Everyman an Artist

The Art Instinct

By Denis Dutton


'What an artist dies with me!" whined the nasty Roman emperor Nero as he prepared to commit suicide. Posterity has generally mocked the thought, judging the occasional singer-actor more of an artless thug.
Not so. We're all artists of a sort, or at least we all vibrate with the art instinct, a certain "ornamental capacity."
Paleolithic cave painter, Renaissance madrigalist, New Guinea carver, urban hip-hopper - each confirms us, Denis Dutton writes, as "a species obsessed with creating artistic experiences with which to amuse, shock, titillate and enrapture ourselves, from children's games to the quartets of Beethoven, from firelit caves to the continuous worldwide glow of television screens."
Why do we create art and beauty? Dutton may be the best-equipped thinker in the world to explain.
An American who serves as professor of the philosophy of art at the University of Canterbury in New Zealand, and founder and editor of the journal Philosophy and Literature, Dutton used to run a contest to identify wretched academic prose. He then launched and still curates artsandlettersdaily.com, an international digest of sophisticated cultural pieces that the Guardian named the "best Web site in the world."
In short, he combines a magisterial command of the history of aesthetics back to Plato and Aristotle, a total commitment to clarity and verve in writing, and an up-to-the-minute grasp of almost every trend on the contemporary cultural scene.
Result? A philosophy of art for the ages. Dutton argues that evolutionary psychology - the school of thought with which cognitive scientists such as Steven Pinker have helped us understand the Darwinian dimensions of much social life - also explains the ubiquity of artistic activity across cultures and eons.
If you care about art writ large as a miraculous bounty for the world, or only for your own selfish sake, The Art Instinct should impress you as the most shrewd, precisely written and provocative study you'll find on its topic's place in human nature.
"What does it mean to call the arts evolutionary adaptations?" Dutton asks. He explains, expanding on his assertion that "the arts, like language, emerge spontaneously and universally in similar forms across cultures, employing imaginative and intellectual capacities that had clear survival value in prehistory."
Dutton's method proves idiosyncratic, lively and persuasive. He begins with fascinating attention to a 1990s experiment by the expatriate Russian artists Vitaly Komar and Alexander Melamid. It showed that people in 10 countries preferred landscapes of a certain savanna-like sort - "with trees and open areas, water, human figures, and animals" - a choice confirmed by preferences in calendar art.
For Dutton, the research indicates that calendar-makers, in responding to "human landscape tastes," are in fact "catering to prehistoric tastes shared by their customers around the globe," a yen for the territory from which we evolved.
He moves on to articulate a larger view of human nature and a "cross-cultural definition of art," using them to explore the human urge to storytelling and imaginative fiction, which offer advantages to survival and "social health." Along the journey, he forays into issues he's treated before, such as how concern for authenticity affects our reactions to forgery, and suggests that sexual selection "explains some of the most creative and flamboyant aspects of the human personality, including the most gaudy, profligate, and 'show-off' characteristics of artistic expression."
One critical reaction to this developing narrative might be to charge "reductionism," to fault Dutton for lowering art to mere biological reflex. But one of the many pleasures of The Art Instinct is how deftly and convincingly Dutton refuses to fall into that trap.
"[T]he art instinct proper," he writes, "is not a single genetically driven impulse similar to the liking for sweetness but a complicated ensemble of impulses - sub-instincts, we might say - that involve responses to the natural environment, to life's likely threats and opportunities, the sheer appeal of colors or sounds, social status, intellectual puzzles, extreme technical difficulty, erotic interests, and even costliness. There is no reason to hope that this haphazard concatenation of impulses, pleasures, and capacities can be made to form a pristine rational system."
Indeed, Dutton eloquently blasts reductionism, contending that "great works of music, drama, painting, or fiction set us above the very instincts that make them possible. Paradoxically it is evolution - most significantly, the evolution of imagination and intellect - that enable us to transcend our animal selves. . . ."
Freed, then, of any obligation to present a rigid model of his theory, Dutton launches into his book able to amuse, challenge and entertain with multiple examples and hypotheticals. A believer in Clive Bell's so-called "cold white peaks of art" - masterworks such as the Cathedral of Chartres, or Wordsworth's "Tintern Abbey," that win admiration from generation to generation - Dutton elaborates his theory in fine form, anticipating objections, producing evidence, offering his cosmopolitan perspective with winning modesty (he acknowledges that music poses a challenge to his theory).
The richness of The Art Instinct means that even those who sympathize with Dutton's views will find points to quibble with. At the outset, for instance, he takes a strong view against "chimpanzee art" and other such feats of the animal kingdom, asserting that animals "do not create art." Time and research will tell whether such confidence is justified.
Similarly, he reveals intermittent annoyance with the views of fellow philosopher of art Arthur Danto, whose vision of the "socially constructed" way criticism and interpretation validate art he considers contradictory to his own.
One might, however, discern a "third way" in which Dutton's theory of the art instinct, and Danto's vaunting of art-world institutions, go hand-in-hand, capturing different time-slices of what we call culture.
Such invitations to debate, however, merely reaffirm rather than undermine the sterling quality of Dutton's brief. "I love fools' experiments," Charles Darwin once wrote. "I am always making them." The Art Instinct is the experiment of a master, and future aestheticians, one suspects, will naturally need to adapt to it.

