Category: Living

I have a new dog.  Her name is Rosie – well, I call her Rosie anyway, her name when I adopted her was Rosa.  I first met her a month and a half ago online, pet adoption basically now mimicking dating conventions, but me being me, I avoided looking online as long as possible because my heart was open and it didn’t matter on some level who I met online, just as long as the spark was there and it was, Rosa was perfect, and while I also met Dwight at the same shelter, my heart went towards Rosa and then I had my mom, who’s going to be doing a lot of the surrogate help with her, meet her, and Rosa was the one.  No question.  She’s perfect.

She also is terrified of change, as almost all of us are, and she’s now embarking on massive change.  So she pees on the floor more than the “housetrained – check” indicator on the shelter website indicated, and she sometimes bolts out of the yard because she doesn’t know that it’s all okay, and she’s not like Gordy, she doesn’t have ten years of trust and treats and foie gras under her belt.

She also has to deal with my son, a seven year old, and Gordy didn’t have to deal with that when he and I bonded eleven years ago.  Gordy had to deal with the odd energy – lots of love, but also lots of confusion and pain, that marked my marriage at the time – but he didn’t have to deal with the utter chaos of a seven year old boy.  My son is lovely on every level but he possesses that explosive energy of boyhood – and having Rosie interact with other children I do realize that it is a Y-chomosome issue – and that makes it more confusing.  Also Rosie is female, and Gordy was male.  Gordy was a bit aloof with my son, but that made sense, or at least, now it makes sense, now that I can see a female dog interact with a young boy.

As I write this, though, I realize I’m generalizing about gender and age and specie, and all of it is wrong.  Rosie is a rescue – she was picked up at the side of the road in the rural bits of Birmingham, Alabama, estimated age of two when she was picked up in January, a botched spaying operation made more tragic by a kind of weird white supremacist tattoo by the site of the operation, a cropped tail which is never something you do to a puppy you actually love – and all of her story is unknown except for that data on the page.  Gordy, on the other hand, was apparently tied up with several other dogs on an abandoned puppy mill in eastern Washington.  Gordy’s emotional scars revealed themselves in a terror of other dogs except for the biggest breeds, Great Danes and Bernese mountain dogs, who I assume were the ones who protected him in bad times; he didn’t like other people, was fiercely protective of me, of my ex-wife, of my son, of the ex-girlfriend.  He also never left my side, except when tempted by chipmunks, and then he felt guilty about it.  Rosie wants to like other people, but needs to explore.  She’s roamed across the neighborhood several times, and tonight, she chased out of my range across a state highway.  She just wants to explore, although she always comes back.

I’ve spoken of recursion often on this site, and I do think recursion – the capacity for infinitely applying the logic of our own observations to ourselves – is what separates sentient beings from non-sentient beings.  Dogs apply the logic of their own experience to the experience they have now, but in my experience, it’s a one-step thing; although I’m sure some can go one step further, most don’t.  Gordy, I think, went one step further; Rosie, I think, doesn’t, although it’s premature for me to assess that.  In any event, human beings aren’t that different.  We observe the world and learn lessons, and then go through one or more – or maybe just one – level of recursion to assess how those lessons will apply at a second level, at the second derivative, as it were.  We can apply those lessons we learn by observing others to ourselves, but mostly we don’t.  Rosie doesn’t, or at least she didn’t this evening – hence I had to walk across three neighbors’ lawns, across a highway, and pick her up and bring her back to my house.  But also, I had to give my son a time out because, despite a set of questions about “are you sure you want to color that picture with a glass of lemonade in front of you”, he colored a picture with a glass of lemonade in front of him and inevitably it spilled over the picture, his clothes, and the couch he was sitting on.

My son will (hopefully) learn to apply questions recursively against the lived experience he has; my new dog will (hopefully) start to see roads, highways, and lawn boundaries as varying steps of safety.  All of us, though, are joined by a leap of faith which (hopefully) we won’t have need to question: we opened our hearts of love, we opened ourselves to joy and hope, and we became companions on this earth.  We will (hopefully) apply our ability – limited in some sense, unbounded in others – to think recursively about love, and we will see the perfection of being open to love from those who are also, simultaneously, open to love.  I ask nothing of Rosie.  I ask nothing of Alan.  Well, not wholly true – I need them to be safe.  But if they aren’t, if he tries difficult things with electricity or she ventures across Route 9 at rush hour, I still love them – in fact, I love them so much I overreact and demand that they understand how much I love them and how much their danger hurts me.  And honestly, I don’t feel they ask anything of me.  I give them food and shelter, and they want encouragement and affection from me, but really, what I sense from both of them is that they just want me.  Me all of me, me with flaws, me with my inability to be there all the time, me with my doubts and fears.  And I want them as they are.

Companions are not possessions.  And companions have to be voluntary, on both sides.  Pets are hard because we provide so much – but you have to listen to them and make sure you are being accepted.  If you aren’t, then you’re just an owner.  You still have tremendous power, but oddly, you have that over your children too.  But we accept the power we have over pets, while we deny the power we have over children, because they will (generally) outlive us, they’ll at least become bigger than us.  But the moment either of them come into our presence, we need to welcome them as companions on our shared journey.  And we need to ask them to welcome us.  We need to be worthy of their company.  I have no right to get a dog; I have no right to have a son.  But I can ask permission of each of them – my son, my new dog – to be part of their life.  I hope they find me worthy of their companionship.  I have to accept the idea that I might not be.  But I’ll do my best.

When my daughter was about eighteen months old, we bought her some painted bricks to play with.  Cubic in shape – around 5cm long in each dimension – and numbering just over thirty in total, they were sufficient to build a tall tower, or two or three smaller towers.  Coloured red, green, blue and yellow, they were ideal for constructions that were aesthetically appealing for someone – like me – more attracted to the Bauhaus than the Gothic.  Made of wood, they were pleasingly tactile in the hand and when they fell to the floor, they produced a mellow marimba-tone that no plastic brick could hope to emulate.

