The Eternal Present Tense of the Liberal Mind

Out of all the critiques that Neoreaction makes of modernity, one of the most compelling is the sheer lack of historical knowledge (let alone perspective) that most people today have. The modern world is incredibly left-wing over any perspective longer than about 50 years, but how many people even know that? Liberalism is an ideology that exists only in the eternal twilight of the present tense. The past, to the extent that it exists at all, is merely a collection of evil ignorant attitudes and actions occasionally brought up in order to emphasise the righteousness of modern attitudes (that is to say, the righteousness of our liberal interlocutor).

But as I pointed out here in the context of colonialism, the actual level of knowledge about these matters is usually sparse to the point of being nugatory. Figures in the past are never actual people who might have had serious reasons for their views, no matter how far outside today's Overton Window they sit. There is no examination of why they thought the things they did, other than that they were deluded or evil or both. And because the signalling spiral must continue, even yesterday's liberal heroes are currently at risk of being thrown under the bus for being insufficiently progressive. Witness, for instance, the portrayal of LBJ in the movie 'Selma' about Martin Luther King.

For the left, this process of only focusing on the present views and preoccupations has the useful effect (for liberalism) of keeping people from noticing just how recent many of these ideas are. Despite being ardent cultural relativists in theory, the left's devotion to the absolute humorless eradication of the world's -isms is fanatical. These are deadly serious issues, you understand, and it would be inconvenient to note that it's only very recently that anybody even bothered to notice them.

Don't believe me? Consider the following.

Listen to the song 'Bourgeois Blues'. It was written in 1937 by Lead Belly, aka Huddie William Ledbetter, an American Folk Singer. It chronicles some of the treatment that Lead Belly received when on a trip to Washington DC. It's a great song - personally I like the Pete Seeger version, but I've given you the original. Pay attention to the story, and how he chooses to describe it.

Listen here people, listen to me 
Don't try to buy no home down in Washington DC 
Cause it's a Bourgeois Town, 
Ooh, it's a Bourgeois Town. 
I got the Bourgeois Blues, 
I'm gonna spread the news all around.

Me and my sweet wife Miss Martha,
We run all over that town 
Everywhere we go the people would turn us down 
Lord, in a bourgeois town 
Ooh, it's a bourgeois town. 
I got the bourgeois blues, 
I'm gonna spread the news all around. 

Some white folks in Washington, 
They know just how 
Call a colored man a nigger just to see him bow. 
Lord, in a bourgeois town. 
It's a bourgeois town. 
I got the bourgeois blues, 
I'm gonna spread the news all around. 

Me and my sweet wife Miss Martha, 
We were standing upstairs 
I heard a white man say we don't want no Negroes up there, 
He was a bourgeois man 
Living in a bourgeois town. 
I got the bourgeois blues, 
I'm gonna spread the news all around.

The home of the brave, 
The land of the free, 
I don't want to be mistreated by no bourgeoisie, 
In a bourgeois town, 
Lord, it's a bourgeois town. 
I got the bourgeois blues, 
I'm gonna spread the news all around.

Okay, got it?

So what strikes you about the song? Not about the story - that's obvious. What seems out of place in how Lead Belly describes the mistreatment he receives?

I'll give you a hint - what is the one word that you would use to describe the actions of the people here?

It's obvious - the word is 'racist'.

Now go back and look at the lyrics again - the word 'racism' is (along with its derivations) conspicuously absent. It's possible that this is a rhetorical or lyrical choice, and maybe he just decided not to use it. But the rest of the song doesn't feel that way. Consider again - you have a white man who calls at a married black couple 'we don't want no Negroes up there' (in other versions of the song, the man uses the word 'nigger' instead, suggesting extra malice in the nature of the demand). Now, faced with such a man, think of the list of words you might use to describe him, starting with racist, then bigoted, then ignorant, then whatever synonyms you want. Would you have thought of him as a 'bourgeois man'? Would this have even made top 20? It's inconceivable.

So what the hell is going on here?