The Economy

It's 2009. You're laid off, furloughed, foreclosed on, or you know someone who is. You wonder where you'll fit into the grim new semi-socialistic post-post-industrial economy colloquially known as "this mess."
You're astonished and possibly ashamed that mutant financial instruments dreamed up in your great country have spawned worldwide misery. You can't comprehend, much less trim, the amount of bailout money parachuting into the laps of incompetents, hoarders, and miscreants. It's been a tough century so far: 9/11, Iraq, and now this. At least we have a bright new president. He'll give you a job painting a bridge. You may need it to keep body and soul together.
The basic story line so far is that we are all to blame, including homeowners who bit off more than they could chew, lenders who wrote absurd adjustable-rate mortgages, and greedy investment bankers.
Credit derivatives also figure heavily in the plot. Apologists say that these became so complicated that even Wall Street couldn't understand them and that they created "an unacceptable level of risk." Then these blowhards tell us that the bailout will pump hundreds of billions of dollars into the credit arteries and save the patient, which is the world's financial system. It will take time—maybe a year or so—but if everyone hangs in there, we'll be all right. No structural damage has been done, and all's well that ends well.
Sorry, but that's drivel. In fact, what we are living through is the worst financial scandal in history. It dwarfs 1929, Ponzi's scheme, Teapot Dome, the South Sea Bubble, tulip bulbs, you name it. Bernie Madoff? He's peanuts.
Credit derivatives—those securities that few have ever seen—are one reason why this crisis is so different from 1929.
Derivatives weren't initially evil. They began as insurance policies on large loans. A bank that wished to lend money to a big, but shaky, venture, like what Ford or GM have become, could hedge its bet by buying a credit derivative to cover losses if the debtor defaulted. Derivatives weren't cheap, but in the era of globalization and declining American competitiveness, they were prudent. Interestingly, the company that put the basic hardware and software together for pricing and clearing derivatives was Bloomberg. It was quite expensive for a financial institution—say, a bank—to get a Bloomberg machine and receive the specialized training required to certify analysts who would figure out the terms of the insurance. These Bloomberg terminals, originally called Market Masters, were first installed at Merrill Lynch in the late 1980s.
Subsequently, thousands of units have been placed in trading and financial institutions; they became the cornerstone of Michael Bloomberg's wealth, marrying his skills as a securities trader and an electrical engineer.
It's an open question when or if he or his company knew how they would be misused over time to devastate the world's economy.
Fast-forward to the early years of the Clinton administration. After an initial surge of regulatory behavior in favor of fair markets, especially in antitrust, that sort of behavior was abandoned, and free markets triumphed. The result was a morass of white-collar sociopathy at Archer Daniels Midland, Enron, and WorldCom, and in a host of markets ranging from oil to vitamins.
This was the beginning of the heyday of hedge funds. Unregulated investment houses were originally based on the questionable but legal practice of short-selling—selling a financial instrument you don't own in hopes of buying it back later at a lower price. That way, you hedge your bets: You cover your investment in a company in case a company's stock price falls.
But hedge funds later diversified their practices beyond that easy definition. These funds acquired a good deal of popular mystique. They made scads of money. Their notoriously high entry fees—up to 5 percent of the investment, plus as much as 36 percent of profits—served as barriers to all but the richest investors, who gave fortunes to the funds to play with. The funds boasted of having genius analysts and fabulous proprietary algorithms. Few could discern what they really did, but the returns, for those who could buy in, often seemed magical.
But it wasn't magic. It amounted to the return of the age-old scam called "bucket shops." Also sometimes known as "boiler rooms," bucket shops emerged after the Civil War. Usually, they were storefronts where people came to bet on stocks without owning them. Unlike their customers, the shops actually owned blocks of stock. If customers were betting that a stock would go up, the shops would sell it and the price would plunge; if bettors were bearish, the shops would buy. In this way, they cleaned out their customers. Frenetic bucket-shop activity caused the Panic of 1907. By 1909, New York had banned bucket shops, and every other state soon followed.
In the mid-'90s, though, the credit-derivatives industry was hitting its stride and argued vehemently for exclusion from all state and federal anti-bucket-shop regulations. On the side of the industry were Federal Reserve Chairman Alan Greenspan, Treasury Secretary Robert Rubin, and his deputy, Lawrence Summers. Holding the fort for the regulators was Brooksley Born, who headed the Commodity Futures Trading Commission (CFTC). The three financial titans ridiculed the virtually unknown and cloutless, but brilliant and prophetic Born, who warned that unrestricted derivatives trading would "threaten our regulated markets, or indeed, our economy, without any federal agency knowing about it." Warren Buffett also weighed in against deregulation.
But Congress loved Greenspan—a/k/a "the Maestro" and "the Oracle"—and Clinton loved Rubin. The sleepy hearings received almost no public attention. The upshot was that Congress removed oversight of derivatives from the CFTC and preempted all state anti-bucket-shop laws. Born resigned shortly afterward.
Soon, something odd started to happen. Legitimate big investors, often with millions of dollars to place, found that they couldn't get into certain hedge funds, despite the fact that they were willing to pay steep fees. In retrospect, it seems as if these funds did not want fussy outsiders looking into what they were doing with derivatives.
Imagine that a person is terminally ill. He or she would not be able to buy a life insurance policy with a huge death benefit. Obviously, third parties could not purchase policies on the soon-to-be-dead person's life. Yet something like that occurred in the financial world.
This was not caused by imprudent mortgage lending, though that was a piece of the puzzle. Yes, Fannie Mae and Freddie Mac were put on steroids during the '90s, and some people got into mortgages who shouldn't have. But the vast majority of homeowners paid their mortgages. Only about 5 to 10 percent of these loans failed—not enough to cause systemic financial failure. (The dollar amount of defaulted mortgages in the U.S. is about $1.2 trillion, which seems like a princely sum, but it's not nearly enough to drag down the entire civilized world.)
Much more dangerous was the notorious bundling of mortgages. Investment banks gathered these loans into batches and turned them into securities called collateralized debt obligations (CDOs). Many included high-risk loans. These securities were then rated by Standard & Poor's, Fitch Ratings, or Moody's Investors Services, who were paid at premium rates and gave investment grades. This was like putting lipstick on pigs with the plague. Banks like Wachovia, National City, Washington Mutual, and Lehman Brothers loaded up on this financial trash, which soon proved to be practically worthless. Today, those banks are extinct. But even that was not enough to cause a worldwide financial crisis.
What did cause the crisis was the writing of credit derivatives. In theory, they were insurance policies for investors; in practice, they became a guarantee of global financial collapse.
As insurance, they were poised to pay off fabulously when these weak bundled securities failed. And who was waiting to collect? Well, every gambler is looking for a sure bet. Most never find it. But the hedge funds and their ilk did.
The mantra of entrepreneurial culture is that high risk goes with high reward. But unregulated and opaque derivatives trading was countercultural in the sense that low or no risk led to quick, astronomically high rewards. By plunking down millions of dollars, a hedge fund could reap billions once these fatally constructed securities plunged. Again, the funds did not need to own the securities; they just needed to pay for the derivatives—the insurance policies for the securities. And they could pay for them again and again. This was known as replicating. It became an addiction.
About $2 trillion in credit derivatives in 1989 jumped to $8 trillion in 1994 and skyrocketed to $100 trillion in 2002. Last year, the Bank for International Settlements, a consortium of the world's central banks based in Basel (the Fed chair, Ben Bernanke, sits on its board), reported the gross value of these commitments at $596 trillion. Some are due, and some will mature soon. Typically, they involve contracts of five years or less.
Credit derivatives are breaking and will continue to break the world's financial system and cause an unending crisis of liquidity and gummed-up credit. Warren Buffett branded derivatives the "financial weapons of mass destruction." Felix Rohatyn, the investment banker who organized the bailout of New York a generation ago, called them "financial hydrogen bombs."
Both are right. At almost $600 trillion, over-the-counter (OTC) derivatives dwarf the value of publicly traded equities on world exchanges, which totaled $62.5 trillion in the fall of 2007 and fell to $36.6 trillion a year later.
The nice thing about public markets is that they act as canaries that give warnings as they did in 1929, 1987 (the program trading debacle), and 2001 (the dot-com bubble), so we can scramble out with our economic lives. But completely private and unregulated, the OTC derivatives trade is justly known as the "dark market."
The heart of darkness was the AIG Financial Products (AIGFP) office in London, where a large proportion of the derivatives were written. AIG had placed this unit outside American borders, which meant that it would not have to abide by American insurance reserve requirements. In other words, the derivatives clerks in London could sell as many products as they could write—even if it would bankrupt the company.
The president of AIGFP, a tyrannical super-salesman named Joseph Cassano, certainly had the experience. In the 1980s, he was an executive at Drexel Burnham Lambert, the now-defunct brokerage that became the pivot of the junk-bond scandal that led to the jailing of Michael Milken, David Levine, and Ivan Boesky.
During the peak years of derivatives trading, the 400 or so employees of the London unit reportedly averaged earnings in excess of a million dollars a year. They sold "protection"—this Runyonesque term was favored—worth more than three times the value of parent company AIG. How could they have not known that they were putting at risk the largest insurer in the world and all the businesses and individuals that it covered?
This scheme that smacks of securities fraud facilitated the dreams of buyers called "counterparties" willing to ante up. Hedge fund offices sprouted in Kensington and Mayfair like mushrooms after a summer shower. Revenue from premiums for derivatives at AIGFP rose from $737 million in 1999 to $3.26 billion in 2005. Cassano reportedly hectored ever-willing counterparties to "play the power game"—in other words, gobble up all the credit derivatives backing CDOs that they could grab. As the bundled adjustable-rate mortgages ballooned, stretched home buyers defaulted, and the exciting power game became about as risky as blasting sitting ducks with a Glock.
People still seem surprised to read that hedge principals have raked in billions of dollars in a single year. They shouldn't be. These subprime-time players knew how to score. The scam bled AIG white. In mid-September, when it was on the ropes, AIG received an astonishing $85 billion emergency line of credit from the Fed. Soon, that was supplemented by another $67 billion. Much of that money, to use the government's euphemism, has already been "drawn down." Shamefully, neither Washington nor AIG will explain where the billions went. But the answer is increasingly clear: It went to counterparties who bought derivatives from Cassano's shop in London.
Imagine if a ring of cashiers at a local bank made thousands of bad loans, aware that they could break the bank. They would be prosecuted for fraud and racketeering under the anti-gangster RICO Act. If their counterparties—the debtors—were in on the scam and understood that they didn't have to pay off the loans, they could be charged, too. In fact, this scenario played out at subprime-pushing outlets of a host of banks, including Washington Mutual (acquired last year by JP Morgan Chase, which itself received a $25 billion bailout); IndyMac (which was seized by FDIC regulators); and Lehman Brothers (which went belly-up). About 150 prosecutions of this type of fraud are going forward.
The top of the swamp's food chain, where the muck was derivatives rather than mortgages, must also be scrutinized. Apparently, that is the case. AIGFP's Cassano has hired top white-collar litigator and former prosecutor F. Joseph Warin (profiled in the 2004 Washingtonian piece, "Who to Call When You're Under Investigation!"). Neither Cassano nor his attorney responded to interview requests.
AIG's lavishly compensated counterparties were willing participants and likewise could be considered for prosecution, depending on what they knew. Who were they?
At a 2007 conference, Cassano defined them as a "global swath" that included "banks and investment banks, pension funds, endowments, foundations, insurance companies, hedge funds, money managers, high-net-worth individuals, municipalities, sovereigns, and supranationals." Abetting the scheme, ratings agencies like Standard & Poor's gave high grades to the shaky mortgage-backed securities bundled by investment banks such as Goldman Sachs and Lehman Brothers.
After the relative worthlessness of these CDOs became clear, the raters rushed to downgrade them to junk status. This occurred suddenly with more than 4,000 CDOs in the first quarter of 2008—the financial community now regards them as "toxic waste." Of course, the sudden massive downgrading raises the question: Why had CDOs been artificially elevated in the first place, leading banks to buy them and giving them protective coloring just because the derivatives writers "insured" them?
After the raters got real (i.e., got scared), the gig was up. Hedge funds fled in droves from their luxe digs in London. The industry remains murky, but some observers feel that more than half of all hedges will fold this year. Not necessarily a good sign, it seems to show that the funds were one-trick ponies living mainly off the derivatives play.
We know that AIG was not the only firm that sold derivatives: Lehman and Bear Stearns both dealt them and died. About 20 years ago, JP Morgan, the now-defunct investment bank, had brought the idea to AIGFP in London, which ran with it. Seeing the Cassano group's success, Morgan jumped in with both feet. Specializing in credit default swaps—a type of derivative triggered to pay off by negative events in the lives of loans, like defaults, foreclosures, and restructurings—Morgan had a distinctive marketing spin. Its "quants" were classy young dealers who could really do the math, which of course gave them credibility with those who couldn't. They abjured street slang like "protection." They pitched their sophisticated swaps as "technologies." The market adored them. They, in turn, oversold the product, made huge commissions, and wounded Morgan, which had to sell itself to Chase, becoming JP Morgan Chase—now the country's biggest bank.
