Michael, Elliott’s Older Brother

My older boys watched Steven Spielberg’s E.T. with me. It was an experiment of mine to see how they might appreciate the movie completely out of cultural context, meaning, when I was nine years old, the bicycle silhouetted against the moon was iconic; we lived and breathed E.T. for years, knew all the tropes, memorized most of the dialogue, collected the E.T. stuffed toys, played the terrible Atari video game, and so forth. As far as my investigations could gather, Tom and Jack hadn’t even heard of E.T. They were tabulae rasae.

Therefore, I was surprised by my own reactions. First of all, as a critic, I was surprised by how many stories are being told, and, moreover, how the main story was told so subtly. For a kids’ movie, Spielberg took an enormous risk with symbolism and framing cues (if you know what I mean). In other words, there was no cabbie explaining the plot to the lowest common denominator in the audience, practically ruining the mystery and imagination. Do we have kids’ movies told so subtly nowadays? My impression is no, but I’d love to see something to contrast the thick stream of broadly told kiddie adventure movies loosely tied to minor character attributes such as loyalty, honor, friendship, or whatever tertiary trait we might want to see develop in ourselves or our children.

Secondly, as a real grown-up with kids of my own, I was struck by the spectacular emotional arc. The man-cave got awfully dusty. The movie is about separation, most importantly, about severance of the home and family. “Dad” is a major character in the movie because he’s not there; he ran away to Mexico with Sally, and this fact drives so much of the movie’s symbolism, character development, theme, etc. Elliot mercilessly pushes this point home near the beginning of the film, driving it deep into Mom’s broken heart.

Are we even allowed to tell stories like this anymore? Divorce was practically a brand-new feature of the American middle class, and it was at that time viewed as entirely and selfishly self-centered, especially with children involved, and we hadn’t yet rationalized away the immense pain created, which yields to rage. I have these memories (perhaps I’ve shared elsewhere) of riding skateboard in brand new residential subdivisions, such as were featured in the movie, talking with my friends about our parents’ divorces. The emotional wreckage was a seed planted to blossom later. How does divorce rank lately? Because we are enraptured by solipsisnormativity, crimes against home and family have been marginalized, so I don’t know that E.T. could have been told today.

Michael, Elliott’s older brother, owns the movie. Naturally he is overshadowed by the puppet and the marvelous performance of Henry Thomas as Elliott, but the story hinges on his own yearning for a father figure, someone who might teach him how to be a man. Spielberg cues us to think to this effect now and again, mostly in the numerous scenes of his mustering up manhood in defense of his mother, but later, more subtly, in the care and protection of E.T., the newest, most vulnerable member of the family, perhaps a father figure himself, though cast in weakness. At the end, Michael, a new man, has gathered to himself a vindication that he has reunited the family around his own courage.

E.T. says to him, “Thank you.”

E.T.-the-Extra-Terrestrial-5.jpg

The Singular of Data

My friend Jeff told me a story in response to a comment I made. I had just mentioned the travails of kid sports, especially since I enrolled my kids in a hockey program which includes one third more ice time than last year’s program. I sighed, “All consuming, you know.”

Jeff leaned back and intoned a story about his brother-in-law, whose boys were raised on the road to become hockey stars, but they were only so close to making it into the professional ranks, and now the anxiety is upon them, as young men in the late teens and early twenties, to acquire a meaningful vocation.

I said, “Can you imagine investing that much money and that much effort (giving away so much of the family life, in effect) toward a goal which has such a small chance of realization?”

Jeff shifted in his chair and recounted the tale of a dear friend of his who was a bona-fide rock star, in his own mind. He did nothing but play his guitar and practice with his band of fellow-travelers, living up the hedonistic ideal, touring Europe and Japan every year. “If you buy him a sandwich, he’ll take it home to his mom’s basement, where he lives, and save half of it for dinner the next day.”

Jeff rarely answers any question  with a propositional statement; he’s all stories, all the time. His experience is wide and varied, so I guess he can. What makes him especially delightful is that he doesn’t tell stories to fill empty space in a conversation, he’s answering a question. One story gives the answer, and then he’s done, no stringing endless tangential episodes ad infinitum.

