Of Pots and Kettles - MLK Day 2015

If you were in Goshen Indiana 55 years ago this past week and had two bucks rattling around in your pocket, you could have gone to see Dr. Martin Luther King Jr. speak on "The Future of Integration".  If you were on a tight budget, you could get the cheap seats for $1.25.  In the Union Auditorium you would have encountered a number of passionate northern college students deeply committed to address the scourge of racism that was wracking the country.  With any luck, you would've met my dad there.

This past week I was asked to address Rev. Jesse Jackson's RainbowPUSH Wall Street Project conference in New York City.  This event - part of Rev. Jackson's on-going effort to highlight the absence of minority participation in the economy with a special focus on the tech sector - was about as diverse as the Union Auditorium would have been in 1960.  And, regrettably, though the pages of the calendar have long faded in oblivion, the Sheraton Time Square was not filled with evidence of the giant strides we made as a society to eradicate ethnic bigotry.  Instead, it was an echo of aspiration to access that is still denied humans by virtue of capricious contempt and toxic xenophobia.

The phenotype expressed through pigment is still an agency of social division no matter how much we may wish it to be otherwise.  Access to capital, interest rates, access to business opportunities, access to education, access to housing, and access to many other opportunities are still mediated by the wavelength of reflected epithelial light.  This is as wrong now as it was 55 years ago in Indiana.  And our approach to addressing this human rights abuse (that's right, the U.S. is still a supporter of human rights abuses) is potentially more harmful today than it was 6 decades ago.  Why?  Well let me answer the question and then unpack my perspective.  By thinking that we're doing something - like the Congressional debates on 49 U.S.C. § 47113 regarding "minority and disadvantaged business participation" - we are confirming our unwillingness to have a zero tolerance policy for any form of bigotry and racism.  And worse, by the persistent use of "set-asides" and "accommodations", we allow racists to persist in their bigotry by imposing a participation tax where minority businesses are seen as a necessary social cause rather than a valued player on an equivalent field.  Sure, we'll grant minority and women owned businesses 5-10% of our government procurement or corporate supply chain but we'll do nothing to provide the capital infrastructure to let that glass floor ever be breached.

President Richard Nixon established the Office of Minority Business Enterprise with his Executive Order 11458 and with it formalized the access agenda.  This unleashed the formation of many acronym-laden committees, councils and boards all with an aim towards…, um, well, apparently, conversations about how access should be equivalent.  But with 20% of the U.S. population identified as Black or African/American and roughly half of the population women, it's clear that we are not serious about the access "aspirational goals" to say nothing about representational mandates.  As recently as the past two years, we still define economically disadvantaged individuals and businesses as, "those socially disadvantaged… whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same business are who are not socially disadvantaged."  But the same Congress that defines disadvantage in the past tense also recommended limiting sole-source contracts to "disadvantaged businesses" at values capped at $4 million and construction contracts at $65 million.  In short, what we have done in 55 years is opened the door ajar to afford a modicum of access but we've insured that no one actually makes it into the ballroom.

In 1969 the U.S. Census Bureau reported that there were about 163,000 black-owned and 100,000 Spanish-speaking minority-owned firms.  You read this correctly.  One wave-length of light and one cultural acoustic discrimination.  The same survey taken in 2007 reported 5.8 million minority-owned firms.  And to be sure, the MBDA, NMSDC, RainbowPUSH, and others have done an amazing job of getting more businesses into the foyer of enterprise.  But, the idea that the next tech IPO, the next financial services innovation, the next social media tsunami will be led by someone categorized as "minority" is as remote at the RainbowPUSH conference as it was in Goshen.

I don't know what it is about the Sheraton Times Square in NYC that gives me that "minority feeling".  Several months ago, I attended the Emerging Women's Summit to absorb the wisdom of my dear friend Sera Beak.  Being one of the only guys in the room, I was acutely aware of being the one that stands out.  This week, I was one of the few appearance-minority wave-length reflectors of a particular hue.  In both instances, I had something to add to the conversation.  And in both instances, what I had to share was indecipherable against the backdrop of segregation.   We The People are not merely the wavelength of light our skin reflects.   We are not merely the genitals which grace our loins or the fat deposits which adorn our chests.  Or the hair that some of us have!  Our experiments fueled by reflexive revulsion to our pathetic impulse to separate and segregate have morphed the impulse towards access into an anemic accommodation.  We're willing to tolerate each other on the best of days.  But as we are not engaging conversations or experiments in integrated activation leading to emanating productivity we are destined to aspire to much and achieve very little. 

This is not a U.S. phenomenon.  Segregation and the violence it engenders shows up in religious, political, class and gender illusions the world over.  It comes in the form of ethnic and gender adjective-laced population generalizations, colonial "development" bribes to usurp landowner and citizens of the rights and resources, impulses to "development", "poverty eradication", "Aid", and other insidious social schemes to reinforce disintegrated illusions to reinforce power delusions.  And it's as likely to show up harming and diminishing communities of persistence from the Lakota and Navajo to Bougainville and Amazonia - all justified by the appearance of "the other" at the expense of their explicit engagement by those who wield the agencies of power and domination.

