How Will You Spend Your Energy?

Faith is taking the first step, even when you don’t see the whole staircase.

— Martin Luther King, Jr.

One of the things I’ve learned since becoming a father is that energy is a precious and exhaustible resource. In BCE (“Before Child Era”), recovering from a long day at work, intercontinental flights, or other enervating activities was fairly straightforward: grab a cerveza and read a book. Restoration achieved.

In CE, particularly upon entering the bipedal (i.e., toddler) period, carving out 30 minutes of reading time has proven to be a high hurdle. I’ve read 465 pages in the last four months.1

Rejuvenating weekends have gone the way of the dodo, as has the memory of routinely getting more than six hours of sleep. With a wife working grueling hours as a physician in residency, there simply has been very little time to recharge. I don’t know how single parents do it.

I don’t remember exactly when the epiphany hit me, but it was preceded by burnout and a rut; a hectic stretch of business travel; coming home to a couple weeks of watching the kid solo; and learning that one of our family members had been diagnosed with terminal cancer at an unjustly young age; that I realized I could no longer put off answering one question: how will you spend your energy? (more…)

The Ancien Régime and the Revolution

With all the hubbub about China as of late, I thought it might be worth reading Alexis De Tocqueville’s The Ancien Régime and the Revolution (Penguin: 2008). A number of China Hands say the Party has used this book to inform their approach to domestic stability and harmony.1 I have no idea whether these assertions are true,2 but if one were a leader seeking to understand the drivers of mass movements and revolutions, The Ancien Régime would be a logical item for the reading list. (more…)

Reflections on a Winding Road to EM Private Equity

In late 2005, I would arrive at the office early and catch up on the latest news of sectarian violence in Iraq.  It made for gruesome reading—bodies discovered in vacant houses, tied to chairs with clear evidence of torture.  A favorite tool seemed to be power drills, which were used on knees, ankles, heads.

There were suspicions that Iraq’s interior minister—Bayan Jabr—was at least partially responsible, and that members of the National Police force that he oversaw were effectively operating as Shia death squads, exacting vendettas against Sunnis and former elements of Saddam Hussein’s regime.  The sectarian violence seemed to be increasing until February 2006, when militants bombed one of Shia Islam’s holiest sites, the Golden Mosque in Samarra, kicking off an orgiastic spate of bloodletting that brought Iraq to the precipice of a full-blown civil war. (more…)

Technological Acceleration and the Wet Noodle of Monetary Policy

The American boy of 1854 stood nearer the year 1 than to the year 1900. The education he had received bore little relation to the education he needed.  Speaking as an American of 1900, he had as yet no education at all.  He knew not even where or how to begin.1

If science were to go on doubling or quadrupling its complexities every ten years, even mathematics would soon succumb.  An average mind had succumbed already in 1850; it could no longer understand the problem in 1900 … At the rate of progress since 1800, every American who lived to the year 2000 would know how to control unlimited power.  He would think in complexities unimaginable to an earlier mind.  He would deal with problems altogether beyond the range of earlier society … The movement from unity into multiplicity, between 1200 and 1900, was unbroken in sequence, and rapid in acceleration.  Prolonged one generation longer, it would require a new social mind.  As though thought were common salt in indefinite solution it must enter a new phase subject to new laws.  Thus far, since five or ten thousand years, the mind had successfully reacted, and nothing yet proved that it would fail to react—but it would need to jump.2

The Internet is the most deflationary invention of all time.3

A few weeks ago, the Fed determined that the world was not yet ready for a 25 basis point increase in U.S. interest rates.  They’re smart and monetary policy is their day job, so I’m sure they know better than I about these things.  But still, I find it all a bit befuddling.

Illustrative example.

Lately I’ve been pondering whether monetary policy has been largely ineffective at generating inflation4 because the drivers of deflation aren’t monetary in nature, but rather technological.  In 1904, Henry Adams developed a theory (“A Law of Acceleration”) on the exponential rate of technological change; and he posited that around the time we’re living in now, the rate of progress might exceed our ability to deal with it (see chart). (more…)

Entropy: The Defining Characteristic of Global Affairs

Expanding prosperity contributed to the popularity of the doctrine [of harmony of interests] in three different ways. It attenuated competition for markets among producers, since fresh markets were constantly available; it postponed the class issue, with its insistence on the primary importance of equitable distribution, by extending to members of the less prosperous classes some share in the general prosperity; and by creating a sense of confidence in present and future well-being, it encouraged men to believe that the world was ordered on so rational a plan as the natural harmony of interests.1

Politics are made up of two elements — utopia and reality — belonging to two different planes which can never meet. There is no greater barrier to clear political thinking than failure to distinguish between ideas, which are utopia, and institutions, which are reality.2

Stocks are near their all-time highs and show few signs of correcting anytime soon; debt markets appear frothy; the VIX is low—the capital markets are telling us that we’re living in “the best of all possible worlds.”3 Even TV commercials show us people dancing on their decks while telling us “the fun is back!”

But in the real world, for a while now I’ve been nagged by this feeling of entropy in global affairs; that order and institutions are giving way to chaos and ungovernability. (more…)

The Reckoning

I am unable to understand why a society that complains of unemployment should encourage and embrace every conceivable possibility of replacing human labor by mechanical devices.1

We are suffering, not from the rheumatics of old age, but from the growing-pains of over-rapid changes, from the painfulness of readjustment between one economic period and another…We are being afflicted with a new disease…namely, technological unemployment.2

I don’t understand what’s happening to my country.3

In my previous post, I mentioned how George Packer’s latest book The Unwinding evoked a visceral sense that the country’s political and economic trajectories are untenable, and that it was hard to avoid the conclusion that we’re heading toward A Reckoning.

Over the holiday, I found myself driving along U.S. Route 220 in Virginia, about an hour north of the hometown of Dean Price, one of the central characters of The Unwinding.  As I traveled that road, which I’d cruised down several times before, I was reminded of Packer’s chronicling of the decline of the textiles and tobacco industries in the Carolina Piedmont, and how in a very real way, America has been gutted. (more…)

Favorite Books of 2013

In light of the holiday season and year end, I thought I’d share the best books I read this year.  While most of these weren’t published in 2013—a number of them dutifully collected dust on bookshelves in no less than three apartments until they were summoned—the following eight books stand out as my favorites over the past 12 months. (more…)