I saw somewhere recently (and, forgive me, I can’t remember the context) someone mention that the Affordable Care Act might be screwing over huge numbers of people, but a) those numbers are still marginal, and b) the fundamentals of ACA are forged in good policy. I take that to mean, in other words, that as long as the proper number of people are served by this public policy, those who are hurt (ground to dust, more like it) by the same public policy are data. I’m under the impression that that number doesn’t even need to rise to a majority; it just needs to meet some data-triggered threshold which satisfies its designers. All others should be able to conform, no? If not, then selection has taken its course, alas.

It’s not that I’m against science, God forbid; it’s that I’m against its magisterial application in all aspects of the human experience. Public policy, public morality, public religiosity (for lack of a better word), public everything falls under the hegemony of science, as though science were some sort of impersonal absolute extracted by innumerable university studies from an easily-accessible material world. Science, in this manifestation, never serves; it is always master.

Okay, I yield the point: “ground to dust” is too much; there are worse things on this earth than ACA. Nevertheless, I will not yield the larger outcry, namely that this sentiment is a resistance to the notion that in our story-less data-gathering, individuals are being sorted in a grand perversity of science-wielding masters so that they lose their individuality, and thus their ability to serve on another. We don’t learn to serve each other by means of data; we learn by means of experience, which is brought forward through civilization through stories, wherein are the ties of myriad strands of data.

Queen Elizabeth was finally convinced that the monopolies, though they appeared to buy consolidation of her throne, were costing her far more than an open market would. The data had always been there, but the stories hadn’t trickled up to the throne.

Sorry About Your Friend

Charlie* came by the house today, looking like the bottom of a city garbage tote in the middle of July, if it were hot, which it’s not. I noticed right away that he couldn’t hear what I was saying; I kept having to repeat myself.

Eventually the conversation turned black, concerning a piece of property over which is some familial contention and striving. He said, “I have insurance. I’ll burn the [expletive] thing down before I let them put a For Sale sign in front of it. Ricky would have helped me.”

Ordinarily, Charlie is a nice enough guy. He takes care of his mother, who is 93, and he greets me and my children kindly, even going so far as to fetch the boys frozen popsicles when it’s hot out, which is rarely but is known to happen. The boys are forbidden to go into his house, first, out of prudence, second, because Charlie is known to invite young men into his house, whereupon he offers them drugs, then performs unspeakable acts of a sexual nature upon them while they are passed out. He represents a problem, the outbreak of leprosy in our otherwise holy camp.

“Ricky,” he continued. “Ricky Matt. He was my best friend. He’s laid out at the funeral home today.” Ah.

Ordinarily, Charlie is not fractured drunk and high by noon. His best friend was shot in the head three times by State Police after he pointed a shotgun at them. Ricky and David Sweat had had an argument in a cabin because Ricky had drunk himself into a stupor. The plan had been to make for Canada, and they were nearing the goal. This happens: self-destructive persons cannot fathom success, and they sabotage themselves. So they split up, and they were both captured.

The more pitiful of the two was killed, stone drunk. They could smell the alcohol pouring out with his blood and brains from feet away. They even offered to show Charlie the pictures of his friend. He said to me, “I didn’t want to look at them. They told me there were three holes and lots of brains.”

My neighbor was standing in front of me, suppressing the mourning reflexes with a heavy consumption of alcohol and drugs.

For fifteen years, Ricky and Charlie had written each other, dating back to when Ricky was in Mexico. After Ricky escaped from prison, State Troopers ransacked Charlie’s house (1, 2, 3…8 houses from mine), looking for all those letters and any indication of Ricky’s whereabouts or intentions. Charlie said, “I told them to get lost; they were wasting their time.” He stood there, staring at me, stupefied.

“Sorry about your friend,” I said. I wondered what it must be like to have a best friend’s violent death celebrated on television.

“He would have helped me burn it down. He always looked out for me. I know he went and did some bad things…”


*Charlie is a pseudonym

The Branch Davidians, Revisited

Waco, Texas, 1993.