So rather than lament the hopeless state we're in, we're actively changing the game.  Working with my amazing friends and colleagues Theresa Arek, Lawrence Daveona, Rodney Woods, Tracy McGrady, Michael Redd, Josh Childress, Duane and Kim Starks, Pam Cole, Robert Smith, Progress Investments, Valerie Mosely, Michael Lythcott, Jennifer Carter-Scott, Dustin and Michael DiPerna, Leo Burke, Colleen Martin, Pieter Fourie, Jimmy Smith, Katie Martin, Karen Knowles and dozens of others, we're answering the questions that Martin Luther King Jr. posed 55 years ago this week.  We're not waiting for a future - not tenaciously holding onto a dream.  We're forging a path defined by integrity and character - not by any agency of division.  We are deploying a technology in the social media space which will include a diversity ownership structure.  We have launched and are launching sophisticated investment platforms and products not available from any "majority" owned firm.  Silently placing fulcrum under systems of oppression and segregation, we're beginning to introduce a wobble that sees the vision articulated from the mountaintop and raises it to a whole new level.  And who knows?  Maybe we will, in so doing, form a More Perfect Union!  And it might not take us another 55 years. 

On this Martin Luther King Jr. Day 2015, let's wake from the Dream and start living!

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Killing The Artist

I recently facilitated an event organized to provide participants with a set of tools with which they more deeply access and engage the abundance that is around them.  As it happened, the event's launch coincided with the gruesome murders of aesthetic commentators in Paris and overlapped the violent end of the ensuing hostage taking.  While it is my custom to directly engage the events that were unfolding half a world away in an explicit fashion, the first day's experience with the group gave me an idea. 

One of the participants, a young woman, was note-taking in illuminated doodles and images which were quite elegant.  Rather than directly offering verbal commentary on the Paris events, I decided to conduct an experiment and conscripted the artist on the second evening.  "Would you," I asked, "be willing to open tomorrow's event by quietly going up to the board and drawing an image that represents whatever impulse you'd like to share?" She was delighted to do so.

At 9 am, the same time we'd started our sessions on the previous two days, we exchanged glances and she proceeded to begin her expression.  I sat conspicuously away from the front of the room deeply enthralled in her forming images.  She drew a man, then spectacles, then a woman veiled with a head-scarf enveloped by a globe prominently featuring the African, European and Asian continents, and then a string of people with interlocking arms standing next to the world - the person next to the globe placing a hand on the world and the person at the end of the line raising a hand as if to alert others to an idea.  The image creation took about 17 minutes.  During her drawing, there were a number of responses.  About 5 members of the group were deeply engaged in watching the art unfold.  A few more were glancing between the board and their fellow table-mates' conversations.  Most were engaged in small group conversations paying little attention to the art - some wondering "when we were going to start".  A few of the latter impulses would occasionally look my way as if to inquire if I was aware of the time. 

With the image complete, I went to the front of the room and expressed my frustration and anger for the insensitivity evidenced by most of the group while pointing out the deep honor and respect I had for those who were fully entering into the engagement.  For the next 45 minutes I sparred with several participants who were quite put out by the fact that I had not fairly alerted them to the sequence of events I'd orchestrated.  "I've completely turned you off," one participant bluntly stated as I explained the callousness evidenced by the majority of the group.  Suggesting that anyone exposed to a workshop aimed at expanding awareness and sensitivity to everything in the ecosystem had "failed the test" of expanded awareness and sensitivity was "unfair" on my part as I hadn't imposed the awareness of the exam.  When invited to offer her perspective on what she intended to convey in her drawing nearly 30 minutes after the deconstruction was underway, the artist smiled and stated that she was delighted to have contributed to such a dynamic process and learning activity and then went back to her drawing.

By the end of our critique of the morning's exercise, several people got pieces of the learning and several apologized to the artist for their callous neglect of her participation.  A few others were deeply moved by situations elsewhere in which they recalled their own neglect of awareness for artists sharing of themselves over the din of conversations and rudeness.  One or two were so absorbed in their sense of violation of decorum in my facility to access anger and frustration in a directional manner that they checked out entirely.  But ironically, I didn't hear anyone get the real point of the exercise.

While we were assembling, aesthetic commentators had been gunned down for expressing themselves with images that were deemed "offensive" reportedly by those who had no obligation to see them.  And there were, as we've been conditioned to do, marches and protests against violence and promoting free speech.  Yet when I invited an artist to open the event with an aesthetic expression in which she explicitly included a veiled woman suggesting a woman of Muslim engagement, no one in the room got the point.  She had demonstrated remarkable generosity in putting herself on the spot to create a performance piece and she was largely unseen.  She had rendered a beautiful image of a world in which diversity is celebrated and that insight was likely entirely unseen - certainly not rising to the level of being worthy of comment.  Why?  Because in a room full of would-be conscious people, there was a waiting for response rather than an awareness of and engage with presumption.  Was she too young?  Was her communication too abstract?  Was she not worth listening to?  Was she a she? 

