What they didn't know hurt us and is still hurting us!

Mathematically sophisticated people -- statisticians, mathematicians, physical scientists -- flocked to the financial industries in the last couple of decades. Their computer forecasting models revolutionized trading, leading to large profits for the firms that based trading decisions on the models.

I suspect that those models also led to the the proliferation of new financial instruments.

I also suspect that the top executives in the financial firms, the regulators, and the people responsible for political oversight of the financial industry and the legislation defining the regulatory powers of the government, did not adequately understand the mathematics, statistics and models.

Nassim Talib, in his book The Black Swan: The Impact of the Highly Improbable points out that many of these models were based on inappropriate statistical assumptions, suggesting that the proliferation of models which underestimated risk led rather directly to the industry investing too riskily, and thus to the 2008 crisis which we continue to dig ourselves out of.

One study reports that the top 10 percent of our society by wealth hold 93.3 percent of business equity and 81.2 percent of stocks and mutual funds. Indeed, the top one percent hold 62.4 percent of business equity and 38.3 percent of stocks and mutual funds. These people could have insisted that the top management of the firms were knowledgeable about mathematics and statistics, at least sufficiently to recognize when models created by their techies were appropriate for use and when they were not.

In our democratic republic, we the voters are responsible for a Congress which lacks that expertise, and thus fails to legislate appropriate regulatory regimes.

I would note that had our legislators and our business executives known more about the financial history of our country -- the Roaring 20s and the following Great Depression, and the long period in the 19th century characterized by booms and busts -- they might have been more reluctant to take huge risks with our money.

American anti-intellectualism may have been the root cause of the current financial crisis. It was that anti-intellectualism that led us to assume that ignorant executive and legislators were good enough!