The first point, which is the more obvious one, is that as late as 1937, the word 'racist' simply did not exist in the popular lexicon. This mirrors the history of the word racism - some attribute the first use to Leon Trotsky in 1930, and the first use in English to Lawrence Dennis in 1936. What seems hard to refute is that in 1937, it had not filtered down to Lead Belly when he was describing a situation where it pretty clearly applied.

And as George Orwell noticed, language tends to shape thoughts. It's not only that the word didn't exist. The concept simply didn't exist as an organising principle with which to critique various actions and views. Lead Belly knows what he doesn't like about the behaviour, but doesn't have a clear way of describing it. The most deathly important social injustice in the modern world, the worst sin and stain on character possible in today's society, the most important concept ever, dates all the way back to... some time after 1937. It's not only that people tolerated racism. It's that people didn't even have a clear concept of racism as a thing to be condemned.

There are many fascinating aspects to this worth pondering. One might wonder how it was that millennia of humans managed to live and die without even noticing the most important crime one can ever commit. Seems odd, no? If modernity is right, and all of history is wrong, racism is the worst injustice one can commit, and is evident in everything from requiring voter ID to banks failing to issue home mortgages at the same rate for all neighbourhoods. So how come nobody even noticed until the middle of the 20th Century? Don't hold your breath waiting for an answer from today's progressives.

But the song actually does give us a partial answer. It's not just that Lead Belly doesn't describe the behavior as racist, it's that he describes it as 'bourgeois'. Google tells me this means 'of or characteristic of the middle class, typically with reference to its perceived materialistic values or conventional attitudes'.

What's going on, in other words, is that in 1937 the left was preoccupied with class, not race. 'Bourgeois' was an all-purpose slur for behaviour that the left disapproved of. Hence, it gets slung around in the same way when other words might be more appropriate.

These days, class is on wane as an organising principle of critique. The Cultural Marxists have displaced the Economic Marxists as the leaders of the left, and in the process 'materialism' and 'capitalism' have been shunted to the back of the '-ism' bus, elbowed out by racism, sexism, homophobia, Islamophobia etc etc.

In 1937, the worst possible sin you could commit was to be a capitalist who was exploiting the poor. But times change. While being a capitalist exploiting the poor is still not ideal, in 2015 it pales into utter insignificance next to the currently unthinkable prospect of a hotel proprietor casually telling someone 'we don't want no Negros up there'.

Of course, if you think about this too long, you might begin to wonder whether in 2087, racism will have lost its place as the Worst Possible Thing Ever, and something else that today we don't even have a word for will have taken its place. This may also cause you to second guess whether the current emphasis is in fact misplaced.

Better to not think too much about it, you might end up too far down the rabbit hole, reading Moldbug and scorning modernity.

Brazil as the Racial Bizarro-verse

Gary Brecher once pointed out, in a podcast I think, that American exceptionalism dominates the American mindset. As he noted, this actually takes two forms. The more remarked-on form is from the right, whereby America is the last, best hope for everything good in the world. But there’s a left-wing version too – that America is the source of everything bad, and that the world would all be right except for the uniquely bad influence and history of America.

And while both are silly, the latter version seems somehow less studied. Which is a pity, because a broader view about how America compares with the rest of the world is actually quite illuminating.

The largest of the American Original Sins is of course racism. America is, so the story goes, not only the most racist country on the planet, but uniquely cursed because of its long legacy of slavery. This has forever poisoned the relations between the races, leading to the never-ending garment-rending and hysteria that characterises any discussion of race in the US.

The USA had slavery, it’s true. Over 300,000 slaves were imported from Africa. This creates a difficult legacy, it’s true. But just how uniquely difficult is the US experience with slavery? How much, in other words, could this actually explain?

Well, fortunately history has furnished us with another much larger slave power in the Americas. Brazil over its history had over 4.9 million slaves arrive. If the USA's slavery history is responsible for the stupidity of modern day race relations, surely Brazil must be many times worse!

In fact, race relations in Brazil are much, much better. Brazil actually manages to achieve what most of US claims to want to achieve – a mixed race country that is largely harmonious in terms of race relations. When you walk around here, it's striking how many genuine mixed-race groups of people there are - not only couples, but larger groups of men chatting away, covering all complexions from white to olivey to Hispanic-looking to black. In America, the vast majority of genuinely mixed race groupings you see are in commercials. When was the last time you saw a black guy, a Hispanic guy and white guy all hanging out together in real life?

