Don’t ask me — I’m a Qualit!
[ by Charles Cameron — Christmas pudding UK circa 1950, math, banks, and moral authority ]
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As I recall, the plum pudding served in our family on Christmas day was not only rich in raisins, sultanas, currants and candied peel, it not only had brandy poured over it and a flame swiftly set to it, it was not only served with brandy butter…
It also had, somewhere within it, a silver coin — I understand these were originally related to coins of healing and the Royal Touch — and one of us, my sister and I, would be the one to find it in our slice. So equality of opportunity was important, both of us wanted to have an equal chance at winning the coveted prize.
Or perhaps I should say, equantity? Because believe me, the quality in each and every slice was just fine.
All this by way of saying that yes, I understand that quantity has its uses.
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In Recipe for Disaster: The Formula That Killed Wall Street a while back, Felix Salmon proposed the upper (and more colorful) of the two equations below, suggesting that it was the root cause of the financial failure of 2008:
Comes now Chris Arnade blogging on Scientific American for the defense, claiming that The Real—and Simple—Equation That Killed Wall Street was the lower of the two equations (the one in black on white).
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Arnade writes of Salmon’s Wired article:
It was not the first piece that made this type of argument, but it was the most aggressive. Since then it has been a common theme in the media that mathematics, especially obscure advanced mathematics, is largely responsible for the catastrophe that doomed the world to the last five years of recession and slow growth.
This theme plays on the fallacy that danger always comes from complexity. It’s a fabrication that obscures the real causes, that makes it easier to say, “Hey, it wasn’t my fault, I was blinded by science.”
The reality is much simpler and less sexy. Wall Street killed itself in a time-honored fashion: Cheap money, excessive borrowing, and greed. And yes, there is an equation one can point to and blame. This equation, however, requires nothing more than middle school algebra to understand and is taught to every new Wall Street employee. It is leveraged return.
What is leveraged return? It’s the return on assets using borrowed money.
I am depicted as the fellow with glasses and a squint, squeezed in between the two equations. When I recover from my discombobulation, I will push my glasses up high on my brow and say, Don’t ask me — I’m a Qualit!
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And now we Anglicans have a new Archbishop who, well, as the Guardian puts it, Archbishop of Canterbury accuses banks of hypocrisy over bonuses:
Two months ago HSBC was also fined a record £1.2bn over allegations of money laundering for Mexican drug barons. Regulators said HSBC had allowed at least $881m of drugs money through its accounts.
Taking evidence from HSBC’s two top bosses – its chief executive, Stuart Gulliver, and chairman, Douglas Flint – the archbishop said: “I’m increasingly baffled at the discussion we are having. What is it essentially about bankers that means they need skin in the game [bonuses]? We don’t give skin in the game to civil servants, to surgeons, to teachers.
“There’s a whole range of people who don’t have that. It seems to me that you are putting huge effort into a values-based organisation and yet at the end of the day, particularly for your most senior staff who are most important as regards setting values and culture, you seem to be saying the only way you can motivate them to any significant extent is with cash.”
The bankers, who said they wanted to turn HSBC into a bank of “courageous integrity”, insisted it was necessary to pay bonuses because they provided incentives that could be clawed back if mistakes were later uncovered.
Don’t you love it? Courageous integrity!
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Hypocrisy is the homage vice pays to virtue.
It seems it is a small price to pay, quantitatively speaking — a rounding error. From a qualitative perspective however, it is a Faustian price — as Wikipedia (following Britannica) has it, it is:
a situation in which an ambitious person surrenders moral integrity in order to achieve power and success
Ooh — it’s a question of having or surrendering moral integrity about one’s own claim to integrity! A self-referential paradox if ever I saw one…
Christianity (since we’ve just been quoting an Archbishop) sets the matter sub specie aeternitatis in Mark 7.6:
He answered and said unto them, Well hath Esaias prophesied of you hypocrites, as it is written, This people honoureth me with their lips, but their heart is far from me.
A small price, or the ultimate? Quant? or Qualit? The choice is always ours.
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So you see why I’d rather be a Qualit than a Quant.
