Screen Shot 2015-11-18 at 4.55.47 PM

Rory Sutherland claims that the real function for swimming pools is allowing the middle class to sit around in bathing suits without looking ridiculous. Same with New York restaurants: you think their mission is to feed people, but that’s not what they do. They are in the business of selling you overpriced liquor or Great Tuscan wines by the glass, yet get you into the door by serving you your low-carb (or low-something) dishes at breakeven cost. (This business model, of course, fails to work in Saudi Arabia).

So when we look at religion and, to some extent ancestral superstitions, we should consider what purpose they serve, rather than focusing on the notion of “belief”, epistemic belief in its strict scientific definition. In science, belief is literal belief; it is right or wrong, never metaphorical. In real life, belief is an instrument to do things, not the end product. This is similar to vision: the purpose of your eyes is to orient you in the best possible way, and get you out of trouble when needed, or help you find a prey at distance. Your eyes are not sensors aimed at getting the electromagnetic spectrum of reality. Their job description is not to produce the most accurate scientific representation of reality; rather the most useful one for survival.

Ocular Deception

Our perceptional apparatus makes mistakes –distortions — in order to lead to more precise actions on our parts: ocular deception, it turns out, is a necessary thing. Greek and Roman architects misrepresent the columns of the temples, by tilting them inward, in order to give us the impression that the columns are straight. As Vitruvius explains, the aim is to “counteract the visual deception by an change of proportions”[i]. A distortion is meant to bring about an enhancement of your aesthetic experience. The floor of the Parthenon is curved in reality so we can see it straight. The columns are in truth unevenly spaced, so we can see them lined up like a marching Russian division in a parade.

Should one go lodge a complain with the Greek Tourism Office claiming that the columns are not vertical and someone is taking advantage of our visual weaknesses?

Temple of Bacchus, Baalbeck, Lebanon

Ergodicity First

The same applies to distortions of beliefs. Is this visual deceit any different from leading someone to believe in Santa Claus, if it enhances his or her holiday aesthetic experience? No, unless the person engages in actions that ends up harming him or her.

In that sense harboring superstitions is not irrational by any metric: nobody has managed to reinvent a metric for rationality based on process. Actions that harm you are observable.

I have shown that, unless one has an overblown and (as with Greek columns), a very unrealistic representation of some tail risks, one cannot survive –all it takes is a single event for the irreversible exit from among us. Is selective paranoia “irrational” if those individuals and populations who don’t have it end up dying or extinct, respectively?

A statements that will orient us for the rest of the book

Survival comes first, truth, understanding, and science later

In other words, you do not need science to survive (we’ve done it for several hundred million years) , but you need to survive to do science. As your grandmother would have said, better safe than sorry. This precedence is well understood by traders and people in the real world, as per Warren Buffet expression “to make money you must first survive” –skin in the game again; those of us who take risks have their priorities firmer than vague textbook notions such as “truth”. More technically, this brings us again to the ergodic property (I keep my promise to explain it in detail, but we are not ready yet): for the world to be “ergodic”, there needs to be no absorbing barrier, no substantial irreversibilities.

And what do we mean by “survival”? Survival of whom? Of you? Your family? Your tribe? Humanity? We will get into the details later but note for now that I have a finite shelf life; my survival is not as important as that of things that do not have a limited life expectancy, such as mankind or planet earth. Hence the more “systemic”, the more important such a survival becomes.

An illustration of the Bias-Variance tradeoff. Assume two people (sober) shooting at a target in, say, Texas. The top shooter has a bias, a systematic “error”, but on balance gets closer to target than the bottom shooter who has no systematic bias but a high variance. Typically, you cannot reduce one without increasing the other. When fragile, the strategy at the top is the best: maintain a distance from ruin, that is, hitting a point in the periphery should it be dangerous. This schema explains why if you want to minimize the probability of the plane crashing, you may make mistakes with impunity provided you lower your dispersion.


Three rigorous thinkers will orient my thinking on the matter: the cognitive scientist and polymath Herb Simon, pioneer of Artificial Intelligence, and the derived school of thought led by Gerd Gigerenzer, on one hand, and the mathematician, logician and decision theorist Ken Binmore who spent his life formulating the logical foundations of rationality.

From Simon to Gigerenzer

Simon formulated the notion now known as bounded rationality: we cannot possibly measure and assess everything as if we were a computer; we therefore produce, under evolutionary pressures, some shortcuts and distortions. Our knowledge of the world is fundamentally incomplete, so we need to avoid getting in unanticipated trouble. Even if our knowledge of the world were complete, it would still be computationally near-impossible to produce precise, unbiased understanding of reality. A fertile research program on ecological rationality came out of it, mostly organized and led by Gerd Gigerenzer, mapping how many things we do that appear, on the surface, illogical have deeper reasons.

Ken Binmore

As to Ken Binmore, he showed that the concept casually dubbed “rational” is ill-defined, in fact so ill-defined that much of the uses of the term are just gibberish. There is nothing particularly irrational in beliefs per se (given that they can be shortcuts and instrumental to something else): to him everything lies in the notion of “revealed preferences”, which we explain next.

Binmore also saw that criticism of the “rational” man as posited by economic theory is often a strawman argument distorting the theory in order to bring it down. He recounts that economic theory, as posited in the original texts, is not as strict in its definition of “utility”, that is, the satisfaction a consumer and a decision-maker derive from a certain outcome. Satisfaction does not necessarily have to be monetary. There is nothing irrational, according to economic theory, in giving your money to a stranger, if that’s what makes you tick. And don’t try to invoke Adam Smith: he was a philosopher not an accountant; he never equated human interests and aims to narrow accounting book entries.

Revelation of Preferences

Next let us develop the following three points:

Judging people on their beliefs is not scientific

There is no such thing as “rationality” of a belief, there is rationality of action

The rationality of an action can only be judged by evolutionary considerations

The axiom of revelation of preferences states the following: you will not have an idea about what people really think, what predicts people’s actions, merely by asking them –they themselves don’t know. What matters, in the end, is what they pay for goods, not what they say they “think” about them, or what are the reasons they give you or themselves for that. (Think about it: revelation of preferences is skin in the game). Even psychologists get it; in their experiments, their procedures require that actual dollars be spent for the test to be “scientific”. The subjects are given a monetary amount, and they watch how he or she formulates choices by spending them. However, a large share of psychologists fughedabout the point when they start bloviating about rationality. They revert to judging beliefs rather than action.

For beliefs are … cheap talk. A foundational principle of decision theory (and one that is at the basis of neoclassical economics, rational choice, and similar disciplines) is that what goes on in the head of people isn’t the business of science. First, what they think may not be measurable enough to lend itself to some scientific investigation. Second, it is not testable. Finally, there may be some type of a translation mechanism too hard for us to understand, with distortions at the level of the process that are actually necessary for think to work.

Actually, by a mechanism (more technically called the bias-variance tradeoff), you often get better results making some type of “errors”, as when you aim slightly away from the target when shooting. I have shown in Antifragile that making some types of errors is the most rational thing to do, as, when the errors are of little costs, it leads to gains and discoveries.

This is why I have been against the State dictating to us what we “should” be doing: only evolution knows if the “wrong” thing is really wrong, provided there is skin in the game for that.

he classical “large world vs small world” problem. Science is currently too incomplete to provide all answers –and says it itself. We have been so much under assault by vendors using “science” to sell products that many people, in their mind, confuse science and scientism. Science is mainly rigor.

What is Religion About ?

It is therefore my opinion that religion is here to enforce tail risk management across generations, as its binary and unconditional rules are easy to teach and enforce. We have survived in spite of tail risks; our survival cannot be that random.

Recall that skin in the game means that you do not pay attention to what people say, only to what they do, and how much of their neck they are putting on the line. Let survival work its wonders.