They were the source of much fun.  I would build towers, of different sizes, colours and architectural designs, which my daughter would delight in knocking to the floor.  I would re-build and she would re-knock.  Build-up, knock-down; build-up, knock-down, build-up, knock-down; repeat ad infinitum.    I came to understand that there were two reasons why she preferred to destroy my carefully constructed towers rather than build with me.  First, the manual dexterity required to stack small cubic bricks is harder for a child than an adult, so for her the building process was much more like work than play.  Second, there is pleasure – great pleasure – to be had in the immediacy of a simple act of destruction.  What took me several minutes to build up, she could knock down in one second.  Thus, our division of labour became institutionalised: I would build-up, she would knock-down: work for me, pleasure for her.

As we grow up, our motor functions become more controlled and our architectural sensibilities more refined, increasing our willingness to take on the role of the builder in such games.  Our sense of time also changes, and we come to attach value to our expected future states as well as our actual present state.  We become capable of taking pleasure in construction as well as destruction, because we learn to be patient, taking satisfaction from the achievements of slow and steady work, not just the thrill of instant impact.  At least that’s the theory.  Personally, I have always been wary of the value of patience, suspicious of its status as a virtue, sceptical of the need to cultivate it as part of my character.   If something needs to be done, do it now and do it fast is my default philosophy.  Patience is often an excuse for dissembling, procrastination and general inefficiency in life.

Which brings me to a famous story about Alexander of Macedon, a figure from ancient history to whom I feel a bond, of sorts, since my middle name is Alexander, although I doubt we have much else in common, as I am neither Greek nor Great.     I draw my story from Flavius Arrianus Xenophon – known to posterity as Arrian – whose history, The Campaigns of Alexander is one of the principal sources for our contemporary knowledge of the adventures and achievements of the young imperialist.  In Book II, Arrian tells the story of the “untying” of the Gordian Knot.  Gordius was a poor man, but his son Midas became king of the Phrygians.  (It’s not a long story, but irrelevant to my purposes in this text, for which reason I pass on without comment.)  As a thank-offering to Zeus, Gordius’s wagon was parked on the local acropolis, its yoke tied to the wagon by a cord made from the bark of the cornel tree.  The Knot which kept the yoke in place was so designed that no one could see where it began or ended.   It was considered near impossible for the yoke to be untied: indeed, local myth suggested that he who managed to undo the Knot would become the ruler of the Persian Empire.

When Alexander arrived in Gordium at the start of his military expedition, it was clearly incumbent upon him to try to solve the puzzle of the Knot, in order to demonstrate his credentials as a conquering hero.  Arrian reports two different accounts of what Alexander did, when confronted by the refractory cornel bark.  One story says that he removed the wooden peg that held the shaft of the wagon to the yoke, around which the knot was tied; another story says that he cut through the knot with his sword.  Either way, as Arrian notes, “when he and his attendants left the palace where the wagon stood, the general feeling was that the oracle about the untying of the knot had been fulfilled”.  Now Alexander was ready to conquer Persia; and then India.  His solution to the problem of Gordian Knot – don’t procrastinate by trying to find the elusive solution to a complex problem, rather act speedily and decisively, thereby showing the problem to be misconceived – has long seemed to me a vindication of my distrust of the so-called virtue of patience.

Except, of course, that not all problems have a “quick” solution that can be revealed by a dash of élan and a rhetorical flourish; not all Gordian Knots can be unravelled by sleight of hand, or slash of sword.  Alexander’s impatience –or rather, his impetuosity – did not work out so well in the long-run, however impressed his immediate audience on the acropolis might have been by his audacity.   Knocking brings easy pleasure, but it requires that someone else is willing to rebuild, otherwise all that remains is rubble.  Defeating the enemy in battle is one thing, governing a newly won kingdom effectively is quite another.

Speaking of which, I write this text after a bizarre week in British politics, during which the smallish electorate that comprises the paid-up membership of the Conservative Party– mostly old, white and wealthy – have selected a new leader for their party, who – by quirk of constitutional tradition – also becomes the new Prime Minister.  For reasons known only to themselves, they have selected a man renowned for his laziness, dishonesty, irresponsibility and shamelessness; a man who, like me, disparages patience, but, unlike me, thinks the current challenges of British politics can be dealt with as if they were knots of cornel.

Two of the three principal challenges facing Boris the Great are shared by all developed democratic societies: first, how to design an electorally acceptable fiscal policy that provides sustainable funding streams to pay for the ever-growing demands on public services that support our aging populations; second, how to persuade the public to adjust their lifestyles by making significant changes to energy and food consumption, necessitated by global climate change.  Neither of these two challenges will be easy; not least because very few politicians are willing publicly to acknowledge the scale and urgency of the remedies that are required; not least because a central element of the solutions to both problems involves immigration into developed democratic societies on a significant scale, which is poorly understood and widely disliked.   I think it is reasonable to predict that Boris will make little if any progress towards serious solutions to either of these challenges, although in this regard, his record will be no more dismal than that of most of his contemporaries in other states.

His third challenge – in one sense more immediate, given treaty deadlines, but ultimately far less urgent, because it is wholly avoidable, what one might call a “fake challenge” – is to deal with the problem of how to exit the EU while not admitting to the electorate what is obvious to most dispassionate observers, namely that the economic and social costs of this foolish policy are enormous and will last for a generation; maybe longer.   As a leading proponent of “Brexit” it is highly unlikely that Boris will ever acknowledge publicly the amount of harm that the policy has already caused and will continue to cause for years to come.  But that cost is now likely to rise significantly, and to become much more obvious to the electorate, because of his propensity to treat the problem of disentanglement as if it were a knot to be sliced through.   Rather than concede that there is a high price to be paid for the gradual untying of relationships between Britain and the EU, Boris appears to believe that it would be clever for him to mimic Alexander at Gordium.