And if you ask Brazilians, they'll mostly tell you that they don't have a race problem. Does this mean that every outcome is distributed identically across every possible combination of ancestry? No, but then again, neither is geography. The north is poor and black, the south richer and whiter, but with plenty of variation in both cases. More importantly, if “identical distributions” is your definition of 'no racism', I'll thank you for providing me a single socioeconomic variable of any importance that's so distributed, in any country on earth, in any period in history. No hurry, I'll wait for you to come back.

One of the things that's hardest to explain to Americans is just how stifling is the atmosphere of debate about race in the US, poisoning honest discussion of such a large range of topics and fueling antagonism and resentment at every turn. I suspect it's hard for Americans to see just how striking this phenomenon is, because it's just what you've grown up with. It's only us foreigners that tend to notice.

If there's one thing that Brazil teaches, it's that you cannot simply attribute this to slavery. Race paranoia, notwithstanding the observations at the start of this essay, actually is a very American pathology. It is also one that it is eagerly exporting to the rest of the world, with wholly deleterious consequences.

So if it's not slavery, what is it?

Well, here's one thought. Maybe the way to get people less pissed off about race is, ooh I dunno, stop encouraging them through the media, schools, and universities to view every single issue through the prism of a race war.

Maybe the solution to hypersensitivity is not actually encouraging ever more sensitivity. Maybe the solution is for everybody to chill the hell out. At the moment, the fact that people have resentments along racial lines is consider the most important reason for permanently fretting over racism. But what if this is actually the source of the problem? What if the permanent hypersensitivity is actually a significant source of the antagonism in the first place?

Perhaps this sounds too simplistic. Perhaps it is. There is a certain ‘don’t think of an elephant’ aspect to it, I’ll admit. But at a minimum, perhaps dial down the permanent ELEPHANT WATCH RED ALERT ELEPHANTS ON THE NEWS 24/7 if you want people to do so.

Or if you dislike my answer, come down here and figure out your explanation of why things seem to work so much better. Because ‘America has a uniquely racist past’ simply won’t cut it.

At the Rescue Mission

Poverty, to an economist, is mostly an abstract matter. Just like GDP is a number and unemployment is a number, the poverty rate is also mostly thought of as a number. It’s a very important number, and one that we work hard to try to reduce. But the essential nature of the task is mostly thought of as a technical problem to be solved, like a constrained optimisation – consider the variable to be minimised and the policy variables that can be altered to achieve this, check that the Lagrange multipliers on all the constraints are satisfied, check the second order condition to make sure you haven’t found a maximum instead of a minimum etc. Out comes optimal policy.

But real poverty, when you see it up close and in the flesh, is raw and visceral.  It is shocking, in fact. This may sound melodramatic, but bear with me. Like anyone living in a large US city, I see poverty mostly in the form of the shambling figures of the homeless walking around downtown areas. But they tend to feature as the Banquo’s Ghost at the fringes of whatever otherwise pleasant social function I’m attending, or the nice area of town I’m walking around in. They are, in other words, an aberration – the puzzling exceptions left behind in the sea of prosperity.

No, to actually see what abject indigence looks like at the coal face, one must venture to where poverty is not the exception, but the norm. I was at a homeless rescue mission the other day, with an out of town friend of mine. His family was dropping off a large order of dinner for Thanksgiving and helping out in the serving. If I had not been spending the day with him, I would never in a million years have headed there.

They say that one of the important things that you are taught in the Marines is to overcome one’s instinct to run away from the sound of gunfire. Everyone has this instinct, but to an army, it is disastrous. A soldier must run towards the gunfire. In a less dramatic way, driving into the really poor part of town is like that. The onset of tent cities and strung out hoboes on the street is mostly experienced in life as a sensation that a) one has wandered into the wrong part of town, b) one should change routes, if possible, and c) a back of the mind feeling of hoping one’s car does not break down. Driving to the mission, in this metaphor, is the equivalent of having left the greenzone altogether and heading for the Fallujah of poverty. Of course, everyone else in the car has done this before and is relatively at ease – it’s only me seeing it for the first time.

