Sun comes out for the London Olympics

The Olympics have actually been going very well for the Brits, particularly the medal count. There have been no major disasters or logistical foul-ups. So the national mood has turned from pessimism to elation. It's like emotional whiplash, says Roger Cohen in the NYT.

But maybe, he says, it is because such collective coming together is sadly rare.

In truth the lesson of Britain’s bout of bipolarity is that we are lonely. That is the problem with modernity. When we come together, rediscover community, the feeling is as good as an adrenalin rush.

We just detested the mawkish, awkward and self-indulgent opening ceremony. Indeed, ironically the Brits may be feeling better precisely because of some unfashionable patriotic victories and feeling proud of themselves rather than the establishment leftist agitprop of the opening ceremony, all the children in sick beds and Mr Bean and milling ravers.

You have to be glad for the Brits getting some gleams of sunshine. We're still deeply frustrated by NBC's awful tv coverage, but dazzled by some Team USA achievements

 

Put a Red Label on it

Researchers in Massachusetts are experimenting with labelling food in the aisle with red, yellow and green codes for healthiness. They found people did consume a bit less of the red category, like sodas.

It comes down to a debate over how much you can "nudge" people to make the right choices.

New York's faith in humanity must be low indeed if it thinks only the most blatant coercion can get people behaving differently. Whether collectively or alone, people are hopelessly incompetent, is the message Bloomberg's soda ban sends. A more accurate way to put it might be that people are incredibly malleable, open to having their decisions swayed in terrible ways by factors that are out of their hands. The difference is slight, but in the small gap between those two statements lies an opportunity to move people in the right direction without taking away their freedom. Just because we often fail at making good decisions doesn't mean we can't.

We talked about the NY soda ban here. In general, I'm in favor of nudging. The issue of paternalism is complicated. On the one hand, expert wisdom is often wrong or even foolish. In practice, the state has historically been more inclined to want people to do things like melt their cookware to produce shoddy steel in their backyards (Mao) or have all children in the country learning about "nos ancetres les Gallois" (France).

But on the other hand, people can be self-destructive, short-sighted and impose serious costs on others. All that obesity results in staggering medical costs too. The core liberal idea of autonomy often does not work very well in practice. The Aristotelian view is more realistic about weakness. We have to be habituated to virtue, he said, learning by doing.

And is one example of where we need a golden mean between forcing people to act in certain ways and being completely indifferent to how people behave.

 

Faster than Common Sense

Here's a very good article from Wired on high-frequency trading.

Trading increasingly is an end in itself, operating at a remove from the goods-and-services-producing part of the economy and taking a growing share of GDP—twice what it did a century ago, when Wall Street was financing the enormous industrial expansion of the economy. “This is counterintuitive, to say the least,” wrote New York University economist Thomas Philippon in an article for the Russell Sage Foundation. “How is it possible for today’s finance industry not to be significantly more efficient than the finance industry of John Pierpont Morgan?”

I just don't believe that more than a few algos can really make consistent money out of exploiting market mispricing and anomalies. It's more flaws in the structure of the market itself. This is all making the case for a Tobin Tax look stronger.

The Cult of Equity?

Bill Gross, not coincidentally the world's largest bond manager, at the worst time in the cycle to hold bonds, thinks future equity returns will be terrible (although long-term bonds will also be terrible.)

Together then, a presumed 2% return for bonds and an historically low percentage nominal return for stocks – call it 4%, when combined in a diversified portfolio produce a nominal return of 3% and an expected inflation adjusted return near zero. The Siegel constant of 6.6% real appreciation, therefore, is an historical freak, a mutation likely never to be seen again as far as we mortals are concerned. The simple point though whether approached in real or nominal space is that U.S. and global economies will undergo substantial change if they mistakenly expect asset price appreciation to do the heavy lifting over the next few decades. Private pension funds, government budgets and household savings balances have in many cases been predicated and justified on the basis of 7–8% minimum asset appreciation annually. One of the country’s largest state pension funds for instance recently assumed that its diversified portfolio would appreciate at a real rate of 4.75%. Assuming a goodly portion of that is in bonds yielding at 1–2% real, then stocks must do some very heavy lifting at 7–8% after adjusting for inflation. That is unlikely. If/when that does not happen, then the economy’s wheels start spinning like a two-wheel-drive sedan on a sandy beach. Instead of thrusting forward, spending patterns flatline or reverse; instead of thriving, a growing number of households and corporations experience a haircut of wealth and/or default; instead of returning to old norms, economies begin to resemble the lost decades of Japan

