Holiday Weekend Interlude

Pieter Bruegel the Elder, Hunters in the Snow, 1565

The kingfisher rises out of the black wave
like a blue flower, in his beak
he carries a silver leaf. I think this is
the prettiest world—so long as you don’t mind
a little dying, how could there be a day in your whole life
that doesn’t have its splash of happiness?
There are more fish than there are leaves
on a thousand trees, and anyway the kingfisher
wasn’t born to think about it, or anything else.
When the wave snaps shut over his blue head, the water
remains water—hunger is the only story
he has ever heard in his life that he could believe.
I don’t say he’s right. Neither
do I say he’s wrong. Religiously he swallows the silver leaf
with its broken red river, and with a rough and easy cry
I couldn’t rouse out of my thoughtful body
if my life depended on it, he swings back
over the bright sea to do the same thing, to do it
(as I long to do something, anything) perfectly.

— Mary Oliver, “The Kingfisher”

© 2013 The Epicurean Dealmaker. All rights reserved.

Turning to Fresh Tasks

Carson River, Nevada, via the U.S. Department of the Interior

Out walking in the frozen swamp one gray day,
I paused and said, “I will turn back from here.
No, I will go on farther—and we shall see.”
The hard snow held me, save where now and then
One foot went through. The view was all in lines
Straight up and down of tall slim trees
Too much alike to mark or name a place by
So as to say for certain I was here
Or somewhere else: I was just far from home.
A small bird flew before me. He was careful
To put a tree between us when he lighted,
And say no word to tell me who he was
Who was so foolish as to think what he thought.
He thought that I was after him for a feather—
The white one in his tail; like one who takes
Everything said as personal to himself.
One flight out sideways would have undeceived him.
And then there was a pile of wood for which
I forgot him and let his little fear
Carry him off the way I might have gone,
Without so much as wishing him good-night.
He went behind it to make his last stand.
It was a cord of maple, cut and split
And piled—and measured, four by four by eight.
And not another like it could I see.
No runner tracks in this year’s snow looped near it.
And it was older sure than this year's cutting,
Or even last year’s or the year’s before.
The wood was gray and the bark warping off it
And the pile somewhat sunken. Clematis
Had wound strings round and round it like a bundle.
What held it though on one side was a tree
Still growing, and on one a stake and prop,
These latter about to fall. I thought that only
Someone who lived in turning to fresh tasks
Could so forget his handiwork on which
He spent himself, the labor of his ax,
And leave it there far from a useful fireplace
To warm the frozen swamp as best it could
With the slow smokeless burning of decay.

— Robert Frost “The Wood-Pile”

How many wood-piles, carefully cut and stacked, will we leave behind once we finally turn to the last of our fresh tasks? Perhaps it is not such a small thing to warm a forgotten corner of a frozen swamp with the decay of our life’s work. There are worse legacies to offer.

Happy weekend.


© 2013 The Epicurean Dealmaker. All rights reserved.

The Invention of Leisure

“Get a job.”

— Famous chorus from a popular song

O Dearest and Most Beloved of All Indiscriminate Internet Content Consumers (that’s you), I fear Your Humble and Most Retiring of All Econoblogosophists (that’s me) has some terrible news to impart:

Goldman Sachs has finally and irrevocably jumped the shark.

And no, I reluctantly interrupt your quiet enjoyment of reality television this sad evening not because the favorite whipping boy of every published journalist and his or her small dog has decided to stop ripping the faces off muppets, repackaging toxic waste for sale to blind widows and orphans on life support, or kicking German Landesbanken in the testicles for the sheer joy of listening to them shriek in agony. No, in each of these respects I believe the Ur-Squid of the Western Capitalist World is still now as it ever was: unrestrained, unrepentant, and not just a little bit naughty.

No, whereof I speak (although Lloyd would rather I were silent) is the horrible, earth-shattering, mind-boggling reality that Goldman Sachs—evil poster cephalopod of tendentious, horse-semen-throwing pseudo-Marxist demagogues pontificating from the decaying soap boxes of musico-cultural mouthpieces long past their prime, relevance, and peak circulation levels¹—has apparently decided to treat its junior professional employees like human beings.

I know, I know. I will pause here a moment to let you collect your dentures from the floor.