But even so, finding that silver coin in my Christmas pudding was pretty special, from a quantish point of view. The brandy butter, more qualitish IMO, was even better.
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Sources for header:
Sources for SPECS:
February 9th, 2013 at 1:13 am
My undoubted favorite quote of the week, entirely supportive of what I’ve said above, comes from a spectacular work of fanfic, Eliezer Yudkowsky‘s Harry Potter and the Methods of Rationality, Chapter 3, Comparing Reality To Its Alternatives:
For those who need a nudge or two before reading (a) fanfic or (b) anything Harry-Potter-related, the SF writer David Brin calls this work a “terrific series, subtle and dramatic and stimulating,” while Eric Raymond, author of The Cathedral and the Bazaar, breathed a blessing over it, “Oh Thoth Trismegistus, oh Ma’at, oh Ganesha, oh sweet lady Eris… I have not laughed so hard in years!”
February 9th, 2013 at 5:35 pm
Forgive me harping on the topic, but this quote from John Burgess’ Crossroads Arabia blog illustrates my point about quant and qualit quite nicely:
February 9th, 2013 at 6:12 pm
I can’t resist giving you one more example — because it comes from an article about eschatology, a major theme of mine, and the work of Joel Richardson, about whom I have written and who has commented here at ZP at least once. It’s from a Religion News Service piece titled *An Islamic Antichrist? Joel Richardson Predicts A Muslim Satanic Figure* which just appeared in the Huffington Post, and I’ll start with a few paras that set the scene:
That’s a rough outline of the diverse ways in which the term “antichrist” has been used, although it omits to mention its use as a translation of the Islamic “dajjal” — and will, I think, explain why the writer describes the application of the term to current political figures as “bad theology” when he continues with the remark I wanted to bring your attention to in the context of “quant and qualit”:
If “good reading” can be attested to by millions of copies sold — a purely quantitative measure — what room is there for qualitative judgment?
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Okay, I understand the phrase means about the same as “page turner” — but even without the quantitative measure, I’d have to tell you the Left Behind books strike me as poorly written to the point where it’s a pain to read them. And there *are* Christian apocalyptic thrillers that are far better written — those of Joel Rosenberg spring to mind. I may disagree with Rosenberg’s theology and its political applications as I do with those of Joel Richardson, but he’s a snappy writer, while Jenkins, the “writer” behind the Left Behind books, is not.
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Source: http://www.huffingtonpost.com/2013/02/07/islamic-antichrist-joel-richardson_n_2635806.html .
February 10th, 2013 at 12:01 am
Perhaps it was leverage and people willing to compromise their values that “killed Wallstreet”. But to me Wallstreet was “killed” by one quantum unit of energy (human) taking advantage of another quantum unit of energy (computers).
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Humans as observed are, in a position of their distribution, to always have an advantage over another distribution called computers This is because it is human math that computers are using, and the home team, as far as I know, always has an advantage.
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To me it is not so much who killed Wallstreet, but why it was killed when it was, instead of at a sooner or at a later date in time.
In other words, Wallstreet was killed at a time when it was at an advantage for the humans to do so, because to do so at a later date would have excluded those who killed Wallstreet (the Qualits), and sooner would have excluded the wealth (quants) that came from the killing.
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Perhaps those who killed Wallstreet were wrong in their tempo, but the tempo was just at a matter of time and not events. It is the qualits (humans), through their math, who command Wallstreet, in control by computers. So it is the quants who were and are in control.
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As the quants don’t have any problem with the qualits in command, they simply control the system as the qualits command.
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So time, the time of the killing, only depends on the qualits’s willing to act and not the magnitude of the decision of the quants events.
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You in effect are asking the qualits to postpone their decisions, based on their orientation, when it is their ability to out “act” the computers that gives them their advantage. But by bypassing their orientation the qualits have an advantage over the quants. Giving up an advantage, which is why we orient ourselves to begin with, goes against the values of the qualits.
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Perhaps the qualits should have acted after the quants burst the bubble, but to do so would not have been to their advantage 🙂