JOHN C. BOLAND

Not the Worst Year

Waiting for the World to End

If being housebound for weeks even with good company wasn’t dreary enough, I had to find something to read. On a shelf in a side room are stacks of scary writers: H.P. Lovecraft, M.R. James, Robert Aickman. There are also four novels by a more overtly literary figure, Shirley Jackson, none of which I had read.

I picked The Sundial, from 1958, which describes a houseful of unpleasant people waiting for the world to end.

The Sundial is patient, character-driven, with a couple of extended scenes that build horror from something as trivial as becoming lost in a fog. Whether the world ends on the designated last day is left unresolved, though one character’s end has a pasted-on, clumsy feel that’s at odds with the general ambiguity Jackson establishes.

What’s apparent in the first few chapters, however, is Jackson’s familiarity with a classic study of cognitive dissonance, Leon Festinger’s 1956 report When Prophecy Fails. The narrative set-ups are identical: a woman delivers a message of mystical origin, foretelling an apocalyptic event. Festinger and his associates set out to explore how believers would respond when a prophecy was falsified by events: how would they adapt their thinking and behavior to a reality that defies their beliefs? Jackson set out to paint unflattering psychological portraits of people struggling to dominate one another. A housebound reader could find either worth a go.

An Internet search turned up some litcrit noting the similarities. It’s unclear whether Shirley Jackson’s papers would offer more. She might have drawn on additional sources. The Midwestern flying-saucer group that drew Festinger and two associates, Henry W. Riecken and Stanley Schachter, to become observers in the late fall of 1954 was known as The Seekers. The group appears centrally in the Festinger study and has a cameo in Jackson’s novel. A newspaper article had reported that housewife Dorothy Martin had received through automatic writing messages from a distant planet predicting a cataclysmic earthquake and flood that would destroy Chicago (and perhaps the rest of the world) on December 21, 1954. Around Martin were gathered a small cluster of believers who were expecting to be rescued by saucers on the eve of the destruction. For Festinger’s team of sociologists from the University of Minnesota this provided an opportunity to test his thesis on the factors that might shape a believer’s reaction to a strong disconfirmation.

When Prophecy Fails is an intriguing book. The study’s results were largely as expected, that believers adjusted to new information largely in proportion to the direct steps they had taken in commitment to their belief, such as giving away property and leaving jobs. The outer group dispersed. The core, who had made major changes in their lives in anticipation, found acceptable reasons why the event hadn’t occurred (ad hoc adjustments protecting belief). The two principals, Mrs. Martin and a Dr. Charles Laughead, continued their psychic work for many years until their deaths.

I’d enjoyed Festinger and his colleagues’ book late last year. Jackson’s I finished a week ago. Now it’s a wet spring and we sit wondering what lies ahead. The wait is mostly tedious. Prophecies are scarce.

When Prophecy Fails. Leon Festinger, H. W. Riecken, S. Schachter, 1956
The Sundial. Shirley Jackson, 1958

As an economist, David Meiselman made a mark early, collaborating at the University of Chicago with eventual Nobel laureate Milton Friedman. His dissertation, The Term Structure of Interest Rates, was published by Prentice-Hall in 1962 and won a Ford Foundation award. David knew everyone and anyone in the circles of liberal-market thinkers, including Friedrich Hayek, who held the chair at the Committee on Social Thought at Chicago. Among friends he was extraordinarily good-natured. Toward socialists, he was contemptuous—though I never saw him in their company, so I don’t know whether the scorn became personal. I wondered once that statists could get around Hayek’s insight on the epistemic deficit of planners, and David replied coldly, “They ignore it.”

When I complained about feckless Republicans and shilly-shallying think tanks (he was involved with both the Heritage Foundation and the Cato Institute), he said we have to live in the world we’re given, not the one I might like.

We both liked the business of markets. Through David and Winnie I met Henry Manne, scathing and cheerful critic of all things regulatory. For several years David and his wife brightened our winters in Sanibel. Either Win or my wife snapped the shot above, David as an expansive Tevye, at Purim twenty years ago.

 August 7 2019

René Maria Rilke to Lou Andreas-Salomé, June 8, 1897:

“I want to put flowers in your hair. But what flowers? There are none with touching enough simplicity . . . .

“I’ve never seen you without wanting to pray to you. I’ve never heard you without wanting to place my faith in you. I’ve never longed for you without wanting to suffer for your sake. I’ve never desired you without wanting to kneel before you.”

Rilke was 21. Andreas-Salomé was 36.

Smart for a Day

A dozen years ago, Eddie Lampert, the chairman of Sears Holdings Corp., gave a luncheon talk in New York about how great it was to be as smart as Eddie Lampert. He was riding high on the success of having leveraged the undervalued real estate of bankrupt Kmart into control of the venerable retail giant Sears. Lampert assured his audience at the Grant’s Interest Rate Observer conference that he was on top of every aspect of the business: store design, merchandise display, pricing. I don’t remember if he talked much about the financial side, but that was where his undisputable expertise lay, as the preceding several years had proved. BusinessWeek had already put him on the cover as “The Next Warren Buffett?”

Sears’ stock closed that week of November 1, 2005, at $83.33. About eighteen months later, it hit $141.29. Eddie Lampert earned his footprint on Wall Street’s Walk of Fame.

This past week, facing the likelihood of bankruptcy, Sears touched $1.07

From the week of his talk to the recent low was a drop of 98.8%. Lampert liked his management style so much he had the company buy in $5.9 billion of its common shares between 2005 and 2010. So the loss adds up to about $14 billion. Holders of a couple billion in debt presumably aren’t happy either, as the unsecureds trade at less than half-par.

