In March 2005, a Muslim girl was given the right to wear the traditional Muslim dress, the hijab (or, in Bengali, the jibab) in schools that have, up to now, had a school uniform.
This is as unhelpful a decision as the decision was some years ago for Sikh boys to be allowed to wear a turban in school.
Neither is essential to the religions concerned, according to their own texts.
A turban is a traditional sign being "respectable" in traditional Indian society and is worn by people of EVERY religion in India either all the time in public (for example, among landlords) or on appropriate public or ceremonial occasions (e.g. marriage). Sikhism elevated all converts to sikhism to the upper-caste and the turban was the sign of this elevation.
Similarly, the neither the Koran nor the Hadith says anything about wearing the long shapeless robe that was traditional for women in the Arab world and has now become part of the fashion for some religiously-committed Muslims also in other parts of the world.
What Islam is adamant on (and, in my opinion, given the sorts of minds men have, the Islam is quite correctly adamant on this) is that women should be modestly and fully dressed.
That requirement does not have to be met by a jibab. It can be met as fully with a school uniform as it can by a salwar kameez (traditional dress among Muslims and NON-Muslims in Pakistan, North India and areas of the world influenced by fashions there).
The requirement can also be met by long Western dresses.
By contrast, there are now some highly expensive and fashionable long Arabian dresses, that are supposed to be hijabs, that can be quite as sexually-provocative as any short Western dress.
The ignorance of Cherie Blair in representing this case is only topped by the unbelievable ignorance of the British Appeal Court.
We will next be told that all sorts of other totally non-Islamic things are also "fundamental" to practicing Islam.
These kinds of decisions do nothing to bring the law into respect with most British people today, whether they be Asians or others.
So this is now the end of the school uniform, which has been the single greatest leveller of class in the UK.
We will now have materialists who will no doubt claim that it is part of their fundamental right to practice their religion to wear diamond-encrusted clothes and accoutrements to school – leaving those students who can't afford these, or whose parents on principle object to such displays of wealth, feeling like second-class citizens.
Shame on the Labour Party for further accentuating such nonsensical divisions within schools.
This "victory" for Islam is a classic case of winning on something superficial, while losing thereby something equally valuable and much more important: equality in schools.
In Western societies, Muslims ought to focus on decreasing, not increasing, class differences.
In British society (unlike most Islamic societies), the girl concerned certainly has the right to wear whatever she wants outside school, and she would of course continue to have the right to wear whatever she likes after she finishes school.
There are much bigger and more important battles for Islam to fight. In so-called "Islamic" societies, Muslims need to focus their energies on working towards freedom of religion, as freedom of thought is the fundamental building block of personal happiness, social well-being and economic prosperity - and all of these are at risk in all so-called "Islamic" societies today.
ENDS
Sphere: Related Content
Saturday, December 31, 2005
Monday, December 26, 2005
The Demonisation of Regulation
The global elites have now made it politically correct to demonise regulation.
All attempts at any kind of regulation are regularly ridiculed by them.
Particular bits of regulation can of course be incompetent or worse.
But the solution to bad bits of regulation is the right political process so that it can turn out the right kind of regulation.
Without government regulation, all business activity would immediately cease.
Why? Because money is itself a product of government regulation, as are the existence of the Internet and the financial agreements which make international trade possible.
The global elites understand this very well.
That is why, alongside demonising regulation in public, they privately spend such vast sums of money in lobbying politicians to try to ensure that regulation benefits themselves!
In a discussion on a private e-mail discussion group, I called for taxation on the development and implementation of a particular technology. A representative of a large multinational company responded that my observation and analysis were entirely correct, but that my solution was not, because "nothing good ever came out of regulation".
I felt like asking (but politely did not, specially as there were more substantial issues at stake) how much his corporation had spent on lobbying every single day in the last 12 months.
Routine demonisation of government regulations started in the USA. Tom Delay, till recently arguably the most powerful man in the US congress, started his very successful political career in the 1980's crusading against environmental regulations he saw as "unfairly" constraining his Texas-based pest control business.