No!  The problem was endemic to our modern expression of humanity and worse among those who delude themselves with "consciousness" and "sensitivity".  And, by the way, just because we don't shoot the artist - in this case - we kill the innovative, generative energy when we succumb to the illusions of credentialed power. 



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The Imitation Game and the Human Enigma

On Christmas Eve, I was invited by Colleen and Katie to see the limited showing of The Imitation Game.  This biographically inspired film (directed by Morten Tyldum and written by Graham Moore) of the tormented life of English mathematician and cyberneticist Alan Turing served as a poignant epitaph on the passage of this year.  Morten Tyldum, a 47 year old Norwegian born director, provided ample space for the audience to enter the crucible of Turing's unconventional childhood which served both as canvas and oil for the artistic isolation of a man who saw what others cannot begin to discern through the fog of consensus-imposed illusions.  When Turing died just before his 42nd birthday, the public his work served and the lives his efforts saved knew about as much about him then as we do now:  basically nothing.  Moore, 33, wrote the screenplay for The Imitation Game in 2011 when it landed on the Black List of the best unproduced scripts in Hollywood.  His refrain throughout the film is a gentle admonition long lost on most of humanity.

"Sometimes it is the people no one imagines anything of who do the things that no one can image."

Alan Turing's Bombe - the German Enigma deciphering device - was a physical manifestation of his graduate thesis postulate of "effective calculability".  In contrast to preceding theoreticians, mathematicians and philosophers, Turing sought to understand functions that could be described through purely mechanical processes rather than seeking to reduce observations to some generalizable set of assumptions.  He spent as much time in his graduate work describing conditions in which his approach did not work as he did describing his primitive recursive models of machine deduction.  He concludes his thesis with the following observation.

"One would prefer a non-constructive system of logic based on trans-finite induction rather simpler than the system which we have described.  In particular, it would seem that it should be possible to eliminate the necessity of stating explicitly the validity of definitions by primitive recursions, since this principle itself can be shown to be valid by transfinite induction. … We have therefore to compromise between simplicity and comprehensiveness."

Unless you cheat.  Which is precisely how the Bombe succeeded in deciphering the German Enigma.  By introducing a deduced analog variable - weather forecasts and Hitler's desire to have his ego reinforced by the chain of command - the code breakers at Bletchley Park could figure out where and when the Germans were going to attack supply lines and troop movements. 

After the war, Turing continued to pursue his Turing Machine, Oracle, and ACE computers relentlessly seeking to demonstrate the power of primitive recursive logic to match the cognitive performance of most humans.  The ultimate enigma - can a machine think like a human? - was entrapped in the more profound question:  can humans think at all or have we reduced ourselves to linear, recursive, efficient logic devoid of the capacity to handle analog complexity with grace and comprehensiveness?  Drawing from the theoretical work of Charles Babbage (the progenitor of conditional logic computers in 1834) and Michael Faraday (the progenitor of electromagnetic devices in 1831), Turing synthesized the best deductive logic to place into electromechanical devices what the physio-electromechanical neural network call the human brain does.  And what he demonstrated is that we can, indeed, build devices that out-think us if we choose to reduce thinking to the speed of processing primitive recursive processes.   He studied the work of Sir D'Arcy Wentworth Thompson and sought to examine the logic of morphogenetics providing some of the foundation for observations that underpin modern molecular biology, genomics and the like. 

It seems fitting that at the end of an entirely predictable and predicted year - both mere confirmations of the sophomoric uselessness of regression in human behaviors and interactions - we could reflect on the two hundred years of logical machine pursuits and at least contemplate emancipation from the mechanization of our hybridized species.  In a year in which "fear" was justification for police executions of citizens and the expansion of a camera-on-every-cop surveillance state; "conservatism" was the façade for wealth managers to rob athletes' wealth; "patriotism" was the veneer used to justify the rise of Nazism and xenophobic Fascism from Scandinavia to the halls of Congress; "consumerism" was the panacea for a U.S. economy that still can't figure out what it means to constructively deal with the big issues confronting the global economy; it seems fitting that The Imitation Game is quietly inquiring into the nature of the humanized machine or the mechanized human. 

This year's come to an end.  I can place on one hand those moments in which I saw the fully humanized human show up this year and have extra fingers.  Maybe it's my age - 47 - which is associated with perseverance, integrity, discipline and mysticism that gives me pause.  I find myself spending inordinate amounts of time seeking to activate the humanized human I see in others who seem to persist in varying degrees of primitive recursive mechanized states.  But, in keeping with my year-end tradition, I thought I'd do the one thing that I've relentlessly held for each year: my expression of gratitude. 

