I was having a conversation the other day about some of the dumber ideas in finance that don’t see to want to die — which led to a laundry list of really bad economic memes, investment concepts, and other assorted silliness.

But all of this begs the question:Why don’t bad ideas die? Why are there all of these zombie concepts that are clearly wrong, money-losing foolishness that seem to hang on forever?

Where is Darwin in all this?


Any suggestions? I am really curious as to why this is . . .

Category: Really, really bad calls

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

69 Responses to “Why Don’t Bad Ideas Die ?”

  1. Iamthe50percent says:

    I hazard the reason is that the bad idea is a smoke screen for something else. A prime example is the zombie lie that cutting taxes on the rich causes the economy to grow.

  2. mikebdot says:

    Much like religion and playing the lottery bad ideas in finance do not die because people will always look for ways to make large amounts of money with very little investment or work required. People want infinite reward for no risk. There will always be people that can be duped and always people willing to dupe. Supply and demand.

  3. TomO says:

    That begs the question of what constitutes a “bad” idea. How often do “good” ideas not work out? Are they really good, or are you just falling in the same trap you are bemoaning?

    Of course there are low percentage ideas out there, but for every trade there is a winner and a loser, even the bad ones (especially the bad ones). As long as there is a way to profit from bad ideas, people will promote them.

  4. A.Political says:

    Might I suggest…

    Th Tyranny of Dead Ideas
    by Matt Miller

    …barks right up that tree you’re talking about.

  5. Rouleur says:

    …when in corporate brainstorming sessions, I frequently hear…”there is no such thing as a bad idea”…errrr…yes, there is…most ideas are bad ideas…why do you think a good idea is a good idea?…it is rare event …now, turning this back to the question at hand…if no ideas are bad ideas, then why should they die, anything is ok, it perpetuates the BS forever?

  6. the conventional/received wisdom

    knowledge or information that people generally believe is true, although in fact it is often false.

    The conventional wisdom is that marriage makes a relationship more secure, but as the divorce rates show, this is not necessarily true.

    See also: wisdom

    Cambridge Idioms Dictionary, 2nd ed. Copyright © Cambridge University Press 2006.


    What if received wisdom is wrong?

    In Commentary

    By Lana Stein, special to the Beacon

    2:45 pm on Fri, 07.01.11

    In his examination of the nature of scientific inquiry, Thomas Kuhn postulated that research was always marked by a dominant paradigm that shapes the hypotheses tested and the methodology used to test them. The social sciences also work with dominant paradigms. For example, behavioralism has been the dominant mode in studying American politics and international relations since World War II. Political scientists have relied on large data sets and econometric techniques to explain political behavior.

    In academia, buying into dominant paradigms helps young scientists obtain jobs and later secure tenure and promotion. The key to upward mobility is publication; and research outside the norms does not stand as good a chance of being accepted in journals. Kuhn postulated that a major revolution in theory building and method was needed to topple the dominant paradigm…”
    and, to jump to..

    Kate Dec 6, 2012 12:11:00 AM

    I disagree when Coase says “the problem runs deeper: Economists study abstractions and numbers, instead of firms and people.” I think that in order to understand the abstractions and numbers associated with economics you have to have the basic understandings of how firms and the labor force work. Without the basic knowledge of how supply and demand work within the economy, and the effects of GDP in the long run how could someone call themselves an economist? Wouldn’t they be just a mathematician? I do however agree that “ignoring the influences of society, history, culture, and politics on the working of the economy” is not acceptable. You can learn a lot from past mistakes and successes. As societies evolve and change the short run economy will also change.

    Kate outlines the “Hard Work” of, actual, Understanding..One, must, ‘snort some Exhaust Fumes’ (instead of Laser Toner) to get the gist of the ‘Traffic Flows’..

    too, many would rather ‘Go along, to Get along’–you know, ‘Everybody else is Doing It’..

