Writing in Vanity Fair and alternating between brilliance and fatuity, Michael Lewis examines one of the detonation zones of the Great Usury Crisis: Iceland. The essay is illuminating in many ways. Lewis certainly understands the culture and psychology of high finance, and he depicts the unique character of the Icelandic people pretty well for so breezy a report. The result is a great read, but of the sort you have to be very careful about, lest you lose sight of the author's lacunae.
One such is this extraordinary statement: "A nation so tiny and homogeneous that everyone in it knows pretty much everyone else is so fundamentally different from what one thinks of when one hears the word 'nation' that it almost requires a new classification. Really, it’s less a nation than one big extended family." Perhaps Lewis has forgotten that "one big extended family" is precisely the definition of nation we get from, for instance, the Old Testament -- and indeed, from antiquity in general. Even the early moderns thought of nations in much smaller, more concentrated terms. A bracing example of a great modern thinker whose theory rested upon smallness in nationality is Rousseau's On the Government of Poland, an unjustly neglected classic. In any case, the true anomaly of nationality, contra Lewis, is a massive, half-imperial polyglot like America.
But my favorite part of the Lewis essay is this:
Iceland’s big change began in the early 1970s, after a couple of years when the fish catch was terrible. The best fishermen returned for a second year in a row without their usual haul of cod and haddock, so the Icelandic government took radical action: they privatized the fish. Each fisherman was assigned a quota, based roughly on his historical catches. If you were a big-time Icelandic fisherman you got this piece of paper that entitled you to, say, 1 percent of the total catch allowed to be pulled from Iceland’s waters that season. Before each season the scientists at the Marine Research Institute would determine the total number of cod or haddock that could be caught without damaging the long-term health of the fish population; from year to year, the numbers of fish you could catch changed. But your percentage of the annual haul was fixed, and this piece of paper entitled you to it in perpetuity.
Even better, if you didn’t want to fish you could sell your quota to someone who did. The quotas thus drifted into the hands of the people to whom they were of the greatest value, the best fishermen, who could extract the fish from the sea with maximum efficiency. You could also take your quota to the bank and borrow against it, and the bank had no trouble assigning a dollar value to your share of the cod pulled, without competition, from the richest cod-fishing grounds on earth. The fish had not only been privatized, they had been securitized.
If you can securitize real estate, why not fish?