* * *

The sad and shocking truth is that Goldman Sachs has apparently decided to require its cannon fodder (excuse me) valued junior professionals² to do something so shocking, so transgressive to the norms of civilized society in the concrete canyons of Wall Street and the City of London that I am loath to describe it here without due warning: take Friday nights and Saturdays off. There is other nonsense associated with this new policy, which admits of few or no exceptions, like uninterrupted week-long vacations for Analysts and Associates and a prohibition against gaming artificial weekend idleness by telecommuting via Blackberry, smartphone, or laptop, but I will not sport with your intelligence by elaborating upon it. The material point is these clowns seem hell-bent upon preventing their junior investment bankers from engaging in one of the few, hallowed activities which has differentiated them from their slacker cousins and co-graduates of elite universities who have traditionally enjoyed their weekends fresh out of school by trying not to contract virulent STDs or end up on a slab in the county morgue deceased of alcohol poisoning. Namely, work.³

I can only say: Lloyd. Gary. WTF?

There has been some attempt from certain quarters of the blogosphere to understand the rationale behind this ludicrous pandering to all that is unholy in Human Resources political correctness, and the consensus seems to be that Goldman is taking this ill-advised step reluctantly, in order to compete for its fresh meat valued junior resources with other, currently more glamorous employers like social media companies and other purveyors of popular masturbatory aids. As part and parcel of this facile narrative there is copious pointing toward the alleged demand for and attraction to the “best and brightest” of our youth by said employers. Since Goldman Sachs is purportedly in direct competition with such archetypes of socioeconomic desirability as Google, Facebook, and Twitter for the most intelligent, ambitious, and driven of the flower of our culture’s young people, of course (the argument goes) they must relax the traditional salt mine labor characteristics of entry level investment banking jobs in favor of “work-life balance” and uninterrupted cocaine benders on Friday and Saturday nights.

But this is stupid on many levels.

* * *

For one, as I have stated unequivocally before, investment banking neither seeks out nor requires the allegedly “best and brightest”—whoever the fuck they are supposed to be—for its employees. All we seek are aggressive, ambitious, smart enough young kids to process our ridiculous pitch books, update our standardized models, and generally take our shit while we senior bankers do whatever is necessary to bring in enough revenues to ensure our continued employment and the consequent support of our dependent wives, children, mistresses, and bartenders. For another, the majority of youngsters who are attracted to investment banking are, contrary to the general prejudice of investment banking critics everywhere, surprisingly risk averse and non-entrepreneurial in nature. The tender young shoot who aspires to Lloyd Blankfein’s beard and pay package is almost never the same sort of soul who wishes he or she were staging a Lord of the Rings-themed wedding in the Pacific Northwest woods on the back of technology company stock options. They hold completely different life ambitions. This can be seen by the perhaps surprising absence of former investment bankers among the massively rich and successful entrepreneurs of the world.⁴

Finally, the implicit coddling and tender concern for the delicate sensibilities of young investment bankers’ boy- and girlfriends which are encoded in Goldman’s new policy are completely and irrevocably at odds with the core premise of my industry, which is uncompromising customer service. The entire fucking point of working 24 hours a day, for days on end, and canceling weeknight dates with Kate Upton, Las Vegas bachelor parties with George Clooney and Brad Pitt, and Christmas holidays with the Pope of all Christendom at the last possible minute is that the entire investment bank works at the pleasure and whim of clients who pay us a small fortune to do so. That is why successful senior bankers never tell the client no. That is why we agree to impossible deadlines for ridiculous requests at the last minute. Why we therefore ruin our junior bankers’ lives with all-night and all-weekend work on a regular basis. Because that is the fucking job.

So telling some pissant college graduate or wet-behind-the-ears MBA she can futz off and take in a Broadway show, art gallery opening, or all-night drinking session in the East Village or West End from Friday night through Sunday morning does that person absolutely no good whatsoever. Because it is telling her, incorrectly, that she should expect clients and bosses to respect the life-work boundaries of normal human beings in her life too. But none of these ever will, and if she wants and expects to make a success of herself in my industry, she better reconcile herself to that fact as soon as fucking possible.