And unlike year's past in which I recite a long list of those who have lit the beacons that I've used to navigate the year, I've chosen a diversion for this year.  I want you to know about a few people who are, in my estimation, evidencing humanity in human form.  These are individuals who, like Turing, Faraday, Thompson and others could contribute in relative anonymity unless they're called out for their contributions.  So here goes.

Jack Chopin was introduced to me by my dearest friend and colleague Bob Kendall (who enjoys my deepest gratitude each year).  Jack has a degenerative condition which has made activities of daily living exceedingly difficult for him and his wife Diana.  Jack has lost what most of us take entirely for granted - the dexterity that comes from fully functioning myoneural junctions.  But together with his brother in law Ron, he decided to do something only analogue humans do.  He developed and deployed a simple device which allowed him to feed himself.  That's interesting.  But what makes Jack great is the fact that he, Ron, and Diana didn't just make the E-Z Eat for himself - they set up an enterprise to make these devices for others.  Machines solve linear logic problems.  Humans have the audacity to realize that the known experience of one is common to unknown others and by addressing the challenge faced by one, the lives of others can be made quantifiably better.  Take a look at this video.

Julio De Laffitte - Rio de Janeiro born uber-Australian - saw the government of Queensland and New South Wales entering into conversations about how to survive tough economic times.  He participated in events where "leadership" was cowardly discussing ways to shrink and diminish the assets around which growth and development would be possible.  He knew that the sclerotic smallness of thought would harm the country he loved and chose as his home.  So, he decided to act - not react.  He decided to charter a voyage - a great metaphor for a country colonized by those born on the waves - to Antarctica where, on the 26th of January (Australia Day commemorating the 1788 arrival of the First Fleet) about 100 visionaries who care for the future of Australia and the world will spend several days dedicated to manifesting a future that works for everyone.  Machines are designed to solve problems based on the algorithm with which they've been coded.  Humans have the audacity see the dysfunction of the algorithm and engage the ecosystem with intrepid enterprise.

We The People will benefit greatly from choosing to learn from the Faraday - Babbage - Turing - Chopin - De Laffitte proposition: to see the self-evident nature of the universe we can apprehend and then engage it for the benefit of ALL - neither individual nor collective - but an entirely integrated whole.  And for those who thus engage, the passage of the year is an illusion of little consequence.  Because this impulse is timeless, dimensionless, persistent, generative and infinitely orthogonal. 

Here's to a New Day, again.

Sieges, Assassinations, and Other Great Terrible Ideas

Some day someone will make a movie that will go something like this.  A country with a massive ego will begin to comprehend that its relevance on the global stage has been crippled by political pettiness at home.  Flourishing federated fiefdoms of patronage so desperate to pander to their benefactors that they can no longer keep an ear on the vox populi and its growing dissatisfaction with wealth asymmetry and race and class police state human rights abuses proliferate and strain to raise their identity above the cacophony of trivial indifference.  Citizen complicity is secured through manipulation of consumer prices and energy but the half-life of apathetic tolerance is minimal.  The protagonist country has a monetary system that is entirely exchanged on vulnerable digital clouds where records of debits and credits fly across Rackspace and EC2 Elastic Clouds.  And then the country - realizing that it's gotten ahead of its own illusions - decides that it needs to create a plausible self-destruct mechanism so that, should its citizens or debt holders ever come calling to redeem the promises it has made, records of exchanges past can be erased and a giant reset can be manipulated.  The less verifiable the self-destruct, the better.  The more anonymity, still better. 

So the country innocently hires two popular Generation Y-not actors to create a film about the assassination of the most unverifiable antagonist on the planet.  Now it's not just any antagonist.  This one has to have the plausibility of the necessary self-destruct button outlined above.  And that self-destruct button happens to be the ability to detonate a nuclear device over - I don't know - let's just say a massive cloud server installation on the west coast of our protagonist country.  Not a property-incinerating surface 20 kiloton yield - just a gamma and electromagnetic pulse emitter that has a solar maxima production sufficient to take out $2 trillion of power grid infrastructure and conveniently erase the records of what the protagonist country owes its investors.  And to top it off, our protagonist country places into its own legislative record a SHIELD Act  that details the script for the attack only to have it killed by Senators who suggest that a cyber-attack is more risky.  So the protagonist country winds up acknowledging - and doing nothing about - its own single point catastrophic vulnerability. 

And then, lo and behold (there, how about a little literary suck up to the season), said film is made; said protagonist country names said antagonist as was foretold in the script in 2010.  Within a few days of being named the cyber aggressor and slapped with a UN resolution calling said antagonist to be referred to the International Criminal Court for alleged human rights abuses said antagonist responds with a threat to "bolster its nuclear capacity." 

Obviously the paragraphs above would be the fantastical illusion of conspiracy theorists, right?  Or, has anyone actually had the audacity to consider that maybe we live in a time when conspiracies, hijinks, tomfoolery, and heinous crimes and torture actually happen?

