Sunday, October 28, 2012

Indemnify Us From Evil

Tragedy struck civilization on Monday when six scientists and one government representative were sentenced to six years in prison for manslaughter.  The seven were convicted for failing to predict, and communicate the severity of, a 6.3 magnitude earthquake that lead to the deaths of over 300 people.  This verdict – including the €7.8 million fine – represents an indictment not on the scientists but on the state of humanity.  And as I write this blog post on the eve of the Mid-Atlantic’s much heralded “Frankenstorm”, I am struck with the chilling commentary this case elucidates on where humans go when they perceive themselves “victims”.

Before I get into the meat of my comments it’s helpful to put some context around the data.  The years 2004 and 2010 hold the recent decade’s record for earthquake attributed deaths (228,802 and 320,120, respectively).  The 2009 L’Aquila quake came in a year of relatively few earthquakes worldwide (14,825 or nearly half the annually observed number) and a year of quite low deaths (1,790).  So, in any year in which “science” and “experts” were relied upon to forecast anything, betting against tectonic plates was a safer bet than fear-mongering.   And let’s be clear, it is relatively rare for earthquakes to actually kill people.  Rather, it is the failure of human infrastructure built to “protect” humans that actually is the culprit.  Following the illogical impulse of the Italian court, the long, blind arm of justice could have equally embraced building code urban planners, architects, builders, building supply enterprises, and the institutions that finance and incentivize the creation of them all.  China, which holds the dubious record for the deadliest natural disasters of the past 150 years (most of which were floods killing as many as an estimated 4 million in 1931), shows us that nature’s mortality statistics have more to do with how many people live in zones of dynamism than they do with the forces of nature.

But what is of far greater import in this week’s story is the “perfect storm” of three idolatries which shake far more foundations than a plate on the earth’s crust.  And while I’ve addressed these tangentially in many previous posts, the meteorological mantra on the Eastern Seaboard of the United States seems to be inviting their revisiting.  They are:

  • The Idolatry of Prediction: the notion that we can use observed metrics of our own creation to foretell that which we fear or covet;

  • The Idolatry of Experts: the notion that through deepening inquiry into a single field one becomes more useful than by embracing the intuition borne of generalists; and,

  • The Idolatry of Culpability:  the notion that identifying a nexus of blame serves to inform others of the gravity of responsibility.

When one considers the data used to understand asset allocation, it is fascinating to see the consensus that industry participants accept when they replace modeled, adjusted, or index data for actual market observations.  These approaches, subject to selection and subjective biases are used to explain past events and prognosticate expectations about the future.  As seen with the credentialed economists of the past decade who neither understood, predicted, averted, nor remedied the economic dislocations through which we’re still passing, the reliance on models built on self-fulfilling assumption justifications is remarkable.  The “raw data” upon which many models are built are neither “raw” nor “data”. Upon this foundation, advisors rearward "model" historical market events and then forward cast lines drawn from modeled observations.  What’s most disconcerting is the belief system which allows anyone to presume that sufficient understanding of measured phenomenon (to say nothing about the accuracy of the metrics) is suitably complete to have confidence in a linear assembly of data.  The notion that, by placing heterogeneous data in a two-dimensional projection (all of which are constrained by user bias and selection preference) one can express confidence in tomorrow is an affront to the experience of life.  To take money from others for the “service” of purveying such approaches is dubious in the best of days (to say nothing of the possible FINRA violations which, while prima facie, are neglected because FINRA’s own enforcers are among the perpetrators).

When seismologists in Italy were asked to comment on the likelihood of an earthquake a week hence, they were not invited to consider the structural engineering of the buildings in L’Aquila.  Their responses didn’t include the covariance of the buildings and infrastructure and its predisposition to fall – earthquake or not.  When meteorologists are asked to comment on the path of a storm and its likely rainfall, they are not asked to contemplate the agrarian cycle which may expose tilled soil to erode worsening the horrific floods in Johnstown Pennsylvania in 1889, 1907, 1924, 1936 and 1977.  When we have “100 year” weather and seismic events every other year, shouldn’t we call into question the value of narrowly focused experts in favor of the broad swath of observations made by generalists well informed?  Most notably, the indictment of our expert idolatry is the Stockholm Syndrome which pervades our cultural behavior.  Having failed to anticipate the cataclysm, we turn to the very same sources to explain their surprise rather than calling into question our blind subjugation to their “expertise”.  Whether it’s the revivalist preacher selling heaven by being an expert is the torments of hell or an economist promoting job creation having never signed a paycheck in his life, expertise is killing us yet our adherence and faith is growing.

