Too Clever By Half


The smartest animals on my farm aren’t my bees (although they possess the genius of the algorithm). It’s not the horses or the goats or even the dogs. The barn cat is pretty smart, but only in fairly limited circumstances, and the house cats are useless. Obviously it’s not the sheep or the chickens. Nope, the smartest animals on my farm aren’t really on my farm at all. They’re the coyotes who live in the woods.

My favorite example? We have a really big invisible fence for the dogs … covers about five acres. Yes, my farm is a great place to be a dog. For those of you who aren’t familiar with the technology of the invisible fence, it’s a buried wire that transmits a signal to a receiver placed on your dog’s collar. When the dog gets close to the wire, the receiver starts to beep, and when the dog gets all the way to the “fence” boundary, the receiver generates a small electric zap. I know, I know … it’s negative reinforcement and it’s a shock collar and all that. Don’t care. It’s fantastic for us and our dogs. But whether it’s a smart dog like Maggie the German Shepherd or a … shall we say … “special” dog like Sam the Sheltie, after a few weeks (Maggie) or a few hours (Sam) they will forget where the fence exists if they stop wearing the collar.

Not so the coyotes.

The coyotes know *exactly* where the invisible fence begins and ends, without the benefit of *ever* wearing a shock collar. How do I know? Because they intentionally leave their scat on their side of the invisible fence, creating a demilitarized zone as precise and as well-observed as anything on the Korean peninsula. Occasionally a coyote will try to test our dogs by leaving its scat juuusst over the line on our side of the DMZ. Our dogs, of course, just blithely ignore the provocation, not even knowing that they’re being challenged. My dogs are the Roadrunner in some real-life Looney Tunes competition with Wile E. Coyote, super-genius. The coyotes are scheming; my dogs have no idea what scheming is.

I feel bad for the real-life coyotes in exactly the same way that 7-year-old me felt bad for Wile E. Coyote and 30-year-old me felt bad for The Brain (not a coyote, of course, but still). They put SO MUCH EFFORT into their plans and machinations for taking over the world, and it all comes to naught in a world of Roadrunners, Pinkys, and dogs like my Sam the Sheltie.
I see myself in the coyotes. So do most people reading this note, I bet.

For the canonical compilation of all Pinky and the Brain “pondering” quotes, see Richard Watanabe’s magisterial site.

The truth is that domestication makes any animal dumb. You name the species — dogs, cats, cows, horses, sheep, pigs — human selection on “tameness” for thousands of years accumulates a wide array of traits, including floppier ears, shorter snouts, hair color variability and the like, most likely based on more basic inherited alterations in certain stem cell and stress hormone production patterns (see Domesticated: Evolution in a Man-Made World, by Richard Francis, for a great read on all this). Different species show these external traits to different degrees. But the trait that ALL domesticated species demonstrate relative to their wild species is a smaller brain. I’d bet it’s happening with humans, too, but that’s just an observation for another day.

Unfortunately, coyotes are too smart for their own good. They are, to use the wonderful Brit phrase, too clever by half. They are, to use a post-modern, TV reality show lingo, not good in the meta-game. And the meta-game has turned against the coyotes with a vengeance.

Case in point — in our pre-farm life, where we had a yard like any other yard and were part of a neighborhood like any other neighborhood, we still had run-ins with coyotes. There were three or four of them roaming around one fall, coming in from the local nature preserve, and it became something of an issue in our small town. Warnings went out on mom chat groups not to let your small children play outside alone, much less your small dog or cat (yes, this was back in the day when it was not a blatant act of animal cruelty in Fairfield County, Connecticut to let your house cat go outside when it wished). Fortunately, clear instructions were provided through various channels as to how to protect your family.

Don’t yell at the coyotes. Half fill an empty coffee can with loose change and shake it at them. This will frighten them and they will run off.

