Soros Examines the Causes of the World Financial Meltdown

In the latest issue of the New York Review of Books, philanthropist, currency trader and international financial expert George Soros offers his own view of the world financial meltdown.

The salient feature of the current financial crisis is that it was not caused by some external shock like OPEC raising the price of oil or a particular country or financial institution defaulting. The crisis was generated by the financial system itself. This fact—that the defect was inherent in the system —contradicts the prevailing theory, which holds that financial markets tend toward equilibrium and that deviations from the equilibrium either occur in a random manner or are caused by some sudden external event to which markets have difficulty adjusting. The severity and amplitude of the crisis provides convincing evidence that there is something fundamentally wrong with this prevailing theory and with the approach to market regulation that has gone with it.

Later in his rumination, Mr. Soros gets to an important point that is routinely, even fetishistically, ignored by those who recite incantations of Faith In Blind Markets.

This remarkable sequence of events can be understood only if we abandon the prevailing theory of market behavior. As a way of explaining financial markets, I propose an alternative paradigm that differs from the current one in two respects. First, financial markets do not reflect prevailing conditions accurately; they provide a picture that is always biased or distorted in one way or another. Second, the distorted views held by market participants and expressed in market prices can, under certain circumstances, affect the so-called fundamentals that market prices are supposed to reflect. This two-way circular connection between market prices and the underlying reality I call reflexivity.


Soros is quite right to focus on human nature -- and our propensity for delusion, in particular -- as a root of the problem. In fact, while markets are wonderful wealth generating machines, that harness competition between individuals and groups in positive-sum ways that benefit us all, they are not mystically simple or perfect. Nor do they arise (as the sun does) out of immutable physical law.

Indeed, if you scan human history, you will find very few examples of market-based systems that escaped meddling and ruination at the hands of the very same elites who stood at the top of the social order -- the owners of nearly all capital, who insisted that they knew what's best, and nearly always squelched competition, rather than let it flow and thrive. In the vast majority of cultures, it was top owners who shut down what we would call open market behavior. A threat far more prevalent than peasant revolts or socialism.

Market Fundamentalists tell themselves a dogma that Adam Smith himself never believed, that markets are rooted in - and organically emerge from - human nature. This is fundamentally wrong. Our natures developed in a Darwinian-tribal context that predated civilization and markets. In order to understand this, simply study the power and economic arrangements in most tribal or pastoral societies. And even later. Try calculating what fraction of the population in most ancient nations must have been descended from the harems of kings. (Recent data show that 8% of the Chinese population, today, is directly descended from Ghengis Khan.)

While it is true that some deeply human imperatives do work well with markets - e.g. our ability to both cooperate and compete, our embedded notion of fairness and quid-pro-quo. other human drives do not. For example, the propensity to cheat and deceive. And our remarkable tendency to tell ourselves satisfyingly delusional stories that aren't well-based in fact. This latter trait makes us wonderful artists, but also great believers in simplistic dogmas.

Like the simplistic dogma of perfect, equilibrium-seeking markets.

What Mr. Soros appears to see clearly, and describes well, is the role of delusion in our both our recent "credit bubble" and a much longer, post-Reagan "super-bubble" that was based upon the assumption that markets automatically correct for all distortions, even though traders can be like any other tribe, influenced by group-think, by shared myths and by zealous optimism. Even by their own standards. hedge-betters did not include enough wagers that pondered the possibility of a serious downturn to what was obviously a bubble,

What Mr. Soros appears to leave out is another aspect of the present crisis, how it was driven not only be delusion, but also by cheating, predation and parasitism. These are three different - if related - things. Cheating is where players seek to limit Hayekian knowledge flows by limiting the transparency that markets require to function.

Predation is outright lawbreaking -- or else stealing by using some loophole, the way that a crony network of golf buddies took over the boards of scores of US corporations, appointing each other to CEO slots and voting each other huge bonuses -- in effect creating a cartel of top managers -- all somehow without triggering the rules against interlocking directorates and restraint of trade. Above all, their belief in market forces was proved hypocritical, since such pay raises for CEOs should (under capitalism) draw in talent from other fields until managerial talent supply pushed prices down again. (See: The Syndrome of the Essential Man.)

Parasitism is the least examined of these forces, in part because it is almost perfectly legal. It happens when an entire species of creature arrives on the scene, that contributes little to economic activity, but draws sustenance from healthy companies, just like a vampire bat siphoning blood from cattle. In my last economics related posting, I suggested that this has happened to our civilization with the arrival, in layer after layer of management, of swarms of "business school graduates."

For all his faults, when Walter Wriston ran Citi Bank, the institution was all about... banking. Because Wriston and his colleagues were, above all, bankers. Likewise, companies led by widget-makers tended to remember that their core business is widget-making. Even if some of the engineers went on to get MBAs and law degrees, at least they would remember the product. The service that customers paid for.

But as corporations were taken over by a caste who never made a product or provided a service, it is only natural that goods and services dropped in priority, while parasitical aspects of business gained importance, like developing innovative ways to hedge and leverage instruments to squeeze a little more profit out of transactions in commoditized debt.

Think of it this way. When vampires are in charge, they will emphasize blood. Even if they are smart vampires who claim to have the health of the cows at heart (so to speak), their goal will be to maximize the flow of blood. Now, blood is important. Like money, it enables the body to live and take nourishment to all its cells. Money and blood matter... but their purpose, in the long run, is to help the body stay alive -- or to help the company to make competitive goods and services. When the vampire tunes the cow's body to deliver JUST the right amount of blood to keep it alive, under ideal circumstance, and no more, guess what happens when the slightest thing goes wrong?

Above all, both vampires and business majors like to live on the edge. They assume the body that they are tapping will remain in equilibrium forever. Reserves? Those are for wusses. Hence, another "management" psychosis that will hit us hard, very soon... our industrial over-reliance on just-in-time production practices -- abetted by tax laws that punish warehousing and robust practices -- will surely be the second shoe to drop.

The drastic step of closing undergraduate business schools and only allowing MBA candidates who heve spent some time in goods and services, may be drastic. But it could be effective.

These warnings are not new. Last time, I urged that folks try watching “Executive Suite,” a 1954 Robert Wise film starring William Holden and Barbara Stanwyck. Though a bit silly, it really does address some of these issues, at a level that movies seldom aspire-to.