Superstitions can be vectors for risk management rules. We have as potent information that people that have them have survived; to repeat never discount anything that allows you to survive. For instance Jared Diamond discusses the “constructive paranoia” of residents of Papua New Guinea, whose superstitions prevent them from sleeping under dead trees. [1]Whether it is superstition or something else, some deep scientific understanding of probability that is stopping you, it doesn’t matter, so long as you don’t sleep under dead trees. And if you dream of making people use probability in order to make decisions, I have some news: close to ninety percent of psychologists dealing with decision-making (which includes such regulators as Cass Sunstein) have no clue about probability, and try to disrupt our organic paranoid mechanism.

Further, I find it incoherent to criticize someone’s superstitions if these are meant to bring some benefits, yet not do so with the optical illusions in Greek temples.

The notion of “rational” bandied about by all manner of promoters of scientism isn’t defined well enough to be used for beliefs. To repeat, we do not have enough grounds to discuss “irrational beliefs”. We do with irrational actions.

Now what people say may have a purpose –it is not just what they think it means. Let us extend the idea outside of buying and selling to the risk domain: opinions in are cheap unless people take risks for them.

Extending such logic, we can show that much of what we call “belief” is some kind of background furniture for the human mind, more metaphorical than real. It may work as therapy.

“Tawk” and Cheap “Tawk”

The first principle we make:

There is a difference between beliefs that are decorative and a different sort of beliefs, those that map to action.

There is no difference between them in words, except that the true difference reveals itself in risk taking, having something at stake, something one could lose in case one is wrong.

And the lesson, by rephrasing the principle:

How much you truly “believe” in something can only be manifested through what you are willing to risk for it.

But this merits continuation. The fact that there is this decorative component to belief, life, these strange rules followed outside the Gemelli clinics of the world merits a discussion. What are these for? Can we truly understand their function? Are we confused about their function? Do we mistake their rationality? Can we use them instead to define rationality?

What Does Lindy Say?

Let us see what Lindy has to say about “rationality”. While the notions of “reason” and “reasonable” were present in ancient thought, mostly embedded in the notion of precaution, or sophrosyne, this modern idea of “rationality” and “rational decision-making” was born in the aftermath of Max Weber, with the works of psychologists, philosophasters, and psychosophasters. The classical sophrosyne is precaution, self-control, and temperance, all in one. It was replaced with something a bit different. “Rationality” was forged in a post-enlightenment period[2], at the time when we thought that understanding the world was at the next corner. It assumes no randomness, or a simplified the random structure of our world. Also of course no interactions with the world.

The only definition of rationality that I found that is practically, empirically, and mathematically rigorous is that of survival –and indeed, unlike the modern theories by psychosophasters, it maps to the classics. Anything that hinders one’s survival at an individual, collective, tribal, or general level is deemed irrational.

Hence the precautionary principle and sound risk understanding.

It may be “irrational” for people to have two sinks in their kitchen, one for meat and the other for dairy, but as we saw, it led to the survival of the Jewish community as Kashrut laws forced them to eat and bind together.

It is also rational to see things differently from the “way they are”, for improved performance.

It is also difficult to map beliefs to reality. A decorative or instrumental belief, say believing in Santa Claus or the potential anger of Baal can be rational if it leads to an increased survival.

The Nondecorative in the Decorative

Now what we called decorative is not necessarily superfluous, often to the contrary. They may just have another function we do not know much about –and we can consult for that the grandmaster statistician, time, in a very technical tool called the survival function, known by both old people and very complex statistics –but we will resort here to the old people version.

The fact to consider is not that these beliefs have survived a long time –the Catholic church is an administration that is close to twenty-four centuries old (it is largely the continuation of the Roman Republic). The fact is not that . It is that people who have religion –a certain religion — have survived.

Another principle:

When you consider beliefs do not assess them in how they compete with other beliefs, but consider the survival of the populations that have them.

Consider a competitor to the Pope’s religion, Judaism. Jews have close to five hundred different dietary interdicts. They may seem irrational to an observer who sees purpose in things and defines rationality in terms of what he can explain. Actually they will most certainly seem so. The Jewish Kashrut prescribes keeping four sets of dishes, two sinks, the avoidance of mixing meat with dairy products or merely letting the two be in contact with each other, in addition to interdicts on some animals: shrimp, pork, etc. The good stuff.

These laws might have had an ex ante purpose. One can blame insalubrious behavior of pigs, exacerbated by the heat in the Levant (though heat in the Levant was not markedly different from that in pig-eating areas further West). Or perhaps an ecological reason: kids compete with humans in eating the same vegetables while cows eat what we don’t eat.

But it remains that whatever the purpose, the Kashrut survived approximately three millennia not because of its “rationality” but because the populations that followed it survived. It most certainly brought cohesion: people who eat together hang together. Simply it aided those that survived because it is a convex heuristic. Such group cohesion might be also responsible for trust in commercial transactions with remote members of the community.

This allows us to summarize

Rationality is not what has conscious verbalistic explanatory factors; it is only what aids survival, avoids ruin.

Rationality is risk management, period.

[1] “Consider: If you’re a New Guinean living in the forest, and if you adopt the bad habit of sleeping under dead trees whose odds of falling on you that particular night are only 1 in 1,000, you’ll be dead within a few years. In fact, my wife was nearly killed by a falling tree last year, and I’ve survived numerous nearly fatal situations in New Guinea.”


Screen Shot 2015-11-18 at 4.55.47 PM

You who caught the turtles better eat them goes the ancient adage: Ipsi testudines edite, qui cepistis [i]

The origin of the expression is as follows. It was said that a group of fishermen caught a large number of turtles. After cooking them, they found out at the communal meal that these sea animals were much less edible that they thought: not many members of the group were willing to eat them. But Mercury happened to be passing by –Mercury was the most multitasking, sort of put-together god, as he was the boss of commerce, abundance, messengers, the underworld, as well as the patron of thieves and brigands and, not surprisingly, luck. The group invited him to join them and offered him the turtles to eat. Detecting that he was only invited to relieve them of the unwanted food, he forced them all to eat the turtles, thus establishing the principle that you need to eat what you feed others.

A Customer is Born Every Day

I have learned a lesson from my own naive experiences,

Beware of the person who gives advice, telling you that a certain action on your part is “good for you” while it is also good for him, while the harm to you doesn’t directly affect him.

Of course such advice is usually unsolicited. The asymmetry is when the said advice applies to you but not to him –he may be selling you something, trying to get you to marry his daughter or hire his son-in-law.

Years ago I received a letter from a lecture agent. His letter was clear; it had about ten questions of the type “do you have the time to field requests?”, “can you handle the organization of the trip”, the gist of it being that a lecture agent would make my life better and allow me the pursuit of knowledge or whatever else I was about (a deeper understanding of gardening, stamp collections, or Lebanese wine) while the burden of the gritty falls on someone else. And it wasn’t any lecture agent: only he could do all these things; he reads books and can get in the mind of intellectuals (at the time I didn’t feel insulted by being called an intellectual). As is typical with people who volunteer unsolicited advice, I smelled a rat: at no phase in the discussion did he refrain from directly apprising me or hinting that it was “good for me”.

As a sucker, while I didn’t buy into the argument, I ended up doing business with him, letting him handle a booking in the foreign country where he was based. Things went fine until, six years later I received a letter from the tax authorities of that country. I immediately contacted him to wonder if similar U.S. citizens he had hired incurred such tax conflict, or if he had heard of similar situations. His reply was immediate and curt: “I am not your tax attorney” –volunteering no information as to whether other U.S. customers who hired him because it was “good for them” encountered such a problem.

Indeed, in the dozen or so cases I can pull from memory, it always turns out that what is presented as good for you is not really good for you but certainly good for the other party. As a trader, you learn to identify and deal with upright people, those who inform you that they have something to sell, by explaining that the transaction arises for their own benefit, with such question as “do you have an axe?” (meaning an inquiry whether you have a certain interest). Avoid at all costs those who call you to tout a certain product disguised with advice –trying to dump inventory on you. In fact the story of the turtle is the archetype of the history of transactions between mortals.

