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It’s been an odd year, no two ways about it. Here in the states, the pandemic has been quietly but no less officially declared to be over: either you have your booster shots, and you’ll be as fine as anyone can make you, or you haven’t, and you’ll get sick soon enough to prevent you from voting Republican in the next election, and that’s all fine, as the midterm results proved out. On the home front, the boy is doing beyond great in fifth grade despite his mom moving to Maine. All other systems are go.

But I haven’t been writing, and it’s been bothering me because I haven’t quite known why. It’s not the day drinking – hell, that’s been here since I started the blog more than five years ago – and it’s not the general amount of spare time I have on my hands, which also hasn’t changed much since I stopped travelling around the world on a weekly basis for Barclays Group Treasury (and yes, for those who know me, that means that the amount of actual time required to run Barclays Restructuring Group was roughly twenty hours a week).

I think I’ve figured it out, and I have to thank Stuart Kirk, the former editor of the Lex column for the FT, for helping me. He wrote a savagely idiotic essay in this weekend’s edition which is wrenching me back to a reality in which it’s worthwhile to talk about the moral consequences of one’s daily choices – which, after all, is the whole point of this blog, and the whole point (to me, at least) of all intellectual and aesthetic choices.

Mr Kirk’s thesis, essentially, is that the only thing that matters is the now. He presents a straw man of what he claims preoccupies the world, the improvement of some future space – which we must prevent from being 1.7C warmer than today, with not too many people who will be potentially harmed – and posits an imaginary future state of today in which potholes exist, where real people who we could know (if we got on a plane and went to find them) are dying, which is far more – 100% certain, to use his verbiage – reliably existent as moral cases to be solved.

That’s not it at all, though.

It’s not to say that Kirk is wrong about the existence of immediate, tangible examples of horror against which we should be railing. He’s right in that sense: there is a high percentage chance that New Delhi will be uninhabitably hot in 50 years, but there is a 100% certainty that a decent greater than 25% ish proportion of its population is living in indecently horrid conditions today. If we focus on the future non-100%-but-close-to-95% likelihood of New Delhi’s future complete failure at the expense of today’s 100% certain failure to help somewhere between 25% and 50% of its population live at a base standard of hygiene and health and education, we are in essence privileging the future potential humans of earth at the expense of the actual current citizens. He’s right to point that out.

Mr Kirk, interestingly, is “former head of responsible investment at HSBC Asset Management and previous editor of Lex“, Lex being the premium column discussing corporate doings in the FT. In other words, it’s not like he’s just coming out of nowhere: this is the kind of thing that bubbles within someone who’s otherwise churning out pablum for institutional investors and occasional columns on random company quarterly earnings. This is his columnist cri du coeur.

But he is guilty of exactly the problem that I think is preventing us from being able to move out of the Enlightenment trap, which is to say, he fails to see human culture as a continuum. The Enlightenment – from Voltaire to Smith to Ricardo to Marx – see the human landscape as a series of set pieces, a series of time scapes, transitioning from one to another. Even Darwin does this: his tree of life concept allows for – indeed depends upon – the idea that you can take a slice of the tree at any moment across the aeons and see “what is”. Darwin does the best of the bunch in that he doesn’t pretend to predict the next step, but the rest of his age are more arrogant, and assert in various ways what must occur, the predictable linear path that must be drawn given the snapshot we capture of today and the strings of the past we observe behind us.

Kirk doesn’t fall for this but he does fall for a related intellectual rabbit hole, the notion that the inherent randomness that impacts our ability to predict the future from the combination of our past “certainties” and our current snapshot ensures that efforts to steer towards future good states or avoid future bad states has too much volatility to bother with, so let’s simply focus on today. He’s inching closer to a better solution, but he’s still caught up in a dangerous separation of the past – which in both his view and in the classical Enlightenment view is “known” – and the present, which is a photographic image, somehow imagined as being complete and precise – and the future, which is a collection of linear extensions of the current state process which vary only by degrees, because they are still just processes.

