Communicating in a Visual World: the Credit Crisis

Take a look at this 12 minute video explanation of the credit crisis:

The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

This is the work of graduate student Jonathan Jarvis and it’s a perfect example of a point that I’ve been making here for some time: increasingly the primary modality for effective communication is a visual one.

Several things leapt out at me from the presentation and, mostly, they echo things I’ve been writing about for a while. First, the entire crisis was fomented by an attitude towards risk. Risk became obscured and, consequently, there was a greater appetite for risk. Second, there are only a handful of prospective solutions to the problem.

We could subsidize housing values and, consequently, pump air back into the system. I think that’s part of the purpose of the proposal the Obama Administration announced not long ago. I think there’s as much risk of a positive feedback situation in this approach as there was during the pre-crisis days. While it may be a reasonable palliative, it’s no longterm solution.

We could introduce friction into the system in the form of new regulation. That would reduce risk but it would also reduce the potential rewards. Since it will never promote things back to the heights they achieved a few years ago, I don’t believe that will work, either.

We could get accustomed to a reduced level of economic activity, meaning that wages and prices would fall. The problem with this is that nowadays a tremendous proportion of the population is insulated from wage declines—they work for the government or in one of government’s handmaiden industries. If you keep keep all of these government workers’ wages constant or even increase them, the degree to which everybody else’s wages will need to fall increases that much more. I see this as a formula for social upheaval.

In a globalized world that has serious implications. For us a ten or twenty percent decline in wages or standards of living would be painful but tolerable. For countries that until very recently were impoverished, e.g. China, India, Mexico, it would be very serious, indeed.

Hat tip: Joe Gandelman

6 comments… add one
  • PD Shaw Link

    The video, though well-done, does raise the question whether a more visual-oriented world is a more stereotypical world, and perhaps a less tolerant world. You have the good family with the husband, wife, baby and dog. You have the bad bankers, fat with handle-bar mustaches. The bad family with four kids and parents that smoke!

    On risk, the problem is exacerbated because the economy is doing something about risk as we speak — regulations would exacerbate the problems. Though, is it too late to repeal Gramm-Leach-Bliley Act?

  • In my previous posts on the subject of visualcy, PD, I’ve at least suggested that I’m deeply distrustful of visual communication as a modality for political communication. I think it has more in common with oral communication than it does with written communication. See here for a comparison of the characteristics of oral and written communication (or, more precisely, communication in an oral society with communication in a literate one).

  • Brett Link

    That’s the real problem, isn’t it? How do you climb back to prosperity when that prosperity was built on the back of an unsustainable housing bubble and a debt binge by Americans?

    The only thing that I can see changing that is what always ultimately changes it, in the long-term: greater productivity growth. Either that, or keep your population from growing.

  • PD Shaw Link

    Thanks for the link; I hadn’t read that visualcy post. One of your finest.

    One of the visuals that stands out to me on this particular issue is the picture on Steve Sailer’s blog of the $340,000 house (2007) in Compton being sold for $69,900 today. (Link below) Do we really want to make that house worth $340,000 again?

  • Andy Link

    Wow, great little video.

    It must be “visual” day or something, because I ran into this handy graphic. I spend time on other forums discussing wonky military procurement subjects, and this picture will come in very handy.

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