  7. jake10 says:

    Within finance? Lies are maintained by individuals intent on maintaining the status quo because that’s what they know. A broker that excelled in the 1980′s-90′s won’t admit it was due to a bull run that no longer exists. That would be admitting they are no longer relevant and the sucess they had was in the past.

    Taxes? To protect self-interests. Wealthy want to keep taxes low to protect the wealth they already have, homeowners want mortgage interest to be deductible because they have loans / want the value of their homes supported, politicians support both (broadly) because they get money from the rich and homeowners are the majority that vote.

    A perfect example (and a blog I read frequently, just to see how those who live on another planet view the investing world these days) can be found here in a mini-rant as to why the rich already pay too much in taxes: http://scottgrannis.blogspot.com/2012/12/tax-shares-update.html

  8. howardoark says:

    There’s always a constituency for ideas of any quality. Sometimes it takes a while for reality to catch up with bad ideas (divine right of kings, droit du seigneur, communism, the designated hitter). But times change (when I was a lad, buy and hold was perceived to be the only good way to invest) and eventually bad ideas are recognized as bad ideas until times change again (hot pants).

  9. arthurcutten says:

    Cui bono? Old frauds never die, but are continually recycled under exciting new names by the financial class whose primary occupation is the clever repackaging of old canards.

  10. RW says:

    Natural selection only works reliably when the penalty is extreme; e.g., a “bad” gene is one that reduces your chances of staying alive long enough to breed (pass the gene on).

    Dawkins suggested that genes themselves could be thought of as agents in this play, enhancing a host’s ability to pass the genes themselves on, and extended this notion to ideas and cultural practices or, more broadly, ‘memes’ which could be selected in a similar fashion.

    But unless an idea causes the majority who adopt it to fail catastrophically there really is very little selective mechanism there there. In fact, the failure may not even be noticed or it could be offset by a more strongly felt success; e.g., a sales person who makes a living selling bad idea to people unfamiliar with it. In a nation of 300 million people, all you need is 5% of them that find a particular sales pitch credible to become a multi-millionaire; lots of rich televangelists and improvement gurus out there, eh.

    Of course folks like Rupert Murdoch have found an even bigger market but the real point is, folks who have bought a brand become loyal and as long as the penalty for loyalty is not catastrophic, well, they’re part of a club and humans are social critters after all. Which is why the Republican party is going to do just fine thank you; with a 30%+ market share they are going to still be rolling in it when thee and me get plowed under.

    NB: It’s easy to forget the time spans and the ultimate form of catastrophic failure involved in selectionism too. It may be very well be that there is an aggregate “BAD” such that the accumulation of ideas and practices reducing adaptability — possibly producing leaders more inclined to predate their own herd in our case — leads a species ever deeper into the morass; e.g., nuclear war was that morass for a time, climate change could be next.

  11. jaymaster says:

    The vast majority of people are ignorant about finance.

    And a large subset of the ignorant are also dumb.

    But ignorance and stupidity don’t preclude many of these folks from amassing vast sums of money (or a huge soapbox) because of things like cronyism, corruption, nepotism, lucky genes, and plain old dumb luck.

  12. rd says:

    I think there are two reasons:

    1. Luck. A bad idea can still lead to a win. Once somebody has made money or been “proven” right some other way, it is very difficult for them to admit that they got lucky wit hthe 1 in 10 chance. Many trading schemes fall into this category.

    2. Data. Data are hard and messy. You have to collect it, catalog it, analyze it, think about it etc. It is much easier to think up a theory without hard data analysis, especially if it supports your view of the world, than to analyze data in order to develop a theory. The same thing that makes it hard to use data to develop a theory means it is hard to use it to disprove a theory. “Trickle-down” and “supply-side” economics appear to fall into this category where the believers’ retort to the apparent failure of these is simply that they were not executed to the extreme.

