Last week Felix Salmon at Reuters posted a comment by Choire arguing that Matt Taibbi in his take-down of Goldman, Sachs & Co. (NYSE:GS) "at least is explaining (or trying to explain) complicated financial operations in the real world -- while the finance writers and bloggers are often willfully obscure, tradey, impenetrable and even at times useless to any audience who isn't actually working (or recently laid off from) a bank. Why are they so willing to abandon us when they should be explaining things to us more than ever?"
This is a provocative comment that takes us to a place that's far more interesting than, say, Taibbi's crude conspiracy mongering in Rolling Stone. Salmon himself offered up the thought that bloggers -- and he blamed himself -- were often lazy and engaged in financial jargon. He then confessed that when he goes on NPR's Marketplace, he speaks "in perfectly comprehensible English about just about anything I cover on my blog." And he points to Paul Krugman as an economist who writes in perfectly accessible English.
All this is fine as far as it goes. We should all try harder to write more accessibly. We should all try to define our terms, reduce jargon and make a greater effort to explain. (I should stop eating Danish too.) But the issue is a bit more complex than Salmon and his commenter suggest. Financial journalism and blogging generally could use better writers or (jargon alert) communicators; that's just a reality that exists in all journalism at any moment in time. Moreover, Salmon and his commenter seem to assume that financial journalism or blogging is all aimed at a broad general audience. That's not the case. There's an entire world of B2Bs like The Deal and Dealscape that, in fact, are targeted at practitioners. The difficulty of the B2B game is not necessarily to write more accessibly as it is to report and write with greater sophistication and depth. Indeed, financial journalism has been routinely beaten up for not seeing the bigger picture, for not penetrating deeply enough into the maze, or is it haze?
Salmon and his commenter skip past the hard question here, however: Can the complexity of finance (and economics) be effectively captured by the kind of simple explanations required by an audience that barely knows the basics? Let's put it another way: In telling that "simple" story, is the journalist distorting the situation, highlighting certain aspects, accentuating certain tendencies and ignoring others?
What we know is how complex, ambiguous, intertwined so many of the practices and processes that drove the unfolding crisis. This begins with many of the arcane financial instruments that are so much discussed -- the CLOs, CDOs, SIVs and CDSs -- and continues into the complex financing arrangements of the banks and onto the complexity of regulation and market behavior in a globalized world. The firms are huge, the markets deep and varied. The economic drivers of all this, particularly their effect on human behavior, are -- despite the certainties of a Krugman or a Simon Johnson -- poorly understood. The future remains uncertain. Given all that, a simple explanation, an executive summary, may tragically misrepresent what is both so promising in our wild ecosystem of a market system, and so perilous.
In short, this crisis demands some familiarity with finance and, perhaps with more difficulty, the ability to hold seemingly contradictory ideas together. Taibbi's anti-Goldman screed is exactly what you get when you strip away complexity and ambiguity: He seems perfectly happy to connect dots, even if his underlying dots arise from fantasy rather than reality. It is an extreme political reading of the situation -- similar except for its extremity to much of what Krugman himself has written. Reductionism is a potent political weapon. And reductionism is merrily at work all over the place in an attempt to "interpret" what's going on to some general audience (see Frank Rich's movies-meet-Madoff Sunday column in the New York Times, which approvingly cites Taibbi's "controversial" piece on Goldman, but never pauses to ask whether it's true). That reductionism creates certainties. All bankers are guilty. All banks are insolvent. All financial innovation is bad. All taxes are bad. All immigrants are bad (or good). The society is divided in two: guilty haves, innocent have-nots. Goldman controls everything. Ideas, not facts, matter. Ends justify means. If we do not do as I say the world will collapse in a heap. March, amigos!
Salmon is perfectly right that we should all try harder to communicate. I would add that we should all try to step back and capture the big picture more effectively as well. But an audience that passively waits for its porridge to be served is an audience waiting to be gulled. Indeed, this is one of the rarely discussed issues underlying this crisis: The truly enormous gulf of expertise and complexity that has opened up not only between Main Street and Wall Street, but between markets and regulators (and politicians) and, indeed, within the warrens of huge global banks themselves. Let's not simplify the challenge of a high-powered market system presided over by large, bureaucratic banks and regulators. Making this work isn't easy. Communicating everything from its technical intricacies to its legal and moral outcomes requires, at the very least, hard work on both sides. Let me resort to the very kind of cliché that so often substitutes for explaining complex matters: In an effective democracy, it takes two to tango.
Robert Teitelman is the editor in chief of The Deal.