Today, the real question is whether the Morgan quants knew the swaps didn't work and actually were grenades with pulled pins. Like Joseph Cassano, such people should consult attorneys.
Secrecy shrouds the bailout. The 21 banks that each received more than $1 billion from the Fed won't disclose how, or even if, they're lending it, which hardly quells fears of hoarding. The Treasury says it can't force disclosure because it took only preferred (non-voting) stock in exchange for the money.
If anything, the Fed had been less candid. It stonewalls requests to reveal the winners (mainly banks and corporations) of $1.5 trillion in loans, as well as the securities it received as collateral. A Freedom of Information Act (FOIA) suit to obtain this information by Bloomberg News has been rebuffed by the Fed, which insists that a loophole in FOIA exempts it. Bloomberg will probably lose the case, but at least it's trying to probe the black hole of bailout money. Of course, Barack Obama could tell the Fed to release the information, plus generally open the bailout to public eyes. That would be change that we could believe in.
As for Bloomberg, its business side, Bloomberg L.P., has been less than forthcoming. Requests to interview someone from the company—and Michael Bloomberg, who retains a controlling interest—about the derivatives trade went unanswered.
In his economic address at Cooper Union last spring, Obama argued for new regulations, which he called "the rules of the road," and for a $30 billion stimulus package, that now seems quaint. In the OTC swaps trade, the Bloomberg L.P.'s computer terminals are the road, bridges, and tunnels for "real-time" transactions. The L.P.'s promotional materials declare: "You're either in front of a Bloomberg or behind it." In terms of electronic trading of certain securities, including credit default swaps: "Access to a dealer's inventory is based upon client relationships with Bloomberg as the only conduit." In short, the L.P. looks like a dominant player—possibly, a monopoly. If it has a true competitor, I can't find it. But then, this is a very dark market.
Did Bloomberg L.P. do anything illegal? Absolutely not. We prosecute hit-and-run drivers, not roads. But there are many questions—about the size of the derivatives market, the names of the counterparties, the amount of replication of derivatives, the role of securities ratings in Bloomberg calculations (in other words, could puffing up be detected and potentially stop a swap?), and how the OTC industry should be reported and regulated in order to prevent future catastrophes. Bloomberg is a privately held company—to the chagrin of would-be investors—and quite private about its business, so this information probably won't surface without subpoenas.
So what do we do now? In 2000, the 106th Congress as its final effort passed the Commodity Futures Modernization Act (CFMA), and, disgracefully, President Clinton signed it. It opened up the bucket-shop loophole that capsized the world's economic system. With the stroke of a presidential pen, a century of valuable protection was lost.
Even with that, the dangerous swaps still almost found themselves subjected to state oversight. In 2000, AIG asked the New York State Insurance Department to decide if it wanted to regulate them, but the department's superintendent, Neil Levin, said no. The question was not posed by AIGFP, but by the company's main office through its general counsel, a reminder that not long ago, AIG was a blue chip with a triple-A rating that touted its integrity.
We can't know why Levin rejected the chance to regulate the tricky trade. He died in the restaurant at the top of the World Trade Center on the morning of 9/11. A Pataki-appointed former Goldman Sachs vice president, Levin may have shared other Wall Streeters' love of derivatives as the last big-money sure thing as the IPO craze wound down. Or maybe he saw swaps as gambling rather than insurance, hence beyond his jurisdiction. Regardless, current Insurance Superintendent Eric Dinallo told me, "I don't agree with his answer." Maybe the economic crisis could have been averted if Levin had answered otherwise. "How close we came . . ." Dinallo mused.
Deeply occupied with keeping AIG, the parent company, afloat since the bailout, Dinallo saw the carnage that the swaps caused and, with the support of Governor Paterson, pushed anew for regulatory oversight, a position also adopted by the President's Working Group (PWG), which includes the Treasury, Fed, SEC, and CFTC.
But regulation isn't enough to stop a phenomenon called "de-supervision" that occurs when officials can't, or won't, oversee a market. For instance, the Fed under Greenspan had authority to regulate mortgage bankers and brokers, the industry's cowboys who kicked off this fiasco. Because Greenspan's libertarian sensibilities prevented him from invoking the Fed's control, the mortgage market careened corruptly until the wheels came off. Notoriously lax and understaffed, the SEC did nothing to limit investment banks that bundled, pitched, and puffed non-prime mortgages as the raters cheered. It's doubtful that any agency can be relied on to control lucrative default swaps, which should be made illegal again. The bucket-shop loophole must be closed. The evil genie should go back in the bottle.
Will Obama re-criminalize these financial weapons by pushing for repeal of the CFMA? This should be a no-brainer for Obama, who, before becoming a community organizer in Chicago, worked on Wall Street, studied derivatives, and by now undoubtedly knows their destructive power.
What about the $600 trillion in credit derivatives that are still out there, sucking vital liquidity and credit out of the system? It's the tyrannosaurus in the mall, the one that made Henry Paulson, the former Treasury Secretary who looks like Daddy Warbucks, get down on his knees and beg Nancy Pelosi for a bailout.
Even with the bailout, no one can get their arms around this monster. Obviously, the $600 trillion includes not only many unseemly replicated death bets, but also some benign derivatives that creditors bought to hedge risky loans. Instead of sorting them out, the Bush administration tried to protect them all, while keeping the counterparties happy and anonymous.
Paulson has taken flack for spending little to bring mortgages in line with falling home values. Sheila Bair, the FDIC chief who often scrapped with Paulson, said this would cost a measly $25 billion and that without it, 10 million Americans could lose their homes over the next five years. Paulson thought it would take three times as much and balked. Congress is bristling because the Emergency Economic Stabilization Act (EESA) could provide mortgage relief—and some derivatives won't detonate if homeowners don't default. Obama's nominee for Treasury Secretary, Timothy Geithner, could back such relief at his hearings.
The other key appointment is Attorney General. A century ago, when powerful trusts distorted the market system, we had AGs who relentlessly tracked and busted them. Today's crisis is missing, so far, an advocate as dynamic and energetic as the mortgage bankers, brokers, bundlers, raters, and quants who, in a few short years, littered the world with rotten loans, diseased CDOs, and lethal derivatives. During the Bush years, white-collar law enforcement actually dropped as FBI agents were transferred to antiterrorism. Even so, according to William Black, an effective federal litigator and regulator during the 1980s savings-and-loan scandal, by 2004, the FBI perceived an epidemic of fraud. Now a professor of law and finance at the University of Missouri–Kansas City, Black has testified to Congress about the current crisis and paints it as "control fraud" at every level. Such fraud flows from the top tiers of corporations—typically CEOs and CFOs, who control perverse compensation systems that reward cheating and volume rather than quality, and circumvent standard due diligence such as underwriting and accounting. For instance, AIGFP's Cassano reportedly rebuffed AIG's internal auditor.
The environment from the top of the chain—derivatives gang leaders—to the bottom of the chain—subprime, no-doc loan officers—became "criminogenic," Black says. The only real response? Aggressive prosecution of "elites" at all stages in this twisted mess. Black says sentences should not be the light, six-month slaps that white-collar criminals usually get, or the Madoff-style penthouse arrest.
As staggering as the Madoff meltdown was, it had a refreshing side—the funds were frozen. In the bailout, on the other hand, the government often seems to be completing the scam by quietly passing the proceeds to counterparties.
The advantage of treating these players like racketeers under federal law is that their ill-gotten gains could be forfeited. The government could recoup these odious gambling debts instead of simply paying them off. In finance, the bottom line is the bottom line. The bottom line in this scandal is that fantastically wealthy entities positioned themselves to make unfathomable fortunes by betting that average Americans—Joe Six-Packs and hockey moms—would fail.
Black suggests that derivatives should be "unwound" and that the payouts cease: "Close out the positions—most of them have no social utility." And where there has been fraud, he adds, "clawback makes perfect sense." That would include taking back the ludicrously large bonuses and other forms of compensation given to CEOs at bailed-out companies.
No one knows how much could be clawed back from the soiled derivatives reap. Clearly, it's not $600 trillion. William Bergman, formerly a market analyst at the Chicago Fed in "netting"—what's left after financial institutions pay each other off for ongoing deals and debts—makes a "guess" that perhaps only 5 percent could be recouped, which he concedes is unfortunately low. Still, that's $30 trillion, a huge number, more than 10 times what the Fed can deploy and over twice the U.S. gross domestic product. Such a sum, if recovered through the criminal justice process, could ease the liquidity crisis and actually get the credit arteries flowing. Not everyone would like it. What's left of Wall Street and hedge funds want their derivatives gains; so do foreign banks.
A tangle of secrecy, conflicts of interest, and favoritism plagues the process of recovery.
Lehman drowned, but Goldman Sachs, where Paulson was formerly CEO, was saved. The day before AIG reaped its initial $85 billion bonanza, Paulson met with his successor, Lloyd Blankfein, who reportedly argued that Goldman would lose $20 billion and fail unless AIG was rescued. AIG got the money.
Had Goldman bought from AIG credit derivatives that it needed to redeem? Like most other huge financial traders, Goldman has a secretive hedge fund, Global Alpha, that refuses to reveal its transactions. Regardless, Paulson's meeting with Blankfein was a low point. If Dick Cheney had met with his successor at Halliburton and, the very next day, written a check for billions that guaranteed its survival, the press would have screamed for his head.
The second most shifty bailout went to Citigroup, a money sewer that won last year's layoff super bowl with 73,000. Instead of being parceled to efficient operators, Citi received a $45 billion bailout and $300 billion loan package, at least in part because of Robert Rubin's juice. While Treasury Secretary under Clinton, Rubin led us into the derivatives maelstrom, deported jobs with NAFTA, and championed bank deregulation so that companies like Citi could mimic Wall Street speculators. After he joined Citi's leadership in 1999, the bank went long on mortgages and other risks du jour, enmeshed itself in Enron's web, tanked in value, and suffered haphazard management, while Rubin made more than $100 million.
Rubin remained a director and "senior counselor" at Citi until January 9, 2009, and is an economic adviser to Obama. In truth, he probably shouldn't be a senior counselor anywhere except possibly at Camp Granada. Like Greenspan, he should retire before he breaks something again, and we have to pay for it. (Incidentally, the British bailout, which is more open than ours and mandates mortgage relief, makes corporate welfare contingent on the removal of bad management.)
The third strangest rescue involved the Fed's announcement just before Christmas that hedge funds for the first time could borrow from it. Apparently, the new $200 billion credit line relates to recently revealed securitized debts including bundled credit card bills, student loans, and auto loans. Obviously, it's worrisome that the crisis may be morphing beyond its real estate roots.
To say the bailout hasn't worked so far is putting it mildly. Since the crisis broke, Washington's reaction has been chaotic, lenient to favorites, secretive, and staggeringly expensive. An estimated $7.36 trillion, more than double the total American outlay for World War II (even correcting for inflation), has been thrown at the problem, according to press reports. Along the way, banking, insurance, and car companies have been nationalized, and no one has been brought to justice.
Combined unemployment and underemployment (those who have stopped looking, and part-timers) runs at nearly 20 percent, the highest since 1945. Housing prices continue to hemorrhage—last fall's 18 percent drop could double. Holiday shopping fizzled: 160,000 stores closed last year, and 200,000 more are expected to shutter in '09. Some forecasts place eventual retail darkness at 25 percent. In 2008, the Dow dropped further—34 percent—than at any time since 1931. There is no sound sector in the economy; the only members of the 30 Dow Jones Industrials posting gains last year were Wal-Mart and McDonald's.
Does Obama's choice for Attorney General, Eric Holder, have the tenacity and will to tackle the widest fraud in American history? Parts of his background don't necessarily augur well: He worked on a pardon for Marc Rich, the fugitive billionaire tax evader once on the FBI's Most Wanted List whom Clinton cleared. After leaving the Clinton era's Justice Department, Holder went to work for Covington & Burling, a D.C. firm that represents corporate heavies including Big Tobacco. He defended Chiquita Brands in a notorious case, in which it paid a $25 million fine for using terrorists in Columbia as security. Holder fits well within the gaggle of elite D.C. lawyers who move back and forth between government and defending corporate criminals. He doesn't exactly have the sort of résumé that startles robber barons.
Can Holder design and orchestrate a muscular legal response, including prosecution and stern punishment of top executives, plus aggressive clawbacks of money? There seems little question that he has the skill, so the decision on how aggressive the Justice Department will be is up to Obama.
Holder could ask for and get well-organized FBI white-collar teams. The personnel hole caused by shifts to antiterrorism would have to be more than filled to their pre-9/ll staffing if the incoming administration decides to break this criminogenic cycle rather than merely address it symbolically.
Black contends that aggressive prosecution would be good for the economy because it may help prevent cheating and fraud that inevitably cause bubbles and destroy wealth. The Sarbanes-Oxley law passed in Enron's wake, for instance, is supposed to make corporations now keep the kinds of documents necessary to assess criminality. Whether the CEOs, CFOs, and others who controlled the current frauds will do so is another matter.
"Don't count on them keeping records for long," Black warns. "It's time to get out the subpoenas."
_