  13. Pantmaker says:

    There are a host reasons for the strength of all bad financial ideas. Most of the strength seems to be a function of how ridiculous the bad financial idea sounds when communicated verbally. Generally speaking, if it rolls off the tongue and fits neatly on a bumper sticker it’s mildly resistant to death. If the bad financial idea happens to rhyme it is considered moderately resistant. Higher forms of bad financial ideas completely immune to death are all ideas containing any form of alliteration (i.e. Repetition, Consonance and Assonance).

  14. Petey Wheatstraw says:

    I think bad ideas don’t die because of (as you would say, BR) flaws in our wetware. Bad ideas support our world view/ego needs/bad habits/prejudices/etc.

    Drinking alcohol to warm up is a good, non-investment example. The person adhering to this example will usually be cold, an alcoholic (or in the mood to get lit), and have liquor close at hand.

  15. Aaron says:

    Maybe it’s because of a failure to accept new, better ideas that discredit old, bad ideas that have been used for so long. A perfect example of this is the efficient markets hypothesis (EMH). Numerous academic studies have shown EMH to be flawed and yet, EMH is still used by professional investors to shape portfolio returns. I think people are scared to accept and learn a new orthodoxy when the old one has served them reasonably well, no matter how bad it may be. Just my two cents, and I could be wrong.

  16. Bob A says:

    Darwinism works very slowly

  17. pintelho says:

    What is money loosing for one is money gaining for someone else…. There aren’t really any money losing ideas…just people “losing” other people’s money with the “bad” idea.

    there are fees being skimmed off the top no matter what happens.

    as for things like laffer economics…that’s fairly straight forward, again rich people have a vested interest in promoting that lie because it leads to favorable tax policy for them.

  18. BennyProfane says:

    Darwin would have put somebody, anybody from HSBC in jail.

  19. Wyatt_Earl says:

    It’s not so much that Darwin is missing as it is P. T. – “There’s a sucker born every minute” – Barnum is present.

  20. In the modern world there really isn’t enough selection pressure to weed out most stupid ideas. Even people who believe socialism is great, the bible is the literal truth, politicians always tell the truth, and everything that Wall St offers is a great investment idea can still have a dozen kids – and teach them all the very same things.

    Bad ideas are almost always a great windfall for some subset of people and as long as those people can maintain the status quo the bad idea will prevail. Socialism is a horrible idea for the mass of humanity but for those in charge and the recipients of their largesse it’s freaking brilliant, as China vividly demonstrates.

  21. gregory barton says:

    1. A new sucker is born every minute; and
    2. many people refuse to learn from their mistakes.

    How many traders have done a ten year audit?
    How many traders compare their performance with a benchmark?

  22. M says:

    People need stories.

    A good story is far more persuasive than data. Even smart folks tend to select the data or accept as data as valid because it supports the story. Its just human nature. It helps to use schemes that defend against the problem like the scientific method. But, they don’t come naturally. So, the world is ending (again) and the stars know our fates. Zombie ideas are modern fables that tie into traits that, no doubt, helped us evolutionarily. Which gets us to Darwin.

  23. kaleberg says:

    There’s a lot of good money to be made peddling old lies. There’s the PT Barnum factor guarantees a new supply of believers every generation with their mantra: “This time is different”, and there are the well heeled beneficiaries of the status quo their well paid team of lap dogs and propagandists.

  24. illyia says:

    Barry, this is the very definition of corruption. One might think of it as a virus causing cancer, and the social body as becoming infested – meme HIV. Ultimately the host dies – of bad ideas consuming all resources.

    Eh? Yeah… it is true…

  25. cheese says:

    even bad ideas have cycles.

    Printing money worked great for John Law……before it didn’t.

    Also, I think it comes from the paradox of technology. You find a new insight, or breakthrough to a problem for a particular solution…….and humans being humans attempt to patch that technology into a different field, and yet, repeat the same mistakes.

    The only way around this is to forsake technology………and, in the case of finance……….regulation……..and build a culture that understands and respects risk. Time, and time again……you’ll find if you do not respect leverage, it will kill you.