David Koresh, a self-proclaimed fulfillment of the prophecies concerning the Jewish Messiah, and who also had great hair, gathered up some people and some guns and beckoned the Apocalypse. The Federal Government, led by a lady named Janet Reno, mounted her steed, sending forth her armies as a plague against the compound.

Ah! Here’s a helpful note: the feds also instructed the press media, constitutionally protected in the Bill of Rights, not to conduct any more interviews with David Koresh, a U.S. Citizen. The well-meaning Attorney General heard that there were children possibly maybe could be sexually abused, so she burned the joint down. Plus, the FBI was tired. The Branch Davidians, of course, set the fires and accelerated them with Coleman kerosene fuel. The guns were turned inward. It was a bloodbath. Seventy-six people died. Broadcast live on TV.

The Federal Government was frustrated, and understandably so, that its will was not being done, that there were threats against innocents, and that people were beginning to see the government as a failing institution. Potency is a premium attribute, nay, a premium morality. Potency means you can get things done; moreover, potency means that people can see that you can get things done. If people see that you can get things done, they will trust you. No, not trust, the other word. If people see your potency, they will…

Blast this mental block!

The president of the Lutheran Church Missouri Synod issued a statement on June 19, 2015, which includes the following paragraph:

As the world devolves around us from insanity to insanity, I’m reminded of the statement of John Adams that “Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.” Nowhere is that more true than in the case of the Second Amendment. As both religion and morality are on steep decline among us, we can only expect more of this insanity by individuals unhinged from the safety of families and a society normed by natural law and influenced by the genuine teaching of the Bible. “Love your neighbor as yourself” (Mark 12:31).

This marks the first attack on the second amendment I have ever considered with any seriousness, a view that I might want to adopt. Then again, morality tends to descend softly from the top down.

Elian GonzalezMonkey see, monkey do.

Think Tank Theology

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The modern Policy Analyst (homō-vāticinius) is a weird, hybrid creature. He or she must be an effective writer, researcher, organizer, and charismatic speaker all at once. Living within the scholarly lacuna between a university professor and a religious evangelist, he or she is perpetually torn by the tensions of academic integrity and ideological purity.

The natural habitat of the policy analyst is known as the Think Tank. While they exists to produce novel research, their deeper raison d’être is advocacy. Unlike the lobbyist, however, they do not speak for any particular firm or special interest. Rather, they keep their grip on non-profit status by appealing to causes or principles of broader appeal. Like a lion stalking its prey, the outcome of a research project is more often than not a foregone conclusion of economic correctness. Yet by pooling relevant facts and talking points under one heading, research generates the much vaunted “citation need” for any on-going debate.

Think Tanks tend to be lean operations, appearing more grandiose to outsiders thanks to the equally enigmatic species known and anointed as the “Senior Fellow”. Following Coase’s theory of the firm, Think Tanks do not spend their precious donations on elaborate office buildings full of retired professors typing out op-eds. Instead, more typically the full time staff is exactly contained by the needs of daily operations, with a network of Senior Fellows who carry on their own day jobs, essentially outsourced. Some of these Fellows produce nothing — they merely lend their name — while others are prolific, fed either by a salary or commission.

Such organizations provide a useful illustration of the limits of Coasean / transaction cost theories. While clearly shaped by a cost function, Think Tanks are also machines of persuasion to a theological degree. In a world of pervasive moral skepticism, Think Tanks stand as entities of secular normative force, continuously prescribing social and economic reforms couched in prophetic rhetoric.

While each organization has its own positive mission, they are nonetheless drawn in particular to the dissident act of debunking. The centrality of apostolic reform to a Think Tank’s mission thus makes them deeply Lutheran institutions. Like Martin Luther, himself an Augustinian friar, the archetypal policy analyst contemplates — but then must share the fruits of his contemplation, to nail his Ninety-Five Theses to the legislature’s door, now in optional infographical form.

Finally, the youngest friars of all — the next generation of public entrepreneurs — undergo a period of cloistered asceticism, more commonly known as the unpaid internship. Though he is free and belongs to no one, he has made himself a slave to everyone, to win as many as possible. And once endowed with the coveted Letter Of Reference, the young policy analyst proceeds alongs, fully prepared to preach the gospel.