The essay by Mr. Soros should be read. We all need to ponder new ways of looking at old problems.

Announcements: A terrific novella... and a TV show about "prediction"

First, great news for those waiting for some high quality Brin fiction -- (as opposed to the usual blather).

Part II of my near-future novella, "Shoresteading,"  is now available at Jim Baen's Universe Magazine.  For those who've already subscribed to this terrific online magazine, that offers great value for your dollar, (!)I hope you enjoy the stirring conclusion!

For those who have been putting off subscribing, I've wrangled - for my fans - a special discount to the most exciting, content-rich and vivid SF magazine around! Use coupon code EE329517B2.

And now, please note a program change! The History Channel has done it again. Now tune in on November 30 (9-11pm) for “The Next Nostrodamus?”... featuring some skeptical riffs by yours truly, trying to hold up a candle in the wind.

Why we should ban the undergraduate business major...

===Ban the Business Major?===

My friend, venture capitalist Bart Stuck, wrote an article called “The Death of Innovation?” questioning the continuing ability of the US electronics high tech industry to innovate. The article was prompted by the October 1996 spin-off of Lucent from AT&T, and with it, Bell Labs – an organization that was funded by cash flow from the telephone monopoly.

”Bell Labs used that money to invent the traveling wave tube, the transistor, lasers, UNIX, as well as 800/700/900 services. It also was a major innovator in loading coils, the coaxial cable, millimeter waveguide, fiber optics and cellular telephony. In the absence of monopolist cashflow, we wondered where new innovation was going to come from – particularly since our review of the top 20 telecom innovations of the previous 25 years suggested that many of them originated from these labs.”

Bart recently reviewed and updated that article and found even more reasons to be depressed over the rate of innovation in America. See: The Death of Innovation (Revisited)

Fundamentally, he believes (and I agree) is the fact that so many bright US students go directly into “business majors” in college, believing that they will thereupon have the skill and the experience and right to manage the engineers and professionals and skilled workers who actually create the products and deliver the services that their companies must try to sell in a competitive marketplace. We have seen the calamity that this kind of thinking has caused.

More than a decade ago, Citi Bank was led by Walter Wriston - a banker - who surrounded himself with bankers, and Citi soared by delivering... well... high quality banking. But with a new century, this changed rapidly, not only at Citi but throughout Wall Street, the London financial centers and corporate boardrooms around the world. I suspect that a careful analysis would show that a 21st Century putsch by business majors -- yes, I mean those guys you knew in college who too a major in “business” or “management” -- spreading like a swarm of locusts, displacing people who actually cared about the company’s core business -- was probably the greatest single factor directly correlatable with corporate mismanagement and demise.

According the Bart Stuck: “Another issue: manufacturing matters! Recall the Brits and the Industrial Revolution: they safeguarded the machinery and plans and techniques For making machinery, eventually some eidetic memory types came to the US and spilled all this, Brits never recovered. Today the conventional thinking is that manufacturing should be outsourced; that is fine, but outsourcing, especially to Asia and to India, coupled with US grad schools in science and engineering filled with Asians/Indians, will lead to these countries matching and then surpassing the US. Our holographic drive play, InPhase, see this In spades: all the partners are in Japan, Korea, China and India. InPhase has unique manufacturing knowhow, won the hard way, by pounding heads on the wall over and over to crack problems. Myriad contract manufacturers Now, with the largest being in China (no small numbers in China), but still the US has lots of manufacturers, but with the drive to look at quarterly results, finance types will cut all the manufacturing out, and this is where the REAL intellectual property lives in products.”

Also there’s a matter of Just In Time...I recently wrote an article for the CIA describing "just in time" manufacturing as another example of the same kind of thinking that brought us hyper-leveraged debt instruments. Squeezing every last drop of efficiency without ever considering that squeezing out the last tenth of a percent is not the only consideration. Indeed, that kind of thinking assumes that the conditions of the present will continue, perfectly predictably, for the indefinite future... exactly the kind of thinking that created today’s catastrophe.

Completely lacking in anything remotely resembling a sense of history or imagination, these business types blithely ignored the possibility that a day might come when change and instability would strike, as they did our ancestors... the kind of time when robustness is needed.

Today we tax the hell out of warehoused goods and supplies. Idiocy! Warehoused reserves should get tax BENEFITS since they make companies and society more resilient.

There is a simple reform: ban the undergraduate “business major.” Continue to teach all of the same subjects, but push them all into either:

(1) MBA programs -- which refuse entry to anyone who has not spent at least two years delivering either a product or a service -- or

(2) into professional development courses that do not offer fancy-sounding credentials.

Either way, hammer home the point that the purpose of “management” is not to lord over the mere engineers and lowly service providers. Nor is it to create “innovative credit instruments” that squeeze leverage out of every last drop of fictitious, imaginary debt-wagers. Rather, management is supposed to empower and smooth the way for innovators! So that companies striving to compete with one another can thrive - ultimately - by offering better goods, better services.

This is not a recent quandary. If you want to see how far back it goes, try watching “Executive Suite,” a 1954 Robert Wise film starring William Holden and Barbara Stanwyck. A bit slow as cinema, the movie hammers home the vital importance of product vs. red tape, in a tribute to the better side of capitalism.

There is another metaphor from fiction that would seem to apply, from the Douglas Adams series The Hitchiker’s Guide to the Galaxy. In book #3 (I think), our heroes find themselves on the “C Ark” from Golgafrincham, carrying the entire planet’s supply of “middle-men, managers, account executives and factotums” who had been tricked aboard and sent away by the two-thirds of the home population, who, thereupon, ended their long dark era and entered a golden age.

It’s not that bad here on Earth. Not yet. But stay tuned.

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The New Scientist Magazine asked six leading writers for their thoughts on the future of science fiction. It special feature also covers the latest science-fiction novels, writers to watch, and results a poll of all-time favorite sci-fi films and novels. Catch Margaret Atwood (implicitly) admitting she is an SF author. And genuine wisdom from that wise-guy, Kim Stanley Robinson.

See an absolutely stunning “Edge” course and discussion of human psychology, behavioral economics and the sudden renewal of interest in what use to be called “subliminal perception.”

See a new book: Generation We: How Millennial Youth are Taking Over America And Changing Our World Forever By Eric Greenberg and Karl Weber. It makes the point -- that we may be emerging, at last, from the shadow of the Boomers, who may be best known for one accomplishment – raising a super next generation.