He is wrong – very wrong – as we are all soon going to discover.  Brexit only become a problem because some people insisted on the need to find a solution.   If we were to stop the frantic search for a way to untie the knot that yokes Britain to Europe, we might give ourselves the space to see that we are tied not by cornel bark, but by shared history, culture, genetics and economics.  Much as I dislike monarchy, both in its substantive and its decorative formats, it is sobering to remember that for the past two thousand years (approximately), since we rid ourselves of Roman (i.e. cosmopolitan Mediterranean) rule, British monarchs have come from Spain (Celts), Germany (Anglo-Saxons), Denmark (King Knut etc.), France ( William the Conqueror), Wales (Tudors), Scotland (Stuarts), Holland (House of Orange) and various German principalities (including Hanover and Saxe-Coburg).  The idea that we are different (and special) compared with continental Europe is ridiculous; the idea that our history demonstrates our separate identity is a preposterous self-delusion.   But it is one that Boris has nurtured.

It is impossible to unravel the Brexit Knot and it is irresponsible to try.  We are not cutting through bark, but flesh: we are kin with the rest of Europe.  We are not severing cumbersome and restrictive commercial ties that constrain our growth, but the very blood vessels of our economy.  For the past three years we have been engaged in a protracted bout of national self-harm: we are a country that should be on suicide watch.  How many pointless sword slashes will it take before Boris understands this?  It’s hard to say, but I predict that it won’t be a small number.  He is committed to knocking-down not building-up and he intends to hit an artificial deadline for no reason other than to try to disguise his own character weaknesses: namely, his laziness, dishonesty, irresponsibility and shamelessness.

As I have grown older, I have come to understand that some tasks take much longer to complete than others.  But when the task is long and complex then, I want to say, loudly and clearly, let’s start straight away and make progress as quickly as we can.  The harder the problem the more our tendency to hesitate, and every day of delay makes it harder to achieve a favourable outcome.   We have not improved our ability to adapt to climate change by waiting years to adjust our consumption of fossil fuels, nor have we made the funding of public services easier by piling up sovereign debt, the interest on which needs to be serviced out of current revenues.   The longer we wait the worse the problems have become.

By contrast, at other times, inactivity is the secret to success.  There is a segment of British society that dislikes the EU and dislikes immigration.  Their voices are loud, but they have no credible plan for managing an economy that is disconnected from its major trading partners and running short of labour.  Boris is committed to cutting the Brexit Knot, but has no clue what to do once the wagon and yoke are separated.  He offers a cure that is worse than the disease.  Like a small child, he will delight in knocking-down, but as yet, there is no-one ready at hand to start re-building work.  In times like these, the best policy is to do nothing, to stick with the status quo, to learn to live with the problem rather than try to solve it, to not rush in like a fool when an angel would fear to tread.   It might not be a virtue – I am still convinced that it is regularly an excuse – but I am now old and wise enough to know that sometimes patience is the best policy.

Mark recently posted an essay speaking to the notion that it is incompetence which makes banking a reviled profession, much more so than any moral failings on the part of its participants.

“What makes banking truly disreputable is not that some of its practitioners have moral failings, but that large numbers of its practitioners are inept: mediocrity, not malevolence, is the dirty secret of the sector.”

I wholeheartedly agree with him, although his digression in his article, in which he mused about the relationship between people who are moral and people who are competent – which he wrote as an aside – was, I think, actually the core of the essay.  Having been a banker now for just shy of 25 years – it’s funny to think that Mark met me just a few years into my career – what he wrote in that aside struck a painful chord.  What I have found is that banking seems to attract the worst people: those who are fully, truly inept, not just at banking, but at life itself.  The problem is that very, very few people understand and appreciate what banking is, but – to quote a famous bank robber –  banks are where the money is.  It’s actually not true; banks are not, in fact where the money “is”, it’s just a kind of transit station that all money has to pass through at some point.  But because all money does have to pass through banks, banks get to “see” all the money, and morally inept people see that and think “gosh, if only I could skim a bit from the top”.  And not just morally inept people: clever morally inept people.

An old friend of mine once said the worst insult she could give to a person was to say that they meant well, that they had a good heart: the implication of course being that while they meant well, they were functionally too stupid to do anything useful about it.  I’m actually of a different vein: give me a transparently dim but good hearted person any day over a clever person without morals.  I’ve met many such people – heck, I’ve dated a few, because I’m a little too optimistic about what’s inside people’s hearts most of the time – and they are the real devils.  If I say you’re clever, then you know I think you’re evil, and you have been warned.

The thing about clever people, though, is that the modestly clever people are caught out by complexity.  Indeed, that’s where banking regulation has historically played a good and fine role: banks deal with the most complex human problem that we’ve created for ourselves, the dynamic expression of social value embodied in the exchanges we make amongst ourselves for goods, services, information, and labour, and while modestly clever people can invent things (CLOs, CDOs, CDO squareds, flavours of ETFs, alternative Tier I capital, contingent capital instruments – you get the picture), eventually the complexity of the system and the tendency of highly complex systems to generate completely random and unforeseen outcomes quickly means that modestly clever people blow up eventually.  This has been my experience, at Washington Mutual, at the British global megabank that should have failed but didn’t because they paid the Qataris to bail them out, at the asset manager that Mark and I both worked for.  The market – money – is too complex to allow the modestly clever to last for long.