Again, this is Fairfield County, Connecticut, where even owning a BB gun is enough to earn a lifetime ban from any play dates for your kids. It’s a far cry from growing up in Alabama like me or Texas like my wife, but when in Rome …

A few afternoons later the coyotes came wandering around our yard. We had (very) small kids at the time. So my wife dutifully brought out the coffee can she had prepared, and rushed out into the yard to confront the coyotes, shaking the coffee can like a madwoman. At which point the lead coyote, a female we think, sloooowly looked up and just stared at my wife. It wasn’t scared. It wasn’t frightened. It recognized immediately that there was absolutely zero danger posed by this human female gesticulating wildly and making a bizarre clanking sound with her hands. The message from that coyote’s stare was clear — is that all you got? Really? Almost derisively, the lead coyote sloooowly turned around and sauntered back towards the woods, leading the others away.

It was an alpha move. Smart, cool, totally in command. I’m leaving because I want to, at my own speed, and only because you’re annoying me with that ridiculous noise, not because I’m scared.

It was also a really dumb move for the meta-game.

What’s the meta-game? It’s the game of games. It’s the larger social game where this little game of aggression and dominance with my wife played out. The meta-game for coyotes is how to stay alive in pockets of dense woods while surrounded by increasingly domesticated humans who are increasingly fearful of anything and everything that is actually untamed and natural. A strategy of Skirmish and scheming feints and counter-feints is something that coyotes are really good at. They will “win” every time they play this individual mini-game with domesticated dogs and domesticated humans shaking coffee cans half-filled with coins. But it is a suicidal strategy for the meta-game. As in literally suicidal. As in you will be killed by the animal control officer who HATES the idea of taking you out but is REQUIRED to do it because there’s an angry posse of families who just moved into town from the city and are AGHAST at the notion that they share these woods with creatures that actually have fangs and claws.

The smartest play for coyotes in the meta-game is never to Skirmish with humans. Never. And if you find yourself in a Skirmish-with-Humans game, then the smart play is to act scared, to run away at top speed from a jangling coffee can. But no, coyotes are too clever by half, plenty smart enough to understand and master the reality of their immediate situation, but nowhere near smart enough to understand or withstand the reality of their larger situation. It’s their nature to play the scheming mini-game. They can’t help themselves. And that’s why the coyotes always lose. It’s always the meta-game that gets you.

Okay, Ben, entertaining as ever, but where are you going with all this?

Almost there. Before I pull this charming discussion of too clever by half coyotes back into the real world of markets, there’s one other (supposedly) clever, non-domesticated animal I need to introduce into this story. That’s the raccoon.

Coyotes have a roguish charm and bring something interesting to the world with their independence and scheming. Raccoons are simply criminals. And they’re not that smart. I’d put our barn cat up against a raccoon any day on any sort of cognitive test. We think raccoons are clever because they have those anthropomorphic paws and those cute little masks and even a Marvel superhero with its own toy line, but please. Raccoons are takers, not schemers. They’re killers, often for the sheer hell of it. Raccoons steal and kill way beyond what they need, and they do so in a totally wanton, non-clever way. I hate raccoons.

When they push their scheming and stealing too far, coyotes and raccoons ALWAYS end up getting killed by the farmer — regretfully in the case of coyotes, remorselessly in the case of raccoons. It’s not a cute Looney Tunes death, either. There’s no little puff of smoke and immediate reincarnation for these Wile E. Coyotes and Rocket Raccoons. Just blood and sadness.

That’s true on the farm and it’s true in the real world, too. And that’s how we pull this allegory together.

Every truly disruptive discovery or innovation in history is the work of coyotes. It’s always the non-domesticated schemers who come up with the Idea That Changes Things. We all know the type. Many of the readers of this note ARE the type.

Financial innovation is no exception. And this is Reason #1 why financial innovation ALWAYS ends in tears, because coyotes are too clever by half. They figure out a brilliant way to win at the mini-game that they’re immersed in, and they ignore the meta-game. Eventually the meta-game blows up on them, and they’re toast.

Reason #2? Financial innovation, more than any other sort of innovation, attracts the raccoons — con men and hucksters at best, outright thieves at worst. They infest financial innovation. And they can’t control themselves, so they always push it too far. They’re never content with stealing a little. Or even a lot. No, raccoons want it ALL.

Example, please.

Financial innovation is always and in all ways one of two things — a new way of securitizing something or a new way of leveraging something.