The Singularity Summit - held recently near the Googleplex - had some interesting riffs. Here’s a summary.

“J. Storrs Hall suggested that instead of fixed moral rules (which a super smart AI with access to its own source code could change later anyway) progenitors should try to inculcate something like a conscience into the AIs they foster. A conscience allows humans to extend and apply moral rules flexibly in new and different contexts. One rule of thumb that Hall would like to see implemented in AIs is: "Ideas should compete; bodies should cooperate." He also suggested that AIs (robots) should be open source. Hall said that his friend economist Robin Hanson pointed out to him that we already live with superhuman psychopaths—modern corporations—and we're not all dead. Part of what reins in corporations is transparency, e.g., the requirement that outsiders audit their books. Indeed, governments are also superhuman psychopaths, and generally the less transparent a government the more likely it is to commit atrocities. So the idea here is that more AI source code is inspected, the more likely we are to trust them. Finally, Hall also suggested that AIs also be instilled with the Boy Scout Law.”

So many thoughts, so little time....

The Planetary Society will be rolling out "Beyond the Moon: A Roadmap to Space" on Thursday (Nov 13) at the National Press Club in Washington. Have a look.

My partner in crime on the Exorarium Project -- Professor and world renowned tech artist Sheldon Brown, if showing installations of his vivid and way-cool/fun SCALABLE CITY project at a number of locales. Drop in if you can! In Los Angeles at the (Hollywood) LA Municipal Art Gallery. Sheldon is giving a talk there in the CONVERSATIONS WITH ARTISTS SERIES.  The Scalable City will also open at the Beall Center for Art and Technology in January, and in Rio de Janeiro in February, and at EPCOT center in March.

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Is this one for the predictions registry? Somewhat reminiscent of my short story “The Giving Plague” or Greg Bear’s VITALS -- SEED Magazine is citing evidence “... that a significant factor in why some countries exhibit higher levels of neuroticism than others may be the prevalence of the parasite Toxoplasma gondii. The study also indicates that it may influence a society's preference for strict laws, an expression of uncertainty avoidance, and its valuation of 'masculine' priorities such as competitiveness and financial success over 'feminine' values like relationship-building.” Infected men tended to have lower levels of intelligence, superego strength and novelty-seeking, while infected women exhibited higher levels of intelligence, superego strength and warmth. Infected people of both sexes tend to be susceptible to feelings of guilt.

In 2000, Webster reported that rats infected with Toxoplasma are less fearful of and, in some cases, can even be attracted to their feline predators. She surmised that the parasite subtly manipulates a rat's behavior to increase the rodent's chances of being eaten by a cat—the only animal in which it can reproduce—thereby upping the odds of the parasite reproducing. But the human “mutualist or commensal” relationship seems to be far more complex.

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A search for Dyson Spheres has been carried out using the 250,000 source database of the IRAS infrared satellite which covered 96% of the sky. The search has used the Calgary data collection of the IRAS Low Resolution Spectrometer (LRS) to look for fits to blackbody spectra. Searches have been conducted for both pure (fully cloaked) and partial Dyson Spheres in the blackbody temperature region 100 < T < 600 deg K. Other stellar signatures that resemble a Dyson Sphere are reviewed. When these signatures are used to eliminate sources that mimic Dyson Spheres very few candidates remain and even these are ambiguous.

Previously unknown work by Stanislaw Lem discovered. An anti-Stalin opera that he hid between the pages of a ‘botched crime novel’ and never showed anyone....

If the topic interests you, a moving documentary by a lovely husband and wife film company near me -- "The Invisible Ones: Homeless Combat Veterans," by a pair of local San Diego film makers.

Well worth a closer look, David Price and his partners have developed their “debate graph” concept a bit farther. Very vivid. Drop by, explore and offer feedback?

Now that the famed Clarion science fiction writers’ workshop has moved to UCSD (San Diego), there are fascinating upshots. One is the publication of some thoughts by Jim Shea including an interview with National Endowment for the Arts director Dana Gioia. It may be the first time that anyone from NEA has made statements like this about science fiction and fantasy.

“Twentieth century critics misunderstood and marginalized both science fiction and fantasy. The celebration of the novel’s “great tradition” of social and psychological realism treated romance as a mode of children’s literature. If it was considered at all, it was mocked or dismissed. Probably only George Orwell and Aldous Huxley escaped censure because their dystopian novels had enormous political and social impact. (And they demonstrated their bona fides by writing realist novels earlier.)

... Modernism celebrated realism above all other modes of fiction. I understand the bias of Modernist critics, but their critical monomania marginalized some of the best fiction. There have always been great fiction writers like Poe, Kipling, Stevenson, Borges, Calvino, Kafka, and Tolkien for whom realism was not the chosen mode. To exclude them from any survey of modern literature is to mischaracterize the last two centuries.... I’ve seen a bit of change lately. Very slowly the literary establishment has grudgingly accepted fantasy and science fiction—mostly because of the continuing popularity of those genres in an era in which traditional literary reading has declined.”

See a cool blog by my collaborator Jeff Carlson, author of PLAGUE YEAR!

Remember when I mused that Sauron might the real good guy, or at least have a point, as opposed to hose haughty, oppressive elf-lords? Well, Stan Nicholls has run with the idea...

There are still attempts to unify science with metaphysics. Most have been dumb. A few have been charming. On rare occasions, they have even offered insights that rise above the level of cliches. Here is one that might deserve a glimpse. In any event, the summary contains some interesting (and somewhat informed) imagery. (Note, I say this as one who has repeatedly indulged himself in speculative metaphysics! As all of you well know.)

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Trying desperately to finish that story in time for part II to run in Baen's Universe Magazine... I have to make this a quick post of misc wonders the have piled up.

Tune in to the History Channel on December 1st (9-11pm) for “The Next Nostrodamus?”... featuring some skeptical riffs by yours truly, trying to hold up a candle in the wind.

Joe & Jill, be careful!

WASHINGTON – Vice President Dick Cheney, getting ready to hand off the job as the nation's second-in-command, will sit down with Vice President-elect Joe Biden on Thursday at the Naval Observatory.

Cheney spokeswoman Megan Mitchell said Cheney and his wife, Lynne, have invited Biden and his wife, Jill, to their home at the observatory, the vice presidential residence.