Today, this demonisation has spread worldwide and, to my surprise, I find otherwise good-hearted and publicly-spirited people falling prey to this political correctness.
People who are good-hearted and publicly-spirited should undoubtedly decry all bad legislation and regulation. But we should also try to work toward the right political processes, so that the best kind of regulation and legislation is produced.
Today, what is vitiating the legislative and regulatory process is not only this kind of demonisation of regulation (and indeed of all politics) but also the weakening of politics. That is, in turn, the result of the weakening of the civic impulse in the West (in the rest of the world it was never as strong anyway). And the civic impulse was itself the result, as I have pointed out elsewhere, of the European Reformation with its strong emphasis on duties rather than rights - an emphasis that began to be weakened by the French Revolution, which emphasised rights instead – with results that are plain for all to see.
So we need to kick aside the debilitating effects of the French Revolution and get back to the public spirited sense of duty that was inculcated by the European Reformation.
Of course, we don't all have to be Evangelicals and Protestants if we want our countries to have public-spiritedness, good-heartedness, proper legislation and healthy politics. But it is essential to find ways of inculcating in the masses that sense of duty which alone leads to healthy politics.
Through history, Marxism, Nationalism and various other "isms" have succeeded in inculcating a sense of duty, but none of them have done so as effectively or with such long-lasting effect as the Reformation. Countries which were most influenced by the Reformation remain to this day the countries which have the most extensively-demonstrated sense of duty, public spirit, good-heartedness, clean politics and responsible legislation.
ENDS Sphere: Related Content
All attempts at any kind of regulation are regularly ridiculed by them.
Particular bits of regulation can of course be incompetent or worse.
But the solution to bad bits of regulation is the right political process so that it can turn out the right kind of regulation.
Without government regulation, all business activity would immediately cease.
Why? Because money is itself a product of government regulation, as are the existence of the Internet and the financial agreements which make international trade possible.
The global elites understand this very well.
That is why, alongside demonising regulation in public, they privately spend such vast sums of money in lobbying politicians to try to ensure that regulation benefits themselves!
In a discussion on a private e-mail discussion group, I called for taxation on the development and implementation of a particular technology. A representative of a large multinational company responded that my observation and analysis were entirely correct, but that my solution was not, because "nothing good ever came out of regulation".
I felt like asking (but politely did not, specially as there were more substantial issues at stake) how much his corporation had spent on lobbying every single day in the last 12 months.
Routine demonisation of government regulations started in the USA. Tom Delay, till recently arguably the most powerful man in the US congress, started his very successful political career in the 1980's crusading against environmental regulations he saw as "unfairly" constraining his Texas-based pest control business.
Today, this demonisation has spread worldwide and, to my surprise, I find otherwise good-hearted and publicly-spirited people falling prey to this political correctness.
People who are good-hearted and publicly-spirited should undoubtedly decry all bad legislation and regulation. But we should also try to work toward the right political processes, so that the best kind of regulation and legislation is produced.
Today, what is vitiating the legislative and regulatory process is not only this kind of demonisation of regulation (and indeed of all politics) but also the weakening of politics. That is, in turn, the result of the weakening of the civic impulse in the West (in the rest of the world it was never as strong anyway). And the civic impulse was itself the result, as I have pointed out elsewhere, of the European Reformation with its strong emphasis on duties rather than rights - an emphasis that began to be weakened by the French Revolution, which emphasised rights instead – with results that are plain for all to see.
So we need to kick aside the debilitating effects of the French Revolution and get back to the public spirited sense of duty that was inculcated by the European Reformation.
Of course, we don't all have to be Evangelicals and Protestants if we want our countries to have public-spiritedness, good-heartedness, proper legislation and healthy politics. But it is essential to find ways of inculcating in the masses that sense of duty which alone leads to healthy politics.
Through history, Marxism, Nationalism and various other "isms" have succeeded in inculcating a sense of duty, but none of them have done so as effectively or with such long-lasting effect as the Reformation. Countries which were most influenced by the Reformation remain to this day the countries which have the most extensively-demonstrated sense of duty, public spirit, good-heartedness, clean politics and responsible legislation.