I don't quite get his argument. The long run return from stocks is a combination of profit income - the share of corporate profits in the economy, including dividends - plus capital appreciation. It is not just the economy's growth rate in isolation.

In any case, pronouncements of the death of equities usually tend to be a buy signal for stocks. In the longer run, I think we could see more legal and institutional change in the nature of the economy that affects stocks, but that is likely decades off.

Beauty and the sublime

I was talking about the art market a week or two ago, and what it says about our wider desires and purposes. I happened to read Venus in Exile: The Rejection of Beauty in Twentieth-Century Art in the last few days. The author is Wendy Steiner, who teaches English at U Penn and sits on some prominent prize award boards.

The book is a daringly ferocious criticism of modernism, and with it much of the "wasteland" of twentieth-century aesthetics and art. She argues modernism shunned beauty for a century, in favor of an aesthetics based on the Kantian sublime.

In modernism, the perennial rewards of aesthetic experience - pleasure, insight, empathy- were largely withheld, and its generous aim, beauty, was abandoned (page xv)

Kant thought of the sublime as an experience of limitless, of awe, of power.

Kant and Burke bequeathed to the West a taste for the sublime, an aesthetic experience in which beauty is a confrontation with the unknowable, the limitless, the superhuman. (5)

The sublime is pure and separate from personal interest, in a way the beautiful is not. Judgement of beauty is disinterested, impartial, autonomous and hence an exercise of freedom.

The main symbol of beauty had been the female subject, certainly in the nineteenth century, she says. The avant-garde did away with this.

Indeed, the history of twentieth century elite art is in many respects a history of resistance to the female subject as a symbol of beauty. (xix)

Mary Shelley was one of the first to question this, in Frankenstein. The creator sees his family killed and ends up wandering on the Arctic ice.

Mary Shelley thus pointed out the irony of the sublime: that in providing supposedly the most human of mental states, freedom, it utterly disregards love and family and pleasure, which have at least as much claim as freedom to define the "human". 9p13)

Steiner quotes Barnett Newman, who explicitly said in 1948 "The impulse of modern art is the desire to destroy beauty." (p111)

Instead, the beautiful was dismissed as the merely charming. Abstract form became more important than concrete reality, or the bourgeois notions of harmony, comfort, order or happiness. And there was a condescending interest in the "Other."

From expatriatism to the Jazz Age and the Surrealist's fascination with the "Imp of the Perverse' and the Marquis de Sade, modernists sought out the thrilling "other" to eperience the allure and charm they had eliminated from their art. (p49).

In practice, Kantian abstraction and sadistic interest went together.

The Outsider is the latest incarnation of the trouble with beauty in twentieth-century art, a replacement for the female subject and the process of intersubjective discovery she entails. In its fetishism modernism focused on various figures: the tribesman, the simpleton, the madman, the racial or social outcast. The avant-garde artist used the foreigness of the Other to perpetuate its sublime alienation. The self could be sought but never recognized in the Other, who is available for appropriation but never mutuality, empathy, respect. (p189)

It also entailed the rejection of "ornament".

Ornament belongs to the realm of play rarher than work, and its dominance implies the upset of the practical, pragmatic world. It threatens the notion of universal truth and value, being most subject to obsolescence. The dominance of an ornamental aesthetic would imply the suppression or outright dismissal of atemporal and ahistorical claims for art. Art would be understood as contextual, unabashedly adverstising its disdain for eternity.(p61)

Much followed from this - a rejection of the domestic sphere, for example, with its striving for charm and pleasure and harmony, and filled with feminine respectability and ornament. Constant impersonal and formal innovation was preferred.