I worked once for a U.S. investment bank, one of the prestigious variety, called “white shoe” because the partners were members of hard-to-join golf clubs where they played the game wearing white footwear. As with all such firms, an image of ethics and professionalism was cultivated, emphasized, and protected. But the job of the salespeople (actually, salesmen) on days when they wore black shoes was to “unload” inventory with which traders were “stuffed”, that is, securities they had in plethora in their books and needed to get rid of them to lower their risk profile. Selling to other traders was out of the question as professional traders, typically non golfers, would smell excess inventory and cause the price to drop. Some traders paid the sales force with (percentage) “points”, a variable compensation that increased with our eagerness to part with securities. Salesmen took clients out to dinner, bought them expensive wine (often, ostensibly the highest on the menu), and got a huge return on the thousands of dollars of restaurant bills by unloading the unwanted stuff on them. One expert salesman candidly explained to me: “If I buy the client, working for the finance department of a municipality, who buys his suits at some department store in New Jersey, a bottle of $2,000 wine, I own him for the next few months. I can get at least $100,000 profits out of him. Nothing in the mahket gives you such return”. Given that the said customer’s employment was for managing some public employee pension fund, is the New Jersey currently and to-be retired person that was in fact paying more than $100,000 for a $2,000 bottle of wine.

Salesmen hawked how a given security will be perfect for the client’s portfolio, how they were certain it would rise in price and how the client would suffer great regret if he missed “such an opportunity”, that type of discourse. Salespeople were experts in the art of psychological manipulation, making the client trade, often against his own interest, all the while being happy about it and loving them and their company. One of the top salesman of the firm, a man of huge charisma who came to work in a chauffeured Rolls Royce, was once asked whether customers didn’t get upset when they got the short end of the stick. “Rip them off don’t tick them off” was his answer. He also added “remember that every day a new customer is born”.

As the Romans were fully aware, one lauds merrily the merchandise to get rid of it. (Plenius aequo I /audat vena/is qui vult extrudere merces[1])

The Price of Corn in Rhodes

So, “giving advice” as a sales pitch is fundamentally unethical –selling cannot be deemed advice. We can safely settle on that. You can give advice, you can sell (by advertising the quality of the product) and the two need to be kept separate.

But there is an associated problem in the course of the transactions: how much should the seller reveal to the buyer?

The question “is it ethical to sell something to someone knowing the price will eventually drop” is an ancient one –but its solution is no less straightforward. The debate goes back to a disagreement between two stoic philosophers, Diogenes of Babylon and his student Antipater of Tarsus, who took the higher moral grounds on asymmetric information and seems to match current ethics endorsed by this author. Not a piece from both authors is extant, but we know quite a bit from secondary sources, or, in the case of Cicero, tertiary. The question was presented as follows, retailed by Cicero in De Officiis. Assume a man brought a large shipment of corn from Alexandria to Rhodes, at a time when corn was expensive in Rhodes because of shortage and famine. Suppose that he also knew that many boats had set sail from Alexandria on their way to Rhodes with similar merchandise. Does he have to inform the Rhodians? How can one act honorably or dishonorably in these circumstances?[ii]

We traders had a straightforward answer. We called this “stuffing” –selling quantities to people without informing them that there are large inventories waiting to be sold. An upright trader will not do that to other professional traders; it was a no-no. The penalty was ostracism. But it was sort of permissible to do it to the anonymous market and the faceless nontraders, or those we called “the Swiss”, or some sucker far away. There were people with whom we have a relational rapport, others with whom we had a transactional one. The two were separated by an ethical wall, much like the case with domestic animals that could not be harmed, while rules on cruelty were lifted when it came to cockroaches.

Diogenes held that the seller ought to disclose as much as civil law would allow. As to Antipater, he believed that everything ought to be disclosed –beyond the law –so that there was nothing that the seller knew that the buyer didn’t know.

Clearly Antipater’s position is more robust –robust being invariant to time, place, situation, and color of the eyes of the participants. Take for now that

The ethical is always more robust than the legal. Over time, it is the legal that should converge to the ethical, never the reverse.


Laws come and go; the ethics stays.

For the notion of “law” is ambiguous and highly jurisdiction dependent: in the U.S., civil law thanks to consumer advocates and similar movements, integrates such disclosures while other countries have different laws. This is particularly visible with securities laws, as there are “front running” regulations and those concerning insider information that make such disclosure mandatory in the U.S. , though it wasn’t so for a long time in Europe.

Indeed much of the work of investment banks my days was to play on regulations, find loopholes in the laws. And, counterintuitively, the more regulations, the easier it was to make money.

Equality in Uncertainty

Which brings us to asymmetry, the core concept behind skin in the game. The question becomes: to what extent can people in a transaction have an informational differential between them? The ancient Mediterranean and, to some extent the modern world, seems to be converging to Antipater’s position. While we have “buyer beware” (caveat emptor) in the Anglo-Saxon West, the idea is rather new, and never general, often mitigated by lemon laws. (A “lemon” was originally a chronically defective car, say my convertible Mini, in love with the garage, now generalized to apply to about anything that moves).

So to the question voiced by Cicero in the debate between the two ancient stoics , “If a man knowingly offers for sale wine that is spoiling, ought he to tell his customers?” , the world is getting closer to Diogenes position of transparency, not necessarily via regulations as much as thanks to tort laws, one’s ability to sue for harm in the event the seller deceived him or her. Recall that tort laws put some skin in the game back into the seller –which is why they are reviled, hated by corporations. But tort laws have side effects –they should only be used in a nonnaive way, that is, in a way they cannot be gamed. As we will see in the discussion of the visit to the doctor, they will be gamed.

Sharia, in particular the law regulating Islamic transactions and finance, is of interest to us insofar as preserves some of the lost Mediterranean and Babylonian methods and practices –not to prop up the ego of Saudi princes. It is at the intersection of Greco-Roman law (as reflected from their contact with the School of Law of Berytus), Phoenician trading rules, Babylonian legislations, and Arab tribal commercial customs and, as such, it provides a repository of all ancient Mediterranean and Semitic lore. I hence view Sharia as a museum of the history of ideas on symmetry in transactions. Sharia establishes the interdict of gharar, drastic enough to be totally banned in any form of transaction. It is an extremely sophisticated term in decision theory that does not exist in English; it means both uncertainty and deception –my personal take is that it means something beyond informational asymmetry between agents. It means inequality of uncertainty. Simply, as the aim is for both parties in a transaction to have the same uncertainty facing random outcomes, an asymmetry becomes equivalent to theft. Or more robustly:

No person in a transaction should have certainty about the outcome while the other one has uncertainty.

Gharar, like every legalistic term, will have its flaw; it remains weaker than the approach by Antipater. If only one party in a transaction has certainty all the way through, it is a violation of Sharia. But if there is a weak form of asymmetry, say someone has inside information which gives an edge in the markets, there is no gharar as there remains enough uncertainty for both parties, given that the price is in the future and only God knows the future. Selling a defective product (where there is certainty as to the defect) on the other hand is illegal. So the knowledge by the seller of corn in Rhodes in my first example does not fall under Gharar, while the second case, that of defective liquid, would[iii].[iv]

As we see, the problem of asymmetry is so complicated that different schools give different ethical solutions, so let us look at the Talmudic approach.

Rav Safra and the Swiss

Jewish ethics on the matter is closer to Diogenes than Antipater; in fact even more extreme than Diogenes in its aims at transparency. Not only there should be transparency concerning the merchandise, but perhaps there has to be one concerning what the seller has in mind, what he thinks deep down. The medieval Rabbi Shlomo Yitzhaki (a.k.a. Salomon Isaacides), known as “Rashi”, relates the following story. Rav Safra, a third century Babylonian scholar who was also an active trader, was offering some goods for sale. A buyer came as he was praying in silence, tried to purchase the merchandise at an initial price, and given that the Rabbi did not reply, raised the price. But Rav Safra had no intention of selling at a higher price than the initial offer, and felt that he had to honor the initial intention. Now the question: is Rav Safra obligated to sell at the initial price, or should he take the improved one?[v] [vi]

Such total transparency is not absurd and not uncommon in what seems to be a cut-throat world of transactions, my former world of trading. I have frequently faced that problem as a trader and will side in favor of Rav Safra’s action in the debate. Let us follow the logic. Recall the rapacity of salespeople earlier in the chapter. Sometimes I would offer something for sale for, say $5, but communicated with the client through a salesperson, and the salesperson would come back with an “improvement”, of $5.10. Something never felt right about the extra ten cents. It was, simply, not a sustainable way of doing business. What if the customer subsequently discovered that my initial offer was $5? No compensation is worth the feeling of shame. The overcharge falls in the same category as the act of “stuffing” people with bad merchandise. Now, to apply this to Rav Safra’s story, what if he sold to one client at the marked-up price, and to another one the exact same item for the initial price, and the two buyers happened to know one another? What if they were agents for the same end customer?