ENDS Sphere: Related Content
Movie review: THE LION, THE WITCH AND THE WARDROBE
Just back from business travels in India and Jordan (which concluded nearly 16 weeks of more or less unceasing travel), the family whisked me off for a couple of days skiing in the Swiss Alps, after which we came back to the beautiful Christmas Eve service at the International Protestant Church in Zurich (standing room only!) with its Zurich Opera singers and Conductor, who outdid themselves this year.
Then on to the next hightlight, director Andrew Adamson's cinematic retelling of C S Lewis's classic THE LION, THE WITCH AND THE WARDROBE. I should say that I know the story only from dim memories of overhearing my wife reading it at bedtime to the kids a couple of decades ago. However, I do remember seeing the BBC film of the story, so the inevitable comparison in my mind was with that.
First, I must say that Adamson's version is thoroughly enjoyable, and I warmly recommend it.
Then, I probably ought to say that as the BBC version was more "British", it was probably more in keeping with the spirit of the original story (all the villains in the Adamson version story have American accents!). And the BBC version's Ice Queen (or Witch) was more striking (more deliberately beautiful, so more likely to gain at least initially to attract one character's as well as the audience). Apart from that, the two versions are comparably good, with a greater use of special effects in this version.
For those who don't know the story, here is my summary of it (no doubt a melange of memories from long ago, the BBC version and this version!):
The four young Pevensie children are evacuated (as so many other children were) to a country estate while London suffers under the German Blitz during World War II. There, the bored kids—Peter, Susan, Edmund, and Lucy—discover a mysterious wardrobe that leads them all to a land called Narnia, which has familiar elements from our world as well as fantastical creatures from Greek, Roman, and Norse mythology. An Evil Witch (the Ice Queen) has usurped Narnia from its rightful owner, Aslan the Lion, and keeps Narnia in a perpetual state of winter (with no hope of Christmas, let alone Spring). It turns out that the arrival of the two Sons of Adam and the two Daughters of Eve in Narnia has a unique role to play in fulfilling an ancient prophecy so that the witch's spell will be broken and her reign ended. One of them (Edmund) betrays the rest to the Ice Queen, with the result that, when he is rescued, she demands his life. Aslan offers his own life instead, and is killed by the triumphant Ice Queen, leaving a transformed Peter and company to lead Aslan's troops in a valiant but losing battle against the hordes led by the Queen. However, Aslan is miraculously restored to life and intervenes in the battle, so that the Foursome are, at the end, elevated to four royal thrones, before Aslan leaves.
Adamson's film, and especially Georgie Henley as Lucy, convey wonderfully Lewis's childlike entrancement in the story and though I have various minor cavils, there is excellent use of motion picture technology, particularly in the visualization of C.S. Lewis' beloved creatures.
However, the highlight of the film, for me, is James McAvoy's acting as the faun Tumnus, with human torso and lower body of a goat - believably awkward but comfortable.
One word of warning. When you go to see the film, don't walk out when the credits begin to roll: the final scenes of the film are still to come before the final roll of credits continues.
I am not sure why Adamson took to this gimmick. It detracts from the film: the cinema that I was in opened the doors at this point and several people got up to leave (this probably happens in other cinemas too!), depriving the final scenes of the film of some of their poignance.
ENDS Sphere: Related Content
Then on to the next hightlight, director Andrew Adamson's cinematic retelling of C S Lewis's classic THE LION, THE WITCH AND THE WARDROBE. I should say that I know the story only from dim memories of overhearing my wife reading it at bedtime to the kids a couple of decades ago. However, I do remember seeing the BBC film of the story, so the inevitable comparison in my mind was with that.
First, I must say that Adamson's version is thoroughly enjoyable, and I warmly recommend it.
