If you really want to know why the financial system nearly collapsed in the fall of 2008, I can tell you in one simple sentence…
That sentence, paraphrased: smart people started working on Wall Street. For most of its existence, Wall Street was mundane, run by Ivy League jocks with old money. It wasn’t run by idiots, but it also wasn’t run by geniuses. Then, with the rise in college costs and Wall Street income, truly smart people started showing up—the kind of people who would otherwise be doing precedent-setting legal work or breakthrough physics research. These geniuses weren’t content with the easy wealth old Wall Street afforded—they wanted to experiment, they wanted to use their tremendous brainpower. And if they made boatloads of money in the process, that was just an added bonus.
The problem came when all that complicated math started collapsing under the weight of excessive greed and ignorant bosses. An already complex global financial system become a tangled web of math which eventually unraveled. Some things, particularly economic and physical infrastructures, are best run by conservatively intelligent people who won’t experiment. I don’t want a genius doing my plumbing and I don’t want one doing my taxes.
This excellent Op-Ed from the New York Times was recommended by Jason Kottke.
John Gruber provides an excellent analysis of Gall’s law as it applies to Apple:
Start with something simple and build it, grow it, improve it, steadily over time. Evolve it.
My only addition is that this same logic applies in all situations. The best way to build a better school system is to start with small, excellent schools and work from there. The best way to rebuild the economy is to start with simple, working banks and build from there. The best strategy for anything: build simplicity, evolve complexity.