But, if recent history has taught us anything, it’s that self-regulation doesn’t work in finance, and that worries about reputation are a weak deterrent to corporate malfeasance. James Surowiecki More Quotes by James Surowiecki More Quotes From James Surowiecki Of course, looking tough on inflation is part of any central banker's job description: if investors believe that inflation is going to get out of control, you end up with higher interest rates and capital flight, and a vicious circle quickly ensues. James Surowiecki circles jobs believe Of course, politicians always say they're just describing their opponents' positions, even if they are in fact offering absurd caricatures, if not outright lies. James Surowiecki opponents offering lying Meeting external deadlines is much harder than meeting internal ones. On the other hand, internal deadlines sometimes don't feel real, and are therefore easy to evade. James Surowiecki real sometimes hands On the simplest level, telecommuting makes it harder for people to have the kinds of informal interactions that are crucial to the way knowledge moves through an organization. The role that hallway chat plays in driving new ideas has become a cliche of business writing, but that doesn't make it less true. James Surowiecki play writing moving Political risk is hard to manage because so much comes down to the personal choices of policymakers, whether prime ministers or heads of central banks. James Surowiecki risk political choices Publishers, naturally, loathe used books and have developed strategies to depress the secondhand market. They bring out new, even more expensive editions of popular textbooks every three to four years, in a classic cycle of planned obsolescence. James Surowiecki depressing book years Framing effects can be very influential, and to the degree that you can think of a task as close rather than distant, you're more likely to actually get it done. James Surowiecki degrees tasks thinking The fundamental problem with banks is what it's always been: they're in the business of banking, and banking, whether plain vanilla or incredibly sophisticated, is inherently risky. James Surowiecki vanilla banking fundamentals To be sure, if you watch CNBC all day long you'll pick up some interesting news about particular companies and the economy as a whole. Unfortunately, to get to the useful information, you have to wade through reams of useless stuff, with little guidance on how to distinguish between the two. James Surowiecki useless-stuff two long When Americans are asked to rank professions in terms of honesty and ethics, insurance agents routinely end up near the bottom of the list - somewhere between politicians and car salesmen. Generally, insurers are seen as clever hucksters who prey on insecurity and ignorance to sell people what they don't need at prices they shouldn't have to pay. James Surowiecki honesty ignorance clever Diversity and independence are important because the best collective decisions are the product of disagreement and contest, not consensus or compromising. An intelligent group, especially when confronted with cognition problems, does not ask its members to modify their positions in order to let the group reach a decision everyone can be happy with. Instead…the best way for a group to be smart is for each person in it to think and act as independently as possible. James Surowiecki smart intelligent thinking If small groups are included in the decision-making process, then they should be allowed to make decisions. If an organization sets up teams and then uses them for purely advisory purposes, it loses the true advantage that a team has: namely, collective wisdom. James Surowiecki team organization wisdom The smartest groups, then, are made up of people with diverse perspectives who are able to stay independent of each other. Independence doesn't imply rationality or impartiality, though. You can be biased and irrational, but as long as you're independent, you won't make the group any dumber. James Surowiecki independent long people Groups are only smart when there is a balance between the information that everyone in the group shares and the information that each of the members of the group holds privately. It's the combination of all those pieces of independent information, some of them right, some of the wrong, that keeps the group wise. James Surowiecki smart independent wise Unfortunately, there is something of a flaw in this idealized picture of the way the scientific community discovers truth. And the flaw is that most scientific work never gets noticed. Study after study has shown that most scientific papers are read by almost no one, while a small number of papers are read by many people. James Surowiecki small-numbers science people This intelligence, or what I'll call "the wisdom of crowds," is at work in the world in many different guises. It's the reason the Internet search engine Google can scan a billion Web pages and find the one page that has the exact piece of information you were looking for. It's the reason it's so hard to make money betting on NFL games, and it helps explain why, for the past fifteen years, a few hundred amateur traders in the middle of Iowa have done a better job of predicting election results than Gallup polls have. James Surowiecki wisdom jobs past The fact that cognitive diversity matters does not mean that if you assemble a group of diverse but thoroughly uninformed people, their collective wisdom will be smarter than an expert's. But if you can assemble a diverse group of people who possess varying degrees of knowledge and insight, you're better off entrusting it with major decisions rather than leaving them in the hands of one or two people, no matter how smart those people are. James Surowiecki smart wisdom mean One key to successful group decisions is getting people to pay much less attention to what everyone else is saying. James Surowiecki keys successful people The smartest groups, then, are made up of people with diverse perspectives who are able to stay independent of each other. James Surowiecki independent perspective people Capitalism, after all, is no fun when real failure becomes a possibility. James Surowiecki possibility real fun