Then, I probably ought to say that as the BBC version was more "British", it was probably more in keeping with the spirit of the original story (all the villains in the Adamson version story have American accents!). And the BBC version's Ice Queen (or Witch) was more striking (more deliberately beautiful, so more likely to gain at least initially to attract one character's as well as the audience). Apart from that, the two versions are comparably good, with a greater use of special effects in this version.
For those who don't know the story, here is my summary of it (no doubt a melange of memories from long ago, the BBC version and this version!):
The four young Pevensie children are evacuated (as so many other children were) to a country estate while London suffers under the German Blitz during World War II. There, the bored kids—Peter, Susan, Edmund, and Lucy—discover a mysterious wardrobe that leads them all to a land called Narnia, which has familiar elements from our world as well as fantastical creatures from Greek, Roman, and Norse mythology. An Evil Witch (the Ice Queen) has usurped Narnia from its rightful owner, Aslan the Lion, and keeps Narnia in a perpetual state of winter (with no hope of Christmas, let alone Spring). It turns out that the arrival of the two Sons of Adam and the two Daughters of Eve in Narnia has a unique role to play in fulfilling an ancient prophecy so that the witch's spell will be broken and her reign ended. One of them (Edmund) betrays the rest to the Ice Queen, with the result that, when he is rescued, she demands his life. Aslan offers his own life instead, and is killed by the triumphant Ice Queen, leaving a transformed Peter and company to lead Aslan's troops in a valiant but losing battle against the hordes led by the Queen. However, Aslan is miraculously restored to life and intervenes in the battle, so that the Foursome are, at the end, elevated to four royal thrones, before Aslan leaves.
Adamson's film, and especially Georgie Henley as Lucy, convey wonderfully Lewis's childlike entrancement in the story and though I have various minor cavils, there is excellent use of motion picture technology, particularly in the visualization of C.S. Lewis' beloved creatures.
However, the highlight of the film, for me, is James McAvoy's acting as the faun Tumnus, with human torso and lower body of a goat - believably awkward but comfortable.
One word of warning. When you go to see the film, don't walk out when the credits begin to roll: the final scenes of the film are still to come before the final roll of credits continues.
I am not sure why Adamson took to this gimmick. It detracts from the film: the cinema that I was in opened the doors at this point and several people got up to leave (this probably happens in other cinemas too!), depriving the final scenes of the film of some of their poignance.
ENDS Sphere: Related Content
Sunday, December 25, 2005
The Corruption of Ideals in our Time
Having just been in Delhi for a week, travelling around on business, I could not help noticing the enormous increase in the number, size and spendour of the temples there.
In my youth, Delhi had only one Hindu temple with any size and that was the Birla Mandir. Though architecturally impressive, it is not particularly splendid, and the Birla family achieved a nice balance (to my mind) between creating something attractive on the one hand, and something reasonably in keeping with the spirit of most Indians.
The recent penchant for temple-expansion and temple-glory reminds me of Europe in the 14th to 16th centuries when all the splendid Roman Catholic cathedrals were built.
Europe was then, as India is now, increasingly corrupt, with religion itself part of that corruption.
In conversation in India, you will find any number of people ready to regale you with tales of the corruption and the incredible wealth of Indian "religious leaders".
When religion itself becomes a corrupting influence then there is no hope for the masses.
And we are now witnessing the world-wide corruption not only of religion but also of idealism of all sorts.
There are now innumerable examples of people using "high and noble and apparently humanistic" objectives only to make money for themselves. The biggest secular temple in the world, the World Economic Forum in Davos, is (as far as I can make out) one such example. Various gurus (from different religious traditions!) are other examples. I am not saying that all gurus are charlatans or that WEF necessarily belong in this category till one has evidence one way or the other.
But we have sadly reached a situation worldwide that one has to be specially careful and suspicious when people invoke what is "high and noble and humanistic". Or, to put it differently, the more "high and noble and humanistic" the aims of the individual or organisation, the more careful and suspicious one needs to be....
Idealistic people can be gullible and that tendency has always been exploited by the hypocritical – think back to Chaucer's The Pardoner's Tale in the 14th Century!
That is why there has always been a danger of "dharma" (principles, ideals, values, religion) becoming "dhanda" (business).