I found it amusing that President Obama elected to normalize relations with Cuba - admitting to the abject failure of our 1960 embargo - while expanding his arrogant posture with Russia, deepening his vitriol regarding North Korea, and looking sideways at an expedient apathy regarding the Islamic Republic of Iran in the interest of uniting and arming common allies against a contrived for 24 hours news black flagged enemy. 

About 2,600 years ago, Nebuchadnezzar II of Babylon decided that his empire would regain relevance to the growing influence of Egypt by laying siege to Jerusalem.  He used inconsistent embargo and siege policy to rapidly erode any semblance of the moral authority that had been built by his predecessor Hammurabi - the source of considerable inspiration for the United States' own Thomas Jefferson.  That strategy worked for a few short years until Cyrus the Great of Persia poured through the impenetrable walls of Babylon in a bloody torrent washing the Babylonian empire into oblivion to never rise again.

Sieges and assassinations have been variously and ineffectively deployed across the course of human history and - Newt Gingrich's insistence notwithstanding - they don't work.  Whether it was Temujin (aka Genghis Khan) crushing the Jin Dynasty in Beijing 800 years ago while in the same year, King John was commencing the First Barons' War at the Siege of Rochester only to lose the castle a year later to the French, or the Ottoman's knocking off the Mamluk Sultanate in Cairo, sieges, embargoes and dramatic executions have been the desperate infantile reflex of despots across humanity and they have not become better with age.

Napoleon used the genius idea of siege and embargo on Great Britain in retaliation for the carnage wrought at the Battle of Trafalgar.  This great idea saw Britain's economy grow nearly 2.5X and the cost of maintaining the ill-conceived blockade actually drained the coffers of France and Europe. 

We didn't lose the Cuba standoff this past week with President Obama's announcement.  In fact, having a giant petroleum refinery anchored off the southern U.S. coast so that we can drain the vast oil reserves under the Gulf of Mexico is likely a protectionist move that will unintentionally enrich some Democrats and Republicans quite nicely.  We lost our moral high ground when we chose the embargo in the first place.  And then, we bloodied any shred of credibility by maintaining our off-shore, not-so-out-sourced torture chamber at Guantanamo Bay.  Human rights abuses in North Korea and China?  Really!  Did any one read the redacted accounts of only those tortures sterilized enough for Fox and CNN? 

See the problem here is actually not that complicated.  Using the monotony of our perceived economic might - an illusion created in the vacuum of a devastated Europe and Japan at the end of the Second World War - and vigorously enforcing freedom and liberty at the barrel of a gun or from Rudolph-the-Red-Nose MQ-1 Predator - paid for by a complicit public trained to fear everything that isn't like us, we've come to the end of our grisly theater production.  Our outrage doesn't sound credible because we're the hypocrite.  Our morality lies bleeding on our streets at the hands of justice.  Our Great American experiment - our "City upon a Hill" - burned in the conflagration of witch trials unleashed by the very Puritan John Winthrop sermons which gave us the metaphor in 1630.  We The People have never been our best when we surrogate our values and morality to the realm - no matter the realm, no matter the period of history.  And the only path We The People can tread that will not be the tired recitation of each wilderness past will be one where WE take responsible stewardship for our lives and the lives we touch. 

And as for the coin of the realm… well, watch for a solar flare - of either solar or manufactured origin.  Whether it’s a belching sun or a provoked villain manufactured for prime-time we'll pay the price for our digital reality soon enough.  And then, We The People can actually start all over again and maybe try a path untaken which, in fact, might make all the difference.

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Skinn(er)ing the Climate Change Cat

So, oil's cheaper this week.  Obviously, for those of you who read my blog last week you'll appreciate that this price drop has nothing to do with an increase of production.  But that doesn't seem to stop the economic consensus charlatans and clairvoyants from continuing to seek a causal link that does not exist to explain what they don't really want to discuss: the additional evidence that economic theory has been weighed in the balance (and in the market) and been found wanting.

In 1971, Burrhus Frederic (B.F.) Skinner wrote Beyond Freedom and Dignity.  In it, he attempted to explain human behavior on a general scale having become quite adroit at his autoegoic reinforcement of the premise that human action is the outcome of patterns of positive or negative reinforcement.  Ironically, he couldn't get far into the book before he observed evidence of the failing of his own hypothesis.

"…the affluent pursuit of happiness is largely responsible for pollution.  As Darlington has said, 'Every new source from which man has increased his power on the earth has been used to diminish the prospects of his successors.  All his progress has been at the expense of damage to his environment which he cannot repair and could not foresee.'"

and,

"… a behavioural technology comparable in power and precision to physical and biological technology is lacking, and those who do not find the very possibility ridiculous are more likely to be frightened by it than reassured.  That is how far we are from 'understanding human issues' in the sense which physics and biology understand their fields, and how far we are from preventing the catastrophe toward which the world seems to be inexorably moving."

In his over 200 pages of a critique of 'autonomous man', he reinforces his contempt for a nostalgic view of 'freedom' and 'dignity' in which a sentimental humanity engages in social environments circumscribed with 'beliefs'.  While concluding that man is not merely a "victim or passive observer of what is happening to him," he could not find any meaningful narrative to get us beyond a causal and reinforcement based view of ourselves and our impact on our environment - both of which he described in hopeless terms.

