I think the rise of quantitative econometrics and a highly mathematical approach to risk management was the obverse of a decline in interest in financial history.
Interpretation
The quote suggests that an increased focus on quantitative methods in finance has led to a diminished appreciation of financial history.
Niall Ferguson's quote reflects on the shift in financial practices, where the growing emphasis on quantitative econometrics and mathematical models for risk management has overshadowed the lessons and insights that can be gained from studying financial history. This indicates a potential danger in prioritizing numerical analysis over historical context, which could lead to a lack of understanding of past mistakes and patterns in finance.
In practice
In a financial conference discussing the importance of understanding past market crashes.
It's all very well for us to sit here in the west with our high incomes and cushy lives, and say it's immoral to violate the sovereignty of another state. But if the effect of that is to bring people in that country economic and political freedom, to raise their standard of living, to increase their life expectancy, then don't rule it out.
If the financial system has a defect, it is that it reflects and magnifies what we human beings are like. Money amplifies our tendency to overreact, to swing from exuberance when things are going well to deep depression when they go wrong. Booms and busts are products, at root, of our emotional volatility.
Civilisation is partly about restraining the male of the species from engaging in the violence of the hunter-gatherer period. But it doesn't take an awful lot to unleash it.
For 500 years the West patented six killer applications that set it apart. The first to download them was Japan. Over the last century, one Asian country after another has downloaded these killer apps- competition, modern science, the rule of law and private property rights, modern medicine, the consumer society and the work ethic. Those six things are the secret sauce of Western civilization.
The West may collapse very suddenly. Complex civilizations do that, because they operate, most of the time, on the edge of chaos.
Over time, the welfare state has become dysfunctional in a surprising way. But in a way it became a victim of its own success: It became so successful at prolonging life, that it becomes financially unsustainable, unless you make major changes to things like retirement ages.
At the simplest level, economics can better show us the consequences of our actions. Less simple are cases in which we don't have the knowledge to predict the full consequences. Global warming and climate change are examples.
In a spiral galaxy, the ratio of dark-to-light matter is about a factor of ten. That's probably a good number for the ratio of our ignorance-to-knowledge. We're out of kindergarten, but only in about third grade.
I'm convinced that sending people to Mars is so expensive that if you go once and bring the people back and then go again and bring the people back, we're eventually going to run out of money. But what if we send people the first time and they don't come back? What if they stay there?
The thing to keep in mind is that we're still in the very early days when it comes to the search for extraterrestrial intelligence. Saying there's a silence is a bit like if Columbus, looking to discover a new continent, only sailed 10 miles off the coast of Spain before turning back to say, 'Nothing out there!'
You stop planetary exploration, those people who do that extraordinary work are going to have to go do something else.
Population, when unchecked, increases in a geometrical ratio. Subsistence increases only in an arithmetical ratio. A slight acquaintance with numbers will shew the immensity of the first power in comparison of the second.
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