Of course idealisms and religions do not have to become corrupt and corrupting. Religion can also be a great cleansing and progressive force, as it was in Reformation Europe, when it struggled with a corrupt and corrupting Roman Catholicism and finally to a large extend cleaning up feudal society and transforming it into what we would today call a modern society.
Similarly, as I have pointed out elsewhere, religion was an enormous positive force in early nineteenth century England, where the Evangelical movement both saved the nation from revolution and cleaned it up, transforming one of the most corrupt countries (including a corrupt and corrupting religion) and making it one of the cleanest that history had known till then. I am not saying that Victorian England was perfect. I am saying merely that in terms of social and environmental concern, political freedom and public justice, no society till then had achieved what it did (and this involved, moreover, cleaning up as much as any colonial power had ever done in history in its colonies, by means of a relatively enlightened colonial policy). I am also saying that the achievement was entirely the fruit of the Evangelical movement.
The challenge for people of all idealistic, humanitarian and/ or religious motivations is how to match the achievements of the European Reformation and the Evangelical movement in nineteenth century England.
The sad thing is that, since the end of the Second World War, the systematic inculcation by the British and global elite of the Theory of Evolution, and the consequent rise of godlessness, has had the result that the achievements of the Reformation and Evangelicalism are understood, even in Christian circles, only "religiously" and not in terms of transformation in knowledge generation, intellectual power, economic progress, political justice and social and environmental concern.
Recovering and studying the real history of the European Reformation and of the Evangelical movement in eighteenth century England has important lessons for our struggle today to clean up idealisms, clean up religions, and focus energy on addressing the enormous challenges posed by the totalitarianism of the capitalist elite, whether in India or around the world.
That is great theory.
But how can you, in practice, tell whether someone (let us call this person Mr Krishna) is a charlatan or whether s/he is truly idealistic/religious/committed to human values?
I have 3 simple questions that I ask myself, and I commend these questions to you as a reasonable place to begin:
1. Considering other people who run charitable organisations of a size similar to that run by Mr Krishna in her/his country, does Mr Krishna have property, possessions and a lifestyle approximating the middle class among such people?
2. How sacrificially does Mr Krishna live?
3. How much of his personal income does Mr Krishna give away to people who are not related to him (by blood, marriage, caste, and so on)?
ENDS Sphere: Related Content
In my youth, Delhi had only one Hindu temple with any size and that was the Birla Mandir. Though architecturally impressive, it is not particularly splendid, and the Birla family achieved a nice balance (to my mind) between creating something attractive on the one hand, and something reasonably in keeping with the spirit of most Indians.
The recent penchant for temple-expansion and temple-glory reminds me of Europe in the 14th to 16th centuries when all the splendid Roman Catholic cathedrals were built.
Europe was then, as India is now, increasingly corrupt, with religion itself part of that corruption.
In conversation in India, you will find any number of people ready to regale you with tales of the corruption and the incredible wealth of Indian "religious leaders".
When religion itself becomes a corrupting influence then there is no hope for the masses.
And we are now witnessing the world-wide corruption not only of religion but also of idealism of all sorts.
There are now innumerable examples of people using "high and noble and apparently humanistic" objectives only to make money for themselves. The biggest secular temple in the world, the World Economic Forum in Davos, is (as far as I can make out) one such example. Various gurus (from different religious traditions!) are other examples. I am not saying that all gurus are charlatans or that WEF necessarily belong in this category till one has evidence one way or the other.
But we have sadly reached a situation worldwide that one has to be specially careful and suspicious when people invoke what is "high and noble and humanistic". Or, to put it differently, the more "high and noble and humanistic" the aims of the individual or organisation, the more careful and suspicious one needs to be....
Idealistic people can be gullible and that tendency has always been exploited by the hypocritical – think back to Chaucer's The Pardoner's Tale in the 14th Century!
That is why there has always been a danger of "dharma" (principles, ideals, values, religion) becoming "dhanda" (business).