Until it breaks…

And then, rather than reflecting on the fact that we built the pedestal from which the diviner of models and statistically robust science made expert proclamations which were falsified by reality, we decide that the priest must be killed.  Six scientists and a government official did not commit manslaughter.  Alan Greenspan did not create the global financial dislocations of 2007-2008.  And the sordid disclosures in her tell-all book notwithstanding, former FDIC Chair Sheila Bair, was neither the Oracle of Delphi nor the collaborator for consensus that she’s been portrayed.  Investors in Bernard Madoff’s scheme were first greedy for unrealistic returns before he was the opportunistic predator he’s been made out to be.  The SEC, the FBI, and the Department of Justice had plenty of time to stop the crimes at a much smaller scale but the system fueled by greed and complacency prefers meteoric super-villains more than it calls for pre-emptive accountability and adherence to law.  “Truth commissions” have never exterminated the root evil – they merely inform the future perpetrators how better to bury their trails.  

In the time that it takes you to read this blog, the World Health Organization confidently states that 382 people will be dead due to our collective disregard for suitable water, food, housing and infrastructure.  More people will be quietly killed by our economic adherence to Adam Smith this year than were killed in the bloodiest year of World War II.  A decade after our Millennium Development Goals were lauded, we’ve done precious little to alter our thoughtless predation on the minerals, forests, chemicals, and labor of the poor while we rush to our Wal-Marts to get the lowest price deal on the things we don’t need.  And as long as we wait for an expert to give us a model to teach us how to end Poverty by 2015, we’ll quite merrily go about living without making any difference. 

Which gets me to the point.  Data, models and experts are, at best, inputs.  At worst, they provide an indemnity (an insurance) against us ever taking responsibility for the roles we all play.  Burying ourselves in statistics and evidence means that we’ll never have to take responsibility for the decisions and actions we take each day.  Millions, on this day, recite what is called the Lord’s Prayer which goes like this:

Pater noster, qui es in caelis:
sanctificetur Nomen Tuum;
adveniat Regnum Tuum;
fiat voluntas Tua,
sicut in caelo, et in terra.
Panem nostrum cotidianum da nobis hodie;
et dimitte nobis debita nostra,
sicut et nos dimittimus debitoribus nostris;
et ne nos inducas in tentationem;
sed libera nos a Malo

Today, let’s pretend that the diety to which this prayer ascends answers, “You got it.  I’ll give you a heaven as you’ve done on earth.  I’ll forgive you like you forgive those you hate and have offended you.  You’re doing fine on your own with the temptation bit without needing me to not lead you there.  Oh, and I did deliver you from evil but it seems you’ve taken it back on yourselves.”  

And then, let’s stop pretending and start living like there’s no tomorrow!

*Note:  This post was edited November 7, 2012

1 comment:

  1. Thank you David. Feels like the Spanish inquisition coming.

    But it's not so hard to understand... only hard to get out of the hammer lock that the upper-crusters have on Us (the collective "Us")

    Long ago, hunting on the savanna, failure meant one step from starvation and we all know dead men share no fails. Then modern man invents money and the proclivity (possibiity) to bank it (i.e. save sequential non-failures). I would argue there is no species on this planet who creates as part of its lifecycle unlimited stores of energy as modern man can and does. And so a superior class of men arose - ones who feared no failure (for they had savings - that never spoiled - in the front of many many failures in the hunt) - thier relative indestuctability and luxurious inheritability set them up as as ones who could take all the risks (if they found it pleasurable) and even fail and remain secure from their extensive saved resources. But why stop there - better yet, let others without the survival savings cushion do the work/take the risk - and get the winnings if they survive and take the easy spoils from the field after their failure (gored by a waterbuffalo, trampled/bitten in half by a hippo, downed by a hungy pride of lions or hyenas). So, with the best seats going to the rich and the best spoils harvesting as well, The system "works". Because there is no integrity in the hunt anymore, the rich get richer and the poor get premature death. No matter whether fish or fowl or edible folaige, Those with the ability to save against failure become the subsistance brothers' keeper. Wisedom: keep him down but not out - until you have everything. And,as we know, dead men eat no tails.

    Now, David, what is the modern extension of this take? can we escape?


Thank you for your comment. I look forward to considering this in the expanding dialogue. Dave