The Last Days of MF Global

The firm spirals to disaster grim detail by grim detail in this Fortune report. It's a bit like watching a car wreck in a Hollywood movie.

It beats me how anyone could have been that positive on European sovereign debt. There must be other sovereign debt losses lurking around the US financial system, too.

 

Tudor Psychological Chills

 

I read Hilary Mantel's new novel, Bring Up the Bodies: A Novel last week as well, about Thomas Cromwell and the fall of Anne Boleyn in sixteenth century England. The successor to her Booker-Prize -winning Wolf Hall: A Novel, it is a chilling evocation of politics and court psychology around Henry the Eighth in the mid-1530s.

I greatly enjoyed it, even if I had to take breaks from confronting the conniving fractiousness and cruelty of humanity in the book. It is absorbing and evocative, although not quite as rewarding as Wolf Hall. Cromwell is established and powerful. It is less intrinsically interesting and dramatic than the story of this rise to the top.

 

Nor is Anne Boleyn a particularly interesting or attractive character. Instead, the chief angle is the dreadful spectacle of how someone like Anne can fall so quickly and terribly. Just three years after her triumphant marriage, she is beheaded in 1536 by a French swordsman on a platform in the Tower of London.

 

The history is familiar. But Mantel brings it alive with vividness and insight.




 

Internet Privacy: It could be the worst deal ever

Cory Doctorow writes in the MIT Technology Review:

Why do we seem to value privacy so little? In part, it's because we are told to. Facebook has more than once overridden the privacy preferences set by its users, replacing them with new system-wide defaults.

..Even if you read the fine print, human beings are awful at pricing out the net present value of a decision whose consequences are far in the future.

 

Browser makers have imposes some sort of order before, he says, especially when they gave users the ability to block the pop-up ads that infuriated them. And the same principle should apply again.

Far from destroying business, letting users control disclosure would create value. Design an app that I willingly give my location to (as I do with the Hailo app for ordering black cabs in London) and you'd be one of the few and proud firms with my permission to access and sell that information. Right now, the users and the analytics people are in a shooting war, but only the analytics people are armed. There's a business opportunity for a company that wants to supply arms to the rebels instead of the empire.

 

Indeed. I haven't posted anything on Facebook for years because I distrust it so much. I take grim satisfaction in seeing its stock price plunge.

 

And I notice cookie permission requests popping up on major sites in recent weeks, so things are beginning to tighten up.

 

That same wariness is why I like to stay anonymous even if I love blogging here.

 

Mindless managerialism is intended to slow down social change?

So here's a left-wing article by David Graeber, who turns out to be an anarchist professor and occupy protestor in London. He argues technology hasn't produced the flying cars and moon bases we were promised in the 1950s because capitalism is being throttled by managerialism and timid bureaucracy:

And so a timid, bureaucratic spirit suffuses every aspect of cultural life. It comes festooned in a language of creativity, initiative, and entrepreneurialism. But the language is meaningless. Those thinkers most likely to make a conceptual breakthrough are the least likely to receive funding, and, if breakthroughs occur, they are not likely to find anyone willing to follow up on their most daring implications.

 

Marxists like Frederic Jameson and Ernest Mandel had pondered what the new technological age of capitalism would mean in the 1960s and 1970s. What if factories were automated and technology solved many ordinary problems? 

End of work arguments were popular in the late seventies and early eighties as social thinkers pondered what would happen to the traditional working-class-led popular struggle once the working class no longer existed. (The answer: it would turn into identity politics.) Jameson thought of himself as exploring the forms of consciousness and historical sensibilities likely to emerge from this new age.

Alvin Toffler argued from the right that there needed to be controls on the pace of change.

The only solution, Toffler argued, was to begin some kind of control over the process, to create institutions that would assess emerging technologies and their likely effects, to ban technologies likely to be too socially disruptive, and to guide development in the direction of social harmony.

Partially as a result, instead of investing in robot factories, corporations preferred to invest in cheap labor instead in places like China. And they focused on more incrementalist technology, or defense contracts. Corporations and governments became uncomfortable with socially disruptive technological innovation.

The upshot was we got less daring incrementalist and consumerist technologies , iPhones instead of rockets ships.

And now we have, Graeber says, a culture of cautious managerialism. Innovators spend their time in universities doing administration and applying for grants, the author says. (Yale apparently refused to put him up for tenure.) Capitalism cannot innovate any more, or produce "poetic technology", he claims.

