According to Shiller, finance, being abstract, is difficult for most people to understand. Thus, there is a human tendency to favor the familiar, time honored forms of financial arrangements. Almost to sacralize them. Which makes it difficult to abandon the old for the new when time and technology have moved on.
The economist gives several examples to illustrate. Shares in corporations were used as far back as Imperial Rome, but disappeared for centuries, only to reappear in Holland in the 1600s. Insurance was also known to ancients, but also only began to be marketed commercially in the 17th century.
The first known mention of derivatives is Aristotle's story of Thales, a sixth century BC Greek who bought a 'future' on the use of his countrymen's olive presses, in the expectation of a bumper crop that would be used to create oil. Yet, even today, thousands of years later, most people have an negative impression of 'speculation'.
Modernization of finance is inhibited by this all too human trait, and today's Senate Banking Committee hearing is no exception. Nor is the Seattle Times columnist Jon Talton's reaction to it;
Where are the old Southern lawmakers who would drawl something like, "Mister Die-mon, I'm just a simple country boy, but I didn't understand a thing you said, and considerin' you're basically gamblin' with taxpayer money, why the heck is your bid-ness so complicated? If I didn't know better, I'd think you were just tellin' stories like my ole buddy Scooter, and that ole boy is now in a federal penitentiary..."We guess he slept through the question and answer period, where all that was missing was the Southern accents.