I deeply enjoyed revisiting this text that I first encountered at Goshen College when studying psychology with Professor Duane Kauffmann.  I found it particularly relevant to the confluence of multiple conversations across the week ranging from climate change advocates to energy investors.  Seeing both of these groups despair over the exact same commodity and our addiction thereto, I pondered why neither seemed to have the capacity to escape the fatalistic despondency articulated by Skinner nearly 43 years ago.  On the one hand humanity continues to belch carbon and nitrous oxide into the air with reckless abandon and at the same time, the producers of this noxious cocktail are seeing their fortunes fall.  If behaviorism was a self-respecting theory, certainly we'd recognize that aversion in both camps should engender an altered response.  Yet, neither group evidenced the capacity to act in a rational manner to their abhorrence of abject failure. 

Advocates for climate change appeal to future-aversion with the apocalyptic zeal of a revival preacher warning sinners of the fires of hell - the ultimate existential "global warming".  If we don't stop burning fossil fuels… begins what ends in impassioned expositions of the carnage of a few degrees centigrade.  Ignored are vital topics like alternative uses for the nearly $10 trillion of capital assets involved in supporting the nearly $40 trillion in consumer production which currently is animated by or consumes climate damaging behaviors.  Inadequate or non-existent proposals for how to move countries' economies into a post-fossil fuel environment are barely acknowledged  as though this will sort itself out if only we stop combusting our way to oblivion.  "Saving the future" spends precious little effort on articulating a future that is worth aspiration.

Advocates for energy investment see their interests fully aligned with a current-aversion in which production and distribution of energy serves as a critical component of investment portfolios from equities to commodities to MLPs and credit which are all under direct downward pressure.  Certain that the world won't stop consuming oil, gas, and coal, these investors see the present price shock as a blip on a relentless march of progress in which we drain every drop of crude out of every nook and cranny and dig every chunk of combustible fossil out of every vein on earth we can find.  War, death, fouled air and toxic landfills are the cost of doing business and every pensioner continues to vote with their investments down this inevitability until…?

In Skinner's era, we were going to incinerate ourselves with nuclear weapons.  Today was never going to come because we'd innovated ways to kill ourselves thousands of times over.  A thousand years ago, today was never going to come because the Saracens were prevailing against the holy campaigns launched against them in the Middle East and North Africa.  Two thousand years ago, today was never going to happen because Roman despots were bent on the destruction of everything that didn't like them which was nearly everything.  And my guess is that we'll have the opportunity to reflect - as some remnant of humanity - on today with quite the same nostalgia unless we pull the escape chute on our tired, linear, causal world views. 

The problem with apocalyptic behaviorism is the cat-nine-lives problem.  Whenever we're sure that we're all doomed, we seem to not all be doomed.  Now, don't get me wrong, I am certain that the harm that we're inflicting on ourselves and our planetary home is going to leave a bunch of us in a very bad way.  But that fact hasn't transformed behaviors and, if Skinner had actually been more careful, he might have recognized a deeper reality than the regression cause and effect limits he imposed on humans.  While the individual may very well exhibit incentives and aversions in reproducible manners sufficient to justify casual and careless theoretical frameworks, what is also evident is the dynamism of fields and inertial masses which polarize and animate behaviors even when they defy evolutionary imperatives for survival or reward. 

We won't address climate change through the promulgation of fear of global warming.  We won't experience accretive investment returns on commodities that are subject to politically sanctioned cabals and cartels.  We won't deploy "alternative energy" if we fail to contemplate alternative appliances. 

We can deploy technologies to address our necessary utilitarian needs without digging or drilling another element from the crust of our earth or exterminating another forest.  By accounting for what we already have in our stewardship and in the stewardship within our network, we've got more than enough.  For that which needs to be produced, we can focus on repurposing what we've already used.  This doesn't require radical change.  Recycled paper isn't glossy white.  But guess what!  Thousands of years of human communication was done on yellows and browns.  And we communicated.  Stop right now.  Think about the things you have two or more of.  Are you using both?  Have you ever used both simultaneously?  Of course not!  I'm still able to wear (so long as you're not entirely offended if you see the upper part of my thigh) the same jeans I purchased 28 years ago on the evening I proposed to my wife.  They may not meet the decency standards for some prudish types out there but they keep my legs from getting shredded when I'm working in the garden.  And when they fall off me at some inopportune time in the future, I've got 5 more slightly more decent pairs to wear. 

This is NOT an anti-consumer mentality.  What it is is a maximum utility model in which we focus on the full utilization of what IS in the system rather than proliferating into a system inferior, sub-maximal utilitarian devices.  And if we really want to change (which I'm pretty sure most of us don't want), we'll commence with ourselves in full, transparent cooperation with those in our ecosystem.  What's got to go is "autonomous" - both for reward and punishment - and from there our covalence can be manifest and thrive.