    Ask Myron Scholes, PLEASE!

  26. b_thunder says:

    Bad ideas don’t die because someone is making money off them. Follow the money, and you will likely find out who has a vested interest in perpetuating them.

  27. algernon32 says:

    Dog training 101.

    Extinction (of bad ideas) is the cessation of reinforcement (of bad ideas).

  28. Oral Hazard says:


    “I’m Johnny Knoxville and this is High Frequency Trading with Fish Lures Dangling from my Balls.”

    Bad ideas R Us, dude. It’s what we humans do.

  29. Richard W. Kline says:

    To me, mikebdot and jaymaster have the two halves of the answer. Bad ideas are the lottery tickets of the subcompetent. That’s a two part explanation; below is the depth on it.

    You don’t get why bad ideas keep on giving, Barry, because you operate in the top decile of most competencies in areas of interest to you. Most people _aren’t_ in that decile, that’s a statistical fact. Most people really don’t know how things work, even with regard to things they do for a living, even with regard to things they do every day. Ideas, algorithms, devices, code: these are all a ‘black box’ to them (and to most of us). Most folks get by through asking a buddy or a drone for a tip or to do the math for them in a crunch, and as a life strategy that usually works just fine. So, if you’ve followed this far, most folks are use to not really understanding _why_ something works. They don’t know what microwaves are or how to reconfigure the oven, they just put something inside and press the button. Accordingly, to most people there are no ‘good ideas’ or ‘bad ideas,’ there are mysteries and ‘recommended ideas’ between which most people can’t make distinctions on their own. If an idea didn’t work, most folks can’t even figure out why it didn’t work, or at least don’t bother; they just look for a newer, bigger, brighter, truthier idea.

    Bad ideas don’t die because many people don’t understand what a ‘good idea’ is, and so can’t themselves make distinctions. This is where you get from subcompetence.

    Because most folks can’t catch a good idea on their own but for sheer luck, they both fall in love with ‘luck’ and are often floundering under actual losses. This is where the ‘lottery ticket’ mentality comes from. “Nobody really understands these things, it’s mostly sheer luck,” is the catchphrase of the subcomepetent and the mantra of the actually incompetent. Because that is their _personal experience_, and again the subcomeptent are overly dependent upon their personal experience because they can’t or don’t conceive of the whole or use appropriate reference material and sources. Someone floundering under losses is hoping for the big score to get in the black or meet target; you know, ‘a lucky break.’ But the subcompetent in their personal experience don’t make their own luck, so it’s going to take something new (to them), something big (which miraculously others don’t have locked up), something bold, innovative, ‘for platinum members only, y’know, Bernie’s friends.’ The subcompetent believe in ‘luck,’ and depend upon ‘some help from their friends,’ so whatever comes down the pike fitting those imagos is crack in a tanktop on rollerskates to them. And once one believes in luck as the solution, there is no wising up: the play that does bad was just ‘bad luck,’ they’ll come out a winner next time. There’s no critical evaluation, and a surfeit of faith’s optimism. That is where you get from lottery ticket ‘strategies.’

    Bad ideas don’t die because most folks don’t recognize them as bad. They’re just different ideas, to them. And if you don’t turn over those rocks, you can’t find the leprechaun’s gold, right? No matter how many tatrantulas you find first.

  30. debrabradley says:

    Humans are conditioned to want control and predictability. So someone creates ways to achieve that. That’s how the concept of the rating agencies get created and stick around so long. (In this case its gov’t trying to create a required condition, sometimes its a private individual). With free enterprise, though, someone should be able to create a GOOD idea to get rid of the bad one. Say a credit default swap or crowd-sourced analyst report is invented.

    Why do bad ideas last so long? We somehow are not creating the environment for good ideas to replace them.

  31. jonas says:

    Bad ideas are hard to get going because they’re bad. People aren’t that dumb. Therefore, if they survived and flourished in the first place, there’s got to be someone or something backing them or some other itch they scratch. That makes them very hardy and hard to kill off.