* * *

I am old enough, O Dearly Beloved, to remember the last time big investment banks tried to pander to junior professionals, during the first dot com boom of the late 1990s. Then we tried fruit baskets, casual Fridays every day, and in-house concierges to pick up and deliver dry cleaning, Broadway tickets, and other bullshit in a desperate and ultimately fruitless attempt to prevent our most ambitious young Turks from joining such guaranteed future world beaters as Webvan or Pets.com. None of it worked, since the true entrepreneurs (or reckless idiots) among our ranks lit out for the coast anyway, and the risk-averse remnants who stayed behind got utterly ruined by our coddling. For believe you me, when the dot com boom imploded, the work-life balance perks and privileges disappeared on Wall Street faster than you can say “Bernie Ebbers.” And the poor young knuckleheads who had embraced the kinder, gentler Wall Street as their birthright could not adjust to the harsh light of workaday reality. It is no exaggeration to say an entire generation of potential investment bankers was ruined by such nonsense.

But that is the nature of large scale corporate investment banking nowadays. Human Resources weasels rule the roost in times of weakened revenue generation and secular decline, and the Executive Committee is more than happy to throw a sop to the political correctness police who claim such nonsense is the only way Goldman Sachs will ever hire another person from Princeton University or Harvard Business School ever again. It doesn’t really cost anything, and it is an easy way to separate the oh-I’m-only-here-for-the-resume-building chaff from the yes-I-really-want-to-be-an-investment-banker wheat.

I’d suggest the junior bankers of Goldman Sachs and elsewhere keep that in mind as they adjust to this brave new world of investment banking with a human face. For in my industry, it is wise to remember that it is always the human beings who are taken out behind the woodshed and shot first.

Related reading:
Molon Labe (September 1, 2008)
If the Phone Don’t Ring, You’ll Know It’s Me (October 1, 2011)
In the Nation’s Service (December 29, 2011)


¹ Yeah, he’s a dick. A talented dick, but a dick nonetheless.
²By which corporate bureaucratese is meant the wet-behind-the-ears tyros who join investment banks straight out of college (known, grandiloquently, as “Financial Analysts”) or business school (known, similarly, as “Associates”) to provide the blood, lymphatic fluid, and gristle which lubricate the grindstones of a large, multinational investment bank such as Goldman Sachs. Note that the moniker “professionals” is applied only to those naïfs who join an investment bank with some pretense or ambition of making widow and orphan cheating their long-term career, rather than the far more numerous, better-treated, and far less dispensable folks known as “support staff” who actually make the world go around.
³ I speak throughout, by the way, as is my wont, of the junior professionals who work in the corporate finance and M&A arms of investment banks, not the knuckle-dragging denizens of the sales and trading floors. For only the former tend to be on call at the whim of the clients of their investment bank 24/7, whereas the latter knock off at reasonable hours on Friday evenings and only return, bleary eyed and hungover, early Monday morning, to devour onion cheeseburgers and rip off hapless portfolio managers of Landesbanken. Perhaps it is revealing that Lloyd Blankfein and Gary Cohn come from the sales and trading side of Goldman Sachs and hence have little understanding, respect, or appreciation for the traditional work hours of their corporate finance colleagues which they have so unwisely attempted to curtail.
⁴ Counterexamples, like Mike Bloomberg and Jeff Bezos, prove my point. They worked at investment banks, but they were not investment bankers. They were technology geeks. Staffers. Q.E.D.

© 2013 The Epicurean Dealmaker. All rights reserved.

Our Glassy Essence

Richard Diebenkorn, Knife and Glass, 1963

But man, proud man,
Drest in a little brief authority,
Most ignorant of what he’s most assured,
His glassy essence, like an angry ape,
Plays such fantastic tricks before high heaven
As make the angels weep.

— William Shakespeare, Measure for Measure

* *
The central epistemological problems of philosophy do not arise primarily from within philosophy at all, but from the recurrence in every area of human thought and practice of rival interpretations, and rival types of interpretation, of events and actions. It is for this reason that every academic discipline is to some degree ineliminably philosophical. The literary critic, the historian and the physicist presuppose, even when they do not explicitly defend, solutions or partial solutions to the problems of representation and justification. Shakespeare and Proust, Macaulay and Charles Beard, Galileo and Bohr cannot be read and responded to adequately without epistemological inquiries and commitments. Moreover, the philosophical problems and solutions in each particular area have a bearing on those in other areas; often enough, indeed, they are the very same problems. Hence the need for a synoptic and systematic discipline concerned with the overall problems of justification and representation...