About one conclusion we can feel especially confident: it will not happen within the framework of contemporary corporate capitalism—or any form of capitalism. To begin setting up domes on Mars, let alone to develop the means to figure out if there are alien civilizations to contact, we’re going to have to figure out a different economic system. Must the new system take the form of some massive new bureaucracy? Why do we assume it must? Only by breaking up existing bureaucratic structures can we begin.

I find it curious that a leftwing author is attacking bureaucracy. Then again, one doesn't often come across a real, live anarchist (although some extreme libertarians are not so different, come to think of it).

And it is odd to see someone arguing the US has a particular problem with corporate rigidity. True enough, the US has its share of mindless managerialism. But it is still more enterprising and less corporate as a rule than France or Germany or Russia.

The article has a strange nostalgia for failed Soviet technological dreams. It just doesn't hang together. All the same, at some point I'm going to have to grapple with more post-Marxist arguments, for completeness and intellectual honesty. I'm even planning to watch David Harvey's famous video series on Marx at some stage.

It may be true that some areas of technology have slowed down, even if the Internet has had a vast impact. We mentioned Tyler Cowen's ideas on that score some time ago on the blog. All the same, this kind of vague pronouncement about the "final stage" of capitalism just annoys me.

(h/t AI Daily)


 

 

 

Ancient Egypt: Tyranny and Dark Ages

I read Toby Wilkinson's The Rise and Fall of Ancient Egypt last week, just for a change. I like to read history of all kinds, and ancient history can have extra freshness and variety in the human drama simply because of its disorienting distance from us.

The book is a relatively detailed political history of ancient Egypt, pharaoh by pharaoh and dynasty by dynasty. Wilkinson says after a career studying the period, he has grown "increasingly uneasy about the subject of my research."

Scholars and enthusiasts alike are inclined to look at pharonic culture with misty-eyed reverence. We marvel at the pyramids, without stopping to think too much about the political system that made them possible. ... From human sacrifice in the First Dynasty to a peasants' revolt under the Ptolemies, ancient Egypt was a society in which the relationship between the king and his subjects was based on coercion and fear, not love and admiration - where royal power was absolute and life was cheap.

The ancient Egyptians invented the concept of the nation-state that still dominates our planet, five thousand years later.

So he aims to give a more balanced view of Egyptian civilization.

It really helps to have a historic framework to understand the evolution of the culture. It would be hard to understand Greece without having some sense of the chronology of the conflict between Athens and Sparta, or Rome without knowing about the decline of the Republic and the main events of the empire. So I found it very interesting to have a better sense of what was going on in the Old Kingdom or New Kingdom. A walk around the Egyptian rooms of the Met is more rewarding.

What does not fully come across, however, is why the remarkable achievement of the Old Kingdom arose so suddenly.

The surprising fact is the era of the pyramids arrived only three hundred years after the first historical pharoah, Narmer, comes to power. Narmer initiated what we call the First Dynasty in 2950 BC. Djoser built the first major pyramid, the Step Pyramid at Saqqara, arrives in 2650. Khufu, the Fourth Dynasty pharoah who built the Great Pyramid at Giza, came to the throne in 2545. That is still very early in the span of Egyptian history. The sequence of dynasties does not end until Cleopatra and Rome's final conquest in 30 BC.

Wilkinson concentrates on the fact that the institutions of kingship seem to have appeared almost fully grown. But how could even tyrannical kings turn a valley full of agricultural villages into a society capable of creating staggering engineering projects whose scale and precision still baffle us almost five thousand years later? Astonishing organization and technical achievement seem to appear fully grown as well.

What made Egypt different? it isn't clear from the book. Political tyranny alone can hardly account for it, otherwise most tyrants since would have similar edifices.

The other thing I am left with is a sense of some of the gaps in historical knowledge, most of all the invasions of the Sea Peoples in the Twentieth Dynasty, 1190-1069. We came across this catastrophe before in the history of the Mediterranean. Most of the shore of the Great Sea was burned. Civilization collapsed across much of the area. Mycenae fell. The Hittite Empire fell. The great trading cities of the Lebanese Coast like Ugarit were burned to the ground.

It was the first terrible dark age in history.

Throughout the Near East, palls of smoke hung in the air where once there had been hubs of commerce and culture. Rich palaces and famous cities lay in ruins. (p328)

And we know so little about who the Sea Peoples were, or where they came from, or what motivated their invasions. Interestingly, it is about the same time as the traditional date for the siege of Troy.