Related: The Problem of Evil and its Coasian Solution

On the Purposes of Schooling

I accidentally insulted a teacher friend of mine (she teaches Grade 9 somewhere in the Niagara Peninsula), so she accidentally insulted me back. I mentioned to her, in connection with the transmission of the fine arts to the next generation, that it’s a little easier for us, since we school our children at home. Immediately, she responded, “I have a friend who’s Catholic who has a large family, and when their kids went to high school, they were unable to function socially.”

It’s the kind of response that makes my left eye twitch. I disciplined myself, reaching for a glass of scotch instead of my revolver, and I said, “We make extra sure our kids are integrated socially amongst their peers.” She would have none of it. She was on offense: “When they got to high school age, the administration had to split them into different schools because the only social interaction they had was family.” It was too late to change the premise because I had gone on defense. It seems that everyone who has an opinion against home schooling knows personally a family whose children do not integrate well socially. I think there is one such family in every region that everyone knows.

She didn’t mention their math scores, nor their language arts scores, neither how they performed in the sciences, or even what the socializing issues were in specific, just that the school administration deemed they were poor performers in social interaction.

The truth is my wife and I don’t work hard in the very least to socially integrate our kids. We throw them out of the house for hours at a time.

The contention is that it is not the purpose of school to learn social skills. In my biased mind, the problem which that school’s administration had was that this Catholic family was filled with children who were introverted learners, and they were overwhelmed by the meat grinder of life as bells, desks, timed tests, and things due. Whereas their previous learning environment was one of nurture and care under mother and father, an environment designed to foster growth and encourage the person, the public school system is an environment of ganglia, clocks, and improving standardized test scores. Besides which, I can’t conceive of a high school social network that is actually healthy.

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Isn’t there a body of literature, both scholarly and juvenile fiction, which treats the social difficulties many children encounter when they switch public schools?

There is no doubt that the parents of this Catholic family acceded to the wishes of the administration because they decided, in their parental wisdom, that the advantages of institutionalized schooling outweighed the disadvantages, probably on the understanding that college preparatory work is difficult to administer at home. There are advantages to pooling resources for certain kinds of education.

Nevertheless, in my mind, the problem is the other way around: why couldn’t the high school kids integrate these outsiders?

The Problem of School Mascots

Local Sports Talk Radio, as I have argued elsewhere, is the application of a handful of social sciences and economics, and a good sports talk radio show host, like Mike Schopp of WGR in Buffalo, (@shopptalk, who, by the way, is a scotch whisky connoisseur like yours truly), must fearlessly engage at all levels with some deftness, else his ratings plummet.

School mascots, particularly those of American Indian progeniture, are a source of anxiety, both for those who are offended by them and for those who have some emotional investment in preserving them. Today, June 3, 2015, Schopp made one of the most cogent arguments I have ever heard against maintaining these racist or near-racist mascots which hearken to a time of a peculiar American injustice.

For the record, I grew up a Washington Redskins football fan; in addition, my personal ancestry includes a fair measure of American Indian. It’s very difficult, on the one hand, to argue that the word “Redskins” is not at least vaguely racist and does not include some pretty hefty racist baggage in its etymology. On the other hand, the Washington Redskins is an NFL football franchise, not a 19th Century Army Cavalry unit scouring the western deserts for Apaches to kill. And it’s a bit of my childhood, right? We used to tease my dad that, when he spent time in the sun, his skin turned the color of the Washington Redskins mascot, and the franchise was championship-caliber at the time.

Washington-Redskins-Logo

The problem is fundamentalism. On the one side, it is essential to scour from view anything that bears a connection to a vile past. For example, if any person derives pleasure in such an image or name, then that person is participating as a belligerent in those past vile acts. On the other side, it is essential to maintain at all costs those mascots because they are ritualistic and deeply personal, occupying the same emotional space an animistic religion might. Taking those images and names away is literally removing a sacred totem.