The really evil ones, though – the truly clever – on some level know that the system will catch them out.  They live in fear of that moment of chaos which will catch them.  Some of them check out of banking, realizing that it is a game that they will eventually lose; most of those, though, are attracted to other shiny objects than simple wealth or power.  They like drugs more, say, or sex, or they realize they can play other, simpler games (like art or charity or real estate) and they won’t face the same risk of losing.  I don’t mind those so much; given that I’m not interested in other, simpler games, they can go do what they like.  As a manager in banking, I’ve spent countless hours of coaching and mentoring such truly clever people to get them out of the building, away from the complex, dynamic, and accelerating machine that is the money system, that teaches humanity what value means to itself.  Eliminating their corruption is a good thing; when I’m in senior enough roles, I can do a lot of good by doing so.

But enough of the truly clever – not incompetent, as Mark calls them – but the clever and the perverse, get through the gates to make banking terrifying and, actually, to attract more of them to the system (until recently, when the Internet offered even more opportunities to the clever and perverse: think WeWork).  These are the people who end up managing most banks.  Their cleverness lies in embedding themselves in the transit station of banking like a leech, but unlike a leech – which sucks until it can’t eat any more – they devote most of their energy to listening to when their host is becoming aware of their scam.  Then they detatch, and reattach at another bank, and resume their gorging.  Their success lures other clever young people – men and women both, although there is something about masculinity that seems to make such leeching more tempting – to join the feast.  Most of the joiners will end up being just modestly clever, and will either be caught out and fail or they will lose the internal political games and get stuck at a low level.  But some will succeed, their ears tuned for the faint but feared signs of discovery, and end up repeating the process.

Oddly, I think banking has always been this way.  There’s a reason Christ overturned the money lenders’ tables outside the temple in Jerusalem; there’s a reason Muhammed condemned usurers to hell: it’s because the truly clever hive into banking.  But there are very few intelligent people in banking – intelligence being not the ability to solve puzzles for one’s sole benefit as cleverness is, but being the ability to self-reflect that puzzle solving ability onto one’s own struggle for purpose and meaning.  Clever people are barren; they serve no purpose except to feed their own hedonism.  Cleverness is not incompetence, though – rather, it is problem solving without reflection, without recursion.  Clever people are, in essence, computers without any ghost in the system: they can’t recognize that they are part of a whole, and at the same time, cannot see their own needs or desires or attractions as part of a larger system.  Intelligent people, on the other hand, recognize that doing themselves good is inherently barren: we all will die.  Serving our needs is inherently meaningless, and an intelligent person sees that and reflects and seeks to find – maybe impossibly – some meaning to serve.  And real intelligence continues to self-reflect – it recurses on itself, it challenges the notion of meaning that first comes to mind, it dives deeper and deeper and refuses to accept even a complex and well-articulated notion of meaning, no matter how tempting it is.  I find it interesting, in fact, that some of the “smartest” people who have made fortunes in banking while also being philosophers – David Ricardo, say, or John Maynard Keynes – have produced only morally vacant thought.  Only Spinoza has managed to combine a stint in the business with a truly insightful moral philosophy – and he remains the most humanistic of the early Enlightenment thinkers.  Intelligent bankers are rare, but they can exist.

In any event, what’s been astonishing to me in the last few years – as I took a break from banking for a few years, and then returned – is how many intelligent people there are on earth who look at banking and both marvel at and revile it.  I’ve had great conversations with lots of them, and usually by the end they see what I see, this marvelous complex and oh-so-very human construction, this money system which encapsulates everything there is about being human – self-aware, social, connected, afraid, exchanging, sharing, taking, giving, and doing it at levels beyond our own awareness.  But at the end they see the same thing Mark sees: the system is run by clever, and many truly clever people, who are not that intelligent at all.  Intelligent people can see that – and when you connect intelligent people with senior, very clever bankers, the very clever bankers quail and retract.

Mark was very kind in his essay in reference to me, actually far too kind – but his choice of title was spot on.  The Good, The Bad, and The Ugly stars Clint Eastwood, Lee Van Cleef, and Eli Wallach, respectively.  Most people want to identify with Clint Eastwood – after all, he gets away in the end and is tall and handsome.  But he’s also forced to understand his own motivations, and he reflects on them, and he acts based on those reflections.  The battle scene where he is confronted by the alcoholic Union captain who can’t stand the sight of the slaughter he must by duty create gives me chills every time I see it – and I watch the film annually at least.  On the other hand, most people would think Lee Van Cleef is the kind of banker in the story – and he is enormously clever, ultimately to his detriment, and an earlier scene reveals the depth of his depravity as he takes advantage of the Confederate losers of the war without consideration or remorse.  Most of us, however, are really like Eli Wallach.  We stumble through life, trying to win at a game here and there – a career, a relationship, an investment – while at the same time forgetting that the system that contains us – the human system, the system which embraces everything we do, including the planet that cradles us while we’ve been growing through our infancy and often shitting the crib while doing so – remembers our every act and is preparing for its revenge, or rather, the feedback loop that teaches us the moral lesson. The truly clever fear this; they’re listening for it and are on guard.  The good, well, they listen too, and they actually hear, and reflect, and incorporate, and change.  But most of us just stumble.

I can still remember when I first saw The Good, The Bad, and The Ugly; it was on Maine public television, starting at 11pm on a Friday night, and while I was planning to watch Cinemax at 11:30, once the movie started I couldn’t change the channel: I was hooked.  I knew that what I needed to be in life was the Man with No Name – Clint Eastwood – but I also knew, if I reflected on it, if I turned my own intellect with honesty towards my heart, that I was Tuco, Eli Wallach.  I knew that I would be balancing on the box at the end, hoping that the Man with No Name would shoot the rope, and hoping that when I fell I wouldn’t crack my head on the fortune, knowing that I probably would.  I’ve been balancing there ever since.  I’m not clever – not truly, not modestly, barely intelligently.  I’m human.  Forgive me.