That view, though – that we live on a process surface, and simply choose between different pathways via the intersection of our choices with those of others – while at the core of most of post-Enlightenment thinking (be it east, west, or post-colonial – there isn’t a real differentiation any more if we’re honest with ourselves), is false. We do not live on a process surface; we are embedded processes, acting both individually, acting within agglomerations of others, acting as part of a species with certain consumptive and reproductive imperatives, acting in the broader drama of life as a process on a mineral and gaseous and aqueous planet, acting in the broader drama of stellar evolution, acting on the background of quantum processes which are (to all intents and purposes to us) infinitely constant and yet wholly unpredictable in the background. Our perception of history as a timeline is false – the timeline seen by someone in Botswana is unrecognisable to me in Maine, let alone how stunningly beautiful and incomprehensible the historical timeline of a Metis in northern Quebec would look to me – but Kirk and others still live and, indeed, their lives depend on positing that simple differentiation of time past, known; time today; knowable; and time future, uncertain.

Accuracy, meanwhile, would hold that the past is knowable, but diverse and irreconcilable. It would hold that the present is no where measurable because there exists a lag in communication even in having my brain know what my toes experience in the moment. And the future is not a process from the past and the present; it is a both perfectly unknowable, and at the same time, we exist as sentient beings on a certain level to sort and compare and choose what future we will construct. That is to say, the future isn’t a process drawn from us: it is a constant choice, made instantaneously by an effectively infinite number of actors – subatomic, mineral, living, sentient – and crunched, waveform-collapsed, and reinitiated every single moment, and since every moment is across space, occurring with effects that also require the time movement of events as they ripple across the cosmos.

The potholes and the indigent and the sickly that Kirk points out are all deserving of our individual concern – but that isn’t to downplay or ignore the future generations who will be crying out from thirst or disease or heat on a warming Earth. And it’s not to ignore or move past those who came before us and were enslaved or ignored or oppressed or kept in silence. Thinking holistically as a moral individual requires thinking not just across spaces – not just being concerned locally – but also to be aware of the dynamics of time and space in motion, and to avoid the easy privileging of any one frame of either time or space.

Does this make it simple? Of course not. Does this give any of us individually the opportunity or hope to effect real change? Of course not. Does this excuse any of us from the effort of doing our best, given the tools and opportunities that come to hand? No, of course not.

We don’t get to focus on the potholes and congratulate ourselves, which is effectively what Kirk tells us. We get to fix the potholes and realise the inadequacy of our efforts, and we get to view the whole and give ourselves only the damning certainty that our efforts will always be in vain. We get to step away from the concept of glamorous self-congratulatory virtue, and step into the shoes of Sisyphean effort which has no end. In a universe which is, essentially to us within it, infinite, we have only the promise and the reward of infinitesimal improvement. There is no solace, and yet, the opportunity to be part of the adventure is what we have – all we have.

For a long time, I have enjoyed reading the work of Marcel Proust, who died one hundred years ago this week, in November 1922.

Proust’s most famous book, À la Recherche du Temps Perdu was initially translated into English as Remembrance of Things Past and then later as In Search of Lost Time, and both titles describe something important about the content of the work, that it is concerned with the operation of memory and that we experience the passage of time as loss, although neither English title quite captures the ambiguity and élan of the original French, and which tells of the perpetual struggle to keep fixed in one’s mind that which is forever fading away, and the paradoxical truth that as we grow older we have more experience of life to draw upon but we have also more that is forgotten, either partially or wholly, and this personal experience of the accumulation of knowledge that is never fully accessible to us – and, as Swann was to discover and Marcel was to repeat, such knowledge often takes the form of wisdom after the event – is also replicated in society at large, where we are surrounded by evidence of previous eras, accumulated over many generations, in the form of church spires, the names of towns, the great aristocratic families with their distinctive lineages and estates, the famous artworks of earlier periods hung in galleries or frescoed onto walls, and the culinary customs passed down within families that specify how asparagus should be cooked or that madeleines might permissibly be dipped into the tisanes with which they are served, all this social and cultural history both grows and fades at the same time, indubitably present in shaping our lives while often bereft of the values that once attached to it, simultaneously in and out of our conscious reach, and that consequently both our individual and our collective lives are conducted in a world that is saturated with meanings many of which we are no longer aware of, unless or until some accidental moment or event – unintended and involuntary – jolts our memory and brings back to our recollection something from our past that casts light upon the present, and suddenly – miraculously – we gain or regain insight into the true meaning of our lives.  