Securitization is a ten-dollar word that means associating something in the real world (a cash flow from a debt, an ownership interest in a company, a deed on a property, a distributed ledger mathematical calculation, etc.) with a piece of paper that can be bought and sold separately from that real world thing.

Leverage is a ten-dollar word that means borrowed money.

That’s it. There’s nothing new under the sun. Finding new ways to trade things (securitization) or new ways to borrow money on things (leverage) is what financial innovation is all about, and there are vast riches awaiting the clever coyotes who can come up with a useful scheme on either.

The biggest market disasters happen when both leverage and securitization get mixed up with the same clever scheme, as when new ways of leveraging and securitizing U.S. residential mortgages were developed in 2001, resulting in the creation of a $10 trillion asset class that utterly collapsed during the Great Financial Crisis. There were a lot of coyotes involved in so gargantuan an Idea That Changes Things, but most illustrative for these purposes is the Gaussian Copula formula published by David Li in 2000, the “technology” which allowed the securitization of pretty much any mortgage portfolio (prior to this most securitization was limited to “conforming” mortgages securitized by Fannie Mae and other government-sponsored mortgage agencies) and also the leveraging of those securities through tranching (splitting up the security into still more securities, each of which can be used as collateral for more borrowing, particularly those tranches with higher credit ratings). I wrote a bit about the Gaussian Copula in “Magical Thinking”, and if you want to learn more you can’t do better than  Felix Salmon’s 2009 Wired magazine article — “The Formula That Broke Wall Street” — still my all-time favorite piece of financial market journalism.

The formula doesn’t look like much, does it? But this little equation made billions of dollars in profits for Wall Street through hundreds of clever coyote schemes. More than a few raccoons got involved along the way. And then it broke the world in 2008.

It’s what I’ll call “coyote-math”. The math behind blockchain and Bitcoin the Gaussian Copula and non-agency residential mortgage-backed securities (RMBS) is undeniable. It is a mathematical certainty that these securities “work”. Unless, of course, you have a government-led chilling effect on exchanges and network transactions a nationwide decline in U.S. home prices, in which case Bitcoin non-agency RMBS doesn’t work at all.

So what will does the aftermath of this classic example of financial innovation gone awry look like?

Blockchain The Gaussian Copula is still around. These things don’t get un-invented, and it’s still a very useful piece of code for certain applications. The truth about blockchain the Gaussian Copula is that it’s an Idea That Changes Things In a Modest Way, not an Idea That Changes Everything. It’s a modern algorithmic twist on letters of credit portfolio risk, and there are a few interesting uses for that. Just a few, but that’s okay. That’s still important. Just not as important as HODLers Wall Street thought it was.

As for the primary financial application that blockchain the Gaussian Copula spawned, Bitcoin non-agency RMBS is still around, too. The securitization of distributed ledger calculations non-conforming mortgages is something that market participants still want and still trade. It will NEVER be a $10 trillion asset class again, because the inherent flaws of this security have been well revealed. Turns out that Bitcoin a AAA-rated tranche of Alt-A mortgages wasn’t the store of value that coyote-math “proved” it was, to the detriment of individual institutional investors who put a significant portion of their portfolio into these securities, and to the ruin of those who used leverage to acquire these securities.

Many of the coyotes involved with this classic example of financial innovation gone awry are (professionally) dead. At the very least careers were permanently derailed, and entire coyote institutions, like Bear Stearns, were taken out into the street and shot in the head by animal control officers were merged into healthier financial institutions by government regulators as an example to other coyote institutions as a necessary measure for systemic stability. I miss Bear Stearns. The world is a poorer place for Bear Stearns not being in it.

Surprisingly few of the raccoons involved are (professionally) dead. In fact, more than a few of the financial hucksters involved with the run-up to the Great Financial Crisis are back to their old tricks with cryptocurrencies whatever the latest coyote innovation might be. This makes me VERY angry, and probably colors my view on blockchain financial innovation more generally. I wouldn’t miss the raccoons for a second if the animal control officers took them out, but somehow they never do.

