Breaking News: Gladwell States The Obvious

When I saw the subtitle of Malcolm Gladwell’s New Yorker piece about Wall Street (“Cocksure: Did Overconfidence Cause the Crash?”), I figured this gave me an excuse to write a very short blog post:

Duh, Malcolm.

But I decided this would be unfair to Mr. Gladwell. He did, after all, go to the trouble of interviewing a bunch of psychologists before concluding that “the roots of Wall Street’s crisis were...psychological.”

As an example of “maladaptive” overconfidence on the Street, Gladwell selects former Bear Stearns CEO Jimmy Cayne, pulling material from William Cohan’s book, House of Cards. (Cohan stuffed his book with fun, eye-opening details about Bear's last days; I've posted about the book here and here.)

Malcolm, you're cheating: Using Jimmy Cayne to illustrate the hubris of Wall Street is like using the New York State legislature to illustrate the dysfunctionality of government; it’s an over-the-top example. Way too easy. Yeah, Wall Street CEOs were arrogant, but Cayne was arrogant in 3-D and Surround Sound.

Actually, by choosing Cayne as his subject, Gladwell undermines his own argument that it was overconfidence, not incompetence, that got us into this mess, because Cayne makes an excellent poster child for both. (Oddly, Gladwell doesn't mention greed.) In one example from Cohan’s book, a Bear executive describes Cayne's behavior during a crucial conference call held for analysts as the firm teetered: “Our vaunted CEO was incapable of answering a single question.”

Overconfidence and incompetence. Makes for a nice double feature. Hand me some popcorn and a giant cup of high fructose corn syrup, please.

image credit: squidoo.com