These things really are contextual. As Mike Schopp remarked, “I am not emotionally attached to the mascot. I’m not making an argument that you should be like me; I’m just telling you how I am about it. I couldn’t care less if they changed my high school’s mascot to The Nachos or whatever. In fact, wouldn’t that be a great gimmick? ‘We’re The Nachos, and we give away free nachos at our football games.'”

Local sports talk radio was considering the topic because a local high school, Lancaster High, has recently changed its mascot, by vote of the student body, from the Redskins to the Legends. The vote to do so was an overwhelming majority.

I think this is brilliant. This non-argument argument gets right to the core: why are you emotionally involved in a mascot? Is it because you can’t be made by those liberal anti-culturalists to give away your childhood? Or your childishness? Yes? No? Maybe? Is it because you can’t stand those dunderheads who won’t see how offensive they are to people who aren’t a member of the oppressive American middle class?

All right, then. Why don’t we vote on it? In fact, at the high school level, or even the college level, why don’t we vote on the school mascot every eight years? That way, two full classes can come and go, enjoying the important cultural unifying effect of being a Warrior or a Bullet or a Bear or what-have-you, and then, the new kids can reconsider. While they’re reconsidering, we can talk to each other sweetly about what we want our mascot to be and why we want it to be that one and not another one.

Let’s take, for example, the Washington Wizards. In the unlikely event that the KKK becomes ascendant in the Midwest, perhaps Wizards becomes a terribly evocative mascot. Is it time to change? Well, here your arguments for and against would be helpful, and the local sports talk radio ratings would be sky high.

Let’s take an example concerning aesthetics: most collective singular mascots, like the Heat, are horrible. But some, like the Crimson Tide, are heavenly. Fierce, silly, whimsical, retrospective, reactive: the tug-of-war among the various factions of fans would create quite the marketing bonanza!

More importantly, I think a regular reconsideration of school mascots would loosen the bonds of fundamentalism. Let’s say that I honestly believe that Redskins doesn’t really harm anyone, but you do. Your job becomes one of persuading me. We take a vote. I win. Your job still remains that of persuasion, because you know another vote is coming.

On the other hand, after some time, perhaps you come to think that maybe, just maybe, you’re expending gigawatts of energy on something that might be a burnt-out 60-watt lightbulb, and you just let it go. Who knows?

Hot Cop on Cop Action

Ferguson and Baltimore are raw blisters on America’s hindquarters, the boiling symptoms of a festering disease that has infected America’s thin blue line. I was thinking, however, it may be related to a basic birth defect.

Americans have heard since the very beginning that they are a barbarous and uncivilized society. It was a criticism during the Cold War from European Soviet Russia that stuck in European ears: we are gangsters, lawless cowboys. Ronald Reagan purposefully embodied the criticism, going so far as to dress the detachment of American athletes to the Sarajevo, Yugoslavia-hosted 1984 Winter Olympics as cowboys. We were still under the threat of Soviet nukes, so the sentiment of lawlessness under that kind of lawfulness was beautiful.

It calls to mind however, the inculcation of lawlessness in American society, that we are a barbarous society from birth, shooting people only when we can see the whites of their eyes, which requires hot and cold blood at the same time, driving the seven-hundred year old throne out of his own colonies. What was on TV in the afternoons, and with cable awaiting in the near-future so that we all watched it together? What sold soap and candy bars?

It was Little House on the Prairie, Gunsmoke, Rawhide, Bonanza, Petticoat Junction, Green Acres, and a handful of other TV shows that were set in the Wild Wild West, not to mention all the weird outer space shows (before we realized how boring space actually is), which were just projections of the wild, lawless American character onto a starry black canvas. Lawlessness abounded, and civilized individuals moved and breathed within it, dealing with it one-on-one, head-to-head, with the occasional hired law man with deputized posse rounded up. Good people even sometimes died in the swirling maelstrom of lawlessness, wherein towering individuals advanced with strength against the cosmic fury to carry out the revenge demanded by flesh and blood.

