Imperfect Periodical

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Posts Tagged ‘hedge funds

#WINNING the Wrong Game

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Charlie Sheen’s gonzo poetry producing, cocaine fueled nervous breakdown, has kicked off the first meme of the year with “Winning”. I’ve seen friendly aquaitences and close friends alike adopt the slogan for their own declartions. The cult of positive thinking casts a powerful spell over it’s adherents, and not without good cause. There are real benefits to keeping a bright outlook on life, if for no other reason than the opposite– the dark spiral of self-depreciation- is just as narcissistic but not nearly as fun for everyone involved.

Yet I’m disturbed by the speed with which people have adopted the Sheenism, without paying any mind to the mind that produced it. Without giving any thought to the process that produced that mind.

Charlie Sheen sits at the apex of our system of American royalty. A second generation actor with a career spanning three decades and millions of gallons of tabloid ink. Sheen is paid, to play a characture of his bad boy reputation, at a rate that would make some hedge fund managers jealous. When he went off the deep end late last year it didn’t really come as much of a surprise.

Nor should it have. He’s got more money than he knows what to do with. So he spent it on cocaine and porn stars. It’s a pretty standard American male fantasy, actually. The only difference between Sheen and most American men is that he has the means to pull it off. He’s getting away with metaphorical murder- keeping two mistresses, admiting to drug use seemingly without legal consequences, and telling his bosses to fuck off in the most conspicous way imaginable. That’s winning alright.

The problem is that Sheen, like the rest of us, is playing the wrong game. It’s the same game that the hedge fund managers play. The game called “He Who Dies With The Most Toys Wins”. For the man with the tiger blood the toys have been defined as whores. For the gentlemen at Goldman Sachs it’s merely filthy lucre. They treat their personal portfolios like X-Box Live leaderboards, and move capital around with the same capacity for empathy displayed by a fourteen year old playing Call of Duty: Black Ops multiplayer. (Translation for non-gamers: none whatsoever.)

Recently I read an analysis of the financial meltdown that explained the crisis as the direct result of a real demand in the financial market. It seems that the massive amounts of wealth accured at the top of the economic food chain here were just sitting around, not being utilized. Now capitalism doesn’t work if capital isn’t kept liquid. The type of finance capitalism we practice demands the maximum return possible for the minimum amount of risk. The sub-prime dervitive markets answered this demand- to spin straw into gold (money into mo’ money mo money mo money!)- without having to deal with all that pesky development of actual products and technologies.

Short version: really rich people had so much money, and the rules of their game require that they gave more than the next guy, so they put it all on the best bet they could find with the least apparent risk. Which turned out to be a titanic amount of bullshit.

Maybe they should’ve just spent it on blow and call girls. It would’ve generated more jobs, at any rate.

Now here’s where I’m going to get a bit metaphysical, so if you want to bail out I understand. Here are some links to funny Charlie Sheen remixes to entertain you- but before you go let me say that I’m going to get metaphysical in the semantic sense, not in The Matrix sense, so you might want to stick around.

There are at least two types of games, according to philosopher James P. Carse in his book Finite and Infinite Games. Finite games are those played to win, while Infinite games are played with the only goal in mind being to keep playing. Within that construct there can be be many, many instances of Finite games. The thing is that the super rich are playing a series of finite games that look a lot more like wrestling than, say, football (American or FIFA, take your pick).

In entrepreneurial capitalism, as in football, competition is good. It leads to innovation and helps push players to the peak of their abilities. The contest becomes a creative force as much as it is a struggle between opposing forces. In doing so it takes it’s place as a positive component of an Infinite game: the innovation allows for the Infinite game to continue.

Total domination and annihilation, on the other hand, makes for pretty poor sport. Both sub-prime derivatives markets and coke fueled media orgies are finite contests with scorched earth endgames. You can’t keep playing when no one can pay back their mortgage or you’ve OD’d in the penthouse of the Wynn.

These Finite games are played with a myopic worldview. The terms of the game are so constrained that players cannot begin to conceive of an Infinite game: that play can be an end unto itself.

In the end I’m probably being unfair to one of my examples here. I suspect that in his more lucid moments Charlie Sheen might be able to grok an Infinite game, and prefer a world where everyone was #WINNING and losing was, at best, a temporary condition.

I don’t have as much faith in the hedge fund managers.

Abstracting Ourselves To Death

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Social Networks, Derivatives, and the loss of self.