    In short, if they were easy to kill on account of the idea being bad, they’d probably never have flourished in the first place!

  32. DuchessGateau says:

    Bad ideas don’t die because of what Stephen Colbert calls his Gut. Emotion trumps reason. Some ideas are in reality strongly felt beliefs, not ideas based in reason. Most otherwise intelligent people have a few “junk” ideas lodged in their brains, causing no harm, stored right next to other ideas developed in adolescence (such as fashion and music taste). It didn’t help that economic ideas became politicized under Thatcher and Reagan.

    David Stockman, architect of Reagan’s Supply Side Economic plan, admitted in an interview with Esquire that it was a plan to make the rich richer and the poor poorer. It had nothing to do with job creation, efficiency, the markets, or anything else. But for many, the tsunami of spin surrounding the idea was stronger than the truth.

    Dick Cheney, Colin Powell, and other neocons politicized intelligence in order to justify the Iraq invasion in 2003. Apparently patently false ideas do require an enormous amount of spin, endorsement, and endless media coverage in order to overwhelm people’s common sense.

  33. capitalistic says:

    It’s less about bad ideas, and more about people wanting to sound smart by repeating old ideas or making outlandish forecasts. There’s really nothing wrong with saying “I have no idea.”

  34. Julia Chestnut says:

    @Richard W. Kline, there’s a problem with your logic, my friend: if you are “subcompetent” or “incompetent” (to me those are synonyms), what you are describing is a pretty efficient strategy and not even wrong. Luck is a massive component in all human activity, and the “ideas” at the base of something need not be understood for a person to use the tool effectively. Even if I don’t remember a damn thing about simple machines and Pythagoras, I’m still going to manage to unscrew a lightbulb. And that is why the world works: we all fall somewhere on the bell curve, and the great lump under the tall part of the curve don’t need to understand why a Bloomberg terminal works or what goes into it in order to use one. Or there wouldn’t be anyone to sell to. In the case of those people, furthermore, not knowing why it works is an incredibly efficient strategy. It’s information management in a world of (perhaps very) limited resources.

    Optimally, you want to know what you need to know. Being naturally curious and loving to learn help, because you just learn stuff and therefore increase the odds that you pick up what you need. But if the vast majority of people have a very fast and loose relationship with information and its quality, it seems to be largely adaptive.

    Some bad ideas are hard wired (cognitive failings and predilections). Others just float in the questionable soup flowing in brownian motion around people of varying ability who have a lot to get done in one day and, therefore, can’t bother with the extraneous details. I will admit to you, I sometimes yearn for the unexamined life. I think those people are a lot happier.

  35. constantnormal says:

    For the Darwinian Scythe to operate, it must kill off the vessels of the bad ideas before they can spawn.

    VD will be easier to stamp out than bad ideas.

    Eventually, our bad ideas will be extinguished, at the same time that humanity snuffs itself out by one mechanism or another, as the power and abilities of individuals continues to be amplified by advancing technology.

    Just my cheery addition to the conversation, have a Merry Christmas, and a Prosperous and Joyous New Year.

  36. Moss says:

    Someone is always making money on the so called bad ideas so they live on. Do I hear a number of ‘prominent Conservatives’ referring to the Conservative movement as a racket?

    That racket has been very profitable for many of the racketeers.

  37. msnthrop says:

    Functional redundancy…nature simply likes having lots to choose from and only those ideas that are bad enough to get you killed will disappear…who knows, maybe a bad idea becomes a good idea at some other point in history…

  38. PeterR says:

    “Why Don’t Bad Ideas Die?”

    Because most people are idiots.

  39. DasKapitalist says:

    Blame Obamacare. Isnt’t that the root of all evil? :)

  40. Lukey says:

    I think the answer could end up being quite simple. In the complex world of finance, there are too many people who end up being right but for the wrong reason(s). This leads to the belief that they have it all figured out when, in fact, they don’t.