By chance, I have two cop neighbors. Not by coincidence, ours is a very quiet street, and considering that a retired cop lives further down the street and the judge lives on the corner, it is also always plowed first during the winter. This is convenient. One officer is my friend, and I am in awe of him, toeing the blue line in my behalf. He’s a big guy, too, of Greek or Turkish decent, tall and solidly built, casting a more solid shadow than I do, darkened, I think, with that olive Mediterranean complexion. He’s pretty imposing when he approaches you at hockey speed on ice skates, but when he puts on his cop outfit, completing it with the reinforced Mylar bullet proof vest, he’s downright fearsome.

I’ve talked to him a bit about policing, and I have the impression that he does not think philosophically about his job. Further, he earnestly believes that it is his calling to stand between civilization and barbarity.

I have seen the time-series charts which show that policemen in the United States have killed more people in the line of duty, on average, per year than in all of Germany, England, France, and Italy combined since World War II. Well, yeah, but they’re civilized.

1984Olympics

Separation Anxiety

Friendly Society

If given the choice to live in a world dominated by risk or uncertainty, I would choose risk every time. Risk is manageable. Risk can be hedged. Risk can even bring people together.

Take the Friendly Societies of the 18th and 19th century. These predecessors of the modern insurance cooperative helped to distribute financial risks among their members. But in addition to providing access to doctor care or income in tough times, members could literally count on a shoulder to cry on. The prerogative of a decentralized social safety net had the by-product of strengthening the all around community, in the form civic engagement, social events and close knit relationships.

Friendly and mutual aid societies flourished for over 300 years in places like England thanks to the challenge of measuring risk accurately, especially on an individual level. For the most part, insurance schemes, both formal and friendly, brush over the immense heterogeneity of risk types to come up with a flat rate or membership premium — an average cost — which in our fundamental ignorance we agree to pay.

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In fact, when individual risk is well known (usually by the individual him or herself) our ability to manage risk with insurance or mutual aid tends to break down. For instance, a person seeking health insurance may choose to conceal their heightened risk of cancer by not sharing their family history. In their famous 1976 paper, Stiglitz and Rothschild showed how this kind of asymmetry of information makes insurance hard, if not impossible. In contrast, consider that a young man cannot easily conceal the salient fact that he is young and male. Since this correlates with worse driving, auto insurance is able to separate into several pools, or to charge several prices, without worry of members misrepresenting their risk type.

In the jargon of game theory, this is the difference between a pooling and separating equilibrium, and it’s not limited to insurance. In any scenario where the type of person or good is not directly observed, you instead observe a signal — a piece of communication — which may or may not be informative. But when different types put off different signals, even if they’re not wholly accurate, types can be discerned, separated and priced accordingly.

In the case of England, Friendly Societies tended to be grouped around industry, skill level, and other imperfect “types”. As a whole, then, the Friendlies weren’t totally unsophisticated. But relative to modern insurance, the mechanisms available for making members reveal their riskiness were first order approximations at best.

History’s Card Sharks

This wasn’t necessarily a bad thing. In the limit, if every person has an idiosyncratic and public risk profile, insurance would be like trying to bet a round of poker with the cards face up. Rather than spreading the cost of car accidents, or health care, or unemployment across large groups, we would be much closer to paying our own way in full. While this could be considered efficient in a narrow sense (each consensually pays his or her marginal cost), in practice it could also be disastrous. Rather than having the congenitally lucky occasionally support the unlucky, the unlucky would lose by predestination. There’s no point in bluffing — you’re simply dealt the hand you’re dealt.

Now imagine Friendly Societies as represented by a group of casual poker players that meet regularly. The play is sloppy and heuristic based, and no one really knows how to calculate pot odds. Sometimes you’re up, sometimes you’re down, but in long run everyone tends to break even. Then one day a new player is invited, a player who happens to be a poker tournament champion and retired statistician. Sometimes he’s up, sometimes he’s down, but in the long run the rest of the table ends up consistently going bust. A friendly game among friendly society suddenly isn’t that friendly anymore, and the group disbands. This is more less the story of how Friendly Societies went from flourishing to sudden decline around the turn of the 20th century.

