When they were purely mechanical, without logic chips and firmware and all those added controls and options, fruit machines were great. One-arm bandits that you knew would take your money but you got a little entertainment in return. You thought that the way the reels were lined up before you played, or the way you pulled the handle, or even how the machine had been behaving in the recent past would affect your chances. But you know none of those things would. The cogs, gears, springs and levers were formed a relatively simple, pure mechanism that was designed to hang on, over time, to a decent percentage of however many coins were put in.
Then came the inevitable intrusion of transistors, chips, software. Theorists and scientists of all sorts, and even human behaviorists had a hand in how the new wave of bigger, noisier, flashier machines would behave. Some would say these machines now acknowledged the player’s skill; push the right buttons, make the right choices and they would pay out slightly more than they would otherwise.
In practice, these machines were asking you to learn the rules and regulations the designers had built into them — or, rather, they were increasing the odds of you losing money if you didn’t waste your time studying that arbitrary and otherwise completely useless information.
Cell phone plans work the same way. And insurance. Mortgage offers. Investment pitches. If information is valuable, then complexity, obfuscation and impenetrability can be more so, since you can hide real information and keep that value for yourself.
Consider your cellphone plan. Is it really the best deal? That juggling of lines, devices, data, overage charges, throttled speeds, bonus features, service coverage, blah blah blah…impossible for you to know. You could spend a good part of your life studying all the carriers’ various schemes and specials, and still be largely none the wiser — except you’d know, whichever one you ended up with, somehow you were being screwed over.
Investment advisors will present you with every fact, figure, diagram, historical analysis required to suggest that they have a handle on the financial markets that will give you an advantage. Dig deep enough, of course, and you discover they don’t — but most of us get caught up by the persuasive way they have that special way to pull the handle that will likely result in three bells, or at last a couple of cherries.
The banks, of course, play the fruit machine game at much, much bigger and more lucrative scale. Economists admit to knowing less about their chosen specialty than do particle physicists. Banking and market crashes are indicators of how complex, unknowable and essentially uncontrollable the web of interdependent investment instruments has become. The very term ‘derivative’ is a key concept in investment strategy, naming a dizzying self-referential process that promotes both creativity and greed in those that attempt to enrich themselves while risking the next financial disaster that could bankrupt all of us.
Caveat emptor they may say. Or rather ludio emptor — player beware. The lights, sounds, switches, knobs and paddles on the latest fruit machine give fair warning that you are about to lose money, but if you play long enough to get the hang of it you may lose slightly less. Cell phone salesmen, investment advisors and mortgage specialist come with fewer warnings but the net result is, more likely than not, the same.