Guest post by David Liss

Because so much of what I write centers on the history of business and economics, I’m often asked to make comparisons between financial upheavals, disasters and misdeeds of the past and those of the present. “Do we ever learn anything,” people want to know, “or do we keep making the same mistakes over and over again.” The short and depressing answer is that we keep making the same mistakes over and over again. It sure makes my job interesting, but it also makes it kind of depressing. You would think that after more than four centuries of modern finance people could at least come up with new ways to be stupid. No such luck. All technology does it give people ways to be the same kind of stupid more quickly and efficiently. I suppose the glass half full way of looking at this is to say that at least were are not getting any dumber. I am happy to say that when it comes to egregious financial errors, humanity has found its natural level of foolishness.

I used to marvel at how much the financial crimes of the past mirror those of the present. The Dutch Tulip Bubble of the 1620s, an example of an organically occurring moment of irrational financial exuberance, look a whole lot like the Internet Bubble of the late 1990s. The South Sea Bubble of 1720, a scheme to defraud investors and the British government by promoting the stock of a company that essentially did nothing but promote its own stock, invites comparison to Enron and, more recently, Bernard Madoff. And our own first major financial upheaval here in the United States, the Panic of 1792, looks a whole lot like the financial meltdown we are currently enjoying. Efforts to repackage potentially worthless real estate slowly turns into excessive stock trading, all resulting in a market panic that drags down healthy and over-valued stocks alike. Meanwhile, anyone with a chance of making money is ignoring the preposterous risk because – well, they have a chance of making money. Am I talking about the past or the present? The answer, of course, is both.

And what about business that don’t implode, or moments that don’t result in catastrophe? My recent research into the British East India Company in the 1720s genuinely shocked me. At times I felt like I was reading about the modern world. The Company’s imports of cheaply made foreign cloths produced upheavals in the domestic wool industry and the silk-weaving trade. The wool lobby attempted to influence the law of the land by buying up Parliamentarians, and so did the Company. Globalization, outsourcing, oppressive foreign regimes selling their labor cheap, influence peddling at the highest levels of government.... The list goes on.

It all makes for great fiction, which works out well for me. Anytime you’ve got a lot of money and power in the balance, and people willing to do terrible things to grab there share, there’s a terrific story to be told. So, while I love the endless supply of juicy material, it leaves the larger question unanswered -- why do we make the same idiotic, predicable and avoidable mistakes over and over again.

Part of the advantage of writing fiction versus, say, doing financial journalism or history, is that it’s my job to get inside the heads of these people and try to understand what makes them work. What we’ve seen in doomed business dealings past and present, weather we are talking about the East India Company or AIG, is that, when it comes to the chance – however remote – of grabbing massive profits, time, as we understand it, no longer works the same way. You and I and most of the people we know live in a world in which there is a lengthy past, a present, and future forever unfolding. For high risk financial schemers there is only the now and the next moment – and that’s it. Those nasty and inevitable consequences when, for example, the market realizes those sub prime mortgage backed securities are worth nothing, or the Parliamentary legislation is going to destroy the existing business model – those futures are so far off that they are not even worth thinking about. That could be next week, or even next month. When you are in financial-mayhem-time, nothing more distant than tomorrow counts for anything. Today you solve today’s problems, tomorrow you solve tomorrow’s. You’ve been doing this up till now, so there’s no reason you can’t keep doing it forever, right?

Of course the answer is wrong. But the delusion is always the same and will always be the same because that’s human nature – which is surely good news for fiction writers.

About the author

David Liss is the author of five novels, with more on the way.

His debut novel, A Conspiracy of Paper (2000) with its hero, the pugilist turned private investigator Benjamin Weaver, was named a New York Times Notable Book and won him the 2001 Barry, MacAvity and Edgar awards for Best First Novel.

David's second novel, The Coffee Trader (2003) was also named a New York Times Notable Book and was selected by the New York Public Library as one of the year's 25 Books to Remember.Available in Kindle now; Available in Print in late 2009

His third novel A Spectacle of Corruption (2004) the sequel to A Conspiracy of Paper, became a national bestseller. David's fourth novel, The Ethical Assassin (2006) is his first full-length work that is not historical fiction.

David's most recent novel, The Whiskey Rebels, is set in 1790's Philadelphia and New York. The third Benjamin Weaver novel, The Devil's Company, will be in stores in late 2009.

Born in New Jersey and raised in Florida, David is, in fact, a one-time encylopedia salesman. He received his B.A. from Syracuse University, an M.A. from Georgia State Universty and his M.Phil from Columbia University, where he left his dissertation unfinished to pursue his writing career.

David lives in San Antonio with his wife and children. You can visit his website at www.DavidLiss.com.