Innovations in the science of actuarial analysis (the statistical study of risk) had been diffusing through society since at least 1693, when Edmond Halley constructed the first “life table” allowing him to calculate annuities based on age. Not long after in 1738, Abraham de Moivre published “The Doctrine of Chances,” credited as discovering the normal distribution that was greatly expounded on by Gauss in the 1800s. Then in 1762, The Equitable Life Assurance Society was founded, with the first modern usage of the term “actuary” (the company exists to this day as Equitable Life, the world’s old mutual insurer). However, as a profession, insurance was truly born much later in 1848, with the founding of the Institute of Actuaries in London, thanks to breakthroughs in measurement and accounting techniques (such as commutation functions) that brought the doctrine of chances from theory to practice.

Scientific actuaries were history’s card sharks. In order to compete, Friendly Societies were forced to adapt — to learn to better calculate the odds — and ultimately they converged on many of the same administrative, procedural, and “scientific” insurance-like structures. The growing (and widely misused) economic surplus this generated fueled an insurance boom peaking in the later part of the 19th century. For efficiency advantages, societies began deepening national networks well beyond the scope of brotherly love, and strove to expand risk classifications and reduce exposure to high risk types.

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By better classifying risk, the “flat rate” pooling equilibrium of the 18th century and earlier rapidly became untenable. Across Europe, the market became increasingly separated, with many differentiated premia and some high-risk types pushed out altogether. This fueled a growing industrial unrest that culminated with the consolidation of private social insurance schemes into nationally run systems.

Commercial insurance, by generating a burst of competition and transitory political instability, was in a sense a victim of its own success. But as many economists have noted, while decidedly non-voluntarist, national schemes (like the one instituted in the UK by the National Insurance Act of 1911) were able to discover large efficiencies of scale through less administrative intensity, tax-based collections, and a comprehensive risk pool. This transaction-cost advantage — and the centuries of social capital it crowded out — guarantees that the days of the close knit mutualists are gone for good, save for some religious congregations. In their stead stands L’Etat Providence — The Welfare State — via a historical process that (as I’ve described) was most rigorously identified by French legal scholar Francois Ewald in a book by the same name.

Classification

The point of this essay (if you’ve made it this far) is to suggest that we are in the midst of a measurement and statistical revolution of equal or greater scale as the 19th century diffusion of actuarial science, with potentially many of the same social and political implications.

With a $99 genotype and sub-$1000 whole genome sequence, in the near future the idea of an insurer asking for your family history of cancer will seem quaint. The immense and inevitable promise of genomics and personalized medicine also portends the inevitable collapse of large, relatively heterogeneous insurance pools, in favour of equally “personalized” healthcare costs schedules.

As I hinted at earlier, this phenomena of moving from pooling to separating equilibria following  advances in measurement technology is by no means limited to risk or health care. Any qualitative distribution can be theoretically mapped to a price distribution, but wind up collapsing into a single price given practical measurement constraints. For example, in the past mediocre restaurants were partially supported by the churn of ignorant consumers, since reliable ratings and reviews were hard to come by. Today, rating platforms like Yelp.com mean that restaurants of different quality have more room to raise or reduce prices accordingly, to separate based on credible signals. It’s the end of asymmetric information.

In the corporate setting, pooling equilibria are represented by relatively flat salary structures given a particular seniority, department or education level. Sometimes there is a commission or performance bonus, but day to day productivity is rarely if ever tracked. This opacity is what permits the possibility of zero marginal product (ZMP) workers — workers who literally contribute nothing to a firm’s output.

For any given kitchen, at some point an additional cook does not actually produce more food. While it can be misleading to say that any particular cook is non-productive (maybe there are simply too many cooks in the kitchen), in deciding on which cook to dismiss it matters a great deal that the cooks aren’t all equally productive. On the contrary, the individual contribution of every kind of worker to a firm’s output is often extremely heterogeneous, with the top 20% of workers contributing as much as the lower 80%.