I have one piece of advice for Joe & Jill Biden. Have all of your medical and biometric measurements taken before you make this little trip... and arrange for trusted people to check them again, after you return. Be thorough. Heck, throw-in a before and after aura-inspection by some mystic psychic-person! All precautions are reasonable.

Because, if there were any place on the planet where there existed the power to snatch souls or replace people with pod-beings...

Moreover (and this is vital), before you move in, have the place swept carefully for bugs (of all kinds), fumigated and then exorcised!

(Advice that would also serve the Obamas well, even though - when it comes to Bush - one feels this imperative with less of a frisson of thriller-novel premonition.)

The crux: I doubt very much these awful people have used up their final ability to lash out, even as the nation rejects them like a really bad boil.

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There are far more mundane methods to suborn bright new leaders, of course. Especially entrapment and blackmail. How to get across to people that there are some areas where simple prudence and grownup behavior have added reasons, and this is one of the most important. A case where a little paranoia is perfectly compatible with simply behaving well.

How I wish I could spread the word on that one, adequately to staunch what will certainly be tried by those desperate to keep illicit routes into influence.

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Speaking of Dick Cheney... anyone care to go on InTrade and see what odds folks will offer there, on my speculation that Bush might resign a week early? Or issue 1,000+ pardons? Or have to move to Dubai?


... and now... just to fill out the time...


== Misc! ==

Your top ten survival items.

From Brian Wang this: a blow-up survival shelter featuring a bed, a couch, freeze-dried food, a 50-gallon water bladder, a first-aid kit, a radio and a cookstove. And the latter is exactly what the "Life Cube" from startup Inflatable World is designed to provide. Packaged into a four-foot-tall cube, it inflates into a 12-foot-tall structure built from the same thick plastic as a bouncy house. Designed to provide shelter and basic amenities for people in the days and weeks after a disaster, the instant housing will come with a $3,900 price tag, so the company's first market could be wealthy survivalists.

A kind of kool/fun Youtube riff by MdDaMan!

Help improve my site! http://www.davidbrin.com is highly ranked in lots of ways, in the top 1% of web sites and all that. But there are clear areas for improvement. In particular, only two of the sub-pages and articles have been “digg’d.” What, none of you digged the essays:

-- On self-righteous indignation?
-- Or suggestions to Congress? 
-- J.R. Tolkien and the Modern Age
-- Essay on Libertarianism

On the other hand, I won’t mourn for the days when I googled as the number 8 “david” link on the planet. The web is far larger now, than 5 years ago. And I still score at 53!

A fun satire of the Matrix... if it ran on Windows.

Poking at my "suggestions" piece. But I promised to actually write my novel... so be patient. Meanwhile, what would YOU suggest to Obama and Congress?

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Michael Crichton, dream on

I only met Michael Crichton once, when we fillmed a PBS show together with the late Octavia Butler. He struck me as a very pleasant fellow... along with being outrageously tall. Well-spoken and courteous. I quite liked him and was shocked and saddened by his recent passing.

I also had the historic opportunity to attend - standing room only - Crichton's famous, or infamous, speech before the AAAS, back in 1999, an hour that he spent defensively proclaiming (in effect) "I do not hate science!"

Certainly, I had my differences with Crichton, but they were entirely philosophical.

Take, for example, his contention that, even when 99% of qualified experts in a field agree about a scientific matter (e.g. global climate change), the phrase "scientific consensus" should be ruled meaningless. Indeed, Crichton maintained that any such a consensus of expert opinion should have no relevance at all, in the arena of public policy. In effect, technically trained boffins - even when they agree with near-unanimity - can be rightfully ignored, leaving technological policy matters to be decided, without reference to science, by 51% of uninformed politicians. A fascinating stance! And, because the one putting it forward was someone I respected, I gave it my full attention, trying hard to see this issue through Michael Crichton's eyes. (I admit, I ultimately failed.)

Likewise, as a fellow writer of science fiction explorations - and I dignify him, quite willingly, with the high encomium of "sci fi guy" - he had some authorial propensities that I found irksome, yet interesting from a broader perspective. For example, I had no problem with his utterly consistent theme of "there are Things Mankind Isn't Meant to Know." (TATMIMK)

Look, dire warnings are always welcome, and a few of Michael Crichton's were so vivid that they may even qualify as Self-Preventing Prophecies, so influential that they actually helped to gird vast numbers of people against the described failure mode. And I believe that there is no higher praise for any creator of scenarios about the future.

(I think we'll all be safer from sixgun-toting robots and velociraptors. Less tongue-in -cheek, some of the arguments about biological warfare spawned by The Andromeda Strain have had quite salutary effects.)

No, it wasn't his dour anti-technology perspective, but rather, the consistency - and, eventually, tiresome predictability - of his story arcs, that made me (with some regret) lose interest as the years went by. The characters who preached TATMIMK in every tale always faced a dire situation wrought by monumental technological hubris - some arrogant scientific ambition that usurped the prerogatives of Heaven - unleashing death and danger. In this, Michael Crichton was clearly the direct heir of Sophocles and Euripedes and a tradition going back thousands of years.

Alas, since every one of his scenarios involved secrecy that exacerbated the Big Mistake even more than hubris, it might have been nice to see Crichton explore how things might differ, had the same projects been pursued in the open, cleansed and criticized by the scrutiny of colleagues, peers, competitors, regulators and... well... wary authors like Michael Crichton.

Indeed, I took to ignoring the TATMIMK rants of his characters, and instead perceiving his scenarios in this light -- as explorations of what can happen when "progress" takes place without the benefit of criticism, which (I've long contended) is the only known antidote to error. As Edward Tenner points out, in WHY THINGS BITE BACK: Technology and the Revenge of Unintended Consequences, it is perfectly true that bold endeavors often have unintended consequences. And if Crichtonian-style villains are ever put in charge of any real world projects, hiding their efforts from the public eye, then it is quite plausible those efforts will go badly wrong.

Of course, I do wish Crichton had shed light upon this variable, or let it even be mentioned (more than in passing) once in a while, since secrecy arguably is the key error-generator, rather than ambition, itself. But, then, we clearly disagreed about that.

