Tuesday, November 18, 2008

Enough Innovation, Creativity and Compensation

If progress and innovation are good, then more progress and faster innovation are better, right? This is a popular line of bullshit. Sure, there are fields of human endeavor in which progress can't come fast enough--Race for the Cure and all that. But even in cancer research, clincial trials, refereed journals, and peer review regulate and govern the pace of progress and the revision of treatment regimes.

Finance isn't one of those fields where more, faster innovation is necessarily an uanalloyed good. Innovation and creativity are, at best, a mixed blessing. In the last quarter of a century, we may very well have had enough innovation and progress in the vineyards of finance, if you can call it that, to last the Western World another half century. In other words, to take Gen X from nappies to Depends.

So much for the hand wringing about the need for care not to impose an undue regulatory regime that might disrupt the flow of creative juices fostering so much innovation in the fields of finance. Might I suggest that there has been quite enough innovation, and that we are now entering a period of culling, discarding, editing, revising and discarding the fruits of several decades of unrestrained innovation.

And the editorial hand shouldn't be invisible. It shouldn't be based on a market mechanism. The market has a place, but it is, ultimately, a legal construct based on the raw power of the state. Power has been the missing ingredient in the fear greed matrix for a decade or more.

The time has come to crush the innovative and entrepeneurial spirit of the capital markets, to subject them to strict regulatory discipline so that the activities in them are limited to meeting the needs of the general economy. We can only hope that a new era of dull reliability, diminished profitability and boring predictability is dawning . . .

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