- 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 dot.com
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.