May 2006

Bonner, William and Addison Wiggin. Empire of Debt. Hoboken, NJ: John Wiley & Sons, 2006. ISBN 0-471-73902-2.
To make any sense in the long term, an investment strategy needs to be informed by a “macro macro” view of the global economic landscape and the grand-scale trends which shape it, as well as a fine sense for nonsense: the bubbles, manias, and unsustainable situations which seduce otherwise sane investors into doing crazy things which will inevitably end badly, although nobody can ever be sure precisely when. This is the perspective the authors provide in this wise, entertaining, and often laugh-out-loud funny book. If you're looking for tips on what stocks or funds to buy or sell, look elsewhere; the focus here is on the emergence in the twentieth century of the United States as a global economic and military hegemon, and the bizarre economic foundations of this most curious empire. The analysis of the current scene is grounded in a historical survey of empires and a recounting of how the United States became one.

The business of empire has been conducted more or less the same way all around the globe over millennia. An imperial power provides a more or less peaceful zone to vassal states, a large, reasonably open market in which they can buy and sell their goods, safe transport for goods and people within the imperial limes, and a common currency, system of weights and measures, and other lubricants of efficient commerce. In return, vassal states finance the empire through tribute: either explicit, or indirectly through taxes, tariffs, troop levies, and other imperial exactions. Now, history is littered with the wreckage of empires (more than fifty are listed on p. 49), which have failed in the time-proven ways, but this kind of traditional empire at least has the advantage that it is profitable—the imperial power is compensated for its services (whether welcome or appreciated by the subjects or not) by the tribute it collects from them, which may be invested in further expanding the empire.

The American empire, however, is unique in all of human history for being funded not by tribute but by debt. The emergence of the U.S. dollar as the global reserve currency, severed from the gold standard or any other measure of actual value, has permitted the U.S. to build a global military presence and domestic consumer society by borrowing the funds from other countries (notably, at the present time, China and Japan), who benefit (at least in the commercial sense) from the empire. Unlike tribute, the debt remains on the balance sheet as an exponentially growing liability which must eventually either be repaid or repudiated. In this environment, international trade has become a system in which (p. 221) “One nation buys things that it cannot afford and doesn't need with money it doesn't have. Another sells on credit to people who already cannot pay and then builds more factories to increase output.” Nobody knows how long the game can go on, but when it ends, it is certain to end badly.

An empire which has largely ceased to produce stuff for its citizens, whose principal export has become paper money (to the tune of about two billion dollars per day at this writing), will inevitably succumb to speculative binges. No sooner had the mania of the late 1990s collapsed than the residential real estate bubble began to inflate, with houses bought with interest-only mortgages considered “investments” which are “flipped” in a matter of months, and equity extracted by further assumption of debt used to fund current consumption. This contemporary collective delusion is well documented, with perspectives on how it may end.

The entire book is written in an “always on” ironic style, with a fine sense for the absurdities which are taken for wisdom and the charlatans and nincompoops who peddle them to the general public in the legacy media. Some may consider the authors' approach as insufficiently serious for a discussion of an oncoming global financial train wreck but, as they note on p. 76, “There is nothing quite so amusing as watching another man make a fool of himself. That is what makes history so entertaining.” Once you get your head out of the 24 hour news cycle and the political blogs and take the long view, the economic and geopolitical folly chronicled here is intensely entertaining, and the understanding of it imparted in this book is valuable in developing a strategy to avoid its inevitable tragic consequences.


Stephenson, Neal. Cryptonomicon. New York: Perennial, 1999. ISBN 0-380-78862-4.
I've found that I rarely enjoy, and consequently am disinclined to pick up, these huge, fat, square works of fiction cranked out by contemporary super scribblers such as Tom Clancy, Stephen King, and J.K. Rowling. In each case, the author started out and made their name crafting intricately constructed, tightly plotted page-turners, but later on succumbed to a kind of mid-career spread which yields flabby doorstop novels that give you hand cramps if you read them in bed and contain more filler than thriller. My hypothesis is that when a talented author is getting started, their initial books receive the close attention of a professional editor and benefit from the discipline imposed by an individual whose job is to flense the flab from a manuscript. But when an author becomes highly successful—a “property” who can be relied upon to crank out best-seller after best-seller, it becomes harder for an editor to restrain an author's proclivity to bloat and bloviation. (This is not to say that all authors are so prone, but some certainly are.) I mean, how would you feel giving Tom Clancy advice on the art of crafting thrillers, even though Executive Orders could easily have been cut by a third and would probably have been a better novel at half the size.

This is why, despite my having tremendously enjoyed his earlier Snow Crash and The Diamond Age, Neal Stephenson's Cryptonomicon sat on my shelf for almost four years before I decided to take it with me on a trip and give it a try. Hey, even later Tom Clancy can be enjoyed as “airplane” books as long as they fit in your carry-on bag! While ageing on the shelf, this book was one of the most frequently recommended by visitors to this page, and friends to whom I mentioned my hesitation to dive into the book unanimously said, “You really ought to read it.” Well, I've finished it, so now I'm in a position to tell you, “You really ought to read it.” This is simply one of the best modern novels I have read in years.