Facebook is attempting to create an online currency for the internet, the libra, which I find enormously entertaining because Libra is my astrological sign.  I’m sure some branding consultant figured that the symbolic meaning of the sign – it being the sign of the scales, the historical symbol of money changers, perhaps appropriate given that I am proudly a banker – would subconsciously resonate, thus earning themselves a hefty fee (to be paid, surely, in dollars).  This may be because I’m a Libran, but the name struck me as being pleasingly non-“crypto”: in a world where blockchain solves all the worlds problems, but comes at a cost of bearing up with newspeaky words like “bitcoin” or “ethereum” or the like, the idea of using libras to buy in-app purchases seems, well, vaguely adorable.

The mainstream press coverage of the libra concept has focused, naturally, on the incongruity of placing trust in a store of value managed by perhaps the world’s least trustworthy individual, Mark Zuckerberg, who seems convinced that maintaining a menacing, narcissistic public face as a kind of youngish cyber James Bond villain is a good idea.  Financial writers have had a field day describing this as the beginning of the end of money as we know it, the dawn of a new era of money, the initiation of the live world of blockchain taking over every nook and cranny of our lives.  My favorite financial columnist, Matt Levine, has basically summed it up as “blockchain blockchain blockchain blah blah blah.” An old colleague of mine has tried whipping up a scare wave on LinkedIn, describing the financial distortions that will evolve as the Libra Foundation – the organization which will manage the libra currency, again named by Zuckerberg with his usual flair for the sinister; the libra as unit is cute, but the Libra Foundation as manager is awfully close to being SPECTRE – periodically buys or sells trillions of dollars or euros or yuan of government bonds which will back the currency – more on that in a bit.  Central bankers, meanwhile, have started to focus on what, exactly, this does mean, with Mark Carney – the George Clooney of central bankers – stating that if well-designed, the Libra Foundation which will manage the libra will have access to pound sterling deposit facilities at the UK central bank.

First, a quick explanation of what I understand as the theory behind the whole shebang.  Libras will be backed by a pool of central bank deposits (to the extent central banks allow it), government bonds, and short-term bank deposits in a basket of currencies representing the rough balance of what people buy into when they purchase libras.  Libras will then be used to denominate purchasable goods and services on Facebook and other platforms that buy into the Libra Foundation instead of, or alongside, purchases denominated in dollars or euros or rubles or leks or what have you.  The Libra Foundation will allow individuals to buy libras with their local currency, which will then be usable on any platform which accepts libras for payment, with the real-world money that’s used to purchase libras then being used by the Libra Foundation to buy said low-risk central bank deposits, government bonds, et al. I haven’t read the whitepaper yet to understand how the basket of currencies will be managed, but I’m assuming it will be something similar to how the IMF manages special drawing rights (SDRs) – some kind of a formula based on the relative weights of the currencies used to purchase the libras, subject to some overarching balancing equation based on liquidity, blah blah.  Of course, libra transactions will be blockchain registered – which for those of us in the real world means nothing, because blockchain is just a handshake mechanism which isn’t terribly different in a metaphysical way from how any wire transfer works in the current world, only it uses some nifty programming to distribute the verification of the transactions which are currently subject to centralized verification in modern central bank systems and SWIFT, the existing private sector standard for institutional payment transfers.  But because it’s “blockchained”, it’s now meta-officially blessed.  Blockchain, after all, is the new metaphysical endorsement of moral certainty.  Right – to quote Matt Levine, blah blah blah.

In any event, what’s interesting is that the libra will be, in effect, a currency not tied to a state, and thus value becomes disconnected from the state in an essential way: in theory – or rather, on Facebook and on other sites which join the Libra Foundation – individuals will buy and sell things to one another with “value” defined by the number of libras, which themselves have “value” equal to an increment of a floating collection of governmental value.  The Libra Foundation will fund itself via the float – the interest paid on the collection of interest-bearing very low risk securities and deposits it holds, although it’s not clear what will happen if the trend towards negative interest rates which already sucks in a good portion of OECD country debt continue to accelerate.  People will be able to convert their libras to the underlying currency basket at a rate which will float based on the underlying currency basket that the Libra Foundation manages, presumably with some bid-offer which again will be a source of income for the Libra Foundation (seriously, the more you say it, the more evil it sounds).

For financey-types among the readership, this will probably sound like an amalgam of several concepts.  To my ear, it feels a lot like the original concept of the Bank of England, which most people forget was a private corporation – not an instrument of state – for most of its existence.  They accepted deposits in specie – gold or silver – and used that specie to buy government bonds bearing a rate of interest.  Depositors then could use “bank notes” – essentially promises of the Bank of England to convert the note back into a given amount of specie – to exchange value amongst themselves.  In a physically defined world, this was much more convenient than carrying around sacks of coins or gold bars, and thus most people came to prefer exchanging notes.  Meanwhile, the Bank of England had to make a profit for its shareholders; just sitting on gold didn’t earn anything (and, indeed, it cost money to store the gold safely: visit the Bank’s building on Threadneedle Street and think about what it cost to build that pile).  So the Bank took most of the gold and bought interest-bearing bonds issued by the English crown, or by buying the notes of other banks at a discount and redeeming them at maturity for par.

This, indeed, is exactly the same as the Libra Foundation proposal.  The kicker for libras seems to be that, just as in the 17th century, people were finding that the inconvenience of paying in gold was hampering their ability to accelerate finance and investment in the physical world, people are finding that banking in the 21st century is too inconvenient in the now virtual world of the internet.  On a certain level, there may be some merit to that: a recent Financial Times article on the inconvenience of the German banking sector, with the result being that the author found it almost impossible to use a UK bank card to get cash, pay for dinner, or the like, shows that there remain areas of personal purchase power which are effectively prohibitively inefficient.  To the extent that people on Facebook and other sites find it challenging to use their existing dollars and euros and rubles to pay for things online, the proposal – in essence, “give me a bunch of your real world cash and I’ll give you a different, but still valuable and convertible, cash that’s completely efficient to use in the virtual world, and I’ll also let you convert back to real world cash in a convenient and seemless (sort of – I’ll still charge a vig) way” – this argument makes sense.  Again, it’s no different than what the Bank of England did in the seventeenth century, and the Swedish Rijksbank did even earlier.