Then, of course, there is the other thing he nearly always did. Putting everything back the way it was... except (of course) for the dead. Dinosaurs scream and charge, nanomachines run wild, diseases invade from space, magical spheres... do their magical sphere thing... but always, after the climactic scene, the world remains unchanged and society continues as a late 20th Century Republican version, perpetually flawed but stable as-is, with a tentative hope that it can stay that way, untouched by the mistakes that unfold in his books, forever.

Okay, I admit being fascinated by change in a different way than he was. I play with scenarios that might challenge the status quo, pondering how peoples and societies might transform, ever after... the way that we have changed so much, and often for the better.

Admittedly, there were advantages and benefits, to Crichton's near-universal recipe of hubris plus secrecy. It certainly did help drive dozens of plots, allowing the requisite mayhem to commence without delay. And boy did it lend itself to movies! And of course it helps to assume that civilization is too slow or stupid to be of any help, or at least not in time. Unimpeded and unbothered by civil institutions, due process, or the kinds of teams of smart and skilled professionals who might get the protagonists out of their jam.

Indeed, so entrancing are these plot situations, that one quells the urge to shout at the screen, during Jurassic Park, demanding "Why didn't you just make herbivores? Duh?" Of course, that would have been logical and sensible.

But it wouldn't have been as much fun. I admit it.

And that's the crux, after all. The world has now lost one of its prime fonts of delicious, scary fun.

Not Perfect?

Like most of you, I am almost too tired to feel the full elation of the moment. Indeed, there are some ways in which I've even felt a little resentment toward being congratulated (as a nation) for the purportedly prime event - the election of an African-American as president. I have to say that Barack Obama's race rarely even entered my mind. It was a non-issue all along, and I'll bet it was for a vast majority of Americans.

No, the paramount fact that mattered to me was that his election would end the hijacking of my country by a bona fide criminal gang. Simply unleashing the US Civil Service and Justice Department to do their jobs again, that would have sufficed, and any democrat would do it.

But, yes, I'm more enthusiastic than that, I admit it. The fellow is clearly brilliant... and calmly levelheaded enough to make brilliance work. His lack of executive experience needn't worry us because:
(1) he will appoint a skilled and varied plethora of good people, and
(2) his campaign showed uncanny administrative and executive skill.

Indeed, I recall eight or nine months ago, when BHO said "If you want to know how I'll lead, watch my campaign." Though slightly arrogant, the statement also showed stunning predictive confidence and accuracy, plus a philosophical readiness to be judged by clear cause/effect metrics... and I'll bet you haven't heard anyone grant him those encomiums, to date!


The Speeches

Actually, there were TWO important speeches. And yes, McCain was classy... and I noticed that his Arizona crowd was polite and not crazy. A hopeful sign. Though of course the rightwing blame avalanche is going to come pounding in on McCain, drawing all the wrong lessons.
 from this defeat. (More on this soon.)

But of course, it was BHO's speech that all the folks in our living room watched with transfixed attention.

(Oh, we threw an election eve party and you were all there in spirit.) 

The speech ratcheted me ever closer to believing that this fellow is what he seems. (Pray God let it be so.) It was clear, inspiring, incisive, and completely on target.

 He not only spoke about finishing off Culture War and made gracious gestures toward sincere republicans, but also mentioned the issues that matter most to me... a re-dedication toward science, problem-solving and pragmatism, after far too-long wallowing in a national state of drugged indignation addiction.



Nevertheless, there was a flaw. (And let's not get too lost in admiration to keep our citizen-skeptical eyes open for such. It is our duty!) During his speech, I did notice one possible slight misuse of a word.

I was shocked. And it transformed my opinion of this man!



Deeply disappointed, I turned to my friends and said what Anthony Quinn did, to Omar Sharif, in Lawrence of Arabia.



"He... is NOT... perfect."


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Comments by others....

I simply lack the time to write anything longwinded. Tomorrow, perhaps, I'll start in on Suggestions For The New Administration... many of them cribbed from my list of 2006 proposals for Nacy Pelosi's newly democratic Congress. Alas, they are all unused...

But for now, let me clip and paste some wisdom from others.

First, from Mark Anderson, noted tech-business analyst - sent the day after the election to members of his Strategic News Service newsletter:

(Note, while SNS is definitely capitalist-investor oriented and pro-tech, nobody was most caustically anti-Bush earlier than Mark Anderson.)

To All SNS Members:

While many Obama supporters are having a great day today (and many McCain supporters are feeling the opposite), I thought it would be appropriate to try to lay out what this election result may mean for business and, particularly, technology businesses.

First and foremost, in both the presidential and Congressional elections, what we have just seen is a broad-based repudiation of Bush, his administration and his actions.  When I suggested to members, eight years ago, that Bush would be known as the worst president in U.S. history, some thought I was making a partisan statement.  I wasn't, and I think it is safe to say that he has now cemented this dubious award.

Members know I have suggested that Obama's election would lead to a $95 average oil price (vs. $135 for McCain).  I am still comfortable with this figure, but it was made prior to the economic destruction of the last month or so.  While that may mean a somewhat lower average price out of the gate, this is only good news to a world that has gotten ill on asset bubbles, and which has been deeply damaged by oil pricing that was manipulated.

So, this election is a plus for oil pricing, in my opinion.  Since oil pricing still drives most of the global economy, this is important.

Neither candidate was strong in economics, which is deeply worrying, but Obama assembled a much stronger advisory team, including Paul Volcker and Warren Buffet.  If ability to choose good people is one key to success, Obama has earned our admiration over McCain (whose economic advisors included Carly Fiorina and Meg Whitman) on this score. 

I believe that the world has already begun celebrating the selection of Obama, and that this will lead just as directly to sales for U.S. firms, as lost sales came from the Bush policy of preemptive warfare.  What will surprise many Republicans, I think, is the depth, and quickness, of this global response.  I expect to see a change in the U.S.' stature, both in foreign policy and in commerce, within days or weeks of Obama's inauguration.  In fact, it probably has already begun.

This, too, is good news for business, since most revenues available to technology companies today are coming from non-U.S. sources.

Politically, I expect Obama to move even more toward the center, perhaps upsetting far left politicians, and surprising Republicans.  His life is a history of finding common ground, rather than espousing a particular ideology, and this is what led him to create a big tent during the campaign.