And that brings me to what is personally the most frustrating aspect of all this. The inevitable result of financial innovation gone awry, which it ALWAYS does, is that it ALWAYS ends up empowering the State. And not just empowering the State, but empowering the State in a specific way, where it becomes harder and harder to be a non-domesticated, clever coyote, even as the non-clever, criminal raccoons flourish.

That’s not an accident. The State doesn’t really care about the raccoons, precisely because they’re NOT clever. The State — particularly the Nudging State — cares very much about co-opting an Idea That Changes Things, whether it changes things in a modest way or massively. It cares very much about coyote population control.

When coyotes play the Skirmish game, that’s all the excuse the State needs to come swooping in. And that’s exactly what is happening with Bitcoin what happened with non-agency RMBS.

What’s the alternative to playing Skirmish in the meta-game?

It’s this: to be an arborist.

It’s this: to be as wise as serpents and as harmless as doves.

Coyotes can change the world. Coyotes WILL change the world. But not if they misplay the meta-game. Not if they hang out with raccoons. Not if they fetishize ANY financial instrument as an intrinsic aspect of a commitment to liberty and justice for all. Because it’s not.

Render unto Caesar the things that are Caesar’s. Wise words 2,000 years ago. Wise words today.

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Always Go To the Funeral

But Brutus says he was ambitious;
And Brutus is an honorable man.
Julius Caesar, Act 3 Scene 2 (1599)

That’s Ray Fearon as Mark Antony on the left and Paterson Joseph as Brutus on the right, in the 2012 Royal Shakespeare Company production of Julius Caesar. You can see a video of Fearon’s funeral speech for the murdered Caesar here. It’s an insanely powerful performance of an insanely powerful scene, with the repetition of the famous Brutus lines twisting the crowd like a rope.

The Democrats, the longer they talk about identity politics, I got ‘em. I want them to talk about racism every day. If the left is focused on race and identity, and we go with economic nationalism, we can crush the Democrats.
Steve Bannon, from his August 16 exit interview with Robert Kuttner in The American Prospect.

A spirit of national masochism prevails, encouraged by an effete corps of impudent snobs who characterize themselves as intellectuals.
Vice President Spiro Agnew (1918 – 1996), Nixon’s Bannon, the voice of the “Silent Majority” (with an assist from speechwriters Bill Safire and Pat Buchanan). Resigned office in 1973, pleading no contest to bribery and tax evasion charges. History never repeats, but it sure does rhyme.

Death has a cruel way of giving regrets more attention than they deserve.
Elisabeth Kubler-Ross (1926 – 2004), author of On Death and Dying, developer of the five stages of grief: denial, anger, bargaining, depression, and acceptance.

I’ve gotten three irreplaceable pieces of advice over the years, two for business and one for life. The business advice: 1) Always live to fight another day. 2) It’s not about the money. It’s. About. The. Money. The life advice: Always go to the funeral. That’s courtesy of my partner Jeremy Radcliffe. I’m not sure who he heard it from. Now I’m passing it along to you.

It’s not easy to go to the funeral. Life closer to home has its demands. Travel on short notice is expensive. And god knows I’ve failed to live up to this advice as often as I’ve followed it. But every time I’ve made the effort, I’ve experienced a uniquely powerful and sustaining human connection that I really don’t have words to describe. Let me put it this way. Twenty years later, I remember who was at my father’s funeral, not in a sense of keeping score, but of abiding appreciation. There’s zero negative affect for those who weren’t there. Zero. I understand! But there’s a nuclear reactor of positive affect and energy for those who were.

Going to the funeral is part of the social contract we have with our families, our friends, and our tribe, both immediate and extended. It’s part of the social contract we have with ourselves. It’s part of the personal obligation that we have to others, obligation that doesn’t fit neatly or at all into our bizarro world of crystalized self-interest, where scale and mass distribution are ends in themselves, where the supercilious State knows what’s best for you and your family, where “communication policy” and fiat news shout down authenticity, where rapacious, know-nothing narcissism is celebrated as leadership even as civility, expertise, and service are mocked as cuckery.

Understanding the obligations we share in life and in death is the greatest lesson I’ve learned (and I hope passed on to my girls) from life on the farm. Because our obligations aren’t just to our human tribe, but to our animals, too.