So far, so uninteresting.  In fact it’s more than uninteresting from a financial perspective.  It actually represents a step backward: private currencies are four hundred years old, and over that time, the inherent risks of such a system resulted in the nationalization of those currencies because private banks couldn’t be trusted to buy totally safe instruments.  Even when they thought they were – when, for example, the Bank of England bought only British government debt – the government itself would do something like, oh, fight a horrifically destructive war against Napoleon, come close to losing, and people would want their gold back.  My ex-colleague on LinkedIn imagined something similar to this, where a stampede of libra holders all seeking to convert back to, say, dollars, would force the Libra Foundation to dump all of its holdings on the market, driving down the value of government bonds and creating a spiral where libras would convert to fewer dollars, the remaining libra holders would panic further and try to convert more, resulting in more government bond sales, etc.  Eventually the poor saps at the back of the line would get nothing and would be forced to exchange their now-worthless libras for anything, presumably leaving only Facebook able to accept them for payment against online advertising…

… which gets me to my real point about what makes money reliable as an exchange of value.  At some point, every government with a private currency system reaches the point described above.  In the US, it happened during the Civil War; indeed, war is the constant theme in the point at which a money system requires transformation.  At some point, there is a crisis of confidence in the currency, and people rush to exchange their now-doubtful notes (or bank accounts) denominated in shaky currency X into less-doubtful notes in safe currency Y, or into gold, or into other physical and mobile goods which will retain value.

Interesting but relevant aside: back when I was working for the incompetent global megabank, and has some modest oversight responsibilities for our African treasury operations, I visited Johannesburg rather often, and was struck by the number of really expensive cars – Maseratis, Porsches, and especially Mercedes and Audis and BMWs.  Houses, meanwhile, were incredibly cheap on a dollar-adjusted basis.  An Audi costs the same for Audi to make no matter where it is sold – let’s say the base model A4, which was everywhere, is $50,000.  People were paid much less on a dollar-equivalent basis than in the US – the average bank employee probably made around $25,000 after tax, versus the equivalent in the US of maybe $60,000 – but in the US, they’d drive a Corolla; in Johannesburg, they’d drive a Mercedes C-Class.  Then again, their flat in South Africa would cost maybe $40,000, while the US person was buying their house for $250,000 or more.  It made no sense until the head of the South African bank’s treasury operation explained it: most people in Johannesburg were anticipating some kind of Zimbabwe like collapse.  In that event, the escape plan for everyone was to drive to Botswana – well known as the Switzerland of sub-Saharan Africa – and since at that moment, they’d need to take as much value as possible with them, they put far more of their savings into a fancy car than into their immovable home.  It made perfect sense.

So to return to the main thread: every currency (including gold, mind you; gold also has had panic attacks in the past when large quantities of it suddenly hit the market, say when Spain looted the Incan and Aztec stores and dumped it overnight on the market in the 16th century, or when the roughly contemporaneous California, Australian, South African, and Yukon gold rushes did the same in the mid to late 19th century) eventually hits a crisis moment.  And when it does, either one of two things happens: either a strong, ideally hegemonic state power forces people to accept the currency as valid, or hyperinflation destroys the currency and it gets replaces by an exogenous alternative.  For most of historical time, the exogenous alternative was some form of relatively difficult to corrupt base metal – gold, silver, or electrum, which is just an alloy of the two – but for the past few hundred years first the pound sterling, then the dollar, have emerged as replacements.  Uneasy replacements, it should be added: there’s a reason gold is now worth a heck of a lot more than it was twenty years ago.  But what I want to emphasize is the role of the power of the state in enforcing the currency as a means of exchange.  It comes in two directions: one is taxation, and the other is the naked exercise of violence, of the state’s rough oligopoly on the use of violence without consequence.  They are, of course, related.  And we’re standing in a moment, due – to repeat a theme of mine – to the emergence of abundance onto the human scene, where violence may not be as relevant as in the past.

On an American dollar, it quaintly states “This note is legal tender for all debts, public and private.”  What that means is that the state – with all the power it has, of police, of war, of violence – will recognize the use of the dollar to extinguish tax obligations to the state, and just as importantly, it will recognize its use in the world of law, which has behind it the threat of the application of the state’s ability to compel via force, to extinguish private obligations as well.  That is to say, if someone gives you notes with face value of $10,000 to pay off a contractual obligation that has a reasonable and legally demonstrable value of $10,000, the state will compel you to accept those notes as payment to extinguish the liability.  You don’t have a choice.  You might want something else – libras, euros, cows, cowrie shells, Green Stamps, frequent flier miles – but the US government and its agents will compel you to accept the notes that are imprinted with that statement – “This note” etc etc – and will then cease to recognize any further obligation of the person who paid you using the currency.  It’s a political statement: this is government imposing itself at the most primal root of human relations, of basic exchange and definition of value.  You might want to value things differently, but the power of the state – with the gun, with the weight of tradition and history but most and, really, only importantly with its relative oligopoly of violence – will compel you to accept its definition of value.

