NEW ORLEANS – A keen grasp of finance or economics was not what first alerted Gillian Tett, of the Financial Times, that danger lurked in the derivatives market well before that sector nearly caused the collapse of the world’s economy. It was her training as an anthropologist.
“I remember walking into a conference in Nice…and being struck immediately by this sense of déjà vu,” Tett said here on Friday during remarks delivered at the annual meeting of the American Anthropological Association.
Tett said that the investment banking conference that she attended in France reminded her, of all things, of when she was doing her doctoral research on Tajik identity under Soviet rule. (Tett, now the US managing editor for the Financial Times, earned a PhD in social anthropology from the University of Cambridge before entering journalism.) Each setting – Nice and Tajikistan – had its own rituals, mores, physical markers and language, she noted. And it was the language of the investment bankers before the crash that struck her most. “It was a group of people that talked about money and never once mentioned a human being,” she said.
Tett said she used her anthropological training to look more closely at the system underlying the financial sector. She saw that the bankers who designed collateral debt obligations, like many others in the industry, existed in a state of apparent disconnect, or what she characterised as silos. “Almost everywhere you looked inside this system there was this fragmentation,” she said. No one who was designing the collateralised debt obligations had any connection to the actual subprime borrowers. Almost every banker thought he or she was devising a smarter, safer financial system that diminished risk by spreading it around.
Tett dug into the story, and realised that the rules governing derivatives were hazy – as was the size of the market itself. By 2006, she grew convinced that there would be a great blow-up, and she has since been hailed as one of the few who predicted the financial crash before it happened. Her book, Fool’s Gold, which was published in 2009, summed up much of her pre-meltdown reporting, and traced the roots of the crisis back to 1994, when bankers at J.P. Morgan decided to develop their derivatives business. Fool's Gold was named financial book of the year at Spear’s Book Awards; Tett was dubbed British Business Journalist of the Year in 2008. Last week, she spared no criticism of business journalists who missed the story leading up to the crash, and called her prizes “guilt awards”. She lay part of the blame on the media’s own cultural norms, which can make it very difficult to report and give proper weight to important stories – especially when they rely on analysis of hidden trends and do not have the benefit of signal events or people willing to speak on the record.
The hyper-specialisation in finance that Tett lamented, and that also has been ridiculed in academe, can exact dangerous consequences if those subjects are left to remain opaque and unexamined – and is all the more reason for scholars to become more engaged in public debate, she said. What might seem to be incomprehensible minutiae can produce outsize effects elsewhere. The inventions hatched in the minds of bankers nearly brought down the economy, just as deep-sea drilling and the geology of the seabed in the Gulf of Mexico affected the rest of the world this summer.
Tett’s speech to the association also amounted to a rallying cry as anthropology departments nationwide get squeezed amid cost-cutting efforts or attempts to adjust curricula to better meet student interest. Tett’s implicit argument is that such moves will prove to be a costly mistake for society at large. The hard logic of numbers can never fully explain things; culture also matters deeply. “Money is fundamentally embedded in culture,” she said. “I think there’s a huge opportunity for anthropologists today.”
She urged individual anthropologists to move out of their comfort zones and engage in the wider public debate. “There’s so much vibrancy that needs to be inserted elsewhere,” she said. “There are so many fields where anthropology can be beneficial.”
Anthropologists, said Tett, have the training to dissect the systems that have been put into place, and the human values articulated within them. “The wonderful thing”, she said, “is that it teaches you to look bottom up, at power structures, at rhetoric, and the unsaid.”