  41. Nick @ PFD says:

    Bad ideas will be with us as long as somebody has something to gain (or avoid losing), whether monetary or psychological, from the promulgation of said bad ideas.

  42. MayorQuimby says:


    1. That you can spend unbacked credit – in any amount – to grow an economy, sustainably.

    2. That austerity is a way to grow an econonomy. It isn’t. It is the necessary hangover from having faked one.

    3. A roaring stock market stimulates the economy. For workers the stock market is simply a gauge as to HOW EXPENSIVE life is. It is only an ‘economic indicator’ to the wealthy.

    4. A CPI target of anything above 0% is permissible. 2% compounded destroys all saved cash in a couple of decades.

    5. Windows RT.

    6. Ballmer.

    7. TBTF.

  43. Lukey says:

    Right on MayorQ!

    And Cullen Roche just happens to have a post up supporting my reasoning (above):


  44. Greg0658 says:

    good thread of thought .. and mostly because its recent in mind&time – Julia me TOO “sometimes yearn for the unexamined life. I think those people are a lot happier.” ..
    but but someone has to think in this advanced world of tools & toys in the Google+ mindset “don’t be evil”

    to the t ? ..
    invested with cash and mindset that the continuation of the idea can work financially and physically for oneself and his/her family … coupled with fighting the mindset, is more an uphill battle than its worth – in the OpSys that is running during ones 100 year life

    on direct T
    “a laundry list” wash those $1′s off and print it with a $50, WORKS (I guess)
    “economic memes, investment concepts, and other ..” has not been my lifes work – but CASH, a guy has to live in there to breathe another day

    oh and – if this is an assault on my duoNovas – to weave the Twinkies thread – surrogates invested for me and put me out of work – investing said monies abroad (imo) .. soooo

  45. bigal says:

    Because the shallow end of the gene pool constantly refills.

  46. Manofsteel11 says:

    It is all about the underlying ASSUMPTION hidden in your question, i.e., that ideas have a value attached to them, and that value is binary – either ‘good’ or ‘bad’.
    1. If ideas are neutral, or alternatively have multidimensional scales of relative values ranging across broad spectrums (plural), then it is of course a matter of perspective/functionality.
    2. Your assumption implies people have an ability to tell good ideas from bad. However, perhaps bad ideas are just as good for our world as good ones, a) eventually leading to the critical mass needed for constructive destruction, b) preventing worse ideas from taking hold, c) proving to create good (whether directly or by propelling a counter force) over the long-run, beyond our present perspective, etc. (Maybe it is good to destroy capitalism and create something new? Perhaps strengthening the few will prove beneficial given the future of the human race?)
    3. This evaluation would depend, to a large extent, on one’s ability to cluster the relevant concepts as part of a sense-making process. Human cognitive abilities in this regard have proven limited. Socio-political institutions abilities have proven very limited. Economic and financial institutions are no exception. So, even if everybody would try to target bad ideas, we would probably be left with…human ideas. Can we improve? Only marginally, and as seen with hedge fund managers, politicians and voters in general, wisdom and responsible results are illusive.
    – Having said that, you got a lot of replies to your post, which means we are all interested in trying to do something about ‘it’.

  47. AHodge says:

    ideas do not necessarily die from wromg they die from mobody likimg or self imterest

  48. pmorrisonfl says:

    Why don’t bad ideas die?

    I think the great philosopher Paul Simon said it best…

    ‘All lies and jests
    Still a man hears what he wants to hear
    And disregards the rest ‘

  49. Jim says:

    Individuals do not want to admit they are wrong.

    It is hard to convince someone they are wrong if you do not also persuade them they are wrong.
    Seth Godin recently referenced this point.
    “It’s much easier to persuade someone if they’re already convinced, if they already know the facts. But it’s impossible to change someone’s mind merely by convincing them of your point.