Of course idealisms and religions do not have to become corrupt and corrupting. Religion can also be a great cleansing and progressive force, as it was in Reformation Europe, when it struggled with a corrupt and corrupting Roman Catholicism and finally to a large extend cleaning up feudal society and transforming it into what we would today call a modern society.
Similarly, as I have pointed out elsewhere, religion was an enormous positive force in early nineteenth century England, where the Evangelical movement both saved the nation from revolution and cleaned it up, transforming one of the most corrupt countries (including a corrupt and corrupting religion) and making it one of the cleanest that history had known till then. I am not saying that Victorian England was perfect. I am saying merely that in terms of social and environmental concern, political freedom and public justice, no society till then had achieved what it did (and this involved, moreover, cleaning up as much as any colonial power had ever done in history in its colonies, by means of a relatively enlightened colonial policy). I am also saying that the achievement was entirely the fruit of the Evangelical movement.
The challenge for people of all idealistic, humanitarian and/ or religious motivations is how to match the achievements of the European Reformation and the Evangelical movement in nineteenth century England.
The sad thing is that, since the end of the Second World War, the systematic inculcation by the British and global elite of the Theory of Evolution, and the consequent rise of godlessness, has had the result that the achievements of the Reformation and Evangelicalism are understood, even in Christian circles, only "religiously" and not in terms of transformation in knowledge generation, intellectual power, economic progress, political justice and social and environmental concern.
Recovering and studying the real history of the European Reformation and of the Evangelical movement in eighteenth century England has important lessons for our struggle today to clean up idealisms, clean up religions, and focus energy on addressing the enormous challenges posed by the totalitarianism of the capitalist elite, whether in India or around the world.
That is great theory.
But how can you, in practice, tell whether someone (let us call this person Mr Krishna) is a charlatan or whether s/he is truly idealistic/religious/committed to human values?
I have 3 simple questions that I ask myself, and I commend these questions to you as a reasonable place to begin:
1. Considering other people who run charitable organisations of a size similar to that run by Mr Krishna in her/his country, does Mr Krishna have property, possessions and a lifestyle approximating the middle class among such people?
2. How sacrificially does Mr Krishna live?
3. How much of his personal income does Mr Krishna give away to people who are not related to him (by blood, marriage, caste, and so on)?
ENDS Sphere: Related Content
Tuesday, December 06, 2005
Financial Bubbles, Damaged Brains and the Condition of Society Today
On 21 July this year (2005), there was an intriguing article published by Jane Spencer, a staff reporter, in The Wall Street Journal.
Titled "Lessons from the Brain Damaged Investor", it said that researchers from the Stanford Graduate School of Business, Carnegie Mellon University, and the University of Iowa had concluded that people with an impaired ability to experience emotions might be able to make better financial decisions than other people under certain circumstances.
Intrigued, I thought I would follow up at some convenient time. That has finally arrived, and I found that the research had been published the previous month in the peer-reviewed journal, Psychological Science, so we can be confident that the study is "scientifically valid", at least from the viewpoint of the peculiar mixture of science and art that is called psychology. Actually, the research is part of a fast-growing interdisciplinary field called "neuroeconomics" that explores among other things the role biology plays in economic decision making, by combining insights from cognitive neuroscience, psychology and economics.
The fifteen brain-damaged participants who were the focus of the study had normal IQs, and the areas of their brains responsible for logic and cognitive reasoning were intact. But they had lesions in the region of the brain that controls emotions, which inhibited their ability to experience basic feelings such as fear or anxiety. The lesions were due to a range of causes, including stroke and disease, but they impaired the participants' emotional functioning in a similar manner.
In the study, the participants' lack of emotional responsiveness gave them an advantage when they played a simple investment game. The emotionally impaired players were more willing to take gambles that had high payoffs because they lacked fear. Players with undamaged brain wiring, however, were more cautious and reactive during the game, and wound up with less money at the end.
The trouble with biologists and psychologists is that they do not understand real-world finance. The way their game was constructed "rewarded" taking high risks. In the real world, high risk can sometimes equal high reward, but it can also mean high loss, or complete loss, of capital.