I’m not a nut about this. The obligations we have to our animals aren’t the same as the obligations we have to our family. They aren’t the same as the obligations we have to other, more remote humans (hmm … sometimes I’m not too sure about that last bit, but let’s go with it anyway), but they’re obligations nonetheless. In life those obligations include water, food, shelter, and an environment that lets them express their sheepness or goatness or horseness or dogness or whateverness in a safe and healthy way. It’s all of those, especially fresh water. That’s a thing for me. In death, those obligations are a proper funeral, well attended. A grave plenty deep, well marked. A body positioned properly, well respected. Collars and bells and other instruments of control all come off, because there are no collars in death. That’s a thing for me, too.

I know this seems like a morbid topic, but it’s not for me, and I suspect it’s not for anyone who’s spent time on a farm. I’ve buried lots of animals. They’re born, they live, and they die. We give them a really good life. We respect our animals in life and we respect them in death. The care we give our animals when they die means nothing to the animals, obviously not to the dead but no more to the living. It means an enormous amount to us. It’s our personal obligation. We owe them, not the other way around, in life and in death.

Always go to the funeral.

Whew! Okay, Ben, let’s see you draw some lessons for investing and macroeconomics from that!

On the investing side, the lesson is that every discretionary investment needs a proper funeral at some point. Discretionary investments are born, they live, and they die. I’ve learned from a lot of great investors over the years, and one of the lessons that really stuck with me was that your portfolio should be one-third positions that hadn’t worked yet and you are getting into, one-third positions that are working now, and one-third positions that have worked and you are getting out of. It’s that last one-third that we all have the most trouble with. It’s not the positions that never work at all. We’ve all been trained to cut our losers, and so that’s what we do. In this business, you’re wrong about something every single day, and if you don’t learn early and well what to do when you’re wrong, then you won’t survive long. No, the much harder lesson is what to do when we’re right. We’ve all been trained to “let our winners run”, and there’s a lot of truth in that for a trader. Much less so for an investor. For an investor, it becomes an excuse to keep a discretionary position in the portfolio well past its natural lifespan, leading to a bloated portfolio, chock-full of merely good or used-to-be good positions. It’s the unforced error that I see more frequently than anything else out in financial advisor-land, because it’s really hard to say goodbye to an investment that’s served you well and faithfully.

I’ve buried lots of investments. You should, too.

That means a proper funeral, well attended. You communicate with your team and your clients. You tell them how and why the death occurred, and you invite them to learn more.

That means a grave plenty deep, well marked. It’s waaay too easy to resurrect a dead investment in a slightly new form, saying that there’s some new catalyst for the old stock when in truth you wouldn’t be there except for the prior history. The dead should stay buried.

That means a body positioned properly, well respected. You keep a record of the investment, and you describe why you were there, how it worked, and how it didn’t. Honestly.

None of this is as easy as it sounds. But it’s your obligation.

Now wait a second, Ben, it sounds like you’re preaching against buy-and-hold stock-picking, something that might get you stoned to death if you were making the hajj to Omaha along with the value investing faithful. Is that what you’re saying?

Nope. I’m an arborist. I love planting trees and investments that can last for decades. There’s nothing more powerful in the investment world than the power of compound returns. But spare me the forever stuff. Nothing lasts forever. Death and taxes … those are the only eternals.

Every highly successful stock-picking investor in the world, value oriented or not, has two things:

  1. A boneyard. You think the guys in Omaha haven’t buried a huge number of investments? Please. And they don’t just bury the dead. They cull the weak. Good for them.
  2. A duration match between assets and liabilities. To continue with the forest example, it’s all great and wonderful to plant some oak trees that you’re certain will be strong and majestic in 20 years, but not if you need the lumber in 5 years. If you’re pursuing long-lived investment returns, you better have similarly long-lived investment funding, or eventually you will fail as an investor. That’s not opinion, that’s math. So yeah, if you’ve got permanent capital, then you can make permanent investments. But no one has truly permanent capital.