When the record labels first started touting CDs to the masses one of the big selling points was how digital copies were superior to analog ones. All kinds of distortion can come into play when you make an analog copy- even temperature can come into play when it comes to the fidelity of a copy on tape. The same problems just don’t exist with digital tech. It’s all ones and zeros. Sure a file can become corrupted, but bit for bit, generation for generation, the quality of an uncorrupted digital master is preserved.

The damage, such as it is, has already been done.

When I was a kid a short-lived and terribly controversial Saturday morning TV show called “Captain Power” posited a world where evil machines had taken over. Human survivors were hunted down by CGI androids whose most terrible power was the ability to “digitize” a person. An arm mounted energy beam could pixelate the atomic structure of a person and then vacuum it up like a DNA dust buster.

The effects are terrible by today’s standards, and the Mattel toy line was shoddy when compared to the other franchises of the day. Yet the themes- the series’ Executive Story Editor was future Oscar nominated screenwriter and genre perennial J. Michael Straczynski- were prescient.

Only we don’t have CGI eagle-men diving down from the sky, hunting us down and metabolizing our vital essences for some megalomanic’s DNA wikipedia. Instead our nearest and dearest deploy that most devastating of WMD’s- peer pressure- and we voluntarily digitize ourselves. First for Friendster, then MySpace, and then for the crown prince of social networks- the Book that must not be named. (Pat yourself on the back if you remember SixDegrees, which presaged them all. But not too vigorously, grandpa, digital geezerism is still a preexisting condition.)

Like the villains on that old Saturday morning show, social networks take a human identity and abstract it. Abstraction as a tool is not all bad. Abstraction allows for perspective- whether its in the form of a math equation or a metaphor. Abstractions allow that quite literally critical amount of distance from a given subject that makes that which is being considered, considerable. One of the impressive outcomes of the digital revolution has been the increased utility of our abstractions. Our reality simulators are getting so good that even our video games are changing the way athletes play professional sports.

Yet as we entangle our lives more and more intimately with our technology we risk not only mistaking the map for the territory, but abandoning non-digital measures of our self-worth. It’s belaboring the point to suggest that “friend counts” are replacing actual friendships measured for their quality, but anyone who has really gotten into a social network can attest to the thrill that comes with hitting a number with a lot of zeros after it.

This is the same kind of thinking that drives the banking industry, and it is there that we can begin to see the horrific outlines of a possible– let me repeat that already stressed word for emphasis- possible digital destiny. The current masters of abstraction are the hedge fund managers: slicing, dicing and spinning numbers like an unholy union of ninja and politician. The current financial crisis was brought on by the collapse of the derivatives market. Finance capitalism had long since left behind the pedestrian world of raising money for ventures that might make a tangible impact on people’s lives. The real money was to be made on the bets that those stocks would fail. To use a familiar gambling metaphor: it stopped mattering whether a given stock rose or fell, only if your broker had bet right on the spread.

Which is the logical destiny of unchecked abstraction in a nutshell. Real value ceases to have as much influence as perceived value. We start planning our futures around models of models. ‘Reality” is confined to what can be perceived in a prospectus or a press release. To a certain degree this is unavoidable. If abstraction wasn’t a powerful tool we wouldn’t use it so much, but the simple wisdom of not buying into our own bullshit seems to have been lost on an entire generation or three of Americans.

What is truly frightening is that this logical error has begun to seep into every aspect of our culture. Worse still, it appears to be self-reinforcing. The boy geniuses at the Book that shall not be named are raked over the coals by the social media press and their customers alike for altering the core experience of their service without notice. Forgetting that even their click-through data doesn’t tell them what their users are actually looking for. Clicking on, yes. Looking at, no way no how.

Google recently decided, with the disastrous rollout of Buzz- that the way to improve upon the current crop of social networking options was to take the human element out of the process. Who wouldn’t want to have everyone you ever had email contact with having instant access to reams of information about you? It’s all just bits and bytes, after all!

The “lords of the clouds”- to use virtual reality pioneer Jaron Lanier’s term- appear to have developed a blind spot for reality. They forget that our “online avatars” are very much the shadows of real people, taking real actions. From up on high only the crowd as a whole has a value. If you’ve ever looked at the way online advertising is billed you’d know this is true. Google and their ilk can’t make money by currying favor with individuals. Not with the business models they’ve chosen. They’re forced into seeing us in the aggregate only, their responsibility to their shareholders demands it. As we come to rely on what they build we risk adopting the same perspective.

We risk our worth as individuals.


You can find Noah J Nelson, professional hypocritic, every day on twitter in the guise of @areyouthatguy. He could use some more followers to bolster his self esteem.

Written by njnelson

March 2, 2010 at 10:15 am