Both in the car, and when I arrived inside the mission, we are the exception. Dysfunction is the norm, and the norm is all around us. To someone who generally associates homelessness with either drug use and/or mental illness, it is initially quite disconcerting to experience the sensation of being vastly outnumbered by the homeless. The instinct for self-preservation battles with the obvious cowardice and shame that such feelings generate. This is not a hostile army, and everyone here ought to be an object of pity. But the law of large numbers holds nonetheless – how many unstable people can one have in a room before the left tail of outcomes becomes dangerous? And yet here is this 5’4 blonde lady smiling and greeting me, seemingly unconcerned.

And, of course, it isn’t actually that bad, just unfamiliar. When we ascend the levels to meet people who have successfully gone through the programs to get their lives back on track, they seem relatively normal. We meet a man who is studying for a computer degree, and tells us he’s now been clean for 15 months. It’s really quite heartening. A lot of the people at the mission will only be in and out of the ‘emergency food’ section, where assistance is given without any questions. But for the ones that are trying to get their life back on track, I’m very glad to see that there are programs ready to help them.

The other fact that becomes very apparent is the reason the whole enterprise exists, evident from the signs on the walls and the people helping out at the center. The rescue mission is not staffed by economists or government social workers. It is staffed by Christian volunteers, as the various posters on the wall and the Chaplain in charge indicate. I am not a Christian, but I am glad they are there, toiling away at this kind of thankless task. If one ever needed a reminder that Christianity is not the problem with America, this was one. It motivates genuine selfless charity in a way that the default of consumerist secular humanism simply does not achieve. Of course, even the selfless often have personal reasons for being there. My friend’s brother in law ended up becoming very involved in the mission and donating a lot of money there after his own brother, who had been a drug addict, went through their program. The homeless live at the outskirts of society, and are easy to just look past, unless you have a particular reason to seek them out.

I drive back in the car, having mostly just been a silent observer during my time there. Going from the relative function of the program graduates back to the chaos of the tent cities outside, blending back into relieving normal society, reinforces the scope of the problem. How did all this happen? And was it always thus? George Orwell wrote of the tramps in ‘Down and Out in Paris and London’, and Dickens wrote of it even earlier. From talking with my friend’s sister, my preconception that a lot of the problem was mental illness is apparently overstated – a lot more of it, according to her, is just substance abuse. Some of the people who seem crazy actually just need to dry out, and they’re hallucinating at the moment.

It is tempting to see tent cities seem like an enormous failure of governance, and there is definitely a decent amount of truth to this. Whether the failure is a lack of money and support or a lack of police presence is a matter upon which people will disagree wildly, but the unsatisfactory nature of the status quo is hard to ignore.

Unfortunately, the narcissism of our age mistakes the feeling that ‘something ought to be done’ for the belief that as long as we vote for the right person (whoever that is) the problem will resolve itself. But does anyone really know how you deal with whatever it is that makes people start taking meth? Especially when they took it up even after seeing other meth addicts losing their teeth and turning into barely living skeletons (and then non-living corpses).

The lazy but satisfying response is outrage – substitute the feeling of pity and disgust for one of anger at some political force that is deemed to be responsible. Insufficient money. Lack of institutionalization of the mentally ill. Greater funding for substance abuse treatment. Stronger police action against vagrancy. Pick your chosen policy. They all make great soundbites and feel satisfying, but when you drive past the tent cities outside the rescue mission (and not for lack of space at the missions, either), it becomes apparent that there are a large number of real people in front of you who cannot find a reason in their life to stop taking self-destructive quantities of mind-altering substances, and this is actually an extraordinarily difficult problem to solve.

After all the policies are proposed, and some are even tried, few people today will tell you what was once considered received wisdom – the poor you will always have with you. When society as a whole was poorer, it used to be easier to convince ourselves that economic growth would take care of the problem. But it turns out the Biblical observation was wiser than we knew. If only the problem were just money. Money, we have now have substantial amounts of. What we do not have is a way to give purpose to the lives of those at the bottom of society. And if we have gotten any closer to solving the problem in the past few decades of growth, it is hard to see it.