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Knaves Marching to War for Cheap Gas

The United States House of Representatives took ample camouflage in media coverage of the execution of black men by police officers and privileged "rape culture" this first week of December 2014 to pass one of the most ominous resolutions in recent memory: H.R. 758 which is the out-going Congress' near authorization for war against the Russian Federation.  In eight pages of inadmissible allegations reminiscent of our march to war in the Middle East, the House did about as much fact checking as Rolling Stones before coming to the conclusion that the U.S. should arm foreign interests with "lethal force" (something that this militarized administration seems to promulgate at every turn) against Russians and their leader, President Vladimir Putin. 

In the resolution, the majority of Congress stated that:

            "The Russian Federation is continuing to use its supply of energy as a means of political and economic coercion against Ukraine, Georgia, Moldova, and other European countries;"

and…

            "The Russian Federation has expanded the presence of its state-sponsored media in national languages across central and western Europe with the intent of using news and information to distort public opinion and obscure Russian political and economic influence in Europe."  

The various enumerated offenses allegedly justify the U.S. to "provide the Government of Ukraine with lethal and non-lethal defense articles" (§9) and provide, "distribution of news and information in the Russian language," (§20) to insure that our interests are foisted upon the region. 

Now the sophomoric propaganda war recommended by Congress in retaliation for an alleged Russian-led propaganda campaign would be easily dismissed if it were in isolation.  Ironically, the same Congress that decided to reach out to injured Ukrainian parties in the Russian language did precious little to educate its own democracy about its reckless behavior.  Obviously, the democratic contempt laid at the feet of Putin is exonerated by virtue of the nationality of the perpetrator.  If the U.S. Congress acts in the paternalistic interest of its citizens justifying its actions with false claims, it's apparently in our best interest. 

Let's examine the ruse that this resolution really seeks to mask.  The allegation that Russia is using its supply of energy as a means of political and economic coercion is dripping with contempt - a contempt celebrated by each holiday commuter who is relishing the irrational gas prices across the U.S.  And by the way, if you think for a moment that gas prices have anything to do with Alfred Marshall's laughable theory of supply and demand, think again. 

The Trilateral Commission 2013/2014 Task Force Report: Engaging Russia: A Return to Containment spells out a number of the underpinnings of what's happening at the pump.  In the report, the task force articulates the six vital and important national goals leading off with, "ensure a favorable balance of power in critical regions that enables continued U.S. global leadership."  Oil dropping below $70 / barrel hurts millions of people.  And any allegation that supply is the principle driver for this price is disingenuous and willfully misleading.  From the Trilateral Commission to the economists at every major banking institution, the real reason for oil's freefall is not even thinly veiled.  The economics are simple:  the Kingdom of Saudi Arabia has sufficient financial asset reserves (over $750 billion) to weather a revenue shortfall while Russia - with the compounding effect of sovereign debt downgrade at a time of recapitalization, the capital flight post sanctions, and the approximately $370 billion in residual capital reserves - is likely to fall into desperation rather quickly.  Oh, and never mind the fact that our anti-Russian oil policy will harm Venezuela, Nigeria, and Iran who all have, of late, been rather critical of U.S. policy and intervention.  In other words, U.S. unilateral energy market manipulation will make winners out of our large shareholder, China (who is rapidly purchasing cheap oil for its strategic reserves) while harming those who don't subscribe to our hegemonic aspirations and our accommodation to our Chinese creditors. 

In the Cold War insanity of the 50s and 60s (which in part necessitated the formation of OPEC), this type of smokescreen geopolitical and economic manipulation was routine.  Born of Alfred Marshall's orthodoxy of supply and demand - a dynamic that enjoys promotion without empirical all-in-cost evidence - the public has been conscripted to play along with these shortsighted expeditions under the veneer of market dynamics.  But the same public fails to read and critique the very dogma that they've been taught to believe.  Marshall, in his own critique made the following observation.

"The modern era has undoubtedly given new openings for dishonesty in trade. The advance of knowledge has discovered new ways of making things appear other than they are, and has rendered possible many new forms of adulteration. The producer is now far removed from the ultimate consumer; and his wrong-doings are not visited with the prompt and sharp punishment which falls on the head of a person who, being bound to live and die in his native village, plays a dishonest trick on one of his neighbours. The opportunities for knavery are certainly more numerous than they were; but there is no reason for thinking that people avail themselves of a larger proportion of such opportunities than they used to do. On the contrary, modern methods of trade imply habits of trustfulness on the one side and a power of resisting temptation to dishonesty on the other, which do not exist among a backward people. Instances of simple truth and personal fidelity are met with under all social conditions: but those who have tried to establish a business of modern type in a backward country find that they can scarcely ever depend on the native population for filling posts of trust. It is even more difficult to dispense with imported assistance for work, which calls for a strong moral character, than for that which requires great skill and mental ability. Adulteration and fraud in trade were rampant in the middle ages to an extent that is very astonishing, when we consider the difficulties of wrong-doing without detection at that time."