Continue reading “Marcel”

There is a familiar storyline in classic European novels, in which a young man from a wealthy family wastes his inheritance through foolish behaviour.  In Russian examples this generally involves running up massive losses at gambling tables, whereas in the most famous German example – Thomas Mann’s Buddenbrooks – it occurs when the northern virtues of diligent labour and prudent trading are abandoned in favour of the southern vices of impulse and the cultivation of an artistic temperament.  The reckless squandering of great wealth that had been carefully accumulated by one’s ancestors is presented to the reader as an evident sign of personal irresponsibility and, more widely, social decline.  It is far less common to read of older people of modest means, whose ethical failing consists in indebting their great grandchildren.  I find this surprising, since duties, presumably, should run in both directions, up and down the family tree.

One of the many achievements of the welfare state, which became the dominant socio-economic model in the Western world in the second half of the twentieth century, was that it replaced the lottery of family inheritance with a safety net that guarantees a minimum of goods and services to all citizens, regardless of what might be passed down by their families.  Irrespective of what kin supplied, kith ensured a decent standard of living for all.  That was the basic idea.  Lately, as the cost of goods and services continues to rise – due in part to a steady expansion of expectation as to what might be included in the baseline package – and widespread resistance to higher taxation grows, Western societies have all – to a greater or lesser extent – decided that their welfare state should be partly funded by future citizens.

Public debt is deferred taxation; spend now, pay later.  There are all sorts of reasons for thinking that this a sensible way of managing the mismatch between the appetite for services and the willingness to pay for them through the tax system.  Spreading costs over time has long been understood as a good strategy for individuals – using mortgage payments to buy a house, or insurance premiums to cover the risk of having to replace a major item that might be lost – and using borrowing to fund investments that will improve future profitability is well understood as a rationale for corporate leverage – the increased productivity achieved by upgrading machinery or premises, or the improving sales that follow from a large marketing campaign –  so it should come as no surprise that a similar approach has been adopted by governments.  The national debt exists, so it is said, not to burden future generations but to increase their inheritance: it should not be thought of as a liability that we pass on, but as a mechanism for increasing the size of the legacy we leave behind.  Well, maybe.

Continue reading “No taxation without representation”

In 49 BC, on a cold winter night, the advanced guard of the 13^th Legion of the Senate and People of Rome reached a small stream that flowed towards the Mediterranean.  This was the Rubicon, a waterway of such little geomorphological importance that today no-one really knows where it ran from and to: its location has been lost.  Minor in physical terms, it was nonetheless major in symbolic terms, for the Rubicon formed part of the frontier between Italy and Gaul, between Rome’s domestic territory and its foreign dominions.  It the 13^th Legion crossed the Rubicon, they were in effect declaring the start of a civil war, a repudiation of the republican form of government that had existed in Rome for almost five hundred years, its traditions, its laws, its aversion to monarchy, and the clear separation between the violence used to suppress enemies abroad and the electoral process used to settle arguments at home.  The commander of the 13^th Legion – Gaius Julius Caesar – paused at the stream, contemplating the potential consequences of his next steps.  

Caesar was aware of the likely immediate impact of his actions, but perhaps not even he could fully understand the historical significance of the symbolic act that he was about to undertake.  A contemporary British historian notes that, in Europe, because of Caesar’s action, a thousand years of civic self-government were brought to an end, and not for a thousand years and more, would it become a living reality again.  (Tom Holland, Rubicon, 2003.)  Caesar overthrew the Roman republic and inaugurated two millennium of monarchic and imperial government, the legacies of which remain today in Europe: the designations ‘Kaiser’ and ‘Czar’ are both derivations of Caesar’s name, and while he might call himself the President of Russia, it seems clear that Mr Putin considers himself an heir to the form of militarist dictatorship that Gaius Julius established at Rome. 

Continue reading “Crossing the Rubicon”

Ms Mary Elizabeth Truss is now the United Kingdom’s Prime Minister, and godspeed to her in that role; it will not be a simple one. She has many challenges, of course, but all of them are coloured by the fact that she has less than two years before she is required, by a law passed by her predecessor David Cameron, to call a general election in 2024, just less than two years from her own elevation to the post. Along with her new Chancellor of the Exchequer, Kwasi Kwarteng, who introduced on her government’s behalf an anything but mini-budget last week at the Commons, she’s going to ride a very interesting, and very quick, ride in macroeconomics. Meanwhile, Andrew Bailey, of the Bank of England, has unhelpfully said that their supply-side stimulus plans will lead to higher interest rates: an observation which academically is uninteresting, but from a PR perspective, seems to indicate Bailey wants to be a jerk.