Calling Mr. Keynes

A Man for All Seasons

The misunderstood John Maynard Keynes.

John B. Judis

When the economy goes south, one name invariably surfaces on the lips of pundits and economists: John Maynard Keynes. That is because the twentieth century's greatest economist is generally associated with the idea that markets require government intervention in order to function properly. During boom times, when the market seems to be working, no one has any use for Keynes's skepticism toward unrestrained capitalism. But, during recessions--when the economy grinds to a halt and Washington suddenly looks like the only thing that can save it--Keynes invariably enjoys a revival. The current economic crisis, our country's worst since the Great Depression, is no exception. Everyone, it seems, has spent the past months rediscovering Keynes.
But the tendency only to turn to Keynes for technical advice in bad times doesn't really do justice to his worldview. Keynes's ideas were not just a prescription for an ailing economy; they were a complete theory of capitalism, one meant to be relevant in both good times and bad. They were also more than just an economic program; his ideas about capitalism--spelled out most thoroughly in his 1936 work, The General Theory of Employment, Interest, and Money--were developed in tandem with his political philosophy. Keynes saw each as bound up with the other. "The most pressing reforms which are economically sound do not, as perhaps they did in earlier days, point away from the ideal," Keynes wrote in 1932. "On the contrary, they point toward it." Keynes, in other words, was interested in more than manipulating the levers of policy to keep economies thriving. He was interested in how economics intersects with political questions of equality and fairness and justice.
This fall, the Bush administration and the incoming Obama administration have had to confront not just narrow technical questions about budget deficits, interest rates, tax cuts, and savings, but also broader political questions about the proper relationship between government and the economy. Without our realizing or anticipating it, the entire panoply of concerns that Keynes faced in the 1930s has come back to us. Turning to him for answers is therefore an understandable, and wise, move--but only if we treat his ideas as what they are: not quick-fix steps for a battered market but long-term principles for creating a functional and just economy.

Keynes, the son of a Cambridge don and of the town's first female mayor, entered Cambridge University in 1902 during what turned out to be the twilight of the British empire. British industry was being challenged by German and American rivals, but unemployment hovered around 5 percent--virtually full employment. This appeared to confirm the theory--which Keynes learned from Cambridge economist Alfred Marshall--that market economies reach a natural equilibrium of supply and demand at full employment.
Like his parents and other members of what was called the "educated bourgeoisie," Keynes was a loyal member of Britain's Liberal Party. Once advocates of political reform and laissez-faire individualism, the Liberals had, by the early twentieth century, embraced an agenda that called for government to alleviate the externalities of capitalism through programs like social security and unemployment insurance. They were similar in outlook to many pre-New Deal American progressives.
As Robert Skidelsky makes clear in his masterful threevolume biography, Keynes was a "new Liberal"--but with Bloomsbury's aesthetic idealism and disdain for vulgar capitalism thrown in. "I want to mould a society in which most of the existing inequalities and causes of inequality are removed," he declared. He initially thought this could be accomplished through classical economics. But, in the 1920s, he decided otherwise.
In the wake of demobilization after World War I, Britain had suffered a steep recession and unemployment climbed above 15 percent. According to classical theory, the economy should have eventually returned to a full-employment equilibrium--which is what Keynes expected would happen. But it didn't. Instead, the unemployment rate hovered around 10 percent for the rest of the decade, then shot above 20 percent after the Great Depression hit Britain in 1930.
Moreover, the remedies suggested by classical economics--wage cuts, balanced budgets, and the gold standard--simply made things worse. Not only did unemployment rise, but social unrest spread. In 1926, an attempt to cut miners' wages led to a general strike. Keynes sympathized with the strikers whom he saw as "victims of cruel economic forces which they never set in motion."
Over the next decade, Keynes attempted to devise policies that would restore full employment--and a new theory of capitalism to back them up. He argued that market economies, if left to their own devices, could reach equilibrium at well below full employment. This challenge to classical economics rested on his reinterpretation of the relationship among three core economic activities--investment, savings, and consumption.
According to classical theory, if unemployment were to rise, consumption would decline, but savings would increase. The increase in savings would lead to lower interest rates, which would lead to greater investment, which would lead to the restoration of jobs--in short, back to full employment. But Keynes rejected this logic. During a recession, lost jobs and wage cuts would lead to a reduction in consumer demand, which meant less incentive for businesses to invest and banks to loan. And, if businesses--skeptical about the rate of return from an investment--failed to invest, more workers would lose their jobs, consumption would decline even further, national income would go down, and any initial increase in savings would be wiped out. The economy would reach equilibrium with a high number of unemployed, which is exactly what happened in Great Britain in the 1920s and 1930s.
Keynes's theory inverted the relationship between savings and investment. Instead of the amount of savings determining the amount of investment, the amount of investment determined the amount of savings. It also inverted the relationship between consumption and savings. If the inducement to invest was determined at least partly by consumer demand, then the greater the propensity to consume rather than save, the greater the inducement to invest. Consuming, in short, was preferable to saving.
These two inversions had radical implications for government policy. In the past, governments had advocated budget cuts and tax increases, along with wage cuts and lower interest rates, to escape recessions; Keynes was arguing that, except for lower interest rates, these measures made matters worse. And, in a severe recession or depression, when pessimism about future business profits made lenders reluctant to finance investment, even government attempts to lower interest rates wouldn't help. What was needed instead? Budget deficits, rather than budget balancing, and public investment and income transfer programs designed to put money in the pockets of the poor--that is, the people most likely to spend, not save it.

As Keynes began developing his new economics during the 1920s, he also forged a new political outlook. Earlier, party leaders--and Keynes himself--had trumpeted the "new liberalism" as a middle ground between Tory free-market conservatism and Labour socialism. But, in the articles he wrote in the late 1920s, Keynes shifted left, advocating policies that "constructive thinkers in the Liberal party" and "constructive thinkers in the Labour party" could support. These ideas, reflecting his newfound enthusiasm for government intervention in the market, took him well beyond "new liberalism."
Keynes called for "the deliberate regulation from the center in all kinds of spheres of action where the individual is absolutely powerless left to himself. " He advocated government regulation of private as well as public investment through a new National Investment Board. He wanted government to set workers' wages and hours. He recommended that private corporations be ruled by two-tier boards, with the top tier containing employees' representatives--and that employees share in ownership and have their pay tied to profitability. He favored the nationalization of the Bank of England, but not firms or banks, which he preferred the government to regulate rather than to run or own.
He eschewed the militant anti-capitalist rhetoric of the Labour left, but he also recognized that what he was proposing was actually to the left of much of the Labour Party. "I am sure that I am less conservative in my inclinations than the average Labour party voter," Keynes wrote. In an odd way, he was even to the left of the party's self-proclaimed Marxists like John Strachey and Harold Laski who, because they didn't think capitalism could be reformed, were unable to advance any practical remedies to challenge the Tories' laissez-faire approach.
Keynes scorned these "catastrophists" in the Labour Party. He also despised Soviet communism. And he had a low opinion of Marx's economics. "My feelings about Das Kapital are the same as my feelings about the Koran," Keynes wrote Bernard Shaw in 1934. But he was sympathetic to the Fabian socialism of Shaw, H. G. Wells, and Sidney and Beatrice Webb, which had influenced the Labour Party.
After 1931, Keynes abandoned everyday politics and the sparkling style of his essays to write The General Theory. But that book, while a dry economic treatise, was also an eloquent statement of his political philosophy. "I expect to see the State, which is in a position to calculate the marginal efficiency of capital-goods on long views and on the basis of general social advantage, taking an ever greater responsibility for directly organizing investment," Keynes wrote. He argued that "a somewhat comprehensive socialization of investment will prove the only means of securing an approximation to full employment." He didn't say exactly what he meant by "socialization of investment," but it seemed to represent an attempt to bring socialist principles and a concern with "general social advantage" to bear within capitalism.
In 1939, Keynes described his political approach as "liberal socialism." "The question," he wrote, "is whether we are prepared to move out of the nineteenth century laissez-faire state into an era of liberal socialism, by which I mean a system where we can act as an organized community for common purposes and to promote social and economic justice, whilst respecting and protecting the individual--his freedom of choice, his faith, his mind, and its expression, his enterprise and his property." Keynes envisioned not just a society with full employment and economic growth, but also one that sought to eliminate poverty and afforded the educated classes time to spend on the kind of artistic pursuits that he and his Bloomsbury friends had favored. He wanted to use technical, economic means to achieve moral ends.