It may not be ethically required, but the most effective, shame-free policy is maximal transparency, even transparency of intentions.

However, the story doesn’t tell us whether the purchaser was a “Swiss”, those outsiders towards whom our ethical rules don’t apply. I suspect that there would be a species for which our ethical rules would be relaxed or possibly lifted. Otherwise, as Eleanor Ostrom has recently shown, the system cannot function properly.[2]

Members and Non Members

For the exclusion of the “Swiss” from our ethical is not trivial. Things don’t “scale” and generalize which is why I have trouble with intellectuals talking about abstract notions. A country is not a large city, a city is not a large family, and, sorry, the world is not a large village. There are scale transformations we will discuss here, and in a special more technical chapter at the end, in Section X.

When Athenians treat all opinions equally and discuss “democracy”, they only apply it other citizens, not slaves or metics (the equivalent of green card or J1b visa holders). Effectively, Theodosius’ code deprived Roman citizens who marry “Barbarians” of their legal rights –hence ethical parity with others. They lost their club membership. Jewish ethics distinguishes between thick blood and thin blood: we are all brothers but some are more brothers than others[3].

Individuals have been traditionally part of clubs, with rules and member behavior similar to those in today’s country clubs, with inside and outside. As club members know, the very existence of a club is exclusion and size limitation. Spartan could hunt and kill helots, those noncitizens with a status of slaves for training, but were otherwise equal to other Spartans and expected to die for theirs and the sake of Sparta. The large cities in the pre-Christian ancient world, particularly in the Levant and Asia Minor, were full of fraternities and clubs, open and (often) secret societies –there were even such a thing as funeral clubs where members shared the costs of, and participated in the ceremonials, of the funerals.

Today’s Roma people (a.k.a. gypsies) have tons of strict rules of behavior towards gypsies and others towards the unclean non-gypsies called payos. And, as the anthropologist David Graeber has observed, even the investment bank Goldman Sachs, known for its aggressive cupidity, acts like a communist community from within, thanks to the partnership system of governance.

So we exercise our ethical rules, but there is a limit –from scaling –beyond which the rules cease to apply. It is unfortunate, but the general kills the particular. The question we will reexamine later, after deeper discussion of complexity theory: is it possible to be both ethical and universalist? In theory, but, sadly, not in practice. For whenever the “we” becomes too large a club, things degrade, and each one starts fighting for his own interest. The abstract is way too abstract for us. This is the main reason I advocate political systems that start with the municipality, and work their way up (ironically, as in Switzerland, those “Swiss”), rather than the reverse that has failed with larger states. Being somewhat tribal is not a bad thing –and we have to work in a fractal way in the organized harmonious relations between tribes, rather than merge all tribes in one large soup. Is that sense, an American style federalism is the ideal system.

This scale transformation from the particular to the general is behind my skepticism with unfettered globalization and large centralized multiethnic states. My collaborator, the physicist and complexity researcher Yaneer Bar-Yam showed that “better fences made better neighbors” –something both “policymakers” and local governments fail to get about the Near East. Scaling matters, I will keep repeating until I get hoarse. Putting Shiites, Christians and Sunnis in one pot and ask them to sing Kumbaya around the camp fire while holding hands in the name of unity and fraternity of mankind has failed (interventionistas aren’t yet aware that “should” is not a sufficiently empirically valid statement to “build nations”). Blaming people for being “sectarian” –instead of making the best of such a natural tendency –is one of the stupidities of interventionistas. Separate tribes administratively (as the Ottomans did), or just put some markers somewhere, and they suddenly become friendly to one another.

But we don’t have to go very far to get the importance of scaling. You know instinctively that people get along better as neighbors than roommates.

When you think about it, it is obvious, even trite, from the well known behavior of crowds in “the anonymity” of big cities compared to the groups in small villages. I spend some time in my ancestral village, where it feels like a family. People attend others funerals (funeral clubs were mostly in large cities), help out, care about the neighbor, even if they hate his dog. There is no way you can get the same cohesion in a larger city when the other person is a theoretical entity, and our behavior towards him or her governed by some general ethical rule, not someone in flesh and blood. We get it easily when seen that way, but fail to generalize that ethics is something fundamentally local.

All (Literally) in the Same Boat

Greek is a language of precision; it has a word describing the opposite of risk transfer: risk sharing. Synkyndineo means “taking risks together”, which was a requirement in maritime transactions.[4]

The Acts of the Apostles[5] describes a voyage of St Paul on a cargo ship from Sidon to Crete to Malta. As they hit a storm: “ When they had eaten what they wanted they lightened the ship by throwing the corn overboard into the sea.”

Now while they jettisoned particular goods, all owners were to be proportioned the costs of the lost merchandise, not just the specific owners. For it turned out that they were following a practice that dates to at least 800 B.C., codified in Lex Rhodia, Rhodian Law, after the mercantile Aegean island of Rhodes; the code is no longer extant but has been cited since antiquity. It stipulates that the risks and costs for contingencies are to incurred equally, with no concern of responsibility. Justinian’s code[6]summarizes it:

“It is provided by the Rhodian Law that where merchandise is thrown overboard for the purpose of lightening a ship, what has been lost for the benefit of all must be made up by the contribution of all.”

And the same mechanism for risk-sharing took place with caravans along desert routes. If merchandise was stolen or lost, all merchants had to split the costs, not just its owner.

Synkyndineo has been translated into Latin by maestro classicist Armand D’Angour as compericlitor henceif it ever makes it into English, should becompericlity, and its opposite, the Bob Rubin risk transfer will be incompericlity. But I guess risk sharing will do in the meanwhile.

How to Not Be a Doctor

Attempts at putting skin in the game in medicine, while important and needed, usually have a certain class of adverse effects, in shifting uncertainty from the doctor to the patient.

The legal system and the regulatory measures are likely to put the skin of the doctor in the wrong game.

How? The problem resides in the reliance on metrics. Every metric is gameable –the cholesterol lowering we mentioned in the Prologue is a metric gaming technique taken to its limit. More realistically, say a cancer doctor or hospital are judged by the five-year survival of patients and need to face a variety of modalities for a new patient: what choice of treatment would they elect to do? There is a tradeoff between laser surgery (a surgical procedure) and radiation therapy, which is toxic to both patient and cancer. Statistically, laser surgery may have worse five-year outcomes than radiation therapy, but the latter tends to create second tumors in the longer run and offers comparatively reduced twenty-year disease-specific survival. Given that the window used for the calculation of patient survival is five years, not twenty, the incentive is to shoot for the former.

So the doctor is likely to be in the process of shifting uncertainty away from him or her by electing the second best option.

A Doctor is pushed by the system to transfer risk from himself to you, and from the present into the future.

And in the case we saw earlier from future into more distant future.

You need to remember that, when you visit a medical office, you will be facing someone who, in spite of his authoritative demeanor, is in a fragile situation. He is not you, not a member of your family, so he has no direct emotional loss should your health experience a degradation. His objective is, naturally, to avoid a lawsuit, something that can prove disastrous to his career.