    If you’re spending a lot of your time trying to convince people, it’s no wonder it’s not working.”

  50. JackH says:

    We keep seeing the same bad economic ideas because many of them use simplistic models that are easy to create on a cocktail napkin, such as the Laffer Curve. What could be easier to understand than a parabola? The problem with simplistic models is that they have to work in complex societies in which we can’t just state as a theoretical physicist could, “All other variables remain constant.”

    Further, while these models could well work over parts of their domain/range, their easily-created nature allows true believers to try to extend their usefulness beyond their failure points, which loses them credibility for even the portion that might work, i.e., “There’s that bad idea again…”

  51. Easyenough says:

    1) As Jonathan Haidt writes convincingly in The Righteous Mind, we use narratives to (falsely) explain what we have done. We don’t act on our explanations.
    2) If what we say is merely explaining what we have done or how we feel, falsifying the explanation has no leverage on behavior.

    For example, the dominant response to your question in these comments is that people are stupid. Clearly this is both a terrible modeling strategy for personal success and empirically false, but it is an explanation that serves self-esteem functions, among other things, so it wins.

  52. poakland says:

    Had dinosaurs as a group lasted, far far longer, then dumb dinosaurs would likely have died out in a challenging environment. For a species to evolve from the less fit members, you need a chronically challenging environment and time, glacial time. If the environment becomes too challenging too quickly, then the whole species dies out.

    The present environment for humans simply isn’t challenging enough to have an effect. Besides different genotypes ‘win’ when their type contributes in greater numbers to the next generation gene pool. But, in the modern world the connection between success and number of kids has been severed. If really effective people have 0 – 2 kids, and other far less effective have 4 -8 kids. The leff effective are winning.

  53. Chad says:

    Break “why don’t bad ideas die” down to the very basics and you get two things: belief and facts. Bad ideas don’t die because someone is either dumb enough or self-serving enough to maintain a belief unsupported by facts.

  54. Slash says:

    I addressed this on another site just yesterday. One thing that still kind of amazes me is the power of a really shitty idea.

    If you live long enough, you’ll be part of some group (doesn’t even matter what kind – family, employees, church, stamp-collecting club, whatever, just a group of somewhat likeminded people with specific goals) and there will be some issue/problem/goal and everyone will be asked for their input/ideas, and someone will come up with a stunningly idiotic one. Often, this person is the person in charge. And nobody will mention how stupid the idea is. And the group will act like it’s best freaking idea they’ve ever heard, even while a couple of them look sideways at each other, as if to say, “Holy shit, we’re actually gonna do this incredibly stupid thing.”

    Because when you are the one person who tells everyone else that an idea is stupid (or even if you phrase it in kinder terms), about 98% of the time, nobody else in the group has the gonads to back you up. They will knowingly proceed with a terrible idea rather than be known as the malcontent or the person who’s being “negative.” And when it all goes tits up, nobody will thank you for being right. Certainly not the idiot who came up with the shitty idea to begin with.

    My theory, anyway, on human history. It’s filled with self-evidently shitty ideas that very few people had enough courage to label as such. Esp. if the shitty idea benefits some people at the expense of others. From these people’s perspective, it’s an awesome idea, because, duh, it works for them. THEY don’t have a problem with it, therefore, there’s no problem at all. I guess most people just want to identify with the “winners” rather than the “losers,” and also most people seem to favor shitty short-term “solutions” over better, longer-term ones, so neither one of those tendencies is a recipe for good decision-making.