Keynes died in 1946. In the decades that followed, much of the debate surrounding his ideas came to hinge on a single question: Did his theories apply to all modern, capitalist economies--or were his ideas relevant only to dire circumstances like those that prevailed during the Great Depression? Keynes himself, of course, believed the former. He argued that, after World War I, Britain and the United States had entered a new "epoch" of mature capitalism in which the continued pursuit of laissez-faire policies would lead away from full employment. Unemployment, Keynes wrote in The General Theory, is "inevitably associated with present-day capitalistic individualism."
Not surprisingly, the opposite view--that Keynes's economics were applicable only to a specific historical moment--was mostly advanced by conservatives. But, in the 1990s, when it seemed like capitalism had entered a new period of uninterrupted growth and full employment, liberals in the United States and Britain began writing Keynes off as well. In Prospect, a British journal identified with Tony Blair's New Labour, political scientist David Marquand declared in 2001 that Keynes's theory "was a system for the age of Fordist mass production, with its giant plants, giant unions and 'sticky' wages, not forever. "
So who was right? Did Keynes's theories accurately describe the economies that took shape in the decades after his death? Keynes believed that mature economies would be defined by several features--features which, if left unaddressed, would tend to push them toward high unemployment. One of these was the advent of labor-saving technology, typified by factory electrification in the 1920s. This new technology made it possible for core goods industries to increase their output dramatically while reducing their workforce. "We are being afflicted with a new disease ... technological unemployment," Keynes wrote in 1930. "This means unemployment due to our discovery of means of economizing the use of labor outrunning the pace at which we can find new uses for labor."
There were, of course, ways out of this dilemma. The most likely recourse, Keynes wrote, was that capitalism would find new outlets in "the field of human services." But, as it turned out, services like health care often had to be sustained by government investments and subsidies. The other recourse was that new areas of capital investment could arise--from weapons production and the development of a commercial aircraft industry to computer technology and the Internet. These new areas could also lead to a burst of employment, but they frequently depended on public investment.
Another feature of mature economies, according to Keynes, was that rising standards of living would reduce the marginal propensity to consume. The wealthier a household, the less likely it was to spend most of its income immediately. So in the absence of, say, redistributive tax policies and income transfer programs, a mature economy would likely suffer from an excess of savings over consumption. That would cause a reduction in demand, discourage investment, and lead to unemployment.
The history of Western capitalism after World War II largely confirms Keynes's ideas about mature capitalist economies. By the 1950s, most Western European countries were enjoying full employment. But that was primarily the result of the substantial new investment needed to rebuild war-torn economies. Capitalism had to start over--to remature. Once Western Europe fully recovered, its unemployment rates began to rise, reflecting the tendency Keynes had described.
Developments on our side of the Atlantic also gave credence to Keynes's theories. Post-World War II demobilization and the reduction of the defense budget contributed to a recession in 1948. And, for the next 25 years, defense spending played a large role in keeping the wolf of chronic unemployment at bay. But, after defense production began to decline in the early 1970s, unemployment began rising. It would not drop below 5 percent until 1997, when the economy was buoyed by a boom in a growing area of investment: computers and telecommunications.
These innovations, of course, initially brought new employment and higher productivity. As Keynes would have foretold, however, the boom did not solve the problem of unemployment forever. The growth of these industries eventually reached a point of diminishing returns in new jobs. In the early 2000s, employment began to drop--falling by 33 percent over the last eight years--in companies making computer and electronic products, even as output increased. These declines might have led to a prolonged recession but were offset by the huge budget deficits of the Bush years and the housing bubble. When the bubble burst, though, unemployment returned. The wolf was again at the door. And just as they had during previous downturns, Americans belatedly began rediscovering Keynes--even as many of them failed to notice that the problems he long ago identified had never really gone away, but were lurking in their economy all along.

All of which raises the question: If Keynes's economic analysis is applicable in both good times and bad, and if his related political philosophy was designed to take account of issues like fairness and justice that are always relevant, why did we ignore so many of his recommendations for so long? The answer has to do with American skepticism of government, reinforced by a powerful coalition in Washington of Republicans and business lobbyists. This coalition balked at carrying out anything but the most attenuated version of Keynes's policies--and Democrats bowed to its wishes. To remove any hint of socialism, Republican and Democratic administrations created an unwholesome stew of Keynesian liberalism and business conservatism. The result has been policies that temporarily lifted the country out of recession but left it more divided economically and prone to more serious downturns.
The most important tool that Keynes recommended for overcoming unemployment was public investment. It enjoyed what Keynes's associate Richard Kahn called a "multiplier." Public investment in a new hospital, say, creates jobs and income not only for construction workers, but for the people and businesses that service the workers. Conservatives and big business, however, have objected to public investment--for instance, in high-speed rail or solar paneling--that would strengthen government's hand in dealing with an industry or compete with private industry. It's socialism, they say--and, in Keynes's terms, it is.
Next on the list of Keynesian tools are government programs that redistribute income from the well-to-do (who have the least propensity to consume) to the poor (who have the most). As John McCain demonstrated during the presidential campaign, such redistributionist programs can also easily be denounced as socialism.
A less controversial, though still effective, tool for combating chronic unemployment is low interest rates. But it can be rendered useless during the kind of downturn Japan suffered in the 1990s and the United States is suffering today, when businesses can see only losses and banks only defaults on the economic horizon.
That leaves, finally, tax cuts. These arouse the most enthusiasm among Republicans and business, but are the least effective means of combating unemployment. The bulk of income tax cuts usually doesn't accrue to the people with the highest propensity to consume. Moreover, in the post-1971 era of yawning trade deficits, what is consumed is often imported. That may help employment in Japan or China, but not in the United States.
If you look at America's periodic experimentation with Keynesian policy, it has been guided from the beginning by a determination to avoid any measures that might be described as socialist. It began with what was later called "military Keynesianism"--defense spending being one kind of public investment that was politically safe. But it has increasingly centered on tax cuts. Kennedy's vaunted experiment with Keynesianism consisted of tax cuts. So did Ronald Reagan's and George W. Bush's. Whatever benefits these stimuli provided in the short term, over the long run, they have exacerbated the potential for chronic unemployment by widening income disparities and reducing the overall propensity to consume. A complete reading of Keynes would have counseled a very different approach. But that has never been the way Americans treated Keynes. Until, perhaps, now.

As Barack Obama takes office, he enjoys a great opportunity. Historically, it has often taken wars or depressions to win support for major economic reforms. Crisis, at least in American history, has generally been the precondition for significant change.
Obama also has a decided advantage over Franklin Roosevelt, the last Democrat who took office during a major downturn. Roosevelt could count on the willingness of the American public to accept radical experiments, and on the weakness of a business class discredited by scandal, but to a great extent he didn't know what to do with the power he had. In the early 1930s, Keynes's ideas were barely known, and, even later, they had to vie with classical approaches for FDR's attention. In 1937, Roosevelt, unsure of his economics, actually went back to a classical approach and erased whatever gains he had made in easing unemployment. Obama--whose chief economic adviser Larry Summers is the nephew of Paul Samuelson, a founding father of American Keynesianism--will know better than to start raising taxes or cutting spending to reduce unemployment.
Still, Obama faces extraordinary challenges in trying to implement a true Keynesian approach. Keynes recognized that a balanced and stable international monetary system--not subject to currency speculation or plagued by large trade surpluses and deficits--was a precondition for implementing his domestic agenda. He spent his last years trying to devise such a system--and some of his ideas were reflected in the Bretton Woods agreement. But Bretton Woods collapsed in 1971, leaving an imbalanced and unstable system that places limits on what a president can do. Presidents Ford and Carter discovered these limits in the 1970s when inflation, fueled by oil price shocks, blocked them from using deficits to bring down unemployment. Obama faces similar limits. He has to rely on foreign purchasers, particularly from China and Japan, to buy the bonds to finance America's large budget and trade deficits. If they balk at buying U.S. Treasury bills, interest rates will go up, creating still another obstacle to domestic investment; yet the United States cannot escape this downturn without running huge deficits. In short, Obama is going to have to focus on reforming global as well as American capitalism.
Obama will also need to venture into some areas that Keynes contemplated but previous administrations have avoided. In subsidizing banks and industries, for instance, Obama will have to concern himself with workers' wages--should a worker at Ford make more than a worker at Honda?--and exorbitant CEO salaries. And he is likely to consider proposals to include workers or public representatives on corporate boards of companies that the Treasury subsidizes or owns a stake in.
Moreover, Obama will need to venture into areas that Keynes did not anticipate. Keynes did not foresee government deciding which industries to subsidize. Government, he wrote in The General Theory, should be concerned with "determining the volume, not the direction, of actual employment." But facing the threat of global warming, finite oil supplies, and a large trade deficit, Obama will have to make decisions about the direction, as well as the volume, of domestic investment. He is going to have to pick winners and losers. Which industries will aid in reducing greenhouse emissions? Which will reduce the country's dependence on oil? And which will help reduce America's trade deficit? Obama won't be able to avoid these kinds of choices. Wittingly or not, he will be putting government in a position to shape private capitalism according to "general social advantage."
Of course, there will be objections from the GOP and business--both of which are weakened, but neither of which has lost all its clout in Washington. If Obama heeds these protests and fails to act boldly, he and the country could suffer the same fate as the Labour Party and Britain did in the 1930s. Labour took office in 1929 on the cusp of the Great Depression, but, as unemployment grew, it ignored Keynes's warnings and held back on public spending. In 1931, Labour was defeated at the polls, and didn't return to power again until 1945. Britain suffered under incompetent Tory leadership during much of the 1930s.
Disheartened over these developments, Keynes wrote in 1932 that Labour Party leaders "differed from the leaders of other parties chiefly in being more willing to do or to risk things which in their hearts they have believed to be economically unsound." That epitaph could certainly describe previous Democratic administrations, which borrowed selectively, and fitfully, from Keynes while ignoring his larger insights. Will Obama make the same mistake? Or will he become the first American president to finally, after 70 years, give the theories of John Maynard Keynes a full try?

John B. Judis is a senior editor at The New Republic.