As for tax policies, we'll have to wait and see what comes out of D.C.  But I have always believed that it is impossible to have a healthy economy without having a strong middle class.  Even Putin seems to understand this, although some Republicans cry "Communist" or "Socialist" without thinking this through.

If you kill the Golden Goose, no one wins.

So, it is important for the U.S. to strengthen its middle class.  I want my money just as much as the next guy, but I don't want my country to collapse around me while I'm getting it.  Having presided over the biggest spending and government bloat in history for the last eight years, Republicans should self-examine before complaining about paying the bill for this self-destructive behavior.

In fact, it will be a reaction to such profligacy which creates a successful New GOP, if there is to be one.  The party faces two or three clear paths now, as it goes into introspection mode: follow the divisive, small-minded politics of Palin; continue to allow the church to dictate the agenda for the state; or move back into a business-driven center.  As you can tell, I believe that only the third choice will lead to success.

For the moment, the worry now may be that the Democrats have too much power, again in reaction to Bush, at a time when we know that the U.S. does best when power is balanced between branches.  If they don't show more self-restraint than the GOP under Bush, they'll be out in no time.

I now expect the Obama camp to do a number of smart things:

1. Move fast.  The transition office is set to open today at noon.  That's fast.  I expect to hear the first appointments for staff this week, and to start hearing cabinet appointments within 1-2 weeks.  I believe he will have a fully functioning executive branch, at the cabinet and top officer level, well before inauguration.

2. Move smart.  I expect he will reset expectations, as he started to do last night in his speech.  Perhaps a stimulus package is inevitable, since both parties and most other countries seem to believe in it, but after that comes a cold look at spending.  If I'm right about this, this step will reassure many Republicans.

3. The Grand Tour.  I expect to see a world tour very early in the year, during which we will see him re-establishing friendly relations with many countries around the world.  This tour will have the feeling of a victory lap, with the whole world turning out in incredible numbers to see Obama, and welcome America back to being a friend, and not just a feared policeman.

4. The Campaign Is Over.  I think we'll see a different Obama, almost immediately: more serious, more concerned, more focused on real problems and real solutions.  Whether he has the steel to make policies stick and laws pass is the real question now, and this may be a lesson he will have to learn on the job.

As in his campaign, I don't expect Obama to do make any dumb moves.  You don't get to be editor of the Harvard Law Review by being stupid, and Obama will be one of the most intelligent presidents we've had.  After eight years of seeing stupid moves on a daily basis, the nation will breathe a sigh of relief.  No longer will the world wonder, daily, what unconnected thing comes next.  I also expect that, in complete opposition to the insulated, incurious current team, the new team will be open to real data and input from many sources.

Science will again matter. 

This is also good news for technology companies, who depend upon the teaching and implementation of scientific ideas for their own staffing and sales. Alternative energy companies will prosper.

In summary, while many GOP members may be feeling as though they lost, I suspect they didn't, if returning to a healthy economy is the measure.  The domestic economy faces serious issues, caused by a Cookie Jar approach to taxpayer money, not the least of which is a long history of job loss and job quality degradation.  Reversing this trend ought to be the first priority of the new administration. 

Wall St. really does need oversight, on national and international scales.  Getting international agreement on assessing and regulating derivatives will have to be near the top of the Treasury's new list. 

While there is much to worry about, I think this election adds to the sense that the right tools, and now players, are in place to fix the problems at hand.  A smooth transition from Bernanke and Paulson to Bernanke and another Goldman-level global banking executive will be the next obvious step in repairing the damage.

We are now on track to an improved domestic, and global, economy.  How long this will take depends upon how fast the Obama team can move, and on how many jobs are lost before the U.S. economy turns around.

Mark Anderson
CEO, Strategic News Service

======
And now --

From the Progressive Policy Institute:

Voters in U.S. 2008 presidential election: c. 131 million

Total voters in all U.S. pres. elections, 1788-1908: c. 137 million

What They Mean:

Last week's Trade Fact worried about trends in democracy abroad. This week, democracy at home seems in good health. This morning's estimates suggest that 131 million American men and women voted in yesterday's election -- 9 million more than in 2004, 25 million more than in 2000, and nearly as many as the combined total of all American voters in the 32 presidential elections between 1788 and 1908. Voters' sole complaint seems to have been about long lines. President-elect Obama, Vice President-elect Biden, the 111th Congress and the newly elected state & local officials inherit lots of troubles and challenges, but also some enduring national strengths.

Further Reading:
Commentary, generally enthusiastic, from 10 papers around the world:

Karachi-based Dawn is enthusiastic: "Mr. Obama provides excitement, a desperately needed jolt of political electricity. If he is elected, America will instantly be seen in a new light around the world ... because the country has found it within itself to turn to someone truly new, whose astonishing ascent could have happened nowhere else on earth. Only in America."
http://www.dawn.com/2008/11/05/int9.htm

The West Australian covers reactions among Perth's expatriate American community:
http://www.thewest.com.au/default.aspx?MenuID=77
&ContentID=106512

Tel Aviv's Ha'aretz is admiring: "Yesterday, the U.S. once again justified its title as leader of the free world: It concluded a campaign that is a worthy model for emulation.":
http://www.haaretz.com/hasen/spages/1034323.html

Tokyo's Asahi Shimbun is cautious and focused on diplomacy: "For many Japanese government officials, U.S. President-elect Barack Obama is an unknown quantity... Two key challenges will be Tokyo's support for the U.S.-led war against terrorism in Afghanistan, initiated by President George W. Bush, and cooperation in dealing with North Korea. [Prime Minister Taro] Aso said Wednesday that the Japan-U.S. relationship will remain the cornerstone of Japan's foreign policy."
http://www.asahi.com/english/Herald-asahi/
TKY200811050340.html

Columnist Koh Lay Chin of Kuala Lumpur's New Straits Times says that "for the first time in history, people all over the world are riveted to an election they feel invested in, despite not sniffing anywhere near a green card":
http://www.nst.com.my/Current_News/NST/Wednesday/
Columns/2393204/Article/index_html

Nairobi's East African Standard is as extensive and enthusiastic as one might guess:
http://www.eastandard.net/