  55. AHodge says:

    Re Darwin
    ideas dont need to reproduce
    they just sit there–until they are ignored or forgotton

    idea challenged people reproduce
    Re Idiocracy –the movie–and oral hazard and the fishlures above, maybe they reproduce better
    maybe they dont have ideas just beliefs

    many many leaders/ social theorists like hitler
    say” ideas” more like beliefs in how things work
    are not for the masses just the elite to make up and feed to masses

    the power of crowd is so strong they survive well
    it ended up not working well for Hitler but those ideas didnt die easily
    or as Nietsche said your quote of day from whileback, something like

    insanity in individuals is rare
    in crowds it is the rule

  56. AHodge says:

    strict scientific scepticism and required proof has killed most “bad” ideas in the real sciences
    economics and most polititical academics are a disgrace to those principals

  57. CANDollar says:

    Bad ideas in finance do not die because very many people, including illogically many in finance, are financially illiterate, that is they lack basic numeracy skills, and those that have the skills have a vested interest in obfuscating financial reality as a form of leverage towards higher fees.

  58. JimRino says:

    I vote for a BOOK passed down thru a SECRET Society, like the Skull and Crossbones.

    Like “Democrats are Socialists”, this goes back 108 years.

  59. DeDude says:

    I think it is mostly tribalism and testosterone poisoning. When you buy into an adviser’s idea you become a member of the tribe that believe in that investment idea (housing, tech stocks, Oil, Gold, whatever). Many people have testosterone poisoning and consider it a defeat to admit that they were wrong. Even more people have a problem with breaking out of their tribes and leaving the cult/group that bonded around a particular belief, even if they have to lie to themselves to stay.

    Remember Darwinism is not applied to a single item at a time, it applies to the sum of all items. The testosterone poisoned arrogant idiot, has a greater chance at becoming a leader and initially harvest the best mates (with his self-assured attitudes). The person bonding well with a tribal group is much better protected from outside harm and exploitation. The concept of actually “winning” by being intellectually strong and able to be right on very complicated “brainy” subjects is still a very new entrant into the Darwinian mix. Even if it eventually ends up producing the most off-springs (which would assume that rich people have more kids), it may not be able to eradicate the influence of those other counterproductive forces.

  60. eideard says:

    Just takes more time than investors are willing to allow for. Like, we should live so long!

  61. AHodge says:

    re calling it stupid
    it may be self justifying superior and not be an explanation for everything
    but i do wish the species were smarter or more educated in logic proof reason in some key areas
    we may be collectively smart enough to have taken over the planet
    but when you look at social structures and issues like economics finance foreign policy
    nobody agrees on anything about our own creations
    so if at least 999 out of 1000 arrays of opinions here must be wrong
    call that what you like.

  62. rpseawright says:

    “Where is Darwin in all this?”

    1. Evolution applies to biology but not to ideas and social constructs (remember “Social Darwinism”).
    2. Evolution is not about “better.” It’s about increased survival rates. In general, our behavioral biases are inaccurate, misleading or bad, but they also generally help us survive. For example, risk aversion may be a threat to our marginal utility but it helps us to live longer in the bush.

  63. bergsten says:

    Darwin never met P. T. Barnum?

  64. ToNYC says:

    re: rpseawright Says:

    …” For example, risk aversion may be a threat to our marginal utility but it helps us to live longer in the bush.”

    Darwin is everywhere, and Dawkins too, if only considering ‘The Selfish Gene’, rather than the p*ssing match he felt compelled to engage with the faith-based dogmatics.
    Risk aversion does indeed help you to live longer in the bush; but it also ensures that you will remain in the bush for longer than your natural life. In that case, being blind to the speed of evolution away from your notice in European clock time, the rest of your life could seem a long time when you realize that you missed the boat called the ‘Evolution Now’.

  65. Warminghut says:

    Bad ideas in investing are like the physical forces of nature. They don’t go away. They are what weed out the weak minded investor and reward those who know better. Bad ideas in investing–e.g.Fibunacci-based foolishness–are more like dangers inherent in the landscape. They are factors involved in the darwinism test of losing or making money–not necessarily life forms in and of themselves.

  66. DiggidyDan says:

    In the context you are bringing this up, I think it’s more a misalignment of consequences vs benefits. That and what slash said. . . if you know an idea is crap, and bring it up against the group, there are consequences, no matter what the outcome.