Dr. Dirac

"Probably the greatest British theoretical physicist since Newton,” is how Stephen Hawking described Paul Dirac at his Westminster Abbey commemoration service in 1995. A pioneer of quantum mechanics in the Twenties and Thirties, he wrote the beautiful equation that led scientists to predict the existence of antimatter. But don’t feel too bad if you haven’t heard of him. Dirac had no interest in publicising his work, which he felt could only be expressed mathematically. “To draw its picture is like a blind man touching a snowflake,” he said. “One touch and it’s gone.”
The man behind the maths was something of a snowflake himself. Outwardly cold and untouchable. Nearly silent. Certainly unique. A flick through the index of Graham Farmelo’s infinitely intriguing biography reveals the following traits listed under “Dirac, personality”: aloofness, determination, lack of social sensitivity, literal-mindedness, other-worldliness, passivity, reticence, shyness and taciturnity. For the physics community, these characteristics have been distilled down to a few legendary anecdotes. Heard the one about the student who raised his hand in the question time after a Dirac lecture? ''I don’t understand the equation on the board,’’ said the student. Dirac just stood there. When pressed, he replied: “That is not a question, it is a comment.” Although curt, that was a reasonably long impromptu sentence from the professor who mostly kept to a binary vocabulary of “yes” and “no”.
Farmelo’s biography offers nature and nurture reasons for Dirac’s verbal economy and social difficulties. Farmelo thinks he was autistic. But Dirac believed himself damaged by his childhood in Bristol. Late in life he confided how his father, a well-respected teacher of Swiss descent, would bully his wife and insisted his three children speak in his native French. At dinnertime Charles Dirac would split the family in two. Paul’s brother and sister could eat in the kitchen with their mother and speak English while Paul had to face his father, in French, in the dining room. Paul had no aptitude for languages and whenever he made a mistake his father would refuse the boy’s next request. Which was usually to leave the table as he suffered from an undiagnosed digestive condition: his stomach did not contain enough acid. But Charles would make the boy sit at the table and vomit there, a humiliation he was to endure for years. Yet Charles Dirac did make funds available for his son to take up a Cambridge scholarship. The monkish routine suited him.
The lanky, reclusive, work-obsessed student was just waiting for a challenge worthy of his powers when, as Einstein put it, “Heisenberg laid a big quantum egg” that involved a whole new way of understanding atoms. This is where Farmelo’s book really takes off, as the world’s physicists compete to pick the diamonds from the sack of gemstones Heisenberg had knifed open.
As Farmelo follows the ricocheting sparks of genius around the globe we meet Schrödinger (with whom Dirac shared the 1933 Nobel Prize) bursting with braggadocio. Oppenheimer, depressed at Cambridge and poisoning a rival’s apple. Heisenberg, who Dirac’s mother thought a “terrible flirt”. Even those of us who struggle to process the group’s discoveries (and it’s a relief to hear that Einstein had trouble) will be gripped by their competitive fraternity. When the war comes, who will work on the atom bomb? And for which side? Oppenheimer invited Dirac to the US to work on the Manhattan Project, but he refused because he could not bear to leave his Cambridge routine. It is a mark of Dirac’s faith in friendship that he believed Schrödinger’s support of Nazism was ''forced’’ and accepted Heisenberg’s claim that he’d only stayed in Germany to mitigate Hitler’s worst intentions. Although Dirac’s wife laughed at her husband’s naivety, calling Heisenberg “That Naaaaazi”.
Yes, his wife. It’s a surprise when a woman walks into Dirac’s life. Colleagues had assumed he was gay. But in his thirties Dirac met his ''antiparticle”. The Hungarian divorcée Manci Balázs was gabby, passionately emotional and liked her creature comforts. The story of their courtship makes extraordinary reading. When Manci writes Dirac an angry letter asking why he has replied to none of the questions in her previous correspondence, he tabulates her questions and his answers, including: “You know that I would like to see you very much?” “Yes, but I cannot help it.” A year after their marriage, he writes her a beautiful letter proclaiming: “You have made me human. I shall be able to live happily with you even if I have no more success in my work.” Although later, when she asks what he would do if she left him, he replies: “I’d say, Goodbye, dear.” According to Farmelo, Dirac only cried once in his life: when Einstein died.
Dirac’s story ends with a whimper. As a young man he had joked that physicists were all washed up by 30 and as he aged his powers waned. The Cambridge physics department took away his parking space and an outraged Manci insisted he take up a fellowship at Florida State University. He died in 1984, aged 82. An atheist, he was buried under a gravestone chosen by Manci. It read “because God said it should be so”.

Death & Dying

Dying and Death: When You Sort It Out, What’s It All About, Diogenes?

THE BOOK OF DEAD PHILOSOPHERS

By Simon Critchley

Illustrated. 265 pages. Vintage Books. $15.95.

Heraclitus, who believed that everything was in a state of flux, died, according to one account, of drowning in cow dung. The philosopher Francis Bacon, that great champion of the empirical method, died of his own philosophy: in an effort to observe the effects of refrigeration, on a freezing cold day he stuffed a chicken with snow and caught pneumonia.
As a philosopher dies, so he has lived and believed. And from the manner of his dying we can understand his thinking, or so the philosopher Simon Critchley seems to be saying in his cheekily titled “Book of Dead Philosophers.”
Mr. Critchley has taken as his thesis Cicero’s axiom “To philosophize is to learn how to die.” That is, to understand the meaning of life the philosopher must try to understand death and its meaning, or possibly its lack of meaning. And for Mr. Critchley you cannot separate the spirit of philosophy from the body of the philosopher. As he says, “The history of philosophy can be approached as a history of philosophers that proceeds by examples remembered, often noble and virtuous, but sometimes base and comical.” He adds, “The manner of the death of philosophers humanizes them and shows that, despite the lofty reach of their intellect, they have to cope with the hand life deals them like the rest of us.”
As a result, Mr. Critchley, philosophy chairman at the New School for Social Research, has made a book out of marvelous and funny anecdotes about the deaths of some 190 philosophers, from ancient to modern. Don’t be daunted by the many centuries involved. And you don’t have to read the book all at once, Mr. Critchley advises. You can just dip in and out of it at your pleasure. Fortunately this reviewer was obligated to read it all. And, as the philosopher would say, it was all for the good.
Thus, we have Diogenes, who disdained fleshly pleasures and was said by some to have committed suicide by holding his breath; Julien Offray de La Mettrie, atheist and hedonist, who died after eating large amounts of truffled pâté; and Ludwig Wittgenstein, who saw life and death as part of the same timelessness. He died the day after his birthday. A friend had given him an electric blanket as a present. “Many happy returns,” the friend said. “There will be no returns,” Wittgenstein supposedly replied.
Mr. Critchley recounts that Voltaire, after decades of denouncing the Roman Catholic Church, announced on his deathbed that he wanted to die a Catholic. But the shocked parish priest kept asking him, “Do you believe in the divinity of Christ?” Voltaire begged, “In the name of God, Monsieur, don’t speak to me any more of that man and let me die in peace.”
Hegel, who, as much as any philosopher, Mr. Critchley says, saw philosophy as an abstraction, while he was dying of cholera, moaned, “Only one man ever understood me ... and he didn’t understand me.”
On its surface this is a lighthearted book. Mr. Critchley is listed as head philosopher of the International Necronautical Society, an avant-garde group whose Web page (necronauts.org) says its central tenet is “inauthenticity” and its purpose is devotion to the study of death, a “space which we intend to map, colonize and eventually inhabit.” But Mr. Critchley has a serious side and is author of learned works like “Infinitely Demanding: Ethics of Commitment, Politics of Resistance,” “The Ethics of Deconstruction” and “Ethics-Politics-Subjectivity.” He is at ease playing in the fields of intentionality, categorical intuition and the phenomenological concept of the a priori. This book has a 13-page scholarly bibliography.
In Mr. Critchley’s serious view Western philosophy is wrongly seen as having been derived mainly from the Greeks. Not true, he says, pointing to its origins among Arabs, Persians, Chinese, Indians and others. Philosophy, he says, has abandoned its original purpose, which is to give us wisdom and help us achieve happiness. The development of philosophy, he writes, has been a process of “westering” or “bestering.” Philosophy has tried to mimic science in its constant striving toward the perfection of ideas and its quest for absolute truth. Gradually philosophy has been abstracted from the concerns of everyday life, leaving us in the grip of the “terror of annihilation.” To calm us, Mr. Critchley says, there are endless sophistries for sale, New Age nostrums, self-help books and the “mindless accumulation of money and possessions.”
All well and good. But dare we amateurs question Mr. Critchley’s organizing principle, that we can find that wisdom we are missing in the deaths of philosophers? Kant died of a stomach ailment. What does that say about “The Critique of Pure Reason”? His last words were apparently spoken after his disciple gave him a little water mixed with wine. “Sufficit,” said Kant. (“It is enough.”) But was Kant saying that he had lived sufficiently long to refine his theories on metaphysics and epistemology? Or that he simply didn’t want any more water?
Some philosophers Mr. Critchley cites may not even have existed. “Let’s not allow Pythagoras’s mere nonexistence to deter us, as the stories that surround him are so compelling,” he suggests at one point, before telling us the legend that Pythagoras died because he refused to cross a field of beans to escape his enemies.
Mr. Critchley himself points out that there are also philosophers in the book whose deaths he doesn’t describe or whose last words are missing. There are also sections in which he makes no attempt to connect the philosopher’s death to his ideas.
Never mind. Many deeds and utterances attributed to philosophers are apocryphal or compiled posthumously by disciples. It’s a long tradition. Philosophical writing is in its essence metaphorical.
This book is just fun to read. You do learn a lot, including the way in which the wise Mr. Critchley envisions the manner of his own death.
“Exit,” Mr. Critchley says, “pursued by a bear.”