Some metrics can actually kill you. Now, say you happen to visit a cardiologist and turn out to be in the mild risk category, something that doesn’t really raise your risk of a cardiovascular event, but precedes the stage of a possibly worrisome condition. (There is a strong nonlinearity: a person classified as prediabetic or prehypertensive is 90% closer to a normal person than to one with the condition. ) But the doctor is pressured to treat you to protect himself. Should you drop dead immediately after the visit, a low probability event, the doctor can be sued for negligence, for not having prescribed the right medicine that is temporarily believed to be useful, say as in the case of statins, but that we now know has been backed up by suspicious or incomplete studies. Deep down, he may know that statin is harmful, as it will lead to long term effects. But the pharmaceutical companies have managed to convince everyone that these –unseen –consequences are harmless, when the right precautionary approach is to consider the unseen as potentially harmful. In fact for most people except those that are very ill, the risks outweigh the benefits. Except that the risks are hidden; they will play out in the long run whereas the legal risk is immediate. This is no different from the Bob Rubin risk transfer trade, of delaying risks and making them look invisible.

Now can one make medicine less asymmetric? Not directly; the solution, I have argued in Antifragile and more technically, elsewhere, is for the patient to avoid treatment when he or she is mildly ill, but use medicine for the “tail events”, that is, for rarely encountered severe conditions. The problem is that the “mildly” ill represents a much larger pool of people than the severely ill –and people who are expected to live longer and consume drugs for longer — hence pharmaceutical companies have an incentive to focus on these.

In sum, both the doctor and the patient have skin in the game, though not perfectly, but administrators don’t –and they seem to be the cause of the troubling malfunctioning of the system. Administrators everywhere on the planet and at all times in history have been the plague.


This chapter introduced us to the agency problem and risk sharing, seen from both a commercial and an ethical viewpoint. We also introduced the problem of scale. Next we will try to get deeper into the structure of things in life by switching our approach when we look at a collection of things –towns, countries, families, markets. Aggregates are strange animals.


Screen Shot 2015-11-18 at 4.55.47 PM

It seems almost a bizarre question. Who thinks about whether zero was invented or discovered? And why is it important?

Answering this question, however, can tell you a lot about yourself and how you see the world.

Let’s break it down.

“Invented” implies that humans created the zero and that without us, the zero and its properties would cease to exist.

“Discovered” means that although the symbol is a human creation, what it represents would exist independently of any human ability to label it.

So do you think of the zero as a purely mathematical function, and by extension think of all math as a human construct like, say, cheese or self-driving cars? Or is math, and the zero, a symbolic language that describes the world, the content of which exists completely independently of our descriptions?

The zero is now a ubiquitous component of our understanding.

The concept is so basic it is routinely mastered by the pre-kindergarten set. Consider the equation 3-3=0. Nothing complicated about that. It is second nature to us that we can represent “nothing” with a symbol. It makes perfect sense now, in 2017, and it’s so common that we forget that zero was a relatively late addition to the number scale.

Here’s a fact that’s amazing to most people: the zero is actually younger than mathematics. Pythagoras’s famous conclusion — that in a right-angled triangle, the square of the hypotenuse is equal to the sum of the squares of the other two sides — was achieved without a zero. As was Euclid’s entire Elements.

How could this be? It seems surreal, given the importance the zero now has to mathematics, computing, language, and life. How could someone figure out the complex geometry of triangles, yet not realize that nothing was also a number?

Tobias Dantzig, in Number: The Language of Science, offers this as a possible explanation: “The concrete mind of the ancient Greeks could not conceive the void as a number, let alone endow the void with a symbol.” This gives us a good direction for finding the answer to the original question because it hints that you must first understand the concept of the void before you can name it. You need to see that nothingness still takes up space.

It was thought, and sometimes still is, that the number zero was invented in the pursuit of ancient commerce. Something was needed as a placeholder; otherwise, 65 would be indistinguishable from 605 or 6050. The zero represents “no units” of the particular place that it holds. So for that last number, we have six thousands, no hundreds, five tens, and no singles.

A happy accident of no great original insight, zero then made its way around the world. In addition to being convenient for keeping track of how many bags of grain you were owed, or how many soldiers were in your army, it turned our number scale into an extremely efficient decimal system. More so than any numbering system that preceded it (and there were many), the zero transformed the power of our other numerals, propelling mathematics into fantastic equations that can explain our world and fuel incredible scientific and technological advances.

But there is, if you look closely, a missing link in this story.

What changed in humanity that made us comfortable with confronting the void and giving it a symbol? And is it reasonable to imagine creating the number without understanding what it represented? Given its properties, can we really think that it started as a placeholder? Or did it contain within it, right from the beginning, the notion of defining the void, of giving it space?

In Finding Zero, Amir Aczel offers some insight. Basically, he claims that the people who discovered the zero must have had an appreciation of the emptiness that it represented. They were labeling a concept with which they were already familiar.

He rediscovered the oldest known zero, on a stone tablet dating from 683 CE in what is now Cambodia.

On his quest to find this zero, Aczel realized that it was far more natural for the zero to first appear in the Far East, rather than in Western or Arab cultures, due to the philosophical and religious understandings prevalent in the region.

Western society was, and still is in many ways, a binary culture. Good and evil. Mind and body. You’re either with us or against us. A patriot or a terrorist. Many of us naturally try to fit our world into these binary understandings. If something is “A,” then it cannot be “not A.” The very definition of “A” is that it is not “not A.” Something cannot be both.

Aczel writes that this duality is not at all reflected in much Eastern thought. He describes the catuskoti, found in early Buddhist logic, that presents four possibilities, instead of two, for any state: that something is, is not, is both, or is neither.

At first, a typical Western mind might rebel against this kind of logic. My father is either bald or not bald. He cannot be both and he cannot be neither, so what is the use of these two other almost nonsensical options?

A closer examination of our language, though, reveals that the expression of the non-binary is understood, and therefore perhaps more relevant than we think. Take, for example, “you’re either with us or against us.” Is it possible to say “I’m both with you and against you”? Yes. It could mean that you are for the principles but against the tactics. Or that you are supportive in contrast to your values. And to say “I’m neither with you nor against you” could mean that you aren’t supportive of the tactic in question, but won’t do anything to stop it. Or that you just don’t care.

Feelings, in particular, are a realm where the binary is often insufficient. Watching my children, I know that it’s possible to be both happy and sad, a traditional binary, at the same time. And the zero itself defies binary categorization. It is something and nothing simultaneously.

Aczel reflects on a conversation he had with a Buddhist monk. “Everything is not everything — there is always something that lies outside of what you may think covers all creation. It could be a thought, or a kind of void, or a divine aspect. Nothing contains everything inside it.”

He goes on to conclude that “Here was the intellectual source of the number zero. It came from Buddhist meditation. Only this deep introspection could equate absolute nothingness with a number that had not existed until the emergence of this idea.”

Which is to say, certain properties of the zero likely were understood conceptually before the symbol came about — nothingness was a thing that could be represented. This idea fits with how we treat the zero today; it may represent nothing, but that nothing still has properties. And investigating those properties demonstrates that there is power in the void — it has something to teach us about how our universe operates.

Further contemplation might illuminate that the zero has something to teach us about existence as well. If we accept zero, the symbol, as being discovered as part of our realization about the existence of nothingness, then trying to understand the zero can teach us a lot about moving beyond the binary of alive/not alive to explore other ways of conceptualizing what it means to be.

Screen Shot 2015-11-18 at 4.55.47 PM

I’m a big fan of Murray Rothbard and have read pretty much everything that he wrote, which was a lot as he was a prodigious author. I came across this article which for the most part was very flattering, but contained these two criticisms.

Unfortunately, Rothbard also sidesteps some difficult problems. The primary argument for having a state at all is that the state can overcome the public goods/free rider problem, while private entrepreneurs cannot. Rather than addressing this argument, Rothbard effectively denies the problem exists, which is no answer at all and certainly does nothing to assuage the doubts of critics. Similarly, in response to the challenge that his proposed private protective agencies would fight among themselves and oppress people, he simply asserts this would be too costly for them and they’d realize peaceful cooperation and trade are more profitable.