So, you make the call.  This first week of December 2014, the U.S. House of Representatives has violated the opening premise of Alfred Marshall's Principles of Economics (1920).  In so doing, the U.S. has undermined its purported "strong moral character" needed to "avert adulteration and fraud".  In fact, it has solidified for itself the dubious distinction of actually placing at peril the lives and well-being of millions around the globe (to say nothing for the Texans and North Dakotans) who will pay in posterity for the boundless supply of contempt and arrogance in the face of a silent, non-existent demand for accountability and leadership from an hypnotized public.  Paying $2.50 at the pump is not only bad for the global balance of power but it is also an act of aggression (if not outright war).  We'll still frack and shale our way to an euphemistic "energy independence" and will enjoy the celebrated economic stimulus associated therewith.  But, when we pay with blood and treasure in the Black and Caspian Sea and when we drive our SUVs to protest aggression in the South China Sea, remember this cheap Christmas and realize that when the math doesn't add up, it's because we're not counting everything.  And this time around, it's all visible for the counting.

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Trimming the Hedges

 When Brevan Howard Asset Management LLP announced the closure of one of its funds last week, it crystallized a reality that has been lurking in the minds of investors and asset allocators for many years.  With around $40 billion in assets under management, Alan Howard’s 2002 foray into hedge fund management has been struggling mightily against a perplexing and unfavorable set of market conditions.  Unlike the hedge fund busts in the late 60s and early 70s, this one is somewhat more disconcerting based largely on the fact that what was supposed to be a pathway to downside market risk management is, itself becoming too great a risk in its own right.  And Brevan Howard is in good, albeit unfortunate, company with managers like Bridgewater Associates, Man Group and Och-Ziff who are all finding it more difficult to manage market complexity.  In a recent interview with CNBC, Luke Ellis, President of Man Group stated that, “The backdrop is more of the same and computers are much better at putting up with more of the same.  Humans always want to call a change in the markets.”

This underhanded compliment to people who didn’t flunk out of math and computer science on the one hand is a long overdue shout out to smart guys.  Well done there!  But whether you take the approach of shuttering a fund like Brevan Howard or turning more investment decisions over to “machines” and algorithms like Man and Bridgewater, there’s a rather ominous implication in what’s become a bloated market choking on correlated assumptions.  Hedge funds, like every other part of the market ecosystem, played a role in the formation of considerable paper wealth – mostly for those who had a lot to start with or got there with the generous fees and commissions they collected during the heady years.  There’s no question that the over $2 trillion of assets committed to these funds, if they were actually deployed per investor expectations, could still be an important part of a healthy investment environment.  However, the aforementioned foreboding is what the Ellis quote suggests about the market direction.

I’ve had the fortune of counting among my valued clients and partners some amazing luminaries in the hedge fund and quantitative trading environment.  I’ve had the dubious privilege of meeting with far more.  And far and away the consensus that I’ve seen is a dearth of appetite to learn and understand the macro conditions that are violating the assumptions upon which hedge fund logic, math, and methodologies were built.  Whether its long/short equities, credit arbitrage, distress, fixed income, or macro, the problem is that when everyone looks at the same data through the same lens polished by the same expertise at the same few credentialed great former performers, the susceptibility for consensus performance suffocation is inevitable and catastrophic.  And having mathematicians, physicists and computer scientists add precision and velocity to consensus-informed human logic patterns is a short-term (and dangerous) fix.  While the speed-of-light decision making algorithms enriched the select few who got into “black box” algorithm funds when things were going well, their undoing has been quiet albeit painful.  And, since the demise of these frothy return engines has been largely known only to those intimately involved in the funds, behemoth managers are following into the abyss their bloodied pioneers like saber tooth tigers trying to catch mammoths in the La Brea Tar Pits.  (Yes, for those of you who track my metaphors, this is one of the best lately!  Look up the exhibits at the La Brea Tar Pits and check out the Ice Age fossils!).

What we need in today’s crazy markets is NOT machines to take what we do and do it faster.  We do NOT need to remove the human from the investment decision.  We gain NOTHING by exterminating those who are experiencing markets from which the wise will learn valuable lessons.  Rather, what we need is the recognition that the current market unease is proportional to the dearth of human inquisitiveness that rewards uncorrelated, non-conforming hypotheses and data.  China data and Black Friday sales are NOT a surprise.  Any expert who wrings their hands with the “who would have seen that coming” defense to being steamrolled by the market is merely admitting to their own sloth (get it, another fossil pun) and conformity.  And while it may not be a deadly sin anymore, sloth still should enjoy no quarter among fiduciary managers.  Bottom line – don’t trim hedges by pulling out the roots.  Don’t replace them with algorithms that will be subject to the illusion disguised as “Moore’s Law” only more volatile and shorter in utility.  Re-engage the love of inquiry – the intrepid capacity to question and learn – and you may get a windbreak to shield you from the coming storms!

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