These two qualities of successful investing — burying the dead and matching the lifespan of your assets with the lifespan of your liabilities — are part of the investment meta-game. They’re not the immediate game — picking this stock or picking that stock — but they’re the game behind the game. It’s more important to play the meta-game well than to play the immediate game well. It’s more important to see the forest than to see the trees.

Here’s another way to think about the meta-game. I was a fan of Shark Tank before it was cool to be a fan of Shark Tank, and I still am. I watch it with my girls, as it sparks all sorts of good conversations about entrepreneurialism and capitalism and the like. My favorite moments on Shark Tank, by an order of magnitude, are when Kevin O’Leary tells a presenter that their idea is dead and they need to bury it. He’s always right. The worst thing that can happen to you on Shark Tank is NOT that you fail to get an investment and go down in flames of embarassment. No, the worst thing that can happen is that you fail to get an investment but are encouraged to keep on pursuing a used-to-be-good idea that died a year ago. You will have another good idea! It’s far more important to play the meta-game well — to do nothing and wait for the next live opportunity — than to keep propping up the dead opportunity with extraordinary effort. Bury your dead. Have a proper funeral. Respect the dead. Never forget the dead. And move on without regret.

On the economics side, the lesson here is that central bankers today are grieving the death of the so-called Great Moderation, where productivity rocked, inflation was tamed, and the business cycle was muted. But they can’t move on. They can’t bring themselves to have a proper funeral. They are expressing their grief poorly — not through anything like the Kubler-Ross stages of denial, anger, bargaining, depression, or acceptance — but through magical thinking, through the pathological belief that if only the right words are said and the right thoughts are thought, then the dead will show up at the front door as if nothing had happened. To understand the human pathology, read Joan Didion’s wonderful book. To understand the policy pathology, you could do worse than to read the Epsilon Theory note.

I’m not going to spend a lot of time rehashing that Epsilon Theory argument, because there’s another death I want to talk about in this note, one connected with neither investing nor monetary policy. It’s the death of cooperative game-playing in American politics. I wrote a full note about this, too, titled “Virtue Signaling … or Why Clinton is in Trouble”, but after the events of the past two weeks, particularly Charlottesville and its political aftermath, I want to update those thoughts here.

I’ll start with what I wrote last September.

I’m thoroughly despondent about the calcification, mendacity, and venal corruption that I think four years of Clinton™ will impose. I think as a candidate she’s a bizarre combination of Michael Dukakis and Teddy Kennedy, and I think as a president she’ll be an equally bizarre combination of Ulysses Grant and Warren Harding, both of whom presided over a fin de siècle global economic collapse. Gag. But I don’t think she can break us, not as a society, anyway.

Trump, on the other hand … I think he breaks us. Maybe he already has. He breaks us because he transforms every game we play as a country — from our domestic social games to our international security games — from a Coordination Game to a Competition Game.

Blowing up our international trade and security games with Europe, Japan, and China for the sheer hell of it, turning them into full-blown Competition Games … that’s really stupid. But we have a nasty recession and maybe a nasty war. Maybe it would have happened anyway. We get over it. Blowing up our American political game with citizens, institutions, and identities for the sheer hell of it, turning it into a full-blown Competition Game … that’s a historic tragedy. We don’t get over that.

Case in point: the current “debate” about Confederate war memorials. In truth, there is no debate about Confederate war memorials. No one cares about Confederate war memorials. There is no “Southern identity” associated with Robert E. Lee statues. You know who thinks that Southerners care deeply about these statues? New York City real estate developers who know nothing about the South, but think that this is what motivates us dumb hicks, that’s who. A month ago, you could have taken down any of these statues and you’d get three wackos holding signs outside the city administration office and an angry letter from the local chapter of the Daughters of the Confederacy. I mean, it’s not like you’re canceling an SEC football game … there’s your Southern pride.

But frame the issue in terms of “THEY are coming to take your statues away from you”, show some pics of Antifa goons and campus goofballs, and absolutely people are going to care. Hell, these pictures make me care, and I’d get rid of the statues tomorrow if I could.

If getting rid of the statues is framed as capitulating to these idiots — and that’s exactly the narrative that’s been created — then every elected Republican in the South who wants to stay in office must now come out in favor of keeping the damn statues. They must be seen as opposing the idiot outsiders who are DEMANDING something that no one cared about a month ago, because that’s what it means to play a Competition Game.