The Financier's Roar

Finance is not generally considered a stirring subject. Interesting, maybe. Remunerative, certainly. Complicated, definitely (and don't believe anyone who says otherwise). But stirring?

Well, not often, but occasionally.

2001 was not a great year for Berkshire Hathaway. The firm had experienced its first decline in book value per share (their chosen measure of performance) in their history. This was coming off the back of a very poor 1999 result where their growth in book value per share underperformed the S&P 500 by 20.5%. In 2001, at least everyone else did poorly too, but to a firm that prided itself on consistent results, this was a tough pill to swallow.

The proximate cause of this problem was that they run a huge reinsurance business, and September 11th caused them to have to pay out a ton. And Warren Buffet, in his 2001 letter to shareholders, had the job of fronting up to investors about what was going on.

He began by explaining what he called the three principles of underwriting, which he acknowledged that they had failed to live up to:

1. They accept only those risks that they are able to properly evaluate (staying within their circle of competence) and that, after they have evaluated all relevant factors including remote loss scenarios, carry the expectancy of profit. These insurers ignore market-share considerations and are sanguine about losing business to competitors that are offering foolish prices or policy conditions.

2. They limit the business they accept in a manner that guarantees they will suffer no aggregation of losses from a single event or from related events that will threaten their solvency. They ceaselessly search for possible correlation among seemingly-unrelated risks.

3. They avoid business involving moral risk: No matter what the rate, trying to write good contracts with bad people doesn’t work. While most policyholders and clients are honorable and ethical, doing business with the few exceptions is usually expensive, sometimes extraordinarily so.

The third one I'm less certain of than the first two. But they all fit a pattern - pick carefully which risks you want to take on. Make sure you can survive them, and pick the ones likely to be profitable.

But having done that, how should one approach the vicissitudes of fortune? How should one weather the storm?

Buffet's answer is perhaps my favourite line in finance. I call it 'The Financier's Roar'.

At Berkshire, we retain our risks and depend on no one.

Just so.

Risk and return are not just academic constructs, but the very stuff on which the economic world is built. The point is not to eliminate risks. If one wants to do that, buy treasury bills, accept a zero rate of return, and don't ever leave your house. You will earn zero, and you will never succeed.

The vast majority of good plans carry a risk of failure. The reason they do is that arbitrage is rare. Sometimes, life hands you a risk-free profit opportunity, but, like the proverbial $20 bill on the sidewalk, they don't stick around for long. And in the space of risky ventures, a similar mechanism holds. If an opportunity has a really high return and very low risk and everyone sees this, mostly the price will get bid up until the expected return has gone back down.

Mostly. But not always. Arbitrage may be very rare, but undervalued assets are more common. Figuring out what they are is the substantive part of the Buffet risk management. Identify things that are good risks, and buying enough that you can take on and survive.

The second part, the Financier's Roar, is the call to courageous decisions. Having selected the right risks to take on, retain them. Be willing to eat the possibility of loss and failure, and don't try to hedge everything out. Have the confidence of your own calculations to hold the portfolio of life's payoffs that you think will work out the best overall. As I have noted before, one does not eat the expectation, but the realisation. No matter how well you calculate, sometimes you will lose. That's life. But at least you won't lose in a stupid manner. Courage, when properly applied, is taking the right risks, though risks they be nonetheless.

The second benefit is the one that's easy to overlook, but is important. When one retains one's risks, one is an island. The universe may deliver success or failure, but the only thing that matters is one's calculations and the roll of the dice. By contrast, the more you hedge out risks by trading with others, the more you rely on the success or failure of others. If you're relying on a counterparty to pay up when the porridge hits the propeller, your risk management now depends on their risk management. Just ask the people who bought credit protection from Lehman Brothers.

Retaining risks leads to self-reliance. Retaining the right risks leads to success or failure with the only tools one has against the cold indifference of fate - one's own wits.

Retain your risks, and depend on no one.