The book is thick, but that's because the story is deep and sprawling and requires a large canvas. Stretching over six decades and three generations, and melding genera as disparate as military history, cryptography, mathematics and computing, business and economics, international finance, privacy and individualism versus the snooper state and intrusive taxation, personal eccentricity and humour, telecommunications policy and technology, civil and military engineering, computers and programming, the hacker and cypherpunk culture, and personal empowerment as a way of avoiding repetition of the tragedies of the twentieth century, the story defies classification into any neat category. It is not science fiction, because all of the technologies exist (or plausibly could have existed—well, maybe not the Galvanick Lucipher [p. 234; all page citations are to the trade paperback edition linked above. I'd usually cite by chapter, but they aren't numbered and there is no table of contents]—in the epoch in which they appear). Some call it a “techno thriller”, but it isn't really a compelling page-turner in that sense; this is a book you want to savour over a period of time, watching the story lines evolve and weave together over the decades, and thinking about the ideas which underlie the plot line.

The breadth of the topics which figure in this story requires encyclopedic knowledge. which the author demonstrates while making it look effortless, never like he's showing off. Stephenson writes with the kind of universal expertise for which Isaac Asimov was famed, but he's a better writer than the Good Doctor, and that's saying something. Every few pages you come across a gem such as the following (p. 207), which is the funniest paragraph I've read in many a year.

He was born Graf Heinrich Karl Wilhelm Otto Friedrich von Übersetzenseehafenstadt, but changed his name to Nigel St. John Gloamthorpby, a.k.a. Lord Woadmire, in 1914. In his photograph, he looks every inch a von Übersetzenseehafenstadt, and he is free of the cranial geometry problem so evident in the older portraits. Lord Woadmire is not related to the original ducal line of Qwghlm, the Moore family (Anglicized from the Qwghlmian clan name Mnyhrrgh) which had been terminated in 1888 by a spectacularly improbable combination of schistosomiasis, suicide, long-festering Crimean war wounds, ball lightning, flawed cannon, falls from horses, improperly canned oysters, and rogue waves.
On p. 352 we find one of the most lucid and concise explanations I've ever read of why it far more difficult to escape the grasp of now-obsolete technologies than most technologists may wish.
(This is simply because the old technology is universally understood by those who need to understand it, and it works well, and all kinds of electronic and software technology has been built and tested to work within that framework, and why mess with success, especially when your profit margins are so small that they can only be detected by using techniques from quantum mechanics, and any glitches vis-à-vis compatibility with old stuff will send your company straight into the toilet.)
In two sentences on p. 564, he lays out the essentials of the original concept for Autodesk, which I failed to convey (providentially, in retrospect) to almost every venture capitalist in Silicon Valley in thousands more words and endless, tedious meetings.
“ … But whenever a business plan first makes contact with the actual market—the real world—suddenly all kinds of stuff becomes clear. You may have envisioned half a dozen potential markets for your product, but as soon as you open your doors, one just explodes from the pack and becomes so instantly important that good business sense dictates that you abandon the others and concentrate all your efforts.”
And how many New York Times Best-Sellers contain working source code (p, 480) for a Perl program?

A 1168 page mass market paperback edition is now available, but given the unwieldiness of such an edition, how much you're likely to thumb through it to refresh your memory on little details as you read it, the likelihood you'll end up reading it more than once, and the relatively small difference in price, the trade paperback cited at the top may be the better buy. Readers interested in the cryptographic technology and culture which figure in the book will find additional information in the author's Cryptonomicon cypher-FAQ.


Ravitch, Diane. The Language Police. New York: Alfred A. Knopf, 2003. ISBN 0-375-41482-7.
One thing which strikes me, having been outside the United States for fifteen years, is just how dumb people in the U.S. are, particularly those 35 years and younger. By “dumb” I don't mean unintelligent: although there is a genetic component to intelligence, evolution doesn't work quickly enough to make much difference in a generation or two, and there's no evidence for selective breeding for stupidity in any case. No, they are dumb in the sense of being almost entirely ignorant of the literary and cultural heritage upon which their society is founded, and know next to nothing about the history of their own country and the world. Further, and even more disturbing, they don't seem to know how to think. Rational thinking is a skill one learns by practise, and these people never seem to have worked through the intellectual exercises to acquire it, and hence have never discovered the quiet joy of solving problems and figuring things out. (Of course, I am talking in broad generalisations here. In a country as large and diverse as the U.S. there are many, many exceptions, to be sure. But the overall impression of the younger population, exceptions apart, comes across to me as dumb.)