Conversely, every elected Democrat in the South who wants to stay in office must now take action to dismantle the statues. Because otherwise you’re capitulating to these very fine people idiots.

Just like the incumbent Republicans, incumbent Democrats must be seen as opposing the idiot outsiders who are DEMANDING something that no one cared about a month ago, because that’s what it means to play a Competition Game.

You hear all the time about how these Trump tweets and the associated narrative construction are a “dog whistle” that motivates and calls forth the alt-right clowns. Okay. I guess. But what the tweets and the narrative really are — and this is what Steve Bannon understands perfectly — is a dog whistle for the Democrats and an obedience collar for the Republicans. It creates a Competition Game where none existed before, and it forces every elected politician, regardless of party, to play their appointed role, strutting and fretting upon the stage. Even though none of them like the script and none of them want to play the part.

It’s a political meta-game.

What’s happening today isn’t new in theory. It’s a tried and true strategy for political entrepreneurs throughout history, ancient and modern. It’s what Marc Antony did to reconfigure the narrative around Julius Caesar’s assassination in 44 BC. It’s what Richard Nixon and Spiro Agnew did with their “Silent Majority” narrative to win the 1968 and 1972 Presidential campaigns. It’s what George Wallace did in 1972 to win the Democratic primaries in Michigan and Florida. It’s what Pat Buchanan (who wrote a lot of the Silent Majority speeches) tried to do when he primaried George H.W. Bush in 1992.

But what’s happening today is very different in scale for two reasons, I think.

First, it’s different because of the unprecedented effectiveness of the technology and social media systems that drive what I call fiat news — highly political statements constructed and presented as apolitical fact. In exactly the same way that fiat currencies ultimately crowded out all hard currencies, so is fiat news now crowding out hard news. Political entrepreneurs today — a roster that includes Mark Zuckerberg and Jeff Bezos and Michael Bloomberg just as surely as it includes Steve Bannon — have a tool kit at their disposal for playing the political meta-game that Richard Nixon could only dream of.

Second, it’s different because of the goals of the political entrepreneurs themselves. Richard Nixon was a professional politician. Being president was his lifelong ambition, and he used the Silent Majority narrative as a means to that end. He didn’t want to blow up the System. He WAS the System. Whatever Donald Trump is, he’s not the System. My sense is that he really doesn’t care about the System one way or another, that so long as he and his family have the keys to the national car, he’s good with whatever happens. Steve Bannon, however, cares deeply about the System. Not to preserve it, but to reboot it. And not just to reboot it, but to reboot it with a new operating system.

So what’s the punch line? Why am I talking about all this in a cheery note about death and funerals?

Because once a Cooperation Game becomes a full-blown Competition Game, it never goes back to the way it was before. Once mustard gas is introduced into your trench warfare game, whether it was one of the other guys or one of your guys, it’s here to stay. Deterrence has failed. The cooperative Stag Hunt equilibrium is dead. I am, admittedly, still at Stage 4 of the Kubler-Ross scale on all this — depression — but we all need to get to acceptance ASAP. No regrets. No magical thinking. Just hard thoughts on how to design an operating system that can compete with and win against the billionaires’ operating system when the reboot happens. And who we want in our foxhole in the meantime. And how to build a gas mask.

Because it wasn’t that long ago when Southern identity was defined not by statues, but by civility, personal obligations, and service, particularly military service to … wait for it … the United States of America. That narrative is still out there. It’s still alive. We can get it back if we’re smart enough to play the political meta-game.

Because there’s a pose that very sick farm animals sometimes take when they’re near death, where they lie down and twist their head way back into their shoulder in a very unnatural way. It’s an odd sight if you don’t know what it signifies, a horrible sight if you do. Both the Republican Party and the Democratic Party are starting to twist their heads back into their shoulders. I don’t know if it’s too late to save them or not, but I’m increasingly thinking that it is. We need to start thinking about the funeral, who’s going to speak, and what they’re going to say.

But Brutus says he was ambitious;
And Brutus is an honorable man.

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