— Alasdair MacIntyre¹

* *
The sciences do not try to explain, they hardly even try to interpret, they mainly make models. By a model is meant a mathematical construct which, with the addition of certain verbal interpretations, describes observed phenomena. The justification of such a mathematical construct is solely and precisely that it is expected to work.

— John von Neumann²

Press a practicing scientist, O Dearly Beloved, to explain what she does for a living and you will often (usually?) find her describing an extremely elaborate, well-constructed, and beautiful intellectual apparatus built to great height and breadth upon subtly shifting sands. As a von Neumann prediction machine, it is remarkably successful, at least in certain well-defined domains (e.g., quantum physics, astronomy), which she will no doubt point to with pride. Look a little closer, however, and you will begin to see lacunae, cracks, and jury-rigged joints papered over with vagueness and contradiction, especially at the gaps between different scientific disciplines or within the same discipline at different scales. Certain sections of the apparatus (like cosmology) seem to have abandoned their purported identity as prediction machines entirely and devolved into nebulous hypothesizing and vague handwaving. Others barely seem to merit the designation “science” at all. Look longer, and you begin to notice that virtually every section of the beautiful edifice is covered with permanent scaffolding and safety netting, with slightly dusty, battered “Under Construction” signs creaking forlornly in the breeze.

If she has any intellectual honesty, your scientist will acknowledge these defects with a slightly embarrassed shrug and an assurance that she and her colleagues are “working on it.” Pressed further, she will admit that the entire, vast apparatus—and every component section of it—is arguably only temporary, a stand-in theoretically ready to be torn down and discarded at a moment’s notice as soon as a more effective replacement is found. You will notice, however, that despite her protestations to the contrary she seems rather emotionally attached and intellectually committed to the existing bits, especially the ones she has devoted her career to understanding and perhaps improving. She also seems somewhat irrationally fond of the beauty of the apparatus—or what she claims to be its beauty, even though you may be unable to see it—and has real difficulty articulating why she believes the beauty of the machine makes it more fit for purpose, which is predicting future events.

* * *

Now far be it for me, a humble dilettante in all matters scientific, to deny the power, efficacy, and success of Science writ large. Without it—and without the legions of practical engineers and technicians who translate the pristine Platonic forms of pure science into messy, approximate, “good enough” directions for the construction of machines which actually work in the real world—you would not be able to read these words on your computer or mobile device and, more importantly, most of what you and I enjoy as perks of an advanced technological society would not even exist. As a cookbook, modern science is amazingly effective.

But it is important to guard against the notion, so often merely assumed by working scientists but occasionally trumpeted affirmatively by certain mouthpieces thereof, that the instrumental effectiveness of particular sciences provides prima facie proof that their underlying theories correctly describe the underlying reality of the world they purport to. For pace John von Neumann, rare is the scientist (or science writer) who can resist adopting the position that scientific theories actually describe that which is. Rare is the theorist who can treat her pet theory as merely a model which enables her to predict certain outcomes. Rarer still is the scientist who is content to ignore underlying reality (entities, causes, and effects) as a black box which doesn’t matter to the efficacy of her theorem. Such a perspective requires an intellectual rigor and discipline which is both rare and, as a matter of fact, practically unnecessary. Someone once quipped that most scientists are instrumentalists on Sunday and scientific realists the rest of the working week. It is simply easier to believe something like the Higgs Boson exists—or behave as if it does—than to practice particle physics as a mystifyingly effective physico-mathematical game.

The undeniable strength of science as a domain of human thought is that it embeds skepticism and contingency at the very root of its self-justification. Science is not science if it does not consist of theorems and hypotheses which are only—always and forever more—taken as potentially true until they are proven otherwise. And science itself declares its ambition to constantly test and retest its theories and assumptions for completeness, accuracy, and truth, even if this happens more often in theory than in fact. This is a highly admirable thing.

But science is not immune to the challenges of representation and interpretation which all human attempts to discover and describe the nature of reality are subject to. Science cannot finesse the influences and distortions which its practice by real human beings in real social contexts impose on it. Science cannot evade the problems of justification raised by choices driven more by aesthetics and intellectual convenience—like the preference for theories which are beautiful or which satisfy Occam’s Razor—rather than any a priori necessity. Science possesses no special defenses against the radical skepticism which calls into question our very relation to the world and each other. Science, in other words, does not hold a privileged position outside the core intellectual puzzles of human cognition and relation to reality.