Well, no. One could use this logic to “prove” that Al Capone would never order the St. Valentine’s Day massacre of the North Side gang, or that Hitler would never invade Poland. There’s nothing special about whether we call an organization a “state” or not that changes the benefit-cost analyses of the leaders in these matters. Perhaps it’s possible that under certain circumstances an anarchic society could be peaceful and stable, but Rothbard simply ignored the most difficult problems for his theory.

That, to me, illustrates Rothbard’s primary flaw. It seems to me that for him, no argument is too shallow so long as it leads him to a libertarian conclusion. His dedication to liberty is admirable, but as the 19th century French economist Frederic Bastiat warned, “The worst thing that can happen to a good cause is, not to be skillfully attacked, but to be ineptly defended.” In my view, by not taking arguments for a minimal state sufficiently seriously, Rothbard ends up deceiving himself and supposing that the case for his anarcho-capitalism is airtight. I think it is not, and there are other examples of this sort of error in Rothbard’s economic, political, and historical writing.[3]

Screen Shot 2015-11-18 at 4.55.47 PM

In the history of ideas, few theories have had the staying power of the Great Chain of Being—the idea that we live in a universe in which one’s position is fixed by one’s status. For some people, that’s very reassuring. As Mel Brooks observed, it’s good to be the king. If, on the other hand, you’re just a serf, you’re not to worry. That’s just where you’re supposed to be in a Great Chain of Being ordained by God himself. That was Pope’s point in the Essay on Man:

Order is Heaven’s first law; and this confest,
Some are, and must be, greater than the rest,
More rich, more wise.

When people looked to theologians rather than scientists to give meaning to a confused world, the Great Chain of Being offered the consolation of a unified explanation of everything. From God himself at the apex down to mere earth below, all that is or could be has its established and immovable place. Below God there are hierarchies of angels, pure spirits; and below them man, both eternal spirit and fallible body. Still lower are soulless animals with the power of motion, and lower still are immobile plants with the power of growth. At the very bottom is earth, mere matter, that has only the attribute of existence.

Amongst humans there are gradations, too—emperors, kings, nobles, knights, freemen, and serfs—and the Great Chain of Being served the double purpose of insulating those on top from peasants with pitchforks below while reassuring those below that their natural desire to move up was nothing more than a snare. As all this was God’s invention, rebellion was both foolish and impious.

We had thought the Great Chain of Being washed away by the rise of science, by 18th-century philosophes such as Voltaire, by Jefferson and the Founders. But we were wrong. As long as there are elites, there will be people who think they deserve their place atop the greasy pole, that resistance is futile, that the underclass must learn where they naturally belong. And that’s what many of our left- and right-wing elites have come to believe.


For the secular left, the Great Chain needs a bit of reworking. There’s no God, of course, and no angels, but there is a self-conscious progressive elite. In place of God, there’s the academy, itself divided by a class structure as rigid as Burke’s Peerage, and ranked by the decidedly underclass U.S. News and World Report.

Beneath the top schools, like the orders of Seraphim and Cherubim in the angelic hierarchy, are ranged the lesser ones. On meeting each other, the assistant professor at Behemoth State would make a low obeisance to the Ivy-chaired prof, while the Shimer College professor would hug himself with delight if the Yale professor deigned to acknowledge his existence. As a sociologist, James Q. Wilson knew all about the status games academics play. He once told me that he had been a member of three institutions: the Harvard faculty, the U.S. Marine Corps, and the Catholic Church. “I’ll leave it to you to figure out which was the most hierarchical,” he said.

Beneath them, like the serfs of old, are the graduate students, the undergraduates, and then—surprise—lower still is the animal and plant world, and Mother Earth. The non-progressives whom Obama described as clinging to their guns and religion, on the other hand—NASCAR nation, country-music fans, people accounted to be dumb as dirt—count for less than dirt in the eyes of the progressive elite.

If you don’t believe me, look at their policies, in which saving the planet takes precedence over saving ordinary lives. Malaria kills nearly half a million people a year, mainly in sub-Saharan Africa. This can be addressed by spraying with DDT, which never killed anyone. It does kill birds, however, and the progressive worries more about them than he does people.

They’ll tell you it’s because they love the earth. Don’t believe them. One can’t love something that can’t love back. That was the meaning of Cardinal Newman’s motto:cor ad cor loquitur, “heart speaks unto heart.” It’s why you can love your dog but not your goldfish.

One reads about people who’ve married trees, about “eco-sexual” students marrying the Ocean (the Pacific, naturally). It’s all nonsense. It’s as silly as people who tell you they worship an impersonal god. You might as well worship Euclid’s geometry. He might be the ground of your being, but if He’s not a personal God, the God of Abraham, Isaac, and Jacob, not of philosophers and scholars, he’s not a God with whom one can have a personal relationship.

So what’s behind the earth lovers, if it’s not love? Just the opposite. Enmity. Contempt. Derision. The goal is to establish oneself in the pecking order by asserting one’s superiority over conservatives, sincere believers, “white trash,” placing them at a lower level than the plant and animal kingdoms. It’s the ultimate form of passive aggression. It’s the indignation of the social-justice warrior at Yale who asserts her own privilege by asking you to check your privilege. And it’s the product of our factories of hatred, the modern U.S. university.


For right-wing elites too, there’s a Great Chain of Being. At the very top are a few right-wing academics, the fellows at the well-funded think tanks, the writers at top conservative magazines, and especially the NeverTrumpers. That something might be said for the Republican nominee’s policies—for restrictive immigration laws, for better trade deals, for campaign-finance reform—is mostly ignored. More revealing, however, is what those at the top of the chain say about Trump supporters.

For George Will, they were “invertebrates.” For Charles Murray and Kevin Williamson, the story is one of white working-class vice, of drug use, divorce, and unwed births. If the underclass wasn’t working, that was its fault. After looking at one town, National Review’s Williamson wrote, “the truth about these dysfunctional, downscale communities is that they deserve to die. Economically, they are negative assets. Morally, they are indefensible. … Donald Trump’s speeches make them feel good. So does OxyContin.”

Had the likes of Williamson paid more attention to Trump’s message, they might have realized that he spoke to real middle-class concerns. Our immigration laws are a scandal and effect a wealth transfer from poor to rich native-born Americans. Our tax system has done the same, and our schools betray our students. The perfect Republican idiots looked at the evidence of income immobility in America and blamed it on the move to an information economy, as though the highly mobile countries to which the American Dream has fled—Denmark and Canada—are living in the Stone Age. They were foolish to ignore the voters and more foolish still because they failed to recognize that all the barriers to economic and social mobility, to the American Dream, were created by the left. It was the right’s issue, and they gave it away.

Williamson reminds one of the unfeeling strain in contemporary conservatism. It’s something we’ve seen in Mitt Romney, Ted Cruz, Randians, and not a few libertarians. What Romney and Cruz communicated was a perfect fidelity to right-wing principles and an indifference to people.

In 2011 Romney presented us with a 59-point plan and settled back as though he had just proven that he deserved the office. No one read any of it, however. What we heard instead was his notorious line about the 47 percent who are “takers,” a phrase that came out of the American Enterprise Institute and which doomed his presidential campaign. Nearly half of all Americans were spongers, Romney had said, and these presumably were the sort of people whom he liked to fire. By contrast, Obama told us he had our back. That was a bit of an exaggeration, as it turned out, but Romney lost what should have been an easy Republican win.

Ted Cruz too approached the primaries as though politics were nothing more than ticking off a series of right-wing boxes. He had an extraordinarily efficient team of Washington advisors—but, graced with a face that seemed incapable of a human smile and given to embarrassing and showy displays of Evangelical piety, he was hard for most primary voters to take. His biography revealed an inner life that was not without its moments of warmth and self-deprecating humor, but none of that came across in the campaign.