SUCCESS

In the winter of 1963, Hakeem Olajuwon was born to the owners of a cement business in Lagos, Nigeria. "They taught us to be honest, work hard, respect our elders, believe in ourselves," Olajuwon once said of his parents. In his middle-class childhood, Olajuwon played handball and soccer, but it was not until the age of fifteen that he was exposed to basketball. After entering his first tournament, he realized that he was remarkably skilled at the sport. Within two years he had arrived in Texas, where he played for three seasons at the University of Houston. In 1983, he won the NCAA Tournament Player of the Year Award; he also led the Houston Cougars to two straight NCAA championship games. As the number one pick in the NBA draft in 1984, he could boast of being chosen two spots ahead of Michael Jordan. NBA analysts now consider him to be one of the twenty best players in the history of professional basketball. Olajuwon is just over 6'10." He perfectly exemplifies what might be called the Height Trumps Experience Rule, which I have just coined. This rule stipulates that people who are at least a foot taller than the average height will excel at a chosen sport, especially when height is an advantage in that sport. The rule also obtains when the individual in question discovered the game relatively late in life, and spent little time practicing during his or her youth. It sheds light on a variety of hitherto unexplained phenomena. I hope to be recognized for it. I have done my best to tell Olajuwon's story in a Gladwellian manner, because it is an axiom of Malcolm Gladwell's method that a perfect anecdote proves a fatuous rule. Outliers: The Story of Success does not mention Olajuwon, but it does expound at length on people who distinguish themselves in their particular field, and can therefore claim the label of Gladwell's title. Gladwell does not attribute achievement to genetic gifts, which is nice. Instead he proposes that group dynamics and cultural legacies play a decisive role in determining how far human beings advance. He dislikes attributing individual accomplishment to the accomplishing individuals. He has set out to prove that people with social advantages do better than people without social advantages, and so the really wise thing for society to do is to arrange for more advantages for more people. Gladwell is fond of quirky factors. The unexpectedness of his explanations often disguises their banality or their error. In his new book, he is particularly interested in examining the amount of time that must be spent honing a skill or a craft, although his larger point is that society frequently plays a role in providing people with the opportunity to do so. "The idea that excellence at performing a complex task requires a critical minimum level of practice surfaces again and again in studies of expertise," Gladwell reports. (I hope those studies did not cost too much.) After quoting a psychologist who said that Mozart spent ten years composing before producing a masterpiece, Gladwell goes a-quantifying: "And what's ten years? Well, it's roughly how long it takes to put in ten thousand hours of hard practice. Ten thousand hours is the magic number of greatness. "Much of this chapter, which is called "The 10,000-Hour Rule," focuses on Bill Joy, the co-founder of Sun Microsystems and one of the world's finest computer programmers. After he tells Joy's story, Gladwell turns to his interview with Joy: "'I was proficient by my second year [at Berkeley]. That's when I wrote programs that are still in use today, thirty years later.' He paused for a moment to do the math in his head -- which for someone like Bill Joy doesn't take very long. Michigan in 1971. Programming in earnest by sophomore year. Add in the summers, then the days and nights in his first year at Berkeley. 'So, so maybe ... ten thousand hours?' he said finally. 'That's about right.' "The Tipping Point: How Little Things Can Make a Big Difference, Gladwell's first book, defined three "rules" that allow fads, or social epidemics, to spread, or tip. The problem was that his examples often did not meet all his criteria, making them less like rules and more akin to conditions that sometimes accompany epidemics. Here he is more careful. "Is the ten thousand hour rule a general rule of success? If we scratch below the surface of every great achiever, do we always find the equivalent of the Michigan Computer Center?" He proposes that we "test" this rule with two examples, and that "for the sake of simplicity, let's make them as familiar as possible." One example is Bill Gates, who for a variety of reasons was able to practice programming continuously throughout his adolescence and early adulthood. The Beatles are his other example, and they practiced in Germany before coming to America. Gladwell strangely refers to this period as the "Hamburg crucible," and quotes one Beatles scholar, Philip Norman, as saying that it was "the making of them. "Put aside for a moment Gladwell's account of the Beatles' ascent to greatness. Gladwell wants us to believe that when Joy was asked how long he had spent programming, he managed to produce, without prodding, the Mozartean number of ten thousand hours. This anecdote casts Gladwell's mode of argumentation in rather a harsh light. By any reasonable estimate, Hakeem Olajuwon had spent significantly less than ten thousand hours playing basketball when he became one of the best college players in the country. If Bill Joy qualifies as evidence of The 10,000-Hour Rule, and Olajuwon counts as evidence of the Height Trumps Experience Rule, what are we to conclude from this disparity? About the roots of success, very little. But the conclusion is inescapable that the explanatory power of nifty little stories may be very limited. Unfortunately, Gladwell has chosen to live by them. "Success" is a wild generality, of course. It comes in many forms and occurs in many realms; and each of those realms has its own standards and rhythms and methods. When one begins to bear down analytically on Gladwell's anthology of success stories, it is not at all clear how they go together. Is ten thousand hours of composing music really just like ten thousand hours of computer programming? And didn't Salieri also have ten thousand hours of composing music under his belt and remain notoriously without greatness? Maybe Gladwell's ten thousand hours means no more than that experience makes a difference; but such a lesson also falls short of greatness. Gladwell's association of greatness with success is a fundamental and revealing error -- a characteristic illusion of our era of winner-worship. In the cult of winning, Gladwell is a high priest. Gladwell's tidings about the origins of success would have amused Richard Hofstadter. In Anti-intellectualism in American Life, Hofstadter explored how the story of business in America became intertwined with the idea of the self-made man: "The topmost positions in American industry, even in the most hectic days of nineteenth-century expansion, were held for the most part by men who had begun life with decided advantages. But there were enough self-made men, and their rise was dramatic and appealing enough, to give substance to the myth.... The horizons of experience were scanned eagerly for clues as to how this transformation could be accomplished." Here Hofstadter introduced his readers to the role of self-help books in furthering the "self-made" narrative. "Self-help was discipline in character," he observed. "The self-help literature told how to marshal the resources of the will -- how to cultivate the habits of frugality and hard work and the virtues of perseverance and sobriety. "One of the most important facets of American self-help literature was its rejection of the idea of genius. "The conception of character advocated by the self-help writers and the self-made men explicitly excluded what they loosely called genius," Hofstadter wrote. "The prevailing assumption in the self-help literature was that character was necessary and remarkable talents were not." Norman Vincent Peale, in The Power of Positive Thinking, his influential manual on achieving the good life, captured this attitude perfectly when he told the edifying tale of a C-student who dreams that he can earn As like his brother. Not only did the brothers' distinct academic careers have little to do with genius or intelligence, Peale proposed, but they also in no way prefigured which sibling would succeed in the real world. With hard work and inner fortitude, anyone could prosper. It did not elude Hofstadter's notice that this theory of success often tended to slight the value of liberal education, and could therefore be identified with anti-intellectualism. Hofstadter's discussion of self-help in modern America occurs in the broader context of a chapter on business, which, he observes, has often been viewed by intellectuals as the "classic enemy" of intellectualism. "Businessmen themselves have so long accepted this role that by now their enmity seems to be a fact of nature," he remarked. "No doubt there is a certain measure of inherent dissonance between business enterprise and intellectual enterprise: being dedicated to different sets of values, they are bound to conflict; and intellect is always potentially threatening to any institutional apparatus or to fixed centers of power." Hofstadter understood, though, that historical events could ameliorate the tension between businessmen and intellectuals. In the past dozen years of economic growth, which ended in December 2007, the unease that Hofstadter detailed was less evident than it had been in any other era in recent American history. When Malcolm Gladwell began writing for The New Yorker in 1996, the economic "boom" had reached the stage where its effects could be glimpsed in the culture and even the language of the country. Robert Rubin and Alan Greenspan were celebrated as intellectual giants who transcended the worlds of finance and politics. The expansion was so astounding as to seem arcane; and the time was ripe for a writer to explicate the seemingly mysterious phenomena, and to instruct readers -- especially in the business community, which is always looking for a new theory of the deal -- in the arts of all this epoch-making marketing. At just the right moment he came along and in disarmingly affectless and faux-naïf prose adapted the work of academics and sold it to a mass audience. Historians will look back on his books as primary documents of their dizzily materialistic day. Outliers argues that American society has a limited and misleading understanding of how and why people succeed. Gladwell never precisely defines what he means by "success," but most of his examples center on people who have risen to great heights in their professional careers. His book adopts the classical reassurances of the self-help line about the irrelevance of personal endowments and talents -- indeed, it goes so far in its rejection of the power of individual intellect that it becomes itself an exercise in anti-intellectualism. (The subtitle of Blink, his second book, was "The Power of Thinking Without Thinking." There's an ideal!) But Gladwell's new book is intended as a rejection of the self-help ideal. He aims to turn the reader's attention away from factors such as willpower and fortitude, away from personal qualities altogether, and toward the social settings in which people operate. Bill Joy may have been an intelligent college student, but he also attended a school that was extremely accommodating to his needs. (He could program endlessly because of a bug in the college's time-sharing system.) "Before he could become an expert," Gladwell writes, "someone had to give him the opportunity to learn how to be an expert." So Gladwell is turning the old self-help paradigm on its head: you need the will to practice your craft, to be sure, but it is the context that will decide. And by focusing on social dynamics, Gladwell once again displays impeccable timing: extensive social science research has recently detailed the importance of social networks in understanding everything from the Internet to international terrorism. Gladwell's overarching thesis in Outliers is so obviously correct that it hardly merits discussion. "The people we surround ourselves with have a profound effect on who we are." Also, tomorrow is the beginning of the rest of your life. Gladwell writes as if he is the only person in the world in possession of this platitudinous wisdom. The central irony of Outliers is that, Gladwell's discomfort with the self-help genre notwithstanding, he has written a book that conforms to it perfectly. This is a motivational manual. It is larded with inspirational stories, and with interactive games to capture the reader's attention -- with handy charts and portentous graphs. Its language puts one in mind of, say, Tony Robbins. (On his blog Gladwell recently referred to two speaking engagements on his book tour as "shows.") We are in guru-land here. "We're going to conduct a crash investigation," Gladwell exhorts -- a little tastelessly -- near the start of a chapter on plane wrecks. Occasionally he tells the reader to write things down. Sometimes he preaches hope: "The world could be so much richer than the world we have settled for." Si, se puede. His stories display the mild melodrama of all inspirational books: they are either uplifting or tragic (and therefore also uplifting). One subject's tale is called "heartbreaking" three times in less than six pages. Gladwell touched on some of these themes, and produced some of these same effects, in his previous books. In The Tipping Point , he referred to The Power of Context, the idea that "human beings are a lot more sensitive to their environment than they may seem." There he cited a number of well-known