* * *

All of which is simply to say that a scientist who claims that philosophy is dead and science has killed it is a fool. He or she is blind to the fact that philosophy is a discipline and way of addressing radical (from radix: root) mysteries and dilemmas at the core of our relationship to the world that science does not even touch. That science takes for granted. Such a scientist lives in a sort of intellectual Flatland, where the two-dimensional inhabitants are either incapable or terrified of grasping the notion they may be embedded in a universe which operates on them with constraints, causes, and effects they cannot even begin to comprehend. Such a scientist literally doesn’t have a clue what he or she is talking about.

The only cure for this, of course—now and always—is a healthy helping of humility. I struggle to remember mine every day.³

Related reading:
Sovereign Triviality (November 19, 2011)


¹ “Alasdair MacIntyre on the claims of philosophy,” London Review of Books, Vol. 2 No. 11, pp. 15–16.
² Cited in Derek Abbott, “The Reasonable Ineffectiveness of Mathematics," Proceedings of the IEEE, Vol. 101 No. 10, pp. 2147–2153.
³ Those among you who have read this far only to be disappointed I did not offer stock tips or inside dirt on the size of Jamie Dimon’s washroom may take this post as either self indulgence or self-directed therapy, as you will. Given that this is my blogsite, after all, I couldn’t care less.

© 2013 The Epicurean Dealmaker. All rights reserved.

Punished by Fate

Winslow Homer, The Gulf Stream, 1899

“Dans ce pays-ci, il est bon de tuer de temps en temps un amiral pour encourager les autres.”

— Voltaire, Candide

Then, as his planet killed him, it occurred to Kynes that his father and all the other scientists were wrong, that the most persistent principles of the universe were accident and error.

— Frank Herbert, Dune

Marxist rationalist C.J.F. Dillow recently published a short post illustrating a central contention of his: that ordinary people systematically misallocate praise and blame to others based on their misunderstanding of the importance of chance in human outcomes. In particular, he cites an interesting experiment:

[The researchers] split subjects into a principal and agent. The agent chose between a safe option and a lottery, and the principal then split a sum of money between himself and the agent after seeing the outcome of the lottery. They found that principals’ payments depended upon the outcome of the lottery, even though this was obviously out of the agents’ control. For example, agents who chose the safe option were paid less if the lottery won than if it didn’t.

The researchers choose to explain this finding as the allocation by the principals of “unjustified blame” to the agents. Mr. Dillow finds this outcome

consistent with research... which has also found that people just can’t distinguish between luck and skill even in the elementary conditions.

I find neither of these interpretations satisfying or persuasive. In fact, I think they both fail because they severely underestimate the complexity and sophistication of ordinary people’s implicit understanding of risk, chance, and justice.

* * *

Take the experiment at hand. Consider an ordinary person’s perspective: as a principal, the experiment forces him to cede decision-making authority over whether to take a chance on a lottery or a safe option to an agent. If the agent chooses the lottery, the principal is exposed to the (presumably remote) chance of a large payout or the more likely outcome of a loss. If the agent chooses the safe option, the principal will enjoy a much smaller but far more certain positive payout. So far so good. But the experiment encourages principals to allocate “payment” to the agent with the hindsight of actual results: principals are both informed of the results of the lottery, whether they participated or not, and they have the discretion to award payment to their agent as they see fit. In other words, “payment for services” (the agent’s ex ante judgment) is rendered contingent, rather than contractual: it implicitly depends on the actual outcome of the experiment. And, from the perspective of hindsight, the agent who selected the safe option when the principal could have won much more money had he selected the lottery has made a bad decision. Ex post, the agent’s action has materially harmed the principal. Why should he not be punished for his mistake? Or, if you prefer to think of it this way, why should he not suffer some portion of the principal’s bad luck? It’s only fair.