What Romney and Cruz had promised was growth, more growth, a greater GDP, but none of this much appealed to middle-class voters who thought that all of the growth would go to people at the top of the heap, asset-fund managers like Romney or lawyers like Cruz. Defending free trade, for example, Cruz said correctly that this would be great for American consumers. What he left out was how it would affect American producers, the working men and women whose jobs are lost when factories move to lower-cost nations abroad. That’s not to say that free trade is a net negative, but only that policies can’t be judged without taking into account their distributional effects on all segments of the people.


In 1845, Benjamin Disraeli, then a society novelist (as well as a politician), shocked his readers when he announced that England was divided into two nations—the rich and the poor. We also are divided into two nations—the intellectuals and la populace, Big Brains versus Little Brains, with the wealth gains going to the former and the smallest of trickle-down kopecks to the latter. Romney and Cruz were obviously members of the Big Brain nation and that’s to their credit, but now we’ve seen a barrier descend between them and the lower classes, like the one described by Disraeli, two nations

between whom there is no intercourse and no sympathy; who are as ignorant of each other’s habits, thoughts, and feelings, as if they were dwellers in different zones, or inhabitants of different planets; who are formed by a different breeding, are fed by a different food, are ordered by different manners, and are not governed by the same laws.

Our intellectuals—a word invented by the repellant and brilliant anti-Dreyfusard Maurice Barrès—live in a bubble, amongst their own kind. They’ll dress differently, eat very different food, laugh at different jokes, attend entirely different schools, and have wholly different leisure activities. They’re far more likely to be liberal than conservative, but whatever their politics they’ll recognize that they have much more in common with each other than with their ostensible political allies amongst the Little Brain populace.

The sense of belonging to a particular class has given us a distinct literature, enjoyed only by the intellectuals. Amy Chua’s Battle Hymn of the Tiger Mothergave away all their tricks to move their children up the Chain, and for this reason was greedily devoured by them. David Brooks’s Bobos in Paradise did the same for their manners and diversions. Earlier still was Richard J. Herrnstein and Charles Murray’s The Bell Curve, which first described the rise of an intellectual class. But intellectuals read it with a guilty pleasure. “How horrible,” they thought, but hugged themselves in delight to find that they belonged to a special, aristocratic class.

There have always been differences between the quick and the slow, but I rather think they mattered less in the past, or at least that we were less divided. In the public school I attended in Canada as a young child, an imbecilic, hydrocephalic boy was one day brought to class. He could not talk, but from the way he smiled he seemed to be very happy to join us. I imagine his parents felt the experience would be good for him, and that our teachers—Sisters of Charity—thought that the experience would be good for us.

I’d like to report that the students befriended him, but we didn’t. We were six or seven years of age, and a little shy and formal. And worried, too, perhaps that we’d open ourselves to ridicule if we did so. No one mocked him, but then no one sought him out either. He lasted no more than a week amongst us, and I never knew his name or what happened to him, but since then not a year has passed when I’ve not recalled him.

The Sisters of Charity had a special reverence for the Curé d’Ars, St. Jean-Marie Vianney, a French priest of the early 19th century. The Church has had a good many highly intelligent saints, but the Curé d’Ars wasn’t one of them. He was slow indeed, and scarcely able to master the Latin he needed to become a priest. He was, however, a profoundly holy person, and it was that combination of sanctity and slowness that commended him to the nuns. They gave us relics of his cassocks and encouraged us to share their love for his simple gifts.

I mention these little stories to emphasize how deeply perverse they’ll seem to the modern reader (for all this happened many years ago). Worth today is measured on an IQ scale, not a holiness one. Indeed, the very idea of holiness will seem unintelligible to most people today, the idea that merit attaches to a life devoted to the service of God, quietly, humbly lived in a little village, without television screens to celebrate public displays of virtue. As for my hydrocephalic classmate, many will think it a shame he was not aborted. But then I would have missed the message about the sanctity of life, of all life. And he would have missed his life, which I expect had more moments of holiness than mine ever will. I remember his face, but count it a shame I never knew his name.

I have another reason to mention these stories, for I want to distinguish the radical equality that the Sisters of Charity embraced from the divide between the makers and takers of Mitt Romney and the American Enterprise Institute, between Big and Little Brains. The divide is seen in where you live, the school you went to, the clothes you wear, and the food you eat. It’s also a question of religious belief, for most intellectuals on the right draw their inspiration not from the Judeo-Christian tradition but from abstract theories of natural rights that have little need of God. They revere Jefferson, but as Walter Berns once asked me, just what kind of a god is “Nature and Nature’s God” anyway? At most, He’s Descartes’s god, as seen by Pascal, where he appears in Act I of the drama to give the system a “little push” and then departs the scene. But if that’s all He is, why do we need Him?


Romney was a bishop in the Mormon Church. Cruz was given to ostentatious displays of religious belief. Few politicians advertise their unbelief. But dig deeper and you’ll find that many right-wing intellectuals are atheists—the Randians, many libertarians, and some of the leading Straussians. We’ve known all this and had thought it didn’t matter. In part that’s because we’ve adopted the rule of etiquette which demands that religious matters are too private to be discussed (which is an excellent rule for dinner parties). We’ve also observed that our atheist friends adhere to a code of honor and morality at least as elevated as that of the loudmouthed believer. Conscious of our own sins, “O God, be merciful to me, a sinner” is the only prayer one should dare utter.

I still think this, but now I begin to think that things are more complicated. However moral and generous the atheist might be, I suspect he’d have a hard time comprehending how I felt about my hydrocephalic schoolmate. I thought my poorclassmate had presented me with a moral challenge (which I had failed), but I suspect that natural-rights theorists would think this mere sentimentality. And this I think is a failing on their part. By resting their political beliefs on abstract axioms of natural rights they have subscribed to theories of learned heartlessness; and it is a testament to their personal goodness that they’re better than their theories.

One doesn’t learn empathy or kindness from John Locke. Perhaps it’s not something one learns at all. The natural lawyer says it’s written on one’s heart; the evolutionary biologist says it’s coded in our genes, which perhaps comes down to the same thing. But it’s not to be derived from abstract theories. At best it’s a philosopher’s premise, not his conclusion, as it was for Adam Smith in The Theory of Moral Sentiments. We might get it from our families, or be reminded of it by novelists such as Dickens, Hugo, or E.M. Forster. Mostly, however, we get it from religious education and belief.

The libertarian’s free-market principles explain how we can build a society in which both others and I may flourish. What they don’t explain is why I should care about others. Our Judeo-Christian heritage tells me I should, but this has been overwritten by the secular doctrines of today. Even devout Christians will prefer to speak the language of natural law and natural rights, conceding to the secular left the principle that moral and political arguments can be framed only in terms that might appeal to people of other or no faiths. But in so doing they abandon the firmest and most encompassing foundations of our moral language.

The natural lawyer, who is often an atheist, would have you think that the opposite of natural law is anarchy and nihilism. It’s not. It’s revealed law, the law given to Moses and preached by Christ. The natural-rights theorist can tell you what others owe him, but not what he owes to others save for the thinnest of duties: don’t harm others, don’t steal from them or defraud them. Does that sound like a complete moral code? Does that tell me anything about my duties to my hydrocephalic classmate?

Morality within the limits of reason alone is the morality of an efficient insurance contract: I will help you because it is in my interest to do so, because I expect a return favor from you. It is the morality of pay-for-play, of Peter Schweizer’sClinton Cash. It is the debased morality that Alexis de Tocqueville saw at the root of the self-help religion of 1830s Protestant America. But morality is not a means but an end in itself, and the goodness I should have shown to my hydrocephalic classmate was its own reward, if any reward there was. The last chapter of Job, if canonical, might nevertheless be regretted.

Kant sought to prove the existence of God from the moral law. He had it backwards. We more readily can infer the moral law from the existence of God. What I learned from my religion is that we all have souls, that we’re all equal in the eyes of God, that the theologian’s Great Chain of Being was a wicked fiction and a betrayal of Christianity, that the lowest of lives is as precious as that of an Ivy League grad. With their egalitarian principles, that’s something the left claims to understand better than the right, and perhaps they do too. What the right had, in place of political egalitarianism, was religion. But what happens when the salt loses its savor, when religious lessons are no longer learned? What one is left with is what Tocqueville—himself a religious skeptic—called the hardest aristocracy that has appeared on earth.