With automation and artificial intelligence reducing the demand for human inputs, the kitchen, so to speak, is shrinking.  It has therefore become paramount for firms to identify the 20 and eject the 80. The contemporary increase in country level inequality is widely recognized as technology driven, but few have put their finger on the micro-foundations that explain why. Part of the story is surely “human-machine substitutability,” but in addition firms have simply started monitoring and classifying worker productivity better than in the past. This leads to a separating equilibrium that shows up in the data as job market polarization, rising premia on the central “signals” like college degrees, and (to the extent that signals are sticky) reduced social mobility. Unsurprisingly, a class based society is first and foremost a society which classifies. The silver lining in this case is that, rather than classes based on pedigree, nobility or race, the future promises to be highly — if not brutally — meritocratic.

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In one future scenario, just as actuaries identified groups that were uninsurable, perhaps large sections of society will discover they are unhirable. Supposing they have too many “one-star” ratings, as it were, on their HR record, their only hope will be in working for fellow one-stars, and to build a matching-economy around their mediocrity. This is essentially the “Average is Over” scenario imagined by Tyler Cowen, who foresees the return of shanty-towns across the United States. But I wouldn’t bet on it. In many ways, the recent calls for a “universal basic income” exactly parallel the early 20th century’s push towards nationalized social insurance. Only here it is labour-income itself that would be nationalized, as part of the inescapable political economy of separation anxiety.

My own anxiety stems from that fundamental uncertainty of the future, as if the social order is dancing along a knife edge dividing two radically different steady states. In either state — from hyper-meritocracy to a New New Deal — the case of the Friendly Societies demonstrates that the only thing for certain will be the loss of our sacred intangibles: the unmeasured qualities that united distinct types under one roof, from the fraternal lodge to the corporate office.

Rehabilitating Neville Chamberlain

After Neville Chamberlain died of bowel cancer in November of 1940, Winston Churchill mourned him privately, “Whatever shall I do without poor Neville? I was relying on him to look after the Home Front for me.”

I think it is oft-assumed that Churchill and Chamberlain were vituperative in their antipathy toward each other. Indeed, nothing can be further from the truth. They saw the Nazi threat differently and understood history differently to the extent that one or the other of them would eventually prevail, but neither of them saw the other as a political foe, not in the sense that one should have power and the other should not. It was the magnanimity of Chamberlain that gave us Churchill to lead the Allies against Hitler; Chamberlain, when he went to King George VI to tender his resignation, stepped over the more senior politician, the more popular and more obvious candidate for Prime Minister, Lord Halifax (who was not pressing his claim to the ministry), suggesting Winston Churchill instead.

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We also have the picture and the quote: “Peace in our time,” a signed document, assurances from Hitler that England and Germany would never wage war against each other. On the night of the British declaration of war against Germany, of course, Hitler sent a well-planned and well-rehearsed air raid against London. We, the beneficiaries of almost 80 years of hindsight, shake our heads with the epithet on our lips, “You idiot, how could you have ever trusted Hitler?”

The photograph, however, was taken with too narrow a field of focus to capture the enormous British zeitgeist. Chamberlain was received by England from the Munich meeting with near-universal acclaim. Note: this was after Hitler had taken the Rhineland, had absorbed Austria, had taken the Sudetenland, and had massed on the Polish border. The people cheered in the streets, a veritable sea of people, so that a nine mile journey took Chamberlain an hour and a half. The press lauded him as a hero. King George VI even wrote him a letter congratulating him on the preservation of the Empire.

A few individuals dared act contrarily, most notably Duff Cooper, who resigned as First Lord of the Admiralty, and, of course, Churchill.

Whence this national fantasy? How does history judge so harshly and so easily while those who were present almost unanimously praised him? Even the most friendly historical treatments of Chamberlain note that his reckoning of Hitler was utterly fatuous. All those cheers for so fatuous a gesture.

Any rehabilitation attempt must not seek to defend Chamberlain in an empty context, that of a leader with a set of beliefs, principles, and assumptions about the world with all the evidence laid out before him as so many archaeological artifacts. Instead, his own people, those who approved so tumultuously of his beliefs, principles, and assumptions, must be acknowledged as the sea driving him inevitably into the shoal water of history.

Who knows the ship of state is driven so by the imaginations of her own people?