You may choose to attribute this estimation to the jaundiced disdain for young'uns so common among balding geezers like me. But the funny thing is, I observe this only in people who grew up the U.S. I don't perceive anything similar in those raised in continental Europe or Asia. (I'm not so sure about the U.K., and my experience with people from South America and Africa is insufficient to form any conclusions.) Further, this seems to be a relatively new phenomenon; I don't recall perceiving anything like the present level of dumbness among contemporaries when I was in the 20–35 age bracket. If you doubt my estimation of the knowledge and reasoning skills of younger people in the U.S., just cast a glance at the highest moderated comments on one of the online discussion boards such as Slashdot, and bear in mind when doing so that these are the technological élite, not the fat middle of the bell curve. Here is an independent view of younger people in the U.S. which comes to much the same conclusion as I.

What could possibly account for this? Well, it may not be the entire answer, but an important clue is provided by this stunning book by an historian and professor of education at New York University, which documents the exclusion of essentially the entire body of Western culture from the primary and secondary school curriculum starting in around 1970, and the rewriting of history to exclude anything perceived as controversial by any pressure group motivated to involve itself in the textbook and curriculum adoption process, which is described in detail. Apart from a few egregious cases which have come to the attention of the media, this process has happened almost entirely out of the public eye, and an entire generation has now been educated, if you can call it that, with content-free material chosen to meet bizarre criteria of “diversity” and avoid offending anybody. How bad is it? So bad that the president of a textbook company, when asked in 1998 by members of the committee charged with developing a national reading test proposed by President Clinton, why the reading passages chosen contained nothing drawn from classic literature or myth, replied, as if it were the most obvious thing in the world, “everything written before 1970 was either gender biased or racially biased.” So long, Shakespeare; heave-ho Homer! It's no wonder the author of I'm the Teacher, You're the Student (January 2005) discovered so many of his students at a top-tier university had scarcely read a single book before arriving in his classroom: their public school experience had taught them that reading is tedious and books contain only boring, homogenised pablum utterly disconnected from the real world they experience through popular culture and their everyday life.

The author brings no perceptible political bias or agenda to the topic. Indeed, she documents how the ideologues of the right and left form a highly effective pincer movement which squeezes out the content and intellectual stimulation from the material taught in schools, and thus educates those who pass through them that learning is boring, reading is dull, and history is all settled, devoid of controversy, and that every event in the past should be interpreted according to the fashionable beliefs of the present day. The exquisite irony is this is said to be done in the interest of “diversity” when, in fact, the inevitable consequence is the bowdlerisation of the common intellectual heritage into mediocre, boring, and indistinguishable pap. It is also interesting to observe that the fundamental principles upon which the champions of this “diversity” base their arguments—that one's ethnic group identity determines how an individual thinks and learns; that one cannot and should not try to transcend that group identity; that a member of a group can learn only from material featuring members of their own group, ideally written by a group member—are, in fact, identical to those believed by the most vicious of racists. Both reject individualism and the belief that any person, if blessed with the requisite talent and fired by ambition and the willingness to work assiduously toward the goal, can achieve anything at all in a free society.

Instead, we see things like this document, promulgated by the public school system of Seattle, Washington (whose motto is “Academic Achievement for Every Student in Every School”), which provides “Definitions of Racism” in six different categories. (Interesting—the Seattle Public Schools seem to have taken this document down—wonder why? However, you can still view a copy I cached just in case that might happen.) Under “Cultural Racism” we learn that “having a future time orientation, emphasizing individualism as opposed to a more collective ideology, [and] defining one form of English as standard” constitutes “cultural racism”. Some formula for “Academic Achievement for Every Student”, don't you think? (Reading The Language Police is quite enlightening in parsing details such as those in the drawing which appears to the right of the first paragraph of this document. It shows a group of people running a foot race [exercise: good]. Of the four people whose heads are shown, one is a Caucasian female [check], another is an African American male [check], a third is an Hispanic man [check—although the bias and sensitivity guidelines of two major textbook companies (p. 191) would fault this picture because, stereotypically, the man has a moustache], and an older [check] Caucasian male [older people must always be shown as active; never sitting on the porch in a rocking chair]. Two additional figures are shown with their heads lopped off: one an African American woman and the other what appears to be a light-skinned male. Where's the Asian?) Now, this may seem ridiculous, but every major U.S. textbook publisher these days compiles rigorous statistics on the racial and gender mix of both text and illustrations in their books, and adjusts them to precisely conform to percentages from the U.S. census. Intellectual content appears to receive no such scrutiny.

A thirty page appendix provides a list of words, phrases, and concepts banned from U.S. textbooks, including the delightful list (p. 196) of Foods which May Not Be Mentioned in California, including pickles and tea. A second appendix of the same length provides a wonderful list of recommendations of classic literature for study from grades three through ten. Home schoolers will find this a bounty of worthwhile literature to enrich their kids' education and inculcate the love of reading, and it's not a bad place to start for adults who have been deprived of this common literary heritage in their own schooling. A paperback edition is now available.