President Biden is riding a similar roller coaster, although he has the advantage of having been in office for a little less than two years. He continued the now-long-forgotten fiscal stimulus bills of his predecessor, Donald Trump, and managed to get a capital expenditure bill through Congress which – unlike the spending giveaways of the early days of the pandemic – just pay for long-deferred maintenance of US infrastructure. But with inflation now at 8% (depending on the metric), he’s also hanging on for dear life.

There’s an entertaining game on the Federal Reserve website which allows people to see how good they are at changing base rates. You start in (interestingly) an interest rate environment which is completely foreign to anyone who has been an adult in the last thirty years; this is a Laffer Curve game, so you would need to ask your parents or grandparents for help, and even then, if they don’t know who Arthur Burns was, you should just give up and go back to tracking the Kardashians on Instagram. In any event, the game starts with a random inflation rate and a random Fed Funds rate, and you – as the omnipotent Fed chair – change the Fed Funds rate in response to macroeconomic data (unemployment – remember, the Fed has to minimise that!) and fiscal spending and exchange rates and blah blah blah… I’ve played it multiple times, and the point of the game seems to be to convince you that the Fed governors have a really tough job and you, sad citizen, will never be up to the task. They never ask whether the Fed governors are up to it either, but hey, I get it, this is their website.

I’ll bring up one last item before getting to the point. I am a willing victim of the Wikipedia default mainpage, at en.wikipedia.org for those of us who are most comfortable in English. Today, there was a link for a climate scientist named Chip Fletcher, who makes the blindingly obvious observation that “our communities are scaled and built for a climate that no longer exists”. But the observation clearly is interesting because it made the front page of Wikipedia’s daily update: someone on their staff thought “wow, people out there probably haven’t made this connection before, this might be interesting.” And of course it is interesting, but only because so few people understand time dynamics in complex systems.

I cut my teeth in macroeconomics a long time ago, but one of the fundamental observations of Volcker, Friedman, et al was that any given change in base rate policy by a central bank – that is, any fundamental change in the cost and carry of a fiat currency set by the institution designated to grant access to said currency – has at least an eighteen month lag before the broad economic impact is fully absorbed. I also learned ecology – oddly – for the first time at the hands of a slightly crazy biology teacher at Cape Elizabeth High School, who used to throw small black balls representing hydrogen atoms at us when we failed to properly model organic molecules. He used to say that environmental systems never change overnight – they change over decades, or centuries, and he brought up as an example our local Presumpscot River, which was not much different than an open sewer in the early 80s, but was getting better, because the Clean Water Act in the 1970s was almost fifteen years old, and every year, the river was getting better. He told us that maybe our kids would be able to fish or swim there (he probably missed it by a decade, but hey, that’s prediction), but he also said that just because it would take 50 years to make up for 300 years of waste and ignorance, we shouldn’t turn back.

So now I’m at my point.

Climate change is happening, and yes, it’s human caused – even though the timing of our human intervention over the past three centuries of industrialisation may be coincident with other astronomical rhythms of sun activity etc. that serve to emphasise the effects. But humanity has caused much, if not all, of the change in our climate of late, and we’ve spent centuries creating it, and while we’re decelerating the pace of change, we’re still not actually reversing it. That means we’ll have centuries – at least – of reacting to the impact. Bill McKibbon, who keeps saying “we have No Choice but to stop our behaviour or else the world will change irrevocably” is thus an idiot, and ignorant of systems behaviour. He is roughly as old as my father, born in the late 1930s; even when he was born, the planet had long since passed the point of no return for being burdened by the impact of human actions on climate. What we can do now is be responsible – reduce our carbon output, optimize our energy consumption where possible, think carefully about consumption and materialism – but what we can’t do is reverse what had started when England, France, Germany, Japan – hell everyone – started burning coal and oil and natural gas back 200 years ago. And it would be deeply hypocritical of us to tell India and China and Africa “hey, you guys have to stay poor, because we already harmed the atmosphere with the carbon we burned to get good stuff” when we already know we have a couple of centuries of downstream impact which haven’t been felt yet.