There was a rejection of connection.

The avant-garde sensibility called for a deliberate estrangement of the artist from his subject. (p153)

In romance, the point is not to plunge oneself into strangeness and alterity forever, but to experience an Other so as to come home to a new self. Modernism, wedded to the heartless sublime, blocks any such accommodation. To the avant-garde sensibility, the achievement of a satisfying self-realization with an Other is a compromise, a retreat from transcendence. (p151-152).

Beauty, she says, is finally making a comeback since the late 1990s. Arid abstraction has run its course, but much of the arts establishment is still steeped in modernist thinking.

It is the task of contemporary art and criticism to imagine beauty as an experience of empathy and equality.(p xxv)

She develops her argument with a myriad of examples ranging from Bonnard to Basquiat, from Matisse to Rothko, from Don DiLillo to Phillip Roth. It's quite fascinating, even just as a display of intellectual fireworks. It is also one persuasive way to talk about art history - although for a subject as complicated and diverse as modernism, I suspect there is no entirely satisfactory explanation. And of course there could be any number of counterexamples.
I'd have to go back to the original thinking in Kant, and even before, to be convinced. I wonder if the sublime can be traced back before Kant and Burke - and I am not sure. I also wonder whether particular kinds of people are attracted to the sublime, and always have been. The answer is probably that before the eighteenth century and the enlightenment, these feelings were primarily expressed as a religious impulse. And so modernism is a deeper stream resurfacing, a strange civic religious mixture of austerity, puritanism and antinomianism.

The question is is Steiner's story an illuminating way to look at twentieth century art. I would have to say absolutely, although it cannot be the only one.

It also makes me think about the deep concerns about the aestheticization of politics that I mentioned regarding the Olympic opening ceremony. These apparently remote aesthetic deliberations can have vast consequences if, in Neronian style, leadership or government is confused with art. I've talked a lot on this blog about the need for more of an emphasis on purpose and on what people actually want out of daily life. In some ways that is a more connected, domestic kind of vision than some grand universalistic new order. It is much more friendly to beauty than the daring heights and terrifying abysses of the sublime.

Beauty also has a fundamental role in any conception of the good life.


Perhaps some people will never be attracted to a more attainable form of happiness - or, indeed, even happiness itself. We saw in Sarah Ahmed's book the Promise of Happiness a preference for the heroic political struggle for the "mayhap" over any conventional happiness, for example.

Aesthetics will affect the ends that people choose for themselves, and the ends that they even see. It rolls together ideas about connectedness, relations with others, autonomy and freedom, beauty and harmony and order which can be all the more insidiously powerful because they are not explicit - but just presented as matters of taste, of "comme il faut". One is seen as a rube for even questioning the implied ethics. Indeed, this is what class largely is these days, a set of unspoken norms and mannerisms and correct attitudes.

Taste is perhaps the least and most political thing of all.

 

 

Time Warner Cable loses 169,000 customers

Heh. We're pleased to be one of them.

 

Hedge fund pain

This is a sign of the times in the macro world. Louis Bacon is nonplussed and returning some cash to investors.

 

LONDON -- A hedge fund titan has decided to return a large sum of money to investors, a revealing illustration of how dried-up markets, vicious volatility and a paralysis of ideas all borne of the crisis in Europe have been particularly hard on the traders who swing for the fences on currencies, stocks and bonds all over the world.

Louis M. Bacon, who together with Paul Tudor Jones and George Soros has come to define this style of high-stakes macro investing for more than 20 years, said in a letter to his investors on Wednesday that he would be giving back $2 billion, about one quarter of the size his benchmark Moore Global Investment fund.

He cited 18 months of what he called "disappointing" investment returns -- and a particularly tough second quarter this year when his main fund was down 3.18 percent.