Weak states can’t do this – Weimar Germany couldn’t; Mugabe’s Zimbabwe couldn’t – but strong states can.  A victorious Union could in the wake of the Civil War, when “greenbacks” were forced into circulation as a means of paying the government’s debts incurred in winning the war.  A victorious United Kingdom could do so in the wake of finally defeating the Napoleonic empire, as it suspended payments of specie against presentment of Bank of England notes until it finally had accumulated enough specie and, more important, prestige and trust to make such exchanges irrelevant.  I have a sense that Zuckerberg – I’m sorry, I mean Facebook – whoops, I mean the Libra Foundation will be a test state, much like all sorts of startup countries (the US in 1789, England in 1694, Canada in 1934) who test their ability to enforce a notion of value.

What’s fascinating is the idea that this startup will not be a state, but it will simply be a collection of online exchange platforms.  I suppose there is a kind of compulsion available to such a platform, namely the dreaded “network effect”: once a network is used by a critical mass of the population, the rest of the population can’t avoid it.  The compulsion now becomes not something of violence, but something of, for lack of a better word, virtual shaming.  Either accept libras or be shunned from the network; since being shunned from the network is akin to the ancient Greek notion of exile, containing at once the loss of identity and meaning, it is so horrid to contemplate that nearly all will accept the value proposition, as it were.  It makes the name “libras” even more compelling: fundamentally, this is a return to the ancient idea of membership as the only means of creating identify, and thus of creating value.  It rejects the medieval but inherited into modern notion of identity being linked to nation, nation being the primal source of violence and control and, thus, of enforcement of value.

But I return in my mind to South Africa.  I have a sense that what will really happen will be an inefficiency.  There will be some good that will be viewed as portable across borders – in this case the border between the virtual and the real, the real being maybe more porous and in flux than before, but still an “other” relative to the virtual.  Some kind of good will emerge as the online equivalent of the Maserati in Johannesburg: a mobile object into which the citizens of the online world can have an escape hatch into an alternative world of value.  Goods in the Libra Foundation would will trade at a discount to those goods which have the capacity to cross the border.  And in the real world, as the threat or lack thereof of violence of the state varies and changes, and as the value of dollars and rubles and pesos and rands and gold varies, even these will become simply markers of relative violence, of virtual versus real violence.

One of the smartest bankers I ever worked with once pitched a capital raise to the bank I worked for which failed (excuse me: the bank that I know failed.  I’ve worked for other banks since, all of which retain the option of failure).  My CEO, who was incompetent to a rather extraordinary degree, advised by the guy who has been spinning up LinkedIn panic about libras, listened to the pitch, and at the end said, well, if the world is as bad as you think, what would we use all the equity we raise to buy?  The smart banker said, in the best line I’ve ever heard in my career – “well, easy: shotguns and canned goods.”

I’m not sure I’m that pessimistic.  And I think we have constructed a world of truly human proportions, with human resiliency, and I’m amazed at how resilient we really are, even when we’re damaged by traumas ranging from divorce, to war, to suicide, to emotional homicide.  I look to the goods that can cross worlds, of the virtual, the real, the worlds of the mind and of the heart.  I’m investing in relationships.  I’m investing in people.  You, my son, I’m investing in you.

And despite my sun sign, I’ll refrain for the time being from any accounts denominated in libras.

In the autumn of 1998, I departed from the asset management division of one global bank and arrived at the asset management division of another global bank.  I didn’t know for sure at the time, but it later turned out – as I hoped it would – that I had moved to a much better job at a much better firm: a spring in the fall.  After a couple of weeks, I was asked to travel to San Francisco to meet some of my new colleagues at the US headquarters.  Thus, it came to pass, just over twenty years ago, very early on a Monday morning in mid-December, on a trading floor high up on Fremont Street, I was first introduced to Peter Freilinger.

I think it is fair to say that during the first months of our acquaintance there was an element of caution from both parties.  In part this was due to some irritating but humdrum office politics, in particular the behaviour of a member of the senior management team, who proved to be an obstacle to the development of a constructive working relationship between us and, in due course, sabotaged each of our careers at the firm.  However, in part this was also due to the hesitation that is all but inevitable when the formerly precocious meets the currently precocious: we circled each other, mostly respectfully but also a little warily.  Time passed, we both changed jobs, Peter moved from one country to another, the financial crisis came and went, and as we become older, we also grew wiser: eventually respect won out over wariness, and we became friends.

Over the years, I discovered that he is a good banker in both senses of the word “good”: technically, he exhibits a very high level of proficiency across a wide range of skills and tasks; at the same time, he reflects carefully on the ethical dimensions of his work and takes his responsibilities – to colleagues, clients and wider society – seriously.  This combination is rare; not as rare as some of the lurid representations of the financial services industry served up by Hollywood might lead one to believe, but nonetheless rare enough to be prized when we stumble across it.   I saw in Peter the combination of competence and conscience that I admire; and, I suppose, he saw something similar in me: let’s call it elective affinity.

I want to say more about the importance of skill in the financial services sector, but first a short digression.  While it seems straightforward to distinguish the two different senses of the word “good” – one meaning highly proficient, the other meaning morally commendable – I find myself repeatedly drawn to the view that someone who demonstrates high levels of skill at a given task should also be expected to behave well, to treat others with respect, to honour the highest values of the culture of which they are part.   I find myself drawn to this view despite the wealth of evidence to the contrary.   I know that Maradona is one of the most gifted footballers in the history of the sport and, at the same time, was a cheat and a tax evader, with a drug habit and some unpleasant political views.   I know that Richard Wagner’s music is glorious, but that his opinions were odious.  I know that the sublime often emerges from the slime.  Despite what I know, I am tempted to think that someone being good at something creates a justifiable expectation of their being a good person too; that excellence in the particular should be accompanied by excellence in general.

There is a contrary view, namely that those who expend significant emotional and physical energy becoming very good at certain skills or tasks, can’t also be expected to have the capacity to invest in being a good person; that the pursuit of excellence in sport, or the arts, or at work, necessarily breeds a certain selfishness and competitiveness, which sit uneasily with the cultivation of good character.  This view would claim not just that being very good at something is perfectly consistent with being a bad person, but that being very good at something is more likely than not a predictor of bad character.  I find this idea troubling, not least because it seems to provide some people a ready-made excuse to indulge the less admirable aspects of their personalities.