Driven from their homelands (unknown, but possibly the western Mediterranean or Anatolia) by drought, famine and the desire for a better life, and possessed of a fierce and warlike nature, the Sea Peoples had proved an unstoppable force...(p329)

Rameses III won a battle against them in the Nile Delta and spared Egypt the fate of other eastern Mediterranean civilizations. But foreign trade with the shattered remainder of the region had been lost . Egypt never really reattained the splendid peaks of her civlization.

One book I read years ago was The Collapse of Complex Societies (New Studies in Archaeology). I don't remember much of it right now, but it's on my shelf and i should take another look.

It's sad, isn't it, that there is an infinity of things to read, a sea of knowledge which overwhelms any one person. And you know you'll never get to read more of a small fraction of what matters. And what you do read you tend to forget over time.

 

Bonds in outer space

The 10-year treasury hit 1.47 last night, and is trading at 1.51 this morning. Unbelievable. Valuation is stretched as far as the moon. This is one heck of a flight to quality, and a sign that fear is rampant. Surely this overprices any chance the Fed will do QE3 in enough scale to justify this.  

It is strange, though, that equities are holding in by comparison to the extreme craziness in bonds.

The Soda Ban and changing behavior

The NYT has a fascinating additional angle on Mayor Bloomberg's ban on large servings of sugary drinks in New York City. This 'Room for Debate' article asks what it means for our ability to influence or change human behavior in general. And that is obviously a central interest on this blog.

Some libertarians see this as a chilling example of an interfering nanny state. No doubt prohibition often only makes people want something more, as some contributors argue. Good intentions can often be counterproductive.

On the other hand, this kind of view doesn't help matters:

We are not an overweight-obese nation just because we drink sugary beverages. We are obese and overweight from self-medicating with sugar, starch, alcohol, tobacco and other forms of serotonin increasing, anxiety decreasing substances because we live in a psychological culture that deprives us of essential social nutrients such as respect, dignity, being listened to and valued as human beings.

Maybe Mayor Bloomberg should ban all public displays of rude and insulting behavior, and mandate respect and appreciation toward one another as a way of healing the real cause of why we are eating, drinking and inhaling substances to help numb ourselves against the onslaught of the disrespect and disconnection we experience daily.

It replaces the issue with a root-causes argument of such staggering broadness that it defeats any chance of incremental improvement. Yes, people should have more respect sometimes. But we surely don't have to wait for utopia to make minor changes to NYC fast food menu options.


And here's another view:

Of course we should be informed about risks; such education can cut through collective misunderstandings. But information alone rarely does the job. Changing the norms that guide our behaviors will take more. Persuasive campaigns that employ the insights of advertising and social marketing will be critical.

As we have learned from anti-tobacco efforts, taxing dangerous products and raising their price can dramatically shape consumer behaviors. Making unhealthy choices too expensive — “not worth it” — ultimately changes consumer norms.

This gets at the problem of will: people often do not act in their own self-interest, even when rationally they want to. And dieting is the classic example. Is it wrong to give people a little help or a nudge to do what most want to do anyway? Very few people actually want or choose to be obese. It is rarely a conscious outcome of liberty.

I think the ban is worth trying. Buying 20 oz servings of fizzy drinks is hardly a fundamental freedom, and I think most arguments that there is a slippery slope from this to tyranny are a little silly.


Some on the right think it's a sign that if government is involved with healthcare, then it will gradually be impelled to interfere with most of our lives. But I don't think it should be turned into a partisan argument about government healthcare. With or without Obamacare, the federal government will spend a trillion dollars on Medicare and Medicaid each year. It's not wrong to try to make citizens healthier, and save billions of dollars in the process. Better to spend scarce tax dollars on useful things like the Coastguard or protecting us against foreign hackers, than preventable diseases caused by obesity.

And obesity is just as big a problem for the private sector, as skyrocketing health insurance premiums undermine competitiveness, take-home pay and other consumer spending.

It does show there is a lingering public resentment of experts telling us what to do, especially when expert wisdom is often wrong or misguided. (Medical advice had often been suspect, from the days of leeches to current controversies over salt intake or cancer screenings). But that is not a reason to ignore all expert guidance, or claim making people healthier is not a legitimate aim of public policy.