond salesman and financial columnist, describes the fundamental flaws behind the political structure of the financial markets in recent years: how rating agencies are also compensated by the financial underwriters of rated securities–a political structure which eventually resulted to the financial crisis.

From Lewis’ lucid description, juxtapose the thoughts of political philosopher Michael Sandel, who meanwhile elucidates how the concept of incentives–directly borne out of the market mechanism, has arguably changed the moral norms of society.

Is a market-driven society an ideal one?

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Intelligence = How To Make The Rules, Wisdom = When To Break The Rules

Barry Schwartz calls for a return to practical reasoning or wisdom using the example of hospital janitors. Quoting Aristotle: practical wisdom is the combination of moral will and moral skill. Wisdom is experiential, not inborn–it is a manifestation of behaviour shaped by experience and the environment.

He makes the important distinction between raw intelligence and wisdom: it doesn’t take brilliance to be wise, but without wisdom brilliance isn’t enough.

Using the tragic story of a kid and spiked lemonade, Schwartz makes a devastating critique of our rules and procedure-based society. He lashes out at our world made mad by bureaucracy where rules do not help us think, incentives end up backfiring and only wisdom–practical wisdom–will help us out of our crises.

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