Is The Recession The Robots' First Strike Against Us?

Illustration for article titled Is The Recession The Robots' First Strike Against Us?

Sure, you may think that basic human greed and incompetence is behind the global economic collapse, but according to one British journalist, there's a much more sinister reason for our financial ruin: Blame the computers.


Dominic Lawson comes from a background of financial insanity - his father was Nigel Lawson, former British Treasury Secretary and Chancellor of the Exchequer - but that doesn't excuse the kind of logic that he brought to his latest column for British newspaper The Independent:

So we taxpayers are called upon to provide another £100bn or so (no one quite knows, least of all us) – and the cry goes up once again: who is to blame for the banking crisis? [...T]here is one often overlooked candidate for blame which is not constructed of carbon (and which will not feel any pain when you kick it). This is the silicon microchip. The astonishing growth in the calculating power of computers is a wonderful thing, enabling us to do things we would never have dreamed of even a decade ago. Electronic calculation, however, is not the same thing as wisdom; and there are great dangers in confusing the one with the other.

Yes, we shouldn't look to bankers, mortgage brokers or Alan Greenspan to bear any responsibility for the world's money worries... The problem is, of course, the computers:

[C]omputers enabled the bankers to contemplate, with just a mere push of a button, trillions of dollars worth of derivative contracts. Figures which might cause a nervous collapse, when analysed within the human brain, seem soothingly manageable when generated by the click of a mouse: and, of course, there is the usual tendency to think that because it is generated by a computer, it is in some sense "right"– even if the assumptions on which the computer based its calculations were originally fed in by a human who had never spoken to, still less met, the end user of the financial instrument.

Clearly, this whole "doing what they were built to do and not feeling human emotion about the figures they calculated without any kind of context" thing was a coldly - one might even say mechanically - calculated ruse to lure unsuspecting financial experts into a false sense of security about the amount of money they were dealing with. Those devious robotic bastards! But then... they were only fulfilling the purpose of their creation. Maybe we need to look elsewhere for the true culprits. Dominic, if you could assist...?

[T]he mathematical geniuses working on these computer programmes were called "rocket scientists" by their employers. During the Cold War years of the nuclear arms and space races, such "geeks" would more likely have been working at Nasa or the Pentagon, than on the floors of investment banks.

Perhaps it would have been better for all concerned if they had remained happily involved in designing bigger and better weapons systems. That way, no one would have got hurt.


That's right! Damn you, geeks! We'd all be living on easy street if it wasn't for you and your "science!"

Dominic Lawson: I blame computers for this crisis []



Ghost in the Machine

Try reading the linked article instead of just the selective quoting above. His point is that people who should have known better were using complex computer generating trading systems that they didn't even understand.

Banking is a simple business. A deposits money in B's bank, B lends money to C after determining that C is credit worthy at a reasonable interest rate, C repays loan to B, B pays A interest on A's deposited money. One of the causes of our current mess was banks and traders trying to generate more profit by doing complex things they really didn't understand and just assumed would work.