Ah yes, my atheist friends are generally more moral than I am. That’s a distressingly low bar, however. And even if they are privately charitable, we are permitted to wonder what might follow when mere sentiments are unmoored from a faith tradition. My friends are the inheritors of a religious, Western culture in which they live as illegal aliens, enjoying its harvest without planting the seed. A.J. Balfour, the most intelligent of British prime ministers, predicted all of the 20th century’s atrocities when he saw where this might lead:

Their spiritual life is parasitic: it is sheltered by convictions which belong, not to them, but to the society of which they form a part; it is nourished by processes in which they take no share. And when those convictions decay, and those processes come to an end, the alien life which they have maintained can scarce be expected to outlast them.

My atheist friends who themselves adhere to the highest codes of duty and honor might nevertheless want to consider how often they’ve observed antique republican virtue on display on college campuses or on television. What they’ve seen instead, for the most part, is the detritus of a culture that has lost its religious anchoring and with it any semblance of a moral culture.

They have dispensed with God and for their sophistication ask to be accepted by the intellectuals of the left as fellow members of a privileged elite in our Great Chain of Being. But in abandoning the religious tradition of the West, in their contempt for the invertebrates, the OxyContin sniffers, the takers, they reveal the icicle lodged in the conservative heart.

Screen Shot 2015-11-18 at 4.55.47 PM

My own experience with Unions is that unfortunately, they are a waste of your money. In theory, they are a good idea as certainly the employer holds more power in the employer/employee relationship.

Several of my cases this year have been Union cases where the Union simply was not interested in becoming involved.

One case in particular, which involved the Collective Agreement, which therefore impacted the entire Union….not interested. All they are interested in is taking the Union dues every two weeks on pay day.

There is the example of a disciplinary case, where, the Union recommended dismissal. It turns out there was a viable defence and the employee is now back at work.

As a condition of my employment as a professor at George Washington University, I must pay the SEIU every month. This Labor Day the good news is that I have been appointed as an adjunct professor of economics at George Washington University. I’ll be teaching a seminar in labor economics and public policy. The bad news is that as a condition of my employment, I must become a card-carrying, dues-paying member of the Service Employees International Union Local 500 — or pay the SEIU an agency fee in order to get out of membership.

The letter from Provost Forrest Maltzman tells me that “failure to pay dues or agency fees may result in termination.” My hiring letter includes a form that I am required to sign. On the form, I must give the SEIU my home address, home phone, alternate phone, and e-mail address. In addition to paying dues, I have to give the union personal information such as where I live and how to contact me. Further, I need to “authorize and request my Employer, the George Washington University, and any successor Employer, to deduct from wages hereafter due me, and payable on each available pay period due me, such sums for Union dues, fees, and/or assessments to the Union at times and in a manner agreed upon between the Union and the Employer.”

Not only do I have to give George Washington University permission to deduct dues from my wages, but I also have to give successive employers — whoever they might be — the power to deduct these dues. The SEIU, with almost 2 million members, is one of the largest political players in terms of political donations, according to the Center for Responsive Politics. So far, SEIU’s PACs and committees have spent $10 million on the 2016 election cycle opposing Republicans and supporting Democrats.

The SEIU has spent $5 million against Donald Trump and $4 million for Hillary Clinton. It spent $307,000 each against Marco Rubio and Ted Cruz. Democrat Katie McGinty, who is challenging Republican senator Pat Toomey in Pennsylvania, received $400,000, and Ted Strickland, who is running against Ohio senator Rob Portman in Ohio, netted $900,000. The Local 500 branch had 8,703 members and almost $4 million in assets in 2013 — the latest data available from With me, it will have at least one more. Of course, the SEIU will say that I am not forced to join the union and pay the $36 monthly dues. Instead, I can pay a monthly agency fee of $29.38. But I have to do one or the other. The SEIU might also say that in return for the dues or agency fees, they bargain on my behalf with George Washington University.

I have no need for anyone to represent me. I can represent myself. If GW does not offer me enough to make it worthwhile for me to teach, I can look elsewhere or find other employment. Unfortunately, while the National Labor Relations Board (NLRB) is shrinking the time to vote to join a union, getting out of a union is not an easy matter. In order to decertify the SEIU Local 500, 30 percent of the part-time faculty of George Washington University (the represented group) would have to sign a petition for a decertification election.

This can only be presented to the National Labor Relations Board 60 days before the end of the contract or after the contract has expired. Should a new contract be ratified before a decertification petition is filed, then the clock is reset and no petition can be filed until the end of the new contract. As the GWU union contract expires on June 30, 2018, it means that a decertification petition cannot be considered before May 1, 2018. If the NLRB truly had workers’ interests at heart, the agency would make it as easy for workers to leave unions as it is to join them. Once in place, unions are not required to hold elections for decertification.

A union could have been chosen to represent workers in 1980 and still exist today — even though all the workers who voted for that union have died or quit. That is one reason, according to a new report by Heritage Foundation scholar James Sherk, that 94 percent of workers in union shops never voted to join the union. Sherk concluded that only 478,000 of America’s 8 million unionized private-sector workers have chosen to join their union. If the NLRB truly had workers’ interests at heart, the agency would make it as easy for workers to leave unions as it is to join them.

Just as is the case with public-sector employees in Wisconsin, workers should be allowed to vote once a year to determine whether they want to be represented by a union — instead of being automatically signed up based on the votes of those who are no longer around. GWU students have an opportunity to learn from professors in classrooms. The SEIU adds nothing to the education of these students, but it subtracts from the compensation of teachers. It’s a bad deal for the students and faculty to enrich the SEIU. If new faculty members want to represent themselves, they should be exempt from all payments to the union.

Screen Shot 2015-11-18 at 4.55.47 PM

For a good many years, Tony Lawson has been urging economists to pay attention to their ontological presuppositions. Economists have not paid much attention, perhaps because few of us know what “ontology” means. This branch of philosophy stresses the need to “grasp the nature of the reality” that is the object of study – and to adapt one’s methods of inquiry to it.
5112X+PoJkLEconomics, it might be argued, has gotten this backwards. We have imposed our pre-conceived methods on economic reality in such manner as to distort our understanding of it. We start from optimal choice and fashion an image of reality to fit it. We transmit this distorted picture of what the world is like to our students by insisting that they learn to perceive the subject matter trough the lenses of our method.

The central message of Lawson’s critique of modern economics is that an economy is an “open system” but economists insist on dealing with it as if it were “closed.” Controlled experiments in the natural sciences create closure and in so doing make possible the unambiguous association of “cause” and “effects”. Macroeconomists, in particular, never have the privilege of dealing with systems that are closed in this controlled experiment sense.

Our mathematical representations of both individual and system behaviour require the assumption of closure for the models to have determinate solutions. Lawson, consequently, is critical of mathematical economics and, more generally, of the role of deductivism in our field. Even those of us untutored in ontology may reflect that it is not necessarily a reasonable ambition to try to deduce the properties of very large complex systems from a small set of axioms. Our axioms are, after all, a good deal shakier than Euclid’s.

The impetus to “closure” in modern macroeconomics stems from the commitment to optimising behaviour as the “microfoundations” of the enterprise. Models of “optimal choice” render agents as automatons lacking “free will” and thus deprived of choice in any genuine sense. Macrosystems composed of such automatons exclude the possibility of solutions that could be “disequilibria” in any meaningful sense. Whatever happens, they are always in equilibrium.

Axel Leijonhufvud

The whole basis of Austrian economics is deductivism. The axiom that is relied upon is ‘human action’. That ‘human action’ unarguably is an axiom should be beyond debate.

The Austrian method also uses the ‘open system’ in that acting man is employed to illustrate the economic phenomena being investigated.

Ultimately all economic systems are comprised of individuals. Therefore it is the individual that must be accounted for in any theoretical investigation of economic systems.


Next Page »