Dickens Diagnoses Irrational Exuberance
I'm reading Little Dorrit right now, inspired by the fine BBC series that aired earlier this year on PBS. Much has been made of the similarities between Mr. Merdle, the fictional 19th-century financier, and Mr. Madoff, the all-to-real 20th century swindler. But I was gob smacked the other night by passages describing the countrywide obsession with Merdle and his supposedly foolproof investments. It reminded me of the many, many conversations I had a few years ago (and I'm sure you did to) which consisted solely of mutual exhortations to jump into the housing market. Now's your chance! Don't lose this opportunity to make money! Housing prices never go down! Indeed.
From the chapter called "The Progress of an Epidemic":
That it is at least as difficult to stay a moral infection as a physical one; that such a disease will spread with the malignity and rapidity of the Plague; that the contagion, when it has once made head, will spare no pursuit or condition, but will lay hold on people in the soundest health, and become developed in the most unlikely constitutions; is a fact as firmly established by experience as that we human creatures breathe an atmosphere....
Of whom Mr. Pancks had taken the prevalent disease, he could no more have told than if he had unconsciously taken a fever. Bred at first, as many physical diseases are, in the wickedness of men, and then disseminated in their ignorance, these epidemics, after a period, get communicated to many sufferers who are neither ignorant nor wicked. Mr. Pancks might, or might not, have caught the illness himself from a subject of this class; but, in this category he appeared before [Arthur] Clennam, and the infection he threw off was all the more virulent....
'Be as rich as you can, sir,' Pancks adjured to him with a powerful concentration of all his energies on the advice. 'Be as rich as you honestly can. It's your duty. Not for your sake, but for the sake of others. Take time by the forelock.... Why should you leave all the gains to the gluttons, knaves, and imposters? Why should you leave all the gains that are to be got, to my proprietor and the likes of him? Yet you're always doing it. When I say you, I mean such men as you. You know you are. Why, I see it every day of my life. I see nothing else. It's my business to see it. Therefore I say,' urged Pancks, 'Go in and win!'
'But what of Go in and lose?' said Arthur.
'Can't be done, sir,' returned Pancks. 'I have looked into it. Name up, everywhere--immense resources--enormous capital--great position--high connection--government influence. Can't be done!'
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