studies, the most infamous of which was probably the Zimbardo Stanford Prison Experiment. In that experiment, students were chosen as either guards or prisoners in a mock prison, and in less than a week the guards began to terrorize the increasingly unstable inmates. Gladwell used the results to show that external conditions greatly affect human behavior. I know of no individualist who would dispute such a finding. Outliers begins with the history of Roseto, a small town in the Lehigh Valley region of Pennsylvania. A doctor named Stewart Wolf spent time in Roseto in the 1950s, and was shocked to find that there were almost no incidents of heart disease in people under the age of sixty-five. Most Rosetans were first- or second-generation Italian immigrants who cooked with lard and ate copious amounts of rich Italian desserts. Many of them had weight problems. But Wolf and a sociologist friend had an explanation for the heart-disease statistics. "In transplanting the paesani culture of southern Italy to the hills of eastern Pennsylvania," Gladwell explains, "the Rosetans had created a powerful, protective social structure capable of insulating them from the pressures of the modern world. The Rosetans were healthy because of where they were from, because of the world they had created for themselves in their tiny little town in the hills." So Roseto was an outlier. "I want to do for our understanding of success," Gladwell announces, "what Stewart Wolf did for our understanding of health. "The strongest evidence for Gladwell's argument comes under the rubric of something he calls the "Matthew Effect," which derives its name from a passage in the Gospel of Matthew: "For unto every one that hath shall be given, and he shall have abundance. But from him that hath not shall be taken away even that which he hath." Roger Barnsley, a Canadian psychologist, noticed something odd about the birthdays of Canadian hockey players. It did not matter whether he looked at professional players or elite junior-leaguers: 40 percent of them were born in the first trimester of the year, and 30 percent of them were born between April and June. The cutoff date for admission in Canada's youth hockey league is January 1, which allows pre-teen hockey players born in January and February to compete with kids who are as much as eleven months their juniors. The older players, generally more physically developed and skilled, get selected for all-star teams. "And what happens when a player gets chosen for [an all-star team]?" Gladwell asks. "He gets better coaching, and his teammates are better, and he plays fifty or seventy-five games a season instead of twenty games a season like those left behind." Circumstances matter. What begins as a slight age advantage becomes a self-fulfilling prophecy. Gladwell acknowledges that the people who rise to the professional level in hockey are also talented athletes, but what fascinates him, what he wishes to bring to the attention of people looking to succeed, is the web of elements outside their own control. This is self-help that does not think very much of the self. Another chapter tells the story of Chris Langan, whom Gladwell describes as a "celebrity outlier" and, oddly, as the "public face of genius" in American life. Langan taught himself to read at the age of three, and at sixteen he had consumed the Principia Mathematica . (Bertrand Russell was a fitting choice: the five-year old Langan had harangued his grandfather with questions about the existence of God.) Langan's IQ was actually too high to be measured, but Gladwell shows that Langan was raised in a difficult environment. His father was absent. One step-father committed suicide, another was murdered, a third drank too much. Langan even lost his college scholarship because of a paperwork mishap. Although he eventually won one-quarter of a million dollars in game-show money, he never recorded the spectacular achievements that had once appeared within his reach. Gladwell proceeds to compare Chris Langan's life to J. Robert Oppenheimer's. Oppenheimer attended Harvard and Cambridge, battled serious depression, and even tried to poison his physics tutor with stolen chemicals. But despite his controversial political connections and a lack of professional experience, he managed to charm Leslie Richard Groves, the military officer in charge of the Manhattan Project. Gladwell attributes this charm to Oppenheimer's childhood and background, which were more stable than Langan's and enabled Oppenheimer to develop "practical intelligence" -- social skills useful in navigating the "real world." "If you are someone whose father made his way up in the business world," Gladwell explains, "then you've seen, firsthand, what it means to negotiate your way out of a tight spot. If you're someone who was sent to the Ethical Culture School, then you aren't going to be intimidated by a row of Cambridge dons arrayed in judgment against you." (Kai Bird and Martin Sherwin, whose Oppenheimer biography is Gladwell's main source, might quarrel with such an account, and attribute more of Oppenheimer's indefatigability to internal resolve.) Much of the remainder of Outliers is taken up with more and less believable explanations of how social networks affect individuals, but gradually the focus becomes clouded. Gladwell has a long chapter on "The Ethnic Theory of Plane Crashes." Why was it that Korean Air's flights were crashing seventeen times as often as United Airlines' flights? South Korea has a notably high "Power Distance Index," which is measured by how often employees are willing to question their bosses, and by how much fear is exhibited toward those with greater social standing. When problems arose in the cockpit of Korean Air planes, pilots were frequently shown too much deference, and underlings were afraid to speak up. Eventually Korean Air brought in an expert from Delta, and he forced company employees to focus on their cultural legacies, and how those legacies affect flight performance. Here Gladwell seems to have amplified his collective explanation for individual achievement to tell us that societies, too, are affected by their shared histories. Society is socially determined. Well, yes. I have no idea what this chapter is doing with the rest of the book, except that its author thinks it is cool. Often Gladwell's discussions are not internally coherent. He wants to know why students in East Asian countries score well on math tests. He introduces the topic with a long digression on rice cultivation. Comparing East and West, he instructs: "In Japan or China, farmers didn't have the money to buy equipment.... So rice farmers improved their yields by becoming smarter, by being better managers of their own time, and by making better choices.... Throughout history, not surprisingly, the people who grow rice have always worked harder than almost any other kind of farmer." And this hardship was partially redeemed by "the nature of that work.... It was meaningful. The harder you work a rice field, the more it yields." When he belatedly turns to the topic of Asian success at math, he does not make any effort to connect it to his discussion of rice paddies, even though he views high test scores to be the direct consequence of toiling in the paddies. "The genius of the culture formed in the rice paddies is that hard work gave those in the fields a way to find meaning in the midst of great uncertainty and poverty," he writes. "That lesson has served Asians well in many endeavors but rarely so perfectly as in the case of mathematics." This is the sort of generalization about cultural and national character that can easily be put to very nasty uses. By the time Gladwell reaches his penultimate chapter, he is in full inspiration mode, and impervious to all forms of critical thinking. He tells the story of Marita, a Bronx student from a single parent home, who attended a KIPP (Knowledge Is Power Program) school. "Marita just needed a chance," Gladwell explains with homiletical emphasis. "And look at the chance she was given!" Gladwell believes that KIPP -- a network of charter schools with more than fifty campuses nationwide -- has "succeeded by taking the idea of cultural legacies seriously." Test scores for socio-economically disadvantaged children tend to suffer more from a long summer break, presumably because, as Gladwell explains, "privileged kids learn while they are not in school." For poor children, "America doesn't have a school problem. It has a summer vacation problem, and that's the problem the KIPP schools set out to solve." KIPP did so, Gladwell claims, by extending the school day and instituting a mandatory summer school program. Unfortunately, many education experts would attribute KIPP's success to more than the extra-long hours. According to a recent report from the Education and the Public Interest Center, there is "no strong evidence" linking KIPP's impressive results to extra time in the classroom. And when Gladwell observes that "[KIPP] decided to bring the lessons of the rice paddy to the American inner city," he, well, muddies his argument. There are no rice paddies in the Bronx. Collective memory is hardly a more vivid element in the lives of young people than their own temperaments and aptitudes, and the way they actually live and act. KIPP schools may take cultural legacies more seriously than other schools do, but I expect that this extra attention is likely the result of looking at the same test results -- taken in America, before and after summer vacation -- that Gladwell adduces in his book. Even more absurdly, Gladwell traces the typically American concern that children work too hard to Western agricultural practices, because Western wheat fields were allowed time to fallow, ensuring that the soil remained fresh. "This is the logic," Gladwell says, that "the [pre-KIPP] reformers applied to the cultivation of young minds. " So one theory of cultivation leads to another theory of cultivation, and for no reason other than that the word is the same. It is Gladwell's discussion of IQ that gives the clearest window into his thinking, and also most acutely exposes the problems with this shallow and irritating book. Gladwell proposes a "threshold" theory of IQ tests, which he introduces by saying that "the idea that IQ has a threshold, I realize, goes against our intuition." He uses this theory, which posits that once your IQ reaches a certain threshold it ceases to matter what score you earn, to defend the affirmative action program -- upheld by the Supreme Court six years ago -- at the University of Michigan's law school. According to research to which Gladwell alludes, minority students who graduated from the law school performed as well as white students in the professional world. It did not matter whether the minority graduates had less impressive academic credentials upon admission, because they reached the threshold. His argument here is sometimes confusing -- is he talking about IQ tests or grades? Does Michigan give its students IQ tests before admitting them? -- but otherwise it is clear enough. Unfortunately it is buried beneath more claims about society. "We think that, say, Nobel Prize winners in science must have the highest IQ scores imaginable, " Gladwell flatly states, before going on to patiently explain that many Nobel Prize winners do not go to Harvard. In a footnote, he admits that in fact Harvard "produces more Nobel Prize winners than any other school." Finally, he adds: "But wouldn't you expect schools like Harvard to win more Nobels than they do?" Here is the Gladwell method nicely on display: a questionable assumption, a partial walk-back of an earlier claim, and finally another questionable assumption synthesizing the half-reversal. The upshot is the mundane observation that Harvard produces more Nobel winners than anyone else, but not too many more. Gladwell wants to be provocative and inoffensive. It is, in fact, his special gift. Gladwell thinks that there is something "profoundly wrong with our idea of success," but he never provides an explanation of what idea of success he means. In an early chapter, he quotes Jeb Bush saying that being the son of a president is actually a disadvantage to one's business career, and notes that the former governor referred to himself as a "self-made man." "[I]t is a measure of how deeply we associate success with the efforts of the individual that few batted an eye at that description," Gladwell claims. One wonders why he is so certain that the Americans who heard this absurd comment did not "bat an eye." Nor does he grasp that the individualist gospel that he rejects is more reassuring and more inspiring to most Americans than the social luck that he celebrates. Gladwell appears to believe that a renewed social Darwinism has taken over the United States. In this vision of America, IQ scores are fetishized, admittance to Harvard is the only measure of a man, and the historical legacies of racism and poverty are entirely ignored. Fortunately, Gladwell is around to remind us that success is determined by more than inner strength, though his readers may be forgiven for resigning themselves to the Harvard determinism. Gladwell is rather a slippery writer; he does not make philosophical commitments. Some people who read Outliers may argue that he gives too little credit to individual resilience. Others may contend that he manages to find a near-perfect balance in weighing the internal and the external. What almost no one would dispute is the boring truism that both factors play tremendous roles in shaping the life of every individual. Maybe the Bush years have left common sense looking like dissidence, but common sense is the most that the outlier Malcolm Gladwell has, in the best of circumstances, to offer. Even when his thinking is right, it is weak.