Belize's Amandla ponders race relations: "In Belize this evening, apart from the floods and the catastrophe on the Northern Highway south of the Haulover Bridge, the headline news is really in the United States, and it's all about looking forward to tomorrow. Someone who looks like a lot of us Belizeans, Barack Obama, the Senator from Illinois, is actually leading the polls as the favorite to win the presidency of the most powerful nation in the world. Many Belizeans are holding their collective breath. They are glued to their television sets as they hope for what Americans forty years ago would have considered a miracle inconceivable.":
http://www.amandala.com.bz/index.php?id=7658

Columnist Humberto Campodonico of Lima's Diario la Republica, reporting from Big Timber, MT, invokes history: "Es claro que los retos y desafios para el ganador solo se comparan a los que tuvo que encarar Franklin D. Roosevelt hace mas de 70 a?os." [It is clear that the challenges for the victory can be compared only to those Franklin Roosevelt faced 70 years ago.]:
http://www.larepublica.com.pe/content/view/
253993/559/

Dublin's Irish Times ponders lessons for Irish politicians from the US' Internet-based campaigns:
http://www.irishtimes.com/newspaper/opinion/
2008/1105/1225523370769.html

And the Toronto Star's Vinay Menon sees a bleak future for America's standup comedy industry:
http://www.thestar.com/News/Columnist/article/529953

And now the (good or bad) aftermath....

It may surprise you that, on the eve of the most important election of our lives, I have little further to add... that is, little having to do with the election itself. Of course, some of you still have a long 24 hours ahead of you, stepping up and finding ways to be useful during a day when America will decide whether or not to save itself.

I urge you all to contemplate finding something helpful to do, if only calling your friends and relatives in battleground states and expressing your willingness to talk, if they have any doubts at all.

Oh, one amusing thing you can share: endorsements of Obama by Eisenhower, Nixon, Goldwater and Reagan. (What, no Bush?)

Having said all that, there's little to add except - God bless us one and all.


And so, our attention turns to the aftermath.

Last time, I alluded to what will happen if Obama loses, an event that can only seem possible if attributed to blatant and outrageous/desperate cheating. An outcome that - frankly - I cannot imagine any truly prescient Republican wishing for.

Why? Well, let me offer a parallel in cosmic-level shortsightedness and stunning stupidity -- Iranian President Mahmoud Ahmadinejad expressing a wish and determination to wipe Israel off the map. And the failure of anyone, in the press or at any level, to ask of him - or any other fanatical Middle Eastern leader - the following question. "What do you think will happen to your nation, if you ever succeed in accomplishing this goal -- turning all the world's remaining Jews, including tens of thousands of the planet's finest scientists and engineers, into enraged revenge-seekers with little or nothing left to lose? Do you honestly convince yourself that those biologists and physicists and chemists and engineers will simply leave your cities alone? Or, indeed, any villages at all?"

Was there ever a more utterly clear example of the expression: "be careful what you wish for"?

Likewise, one has to ask those Republicans and redstaters -- and especially the cabal-masters who may be thinking of performing massive electoral cheating: do you really want the America you will then have to rule? Are you so convinced that Blue America will simply lie down and accept it, this time?

Ah, but I reiterate my previous posting and it is time to move on. We'll just see.

What interests me now is the more likely scenario: what happens after Obama wins?

I mean, other than hoping that Obama and Biden never again occupy the same room or come closer then a mile to each other, communicating only by visiphone or whatever.


First: Cabinet choices...

BHO has already made it clear that he plans to reach out to all reasonable and talented people, including Republicans. POLITICO - is out with its predictions for Obama's cabinet and other key staff and the initial list is fascinating. (Those of you still looking for "ostrich bait" could do little better than showing this list, which demolishes all thought of "socialist fanaticism" and supports the image of a fiercely determined pragmatist.)

Still there may be an unexpected side effect of bringing so many moderate Republicans into an Obama Administration -- to hollow out the Realist Wing of the GOP, just when it is about to be plunged into civil war over the heart of the Republican Party. That civil war may be the biggest news of 09. And I will offer more about it, soon.


Second: the reaction on the street and around the world...

It has been said that the Superbowl and World Series are actually contests over which cities will go up in flames, the night the championship is decided. Likewise, is it a nobrainer to expect some smoke Tuesday night, no matter who wins the election? Sure, the reaction will be far more dangerous if people feel Obama lost to cheating. But even if he wins, I'll not be surprised if there are some unfortunate excesses -- even joyful ones -- that end in some tears.

What will amaze Americans even more is the demonstrative spirit we'll see in many foreign locales. Never before has so much passionate interest in an American election consumed the world. Expect some colorful footage. And some re-reaction proclaiming "F### the rest of the world."


Third: The Pardon Tsunami, the whistle-blow tornado, and the rise (at last) of the civil servants

I have spoken often (and almost alone) of the likelihood that President George W. Bush has promised a veritable heap of pardons, in order to buy silence till after the election. I have no evidence, but even if it's true, there's no guarantee he'll keep most of the promises, knowing that too long a list could make life very uncomfortable for him here in the States. If he keeps the list short, then what other options will your typical henchman have, except to hurry and make a deal with the other source of clemency, Representative Henry Waxman. Of course, the quickest to spill his or her guts will get the best bargain.

Will we also see the too-long delayed rise of civil servants who have been squelched by GOP hatchetman political appointees? The paucity of courage has been disappointing, but after BHO is President Elect, there really won't be much that any agency head or enforcer can do to bureaucrats who have kept careful files of a long list of crimes. We'll see if this model pans out... or if the bureaucrats really are as useless as the Republicans have been saying, all along.


Fourth: The recriminations and implosion of the Republican Party.

>>Jacob Weisberg is all over the media blaming libertarians for both the Wall Street collapse and the coming election results (this one is in Slate and Newsweek both). Of course the Goldwater conservatives are the injured ones with a real grievance. The only issue is whether the moderates and libertarians will have the guts to make a major play. If they gather their fortitude and make a real fight of it --

--then does anybody see a scenario under which the GOP survives, as-is? Can the Rovean Coalition really hold together? It certainly would seem more likely that the mods and libs will stalk off to form a new party, leaving the Palintropes in charge of a rump GOP... or else the moderates+libertarians will get the rump and the Palinesques will form the new one. Either way, the lunacy of know-nothing worship will suffer a deadly blow and Culture War might finally ease....

That is... it SEEMS the most likely scenario. Because this Frankenstein monster should never have survived its internal contradictions in the first place...

...which is exactly why I am betting against self-demolition of the Republican Party. Because monsters have a way of surviving, awful stitchwork and all. After all, the key element is already there, an AIDS-like suppression of any immune system against delusion.