In a dozen years, much has changed. Retail isn’t what it was, and neither is the real estate on which it sits. To have foreseen the extent of these changes would have taken someone even smarter than Eddie Lampert. And in truth, there probably aren’t a lot of people in the world who are smarter. So what went wrong?

The autopsies of Wall Street failure make entertaining reading for the resentful. When Genius Failed on the collapse of Nobel-driven Long-Term Capital Management, The Big Short on the mortgage bonds disaster, numerous exhumations of Lehman and Bear Stearns all feed on the not-quite-as-smart reader’s desire to see a comeuppance of the mighty. John Paulson made billions during the financial crisis shorting mortgage debt. Then he got his clock cleaned over the next decade. Bill Ackman was a celebrated short seller who bet against Herbalife.  Add recent hedge fund casualties Paul Tudor Jones and David Einhorn. The moralist’s tale is that successful people succumb to hubris. But when things are working, who doesn't?

What the best players can’t seem to get around is an impersonal problem: regression to the mean. Does this imply that people are smart some days and stupid others? It’s more evidence that the world is so complicated and impossible to predict that the fellow who gets it right this year and a few others has probably been, in addition to very clever, also pretty lucky. It’s asking a lot to be not only smart every year but also lucky.

It’s easier to appear smart if you’re talking rather than doing. A stated opinion is much more nuanced than a buy or sell ticket. That helps explain why some investment advisors survive many decades longer than either their market-forecasting skill or chance would permit. That and the fact their followers can always blame themselves for failures. The late Joseph Granville had an illustrious career built on the fallacy that a close understanding of market history would provide insight into what lay ahead. In the 1970s, his pronouncements could move markets. A fellow who worked p.r. for Granville described a gathering at a resort, where Joe appeared in prophet’s robes, walked straight across a swimming pool on submerged boards that had been painted blue, spread his arms and announced, “Now you know.”

Two footnotes about impermanence. BusinessWeek, which was ad-fat well into this century, was sold to Bloomberg in 2009 for corporate pocket change. And as for those footprints on Wall Street’s Walk of Fame, they’re imaginary, but if they existed they would be etched in chalk. Being right, the only thing that counts in markets, is that fleeting.

August 28 2018

 About Uncle Liam and Me

A year or so ago, I asked a company called 23andMe to sort my DNA. I’ve always assumed I was mostly Irish on both sides of the family. It turns out the picture here may be of a great-great-great-etc. uncle of mine, though he probably wasn’t named Liam.

23andMe screens for a relatively small percentage of Neanderthal DNA markers. The most they’ve reported to any customer was 397. I have 299, more than 81 percent of their clients. Their client base doesn’t provide a statistical reference, as it’s self-selected. But still . . .

A couple of years ago, I joked that the discovery that many of us share Neanderthal markers was a new source for ethnic pride, if one were so disposed. Now it appears that the Neanderthal were the first members of the human family to paint images on cave walls. 23andMe didn’t mention that trait, which hadn’t been discovered a year ago. Their insightful analysis suggested tendencies toward straight hair, absence of back hair, and soft ear wax.

Uncle Liam aside, the evidence accumulates that modern humans are hybrids of marvelous  complexity. Last I read, Homo sapiens sapiens and Neanderthalensis had a common ancestor a million years ago. That estimate is continually debated. Some scientists put the divergence only half that far back. But the emergent picture suggests that the exodus from Africa has been long and repetitive, and that the subsequent events are complex and not well understood. Given how much can happen in hundreds of thousands of years, that’s not surprising. So far 23andMe doesn’t screen for Homo denisova markers. Maybe, somewhere along the long human line, I have an Aunt Denise, though I gather this is unlikely. The Denisovans, who carried Neanderthal markers as well as those of one of the "ghost" species that have left behind nothing but bits of coding, may have vanished* from the human genome except for DNA sequences carried by the aborigines of Australia and Papua New Guinea.

About a decade ago, I wrote a book called Hominid that conjectured about the strong selection that might occur in island populations. A slightly villainous character who is financing research speculates early on that humans and Neanderthals might have interbred, but he later accepts the view prevailing in the first decade of this century that rejected that notion. By the time Svante Pääbo at the Max Planck Institute sequenced Neanderthal DNA and began looking for distinctive markers, the book was finished. The novel was about something else, in any case, the incredible speed at which strong selection can occur. One example is the spread of lactase persistence mutations through Europe in perhaps ten thousand years. The selection isn’t complete; most of us know people who are lactose intolerant. Another example was how a certain favorable genetic trait might flourish in an isolated population, in the novel a gift of longevity.

Those who wish for diversity have it: we have diverged, and rejoined in a limited way, and diverged again, who knows how many times or with how many archaic humans. Our families have experienced adaptation and selection every step of their migration across the earth. Most of you reading this will never be tested for Tay-Sachs, but European Jews who intend to marry certainly will be. It’s distinctive to that population, as the absence of facial hair is to American Indians, the epithelial fold is to Asians, tyrosinemia is to the Chicoutimi, thalassemia is to some Pacific Islanders, and as the absence of back hair is to Uncle Liam’s descendants. The prophet who said his father’s house had many mansions could have been describing us.

[* Note: Some of the material above is already out of date. Harvard researcher David Reich's Who We Are and How We Got Here is a terrific source on recent findings. I could add, to the oddities of human wandering, that 23andMe reports that my Irish-German mother's haplogroup is found today most often in Iraq.]

March 3 2018