First Do No Harm

  Several weeks ago I mentioned something about financier George Soros’ back.  He employed it as sort of an economic indicator.  I’m reading his book The New Paradigm for Financial Markets.  It came out last April.  Wish I’d read it then. Or asked him about his back.  His advice in a memo written in January was to sell US stocks.  The Dow Jones Average is now some 30%/4,000 points less than at the end of that month.

  His purpose in writing the book is to put forth in detail his “theory of reflexivity” underlying his tremendous investment success.  “The theory of reflexivity seeks to illuminate the relationship between thinking and reality.

  “My starting point is that our understanding of the world in which we live is inherently imperfect because we are part of the world we seek to understand”… Understanding a situation and participating in it involves two different functions.  On the one hand people seek to understand the world in which they live.  I call this the cognitive function.  On the other, people seek to make an impact on the world and change it to their advantage. I call this the manipulative function.  When both functions are in operation at the same time they may interfere with each other.”

  Application of his theory in the financial markets leads him to: “the conclusion that both the financial authorities and market participants harbor fundamental misconceptions about the way financial markets function.”  His theory clearly is contrary to prevailing opinion that markets are inherently efficient.    

  Application of his observations to the current political scene is quite provocative in its description of the path that led to the current pickle we’re in.  “The primary purpose of political discourse is to gain power and to stay in power.  Those who fail to recognize this are unlikely to be in power.  The only way in which politicians can be persuaded to pay more respect to reality is by the electorate insisting on it… The electorate needs to be more committed to the pursuit of the truth than it is at present.”

  It’s not just Machiavelli.  The point is that once in power a ‘prince’ might manipulate realty with a certain goal in mind, but end up at the wrong end of the field in disaster.

  The road to hell is paved with good intentions.  An article in the business section of the October 7 online edition of the Economist admonishes: “First do no harm.” And then asks: “Do bosses need their own Hippocratic Oath?”

  Oddly, considerations of the above brought to mind another book recently read: The Architecture of Happiness by Alain de Bolton.  It is a wonderful treatise on the tremendous impact architecture and design have on our existence.  “The places we call beautiful are the work of those rare architects with the humility to interrogate themselves adequately about their desires and the tenacity to translate their fleeting apprehensions of joy into logical plans – a combination that enables them to create environments that satisfy needs we never consciously knew we even had.”

  But the reason consideration of Soros led to M. de Bolton is the latter’s description of how few are needed to effect positive change.  “Lest we begin to despair at the thought of how much might be required to bring about a genuine evolution in taste [and whatever else], we may remind ourselves how modest were the means by which previous aesthetic revolutions were accomplished.”

  Starting with the renaissance and ending with much of the western world’s modern built environment he shows how hugely generative and positive movements have been spawned by just a few tenacious individuals.  “The Italian Renaissance was the work of only about 100 people… It took a mere 200 pages of Le Corbusier’s Towards a New Architecture to decide the appearance of much of the built environment of the twentieth century.”

  He concludes: “We owe it to the fields that our houses will not be the inferiors of the virgin land they have replaced.  We owe it to the worms and the trees that the buildings we cover them with will stand as promises of the highest and most intelligent kinds of happiness.”

  Yup.

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