Like the delusions of the Libertarian Party itself. Had they done any better, this year, they might have offered an alluring home for the mods and libs thinking of fleeing the GOP. But the LP started off with a reputation for doctrinaire, impractical craziness, utterly contemptuous of compromise or incrementalism. Then they added that piece of work, Bob Barr. The crux? The LP has turned itself into an object lesson against ever trying to form a third party.

So no... the moderates and (quasi) sane Republicans will swallow their pride -- along with all standards of intellectual honesty and decency -- and they'll rejoin a GOP led by the Palin wing. They'll dive into rationalizations and pass up the historic moment. The chance to end Culture War and spare us the REAL crisis... the election of 2012, when Robert Heinlein forecast the arrival of Nechemia -- or Naomi? -- Scudder.

Penultimate Ammo (an interim/misc posting)

Fresh back from an exhausting trip east (to speak at MIT and IBM about the future of information technologies), I have only time to toss in a little last-minute "ostrich bait."

I do hope to get in one last philosophical musing before the American People -- led by a new and potent and truly impressive generation -- decide to reclaim the nation and resume America's mission as leader of the Enlightenment.

For now, however, let me reiterate one point that occurred to me recently -- that obstinate ostriches now seem reduced to relating scary anecdotes or "Just-So Stories."

Sure, some of the stories -- if proved -- might be worrisome... if there were a scintilla of any reason to believe them. From "he's a muslim" to "socialist" to anything your paranoid little heart chooses to cling to, in order to rationalize justifying the outrageously unjustifiable. But, since the neoconservative/fundie scary story machine has been at it since 1994 without ever proving a single one, the rest of us can be forgiven for reacting with a yawn, and a look of utter pity in our eyes.

Meanwhile, the other side -- it happens to be the democrats -- has every conceivable statistic... from fiscal responsibility to small business startups to performance of the stock market to GDP to military readiness to worldwide willingness to accept American leadership... any conceivable measure of national health including every conceivable measurement that reflects sane, old-fashioned conservative values, comes down in favor of the democrats.

If you exclude Eisenhower and two of Reagan's eight years, there would be no statistical basis for ever trusting the GOP with anything more powerful than a burnt match, ever!

So, what do you say to obstinate aunts and uncles? Those cousins who aren't fundies or nation-raping kleptos, and yet somehow cling to a loyalty that is based entirely on illusions, and no facts at all? After all the energy and thought I have poured into "ostrich arguments," I am left to fall back upon my main profession. Clearly, these folks are the kind who like fantasy stories.

I hope President Obama will somehow find a way to convert them to realistic, pragmatic and rational science fiction.

-----

Some addenda:


Russ Daggatt offers his own version of ostrich bait at:
http://daggatt.blogspot.com/2008/10/for-your-wavering-republican-friends.html

Some details:

Forget the tax rates; did you even HAVE any capital gains?

The Dow Jones Industrial Average went up from 3253 to 10,587 under Clinton (325%). As of yesterday’s close, it has gone DOWN to 8175 under Bush (-22.8%).
The S&P 500 went up from 447 to 1342 under Clinton (300%). It has gone DOWN to 848 under Bush (-36.8%).
The NASDAQ went up from 700 to 2770 under Clinton (395%). It has gone DOWN to 1505 under Bush (-46.7%)

Let’s take the broadest measure of the market, the S&P 500: Would you rather pay a 20% tax on a gain of 300% or enjoy the benefit of a lower 15% tax rate on a … LOSS of 46%?
Any genuine fiscal conservative who calls Obama a socialist - knowing that his top economic advisors are Warren Buffett and Paul Volcker - would have to be a a completely hypocritical loon... someone who would prefer the discredited Phil Gramm and Alan Greenspan.

(Though in an ultimate irony, even Greenspan vastly preferred Clinton over Bush.)

If your friend is a genuine right-wing hawk, but still listening, skim down to where Daggatt quotes a right-wing hawk - Kenneth Adelman - who is unrepentant in countless ways, but is still voting for Obama simpy because Obama is steady and calm and McCain gives Adelman the creeping heebie jeebies.


Oh and Dave McCabe offers this chart re what the Blue States may have to resent:
http://democraticactionteam.org/redstatesocialism/index.html

...

In fact, what I have found most amazing is the look on some ostriches' -- and especially the non-ostrich True Righters' -- faces when they realize how ANGRY blue americans are, right now. They blink in surprise, as if we have somehow usurped their God-given license to wallow in selfrighteous indignation and culture war, amazed that our habitual, long-suffering patience and smarty-pants intellectual attempts to use reason have given way to a state of barely-contained rage. A fury that is fundamentally-based upon a patriotism that used to be far more restrained and genteel than theirs, and superfically less fervid -- till now -- but that is based far more deeply upon a love of what America really stands for...

...than the insipid, frenetically flag-waving, dionysian-masturbatory kind of "patriotism" evinced by good-old-boys who -- if you scratch the surface -- would much rather the South had won the Civil War and who would (if they ever got their hands on a sci fi time machine) leap back in an instant to provide Claymore mines and AK47s to Nathan Bedford Forest.

The kind who will never give President Obama -- the freely and lawfully elected chief executive of their nation -- the benefit of the doubt, or the grudging cooperation that democrats almost always gave Ronald Reagan and both Bushes. The kind who will immediately fly into paranoid rumor-suckling and even McVeigh-admiring, just because the innings have changed and they are too immature to let the other team have its at-bat or a chance to clean up the mess without undue obstruction or even outright rebellion. (Exactly the way the South responded, when Abraham Lincoln was elected.)

But no... I will hope for the best. We can pray that God grants Barack Obama eloquence and skill sufficient to soothe away culture war and restore to American hearts a pragmatic, modernist, future-oriented and confident willingness to negotiate solutions to problems.

And... well... when the GOP has its own civil war, we can root for the sane wing and wish them well. Maybe...

But let's keep our options open. And meanwhile? Proceed to tally what companies advertise on Fox and Limbaugh and start making clear that with which we'll no longer put. We have a right to patronize companies that do not subsidize monsters.

And if (God forbid) cheating prospers on Tuesday. Then dust off great grandpa's blue uniform.

The world cares deeply about America and wants us back.

We won't let them down.