Note, mind you, that nothing I have related above depends on the principal’s correct or incorrect understanding of the role of chance in the experiment’s outcome. Nevertheless, I find it hard to envision any group of participants the researchers were able to assemble being so dense as to fail to understand that the lottery drawing central to the experiment ties its outcome ineluctably to chance. Of course the outcome of a lottery depends on luck. That’s what lotteries are. Everybody knows this. Accordingly, if you asked them, every principal would acknowledge that the agent’s choice of lottery or safe option has absolutely no causal bearing on the eventual outcome and, therefore, that the agent can in no way be blamed for a poor result.

And yet principals in the experiment punished agents who chose wrong. What is going on here? How can we tie these seemingly contradictory understandings together?

* * *

One way to gain greater insight into this dilemma is to examine the motivations and incentives for agents in this experiment. As an agent, one bears no downside risk for making a decision on behalf of the principal. The agent will get paid one way or another. But the agent understands the contingent, ex post nature of his payment for services, too. Why would an agent not believe that, if he put the principal’s money at risk in the lottery and the principal won, the principal would not reward him with a greater payment than otherwise? Give him a big tip? Share the luck? Of course, if the principal loses the lottery, the agent should have every expectation of getting paid nothing, but this should not matter. The agent who chooses a fair lottery for his principal is also choosing to tie his payout (at least via the mechanism of normal human psychology) to chance as well.

But what of the agent who chooses the safe option on behalf of his principal? He is explicitly choosing to deny his principal the remote chance of a large payout in favor of a low risk, safe return. He is choosing a small, low risk payout for himself over a much riskier payout profile tied to the good or bad fortune of his principal. And the principal knows it. Hence, one might argue that a principal who pays an agent who chooses the safe option less if the lottery wins is punishing the agent for risk aversion, because it is the agent’s risk aversion which has, in retrospect, forced the principal to forgo a windfall of good luck.¹

* * *

Unlike Mr. Dillow,² I believe most people do have a solid if inarticulate understanding of the role of chance in their lives. Most ordinary folks can see the effects of good, bad, or indifferent luck in their own lives and the lives of their families and acquaintances very clearly, and most people understand that good and bad luck is relatively rare. They understand in a way that lucky people cannot that luck has absolutely nothing to do with talent, character, or “just deserts.” They think if only they’d had that lucky break, they could have been as successful and happy as the rich and famous people they see on television. They know that bad things can happen to good people, and good things can happen to the undeserving. They understand that they live in an indifferent or even hostile universe, and that they can fall prey at any moment to bad luck which can ruin or blight their lives or the lives of those they love. They are fatalists.

And because they are fatalists, most people have an instinctive ethos which says that because we cannot avoid the influence of luck in our lives, and good and bad luck happen for no rhyme or reason, therefore we must all take our chances. And, because we are all exposed to chance, and none of us fully deserve what happens to us because of it, we should share the burden or benefit of chance when it is suffered or enjoyed. This is why, I believe, we have so many stories like those of the executed Athenian generals Mr. Dillow recalls, so many examples through history of leaders and commoners alike punished (or rewarded) for things literally out of their control. These are sacrifices, yes, to an indifferent fate, but they are also methods of spreading the terrible burdens and benefits of ineluctable chance from the literally undeserving shoulders of the people it falls upon onto the broader shoulders of the community.

In other words, I think most of us believe, deep in our bones, that none of us blessed or cursed with fickle chance deserves to enjoy or suffer it alone. It is our common burden, because it is our common condition.

This is also known as justice.

Related reading:
C.J.F. Dillow, Misallocating blame (Stumbling and Mumbling, September 27, 2013)
Occupy Galt’s Gulch (May 8, 2012)
To Whom It May Concern (August 31, 2013)


¹ I suspect there is an entire other blog post to be written following on from these remarks concerning their implications for principal–agent relations, risk aversion, and Wall Street. I will spare you it for the nonce.
² Who is focusing on this example of “unjustifiable blame” because, methinks, he is so concerned with the phenomenon of unjustified reward; that is, the rewards and benefits accruing to (mostly socioeconomic) elites from good luck. But my intuition tells me, as I have attempted to articulate above, that most people are willing to let the lucky enjoy most of the fruits of their luck—perhaps because they hope they will have the same chance themselves one day—but not all of them. How much of the good and bad luck accruing to individuals should be redistributed to the larger community—and in what fashion: progressive taxes, social welfare systems, charity, etc.—is of course the central political question, and one which each society answers differently at different times.

© 2013 The Epicurean Dealmaker. All rights reserved.