It might be that there just is no correlation between the two senses of “good”, that one’s being very good at some skill or activity is not consistently indicative – one way or the other – of the quality of one’s character.  In “Science as a Vocation”, Max Weber makes the point that today there is no credible reason for us to assume a common source for the values of truth, goodness and beauty.  It is the fate of those who live in the modern world, Weber suggests, to be forced to acknowledge the reality of the “evil genius”, the “ugly truth” and the “flowers of evil”.  Kant, we should remember, wrote three critiques, not one.  Even so, despite all that I know, I remain attracted by the idea that excellence, at its most excellent, forms a unity.

End of digression.  Back to banking.

The financial services industry is not popular.  The scorn and loathing its practitioners attracted a decade ago, in the immediate aftermath of the financial crisis, has waned somewhat but there is no sign of the emergence of affection or admiration for bankers from among the non-bankers.  Rather, they continue to be portrayed as greedy and irresponsible, over-paid and unrepentant, privatising the upside gains while socialising the downside costs.  I do not want to deny that there is an ugly side to the industry: during my career in finance I have met – and sometimes worked with – people who were dishonest, mean, selfish, vindictive or cowardly.  What I do want to deny is that this is the main problem with the financial services industry.   What makes banking truly disreputable is not that some of its practitioners have moral failings, but that large numbers of its practitioners are inept: mediocrity, not malevolence, is the dirty secret of the sector.

Let’s put moral judgement aside and focus instead on competence.  Within the financial services industry there is a wide range of roles, which require a wide range of skills: some are fairly technical, requiring high levels of numeracy or analytical ability, others call for skills in communication, team leadership, project management, technology and operations management.  Almost all roles require a good level of interpersonal skills, not least to ensure that risks in one part of the business are well understood by people working in other parts of the business.  Given the generous levels of remuneration that are widely available in the sector, firms should be able to hire and retain individuals who can evidence one or more of these skills, and who are willing to work hard to improve their skills-sets in some of the other areas.  From the point of view of capability, then, the financial services industry should have a reputation for technical excellence: good bankers should be plentiful.  But they are not.  There are some individuals who are outstanding but, in my experience, they are notable for their rarity.  In the financial services industry, the mean, median and mode for technical quality are all lower than they should be.

Further, those who rise to the top tend not to be the best: merit is a less reliable predictor of career success than endurance, combined with patronage.  The route to advancement in many firms is to hang around for long enough – and to hang out with the right people – rather than to demonstrate consistently high performance.  Some of this can be attributed to office politics, of the kind that Peter and I suffered from back in the day.  But much is due to the growing role of regulation in the sector.   The more rules there are to follow the more the industry becomes fixated on compliance rather than excellence: making sure things are not done wrong, rather than making sure they are done well.  Being compliant is mostly a low hurdle, but it quickly becomes the standard beyond which there is little reward for effort: the sector congregates just above the regulatory line, and the excellent is crowded out by the acceptable.  The good-enough has become the enemy of the best.

There is, for sure, an important role for regulation in the financial services industry.  Banking needs rules as much as do baseball and cricket.  Unlike team sports, however, there is a strong tendency in corporate life for rules quickly to become norms rather than constraints.  By which I mean, in sport the players take account of the existing rules and are forced to adapt their playing style quickly to changes in the rules, but no-one thinks that they should be rewarded just for following them.  In banking, following the rules is sometimes regarded as good enough because it has become the new standard of performative assessment: “we didn’t get fined by the regulator this year” is viewed as a more important measure of success than “ we did a really good job for our customers”.

There are people working in finance who care about the quality of their work, who want their customers to be pleased by the quality of the service they received and the level of price they were asked to pay for it; who want their colleagues to be well-trained, well-motivated, well-treated and well-compensated for their work; who think hard about how they can improve the products they provide, to the benefits of all the stakeholders of the business (shareholders, for sure, but creditors, clients and other partners, broadly construed, too); who consider the wider social impact of their company’s activities and practices, and who care that their firm is making a sustained positive contribution to the well-being of the community; and who, for reasons of personal pride, like to challenge themselves to work harder and achieve better results, day-by-day, month-by-month, year-by-year.  There are some good people working in finance, but often they get disheartened, swamped by the preparedness of many of their colleagues to settle for far less, for just about good enough, for the complacency of being merely compliant.

What is true finance is probably true of many other sectors of the economy, especially those that have recently undergone a significant increase in the volume and complexity of regulatory oversight.  This is not just a problem for bankers.  But it is a problem – a very real problem – for bankers, and for everyone else too because, as we learned a decade ago, what goes on in the banks ends up impacting us all.  Ever more regulation leads to an ever greater focus on compliance, which leads in turn to the abandonment of excellence in favour of acceptability; those who get ahead are those who keep their heads down, instead of those who take on the risk of leading their teams into new and better values and practices.

There are ugly people everywhere – that is, people whose behaviour is morally ugly – who deserve to be exposed and held to account.  Finance has its fair share but, in my experience, it is not unique in this regard.  However, if we want the financial services sector to work better we need to pay less attention to these miscreants, and to focus instead on rooting out the lazy and the mediocre; and we need to identify and celebrate the good bankers, who work hard, with skill and conviction, doing a good job for their customers and for society more widely.  All of which is a long and roundabout way of saying, that while we must continue to recognise that the word “good” has two separate and equally important meanings, we should also acknowledge that in some spheres of life, such as banking, the pursuit of technical proficiency – that is, the development of products that are reliable and effective, delivered to customers in a professional and responsible way – is at the same time a moral good.