Saturday, January 24, 2009

Lessons to learn from the financial crisis

Lessons to learn from the financial crisis: [...] Today's deep thought is: how much of modern computer science is about making the complexities in our world simpler and more understandable - and how much is making the world more complex and more opaque? And how complicated can a system be and still be controlled, maintained, and regulated by human beings? (Via Cranial Darwinism.)

Read William's whole post, very interesting. I was talking with a friend a couple of days ago about the current arguments about different alternative energy sources. He argued that we need for detailed models that take into account physical an market factors in assessing the real costs and benefits from each proposal. I agree, but I added that the models have to be transparent, available for analysis and critique, and describable at different levels of detail for technical analysis, policy study, and general public debate. The opacity of financial models and instruments is not just dangerous in the short term, but it also induces cynicism and facilitates demagoguery, as the current debates on the crisis and rescue packages show.

1 comment:

William Cohen said...

I kind of liked Mike Berman's idea: why not make comprehensibily a legal requirement for financial products?