The Banker's Paradox

I'm currently reading a book called "The Mind of the Market" by the always brilliant Michael Shermer. In it, he outlines the way humans think about their own personal economic interests and how that influences societal trends. It's a remarkable book, which I'd recommend strongly to anyone. But he opened with some interesting thoughts, which I'd like to expound upon, having to do with what's called the "banker's paradox."

The banker's paradox is this: Say you're a banker with a limited amount money to lend. Do you lend it to poorer people, who are greater credit risks, and take a high gamble that they won't be able to pay you back? Or do you lend to richer people, who are low credit risks, and take a safe bet that they will pay you back? If you are like most people, you'll want to take the safer investment with your money. Thus, the money loans tend to go to the rich, while the poor who need it the most can't get loans. The rich get money for start-up businesses, while the poor are denied their fair shot at opportunity. The rich get richer, the poor get poorer. Only a government program can circumvent this trend by taking on the risks banks cannot. But this is not due to any malice on the part of the banking industry towards the poor, nor is it done out of any desire to safeguard the rich. It is merely individual bankers being smart with their money, just as any of us would be with our own checkbooks.

The Banker's Paradox, writes Shermer, can be translated via evolution into a general understanding of altruism. Why should one engage in altruism: that is, why risk the reproductive success of one's genes in order to help the reproductive success of someone else's genes? If we risk our own reproductive success to help someone else's reproductive success, and they don't repay in kind later on, then we've lost our reproductive success for nothing. So here again, we see the Banker's Paradox, but in a different form. Why should I invest in my neighbor?

Analyzers of evolution have traditionally taken two paths to answer this question: One, they cite kin selection: that is, favoring those who are our children, or those closely related to us, as a means of enhancing one's own genetic success. And two, reciprocal altruism: "I'll scratch your back if you scratch mine." But this is too simplistic. We see right away that there is a sort of "altruism credit rating" where one can decide whether the person being helped is truly worthy of our support. If such a person is a "fair weather friend," who won't help us if things get rough, we might tend not to help that person. And if the person is seen to be a loyal friend, who helps us even in times of trouble, we might tend to help that person more. And so this altruism credit rating helped to develop human society as it emerged from a hunter-gatherer state into an agrarian, and later, civilized, one.

Shermer writes that evoluion "would have selected for adaptations to work around the Banker's Paradox dilemmas, including selecting us to (1) seek recognition from our fellow group members for our trustworthiness and reliability, (2) cultivate those attributes most desired by others in our group, (3) participate in social activities that recognize and reinforce such prosocial attributes, (4) avoid social activities that lead to untrustworthy actions and therefore a negative reputation, (5) notice similar attributes of trustworthiness in others, and (6) develop the ability to discriminate between true and fair-weather friends." This, taken from earlier insights from some earlier writers named Tooby and Cosmides, is how Shermer reckons that an evolved psychology comes about. If you are valuable to someone else, someone else will take a strong interest in your welfare. In turn, their interest in your well-being makes those individuals more valuable to you. "The fact that they have a stake in you means you have a stake in them," as the author cites.

And here is where my thought processes digress from Shermer's, because I can immediately see one consequence of these facts: If one wants to dramatically increase reciprocal altruism, all one has to do is wrap superstitions around them which influence people to help one's interests and not harm them. That means that any beliefs regarding the gods would be incorporated into assisting behaviors deemed desirable, and deterring behaviors considered undesirable. "Do X, Y, or Z, even if you don't feel like doing it, and the gods will be pleased. Do them not, and the gods will become angry." Eventually, the belief in an afterlife (probably already invented long before this stage of human history) gets recruited for this purpose. Do those things which please the gods, and you go to a happy afterlife. Do those things which displease them, and you will have an unhappy afterlife.

It's easy to see that those societies who developed the most successful superstitions would have the most cohesive societies. This, in turn, would increase their survival potential. At first, this might seem to be a good thing. But it has a dire consequence. Those deemed not part of the "inner circle" are considered unworthy of support, regardless of their true merit. The results are well known: Wars, pogroms, jihads, crusades, inquisitions, and other persecutions of all sorts.

But religions were not the only superstitions to try to encourage altruism. Often, we got a "winning feeling" about someone, and ended up sticking to that person, because that feeling helped reinforce mutual survival. But hundreds of thousands of years of that winning feeling being an asset have turned it into a detriment. Just as a craving for sugar was a survival trait in a sugarless environment, and today is a detriment in a sugar-saturated world, so that "winning feeling" has turned into a craving for that which is harmful to us. We hold on to stocks which we ought to sell. We continue to gamble, even though the casino always eventually wins. We buy name-brand, even though generic is cheaper. We remain in the Catholic Church, even though it abuses our children.

And now, that "winning feeling" has so infested the Muslims of the East in their war against the democracy of the West, that it has many in it who will forfeit their own life in order to snuff out others. This is the Banker's Paradox turned backwards: Instead of investing genetic success to help others, it sacrifices one's genetic success permanently in order to eliminate the genetic success of as many others as possible, because those others are deemed by the superstition (wrongly, of course) to be non-altruistic. It's as if the banker decided that rather than lend his money, that he would spend it on gasoline to burn as much of other people's money as he could.

We turned to superstitions in our past to augment the altruistic behavior which was already in our best interests. We had done just fine without superstition before then, but discovered that the belief structures gave our societies an added boost, which enabled our cultures to spread far and wide. We let that "cultural conquest" go to our heads, and embraced it as sacrosanct - as unquestionable as our mother's love.

But we were wrong.

That same structure, which was once a beneficial supplement, has turned itself into a detrimental ball and chain. Capital interests will forever synergize with psychological beliefs to trick consumers into buying useless or outright fraudulent product. And not only that, but we are living in the age of post-conventional warfare. Never again will armies meet one another in battle. All-out war means total annihilation in the nuclear age. All wars will now be ones of attrition, where standing armies try in vain to put down some variation of guerrilla warfare. And that guerrilla warfare will always try to thwart democracy by frightening voters into voting their way. These modern-day enemies will target the women and children first - because they must.

Thus, the supplements of old - religion, nationalism, and credulity, are now our greatest enemies. We must defeat them, before they seize the already-present technology and defeat us.

Eric