That is Mihir Desai, above. Desai is an Indian-American economist who is currently the Mizuho Financial Group Professor of Finance at Harvard Business School and a Professor at Harvard Law School into the bargain. In drawing your attention to Desai's recent column in The New York Times, I am "piling on" to a point I have made before - with the earliest diatribe I was able to locate dating from June of 2019.
Desai's column, which appeared in the January 18, 2023, edition of The Times, was titled, "The Crypto Collapse and the End of Magical Thinking." I have, as just indicated, frequently inveighed against the idea that "crypto currency" has any enduring value, and I do think that believing in "crypto" as a meritorious investment opportunity is properly described as "magical thinking." Here is how Desai introduces the topic:
At a guest lecture at a military academy when the price of a single Bitcoin neared $60,000, I was asked, as finance professors often are, what I thought about cryptocurrencies. Rather than respond with my usual skepticism, I polled the students. More than half of attendees had traded cryptocurrencies, often financed by loans.
I was stunned. How could this population of young people come to spend time and energy in this way? And these students were hardly alone. The appetite for crypto has been most pronounced among Gen Z and millennials. Those groups became investors in the past 15 years at previously unseen rates and with exceedingly optimistic expectations.
I have come to view cryptocurrencies not simply as exotic assets but as a manifestation of a magical thinking that had come to infect part of the generation who grew up in the aftermath of the Great Recession — and American capitalism, more broadly.
For these purposes, magical thinking is the assumption that favored conditions will continue on forever without regard for history. It is the minimizing of constraints and trade-offs in favor of techno-utopianism and the exclusive emphasis on positive outcomes and novelty. It is the conflation of virtue with commerce.
My only caution, with what Desai says, is that to suggest that the "magical thinking" associated with "crypto" is tied, generationally, to those Gen-Z types, is probably just a bit unfair to Generation Z. Desai's warning about "magical thinking" is applicable to every generation!
As Bob Dylan puts it (and he's way pre-Gen-Z):
Through hostile cities and unfriendly towns
Thirty pieces of silver, no money down
Maybe someday, you will understand
That something for nothing is everybody’s plan
Bob Dylan, "Maybe Someday"
Image Credit:
https://jaipurliteraturefestival.org/archive/2019/speaker/mihir-desai
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