Climate change is hard because frankly, we’ve already cursed our grandchildren, and their grandchildren, and we’re now relying on us – who grew up enjoying hydrocarbons – to somehow curtail our addiction, and to develop a picture of rational chemical energy consumption (while we’re still trying to perfect fusion and solar power) for our children and their children that will make the future maybe, possibly, sustainable. In the interim, though, get over it: get used to the forest fires, and the smoke infecting cities on the West Coast, and the floods in Pakistan, and the step function in tropical storms affecting Canada, and the droughts everywhere, and the floods everywhere else. It’s over, people: the world has changed and it’s our fault and no one alive today, even if we do everything right, will enjoy an optimized planet in their lifetimes, because even if humans might possibly live to be 150 years old if narcissists like Elon Musk pull off their pipe dreams, the environment as a complex system is going to take at least the 300 years it took for us to carbonise it to resume normal operations, and more likely, will take a factor multiple of those 300 years to truly work out the impacts we’ve created.

And so we get to the economy, which is no different. In the US – which issues the numeraire currency of all human societies, having replaced gold and its semi-humorous proxy, the pound sterling, back in the 1940s as the core representation of temporal and instantaneous value among individuals independently choosing to engage in trade to take advantage of the differences in productivity, access to primary inputs, and possibilities of creation that exist across all however many billion of us there are on this planet – the Federal Reserve from time to time changes both the quantity of central bank money, and the price paid for that money. But because all seven or eight billion of us transact, at a basic level, in dollars, and we create our personal and corporate value over longer time spans than the instantaneous rate at which the Fed changes interest rates or ceases or starts creating central bank money, it takes awhile for those changes to take place. Paul Samuelson gave me the rule of thumb in, I think , the seventh edition of his classic textbook of economics, of eighteen months lag being a good assumption. That is, the Fed changes rates (or reserve requirements), and roughly eighteen months later the impact fully is absorbed by the broad economy through credit creation or destruction and the impact that has on economic activity. Friedman didn’t seem to disagree with him when I read his and Anne’s treatise in high school.

The economy is complex, and while we endow certain players with outsized power, their power is not instantaneous. Inflation in the US will be here for awhile, no matter how fast Powell and his ilk observe the lessons of Volcker. At least he has a term of office that outlasts the president in office; Liz Truss has barely two years to see if her fiscal policies can reverse the international trade insanity that was Brexit and the monetary expansion that Bailey and others knee-jerk installed in response to a small virus that made all of us go temporarily insane. All complex systems respond with various degrees of delay – no matter what we observe in the Dow, or the cable exchange rate.

And that should give us pause when thinking about the most complex system of all in which we live, that of our planet. We’ve spent 300 years polluting it – but not so much intentionally as unconsciously, as we’ve experimented with this marvellous thing we have which is our own capacity for exploration. We’re actually quite lucky that within only 300 years – maybe eight or ten generations – we’ve realized the self-reflective capability to think hey, maybe what we’re doing is really bad for water, and for soils, and – holy crap – maybe for the entire planet’s atmosphere and weather structure. Maybe we should dial back – but because our impact took awhile without our being conscious of it, we built into our society structures which now depend on pollution, and destruction, and bad things, just to make sure we have food on shelves at the Aldi on the A13 in Southend-on-Sea that sustains thousands of people who never, ever, could have lived there in 1722, when there was a farm there that barely sustained a village of ten or fifteen people. Those structures cannot be deconstructed in a day, regardless of Bill McKibbon’s exhortations – but even if they could, it still wouldn’t affect the world of our children.

My son, and his friends, will live in a world that’s already locked into place. It’s warmer, harsher, more complex, and probably harder to work with. But there’s nothing we can do about it now, at least for their direct benefit, except to help them get ready for the task which will be at their hands to manage, which is simply to survive this new and crueler world which we, and our ancestors, have gifted to them. We can use resources better today, sure, but we need to be blunt and honest: our kids, and their kids, and probably their grandkids, are going to suffer through an Outward Bound exercise the likes of which we never had to contemplate.

Delayed responses are the reality of complex systems. For those who would deny the long term consequences of our actions, I have no patience: their ignorance and stupid attraction to linear consequences is demonstrably worthy of contempt. For those who would somehow claim what we can “make a difference for our kids”, though, I share a similar contempt. My job is to help my son, and his friends, prepare for a bruised and cratered world that wasn’t my own at his age, and to help him think beyond an election cycle, or the time until he’s middle aged, or the time until his children are middle aged. Our job as human beings – members of the first species on earth that seemingly combines sentience, with self-awareness, and with the capacity to project forward the consequences of our choices – is to arm our children with the knowledge that their event horizon is beyond their own lifetime. Eternity is not for the blessed; it is for the as-yet unborn who will choose their path on a planet we cannot imagine.