The highest-risk form of investment is straightforward gambling, and the returns from that are well established. If you are in love with gambling, then the best way to "play" is not to place bets, it is to set up a company that organises gambling games or, better, invest in a company that is already successful at gambling. (NOTE: I am not recommending that you be involved in gambling at all. I personally consider gambling immoral – not necessarily to participate as a gambler (that is merely financially stupid but if you enjoy the activity I can't see that a moderate amount of the activity does any harm – the problem is only that one can get "hooked" on gambling, but then one can also get "hooked" on chocolate or coffee or anything else, so it is not the coffee or the gambling that is the problem here, but one's tendency to get "hooked"); however, organising gambling as a commercial activity is immoral because it exploits the weakness of those who are most vulnerable to the "attractions" of gambling, such as emotionally and financially weak people.)
Having considered the study, I can only conclude that the researchers "fixed" the results by "fixing" the rules of their game. If you construct a game in which those who take high-risks win (which is not necessarily the case in the real world) then you will get high-risk takers winning.
The only thing that the study proves is that brain-damaged people are less able to take a balanced view of the nuances of a situation, and so are more likely to take higher (and probably unrealistic) risks.
So all that the study proves is that brain-damaged people are likely to take high risks – but we did not need the experiment to tell us that!
Modern academic activity is unfortunately now too full of such rubbish. My advice to anyone thinking of investing their lives in such research is to stay away till the researchers can learn some basic lessons about logic, experimental design and real-life economics, finance and investing.
In fact, we have known from experience for at least a hundred years that successful investing requires objectivity. To put it differently, it requires the ability to look at all the facts and come to one's own rational conclusions. It requires the ability not to be swayed by emotions such as fear or greed or ambition or what might be called the "herd factor".
On the other hand, the successful investor does have to take the "herd mentality" into account rationally as a factor in making any investment decision today, because so much of the market has stopped being driven by fundamentals. Most of the market is in fact driven by emotions as more and more "small investors" are doing their own investment and disinvestment. As these inexperienced and professionally untrained and perhaps even psychologically-unsuitable investors have entered the market in greater and greater numbers, they have changed the nature of the market from a more or less rational field, to an increasingly emotion-driven field.
The challenge as an investor is how to "sense" where the market is going, when there are no (or few) fundamentals to guide you. The current housing bubble in metropolitan areas around the world clearly illustrates the challenge. We know that, from the viewpoint of fundamentals, house prices should have started coming down a long while ago. The key questions are: WHEN will they actually start coming down and how far will they fall.
A parallel case was the IT bubble from 1998 or so till Spring 2000. No one knew when the "bust" would begin or how low prices would fall, even though it was clear (certainly from 1998) that the situation was a real bubble. But we had apparently serious students of economics, technology and finance telling us that we were in a "new economy" where the old rules did not apply. The old rules certainly did not apply in this market for a couple of years or more, but then they struck with a vengeance.
So investors who were stupid, emotionally-challenged or even brain-damaged could profit for a couple of years from a market gone mad. And they did profit. Many executives ended up in top positions simply because they were functioning in an area which "benefited" from that madness. Many CEOs earned millions who should never have been CEOs in the first place. Many companies were bought and sold that should never have been bought or sold (think AOL-TimeWarner). The ability to be genuinely objective is unfortunately too rare, whether among investors, executives or CEOs. It is easy to be influenced by what is currently fashionable or by your class or your nation or your own family.
However, the good thing is that everyone can play and you might be lucky or unlucky with your timing. The "irrational exuberance" regarding shares the late 1990s has, since then, been replaced by the "irrational exuberance" regarding housing now. Only a fool will invest in housing now. But fools can get lucky. (I am just buying a house myself at present, but that is for domestic reasons and because I have no option in the location where I need a house).
The interesting question, as more and more people enter the investment market and realise that ones needs to be either lucky or "brain damaged" in order to be successful is the following: "What are the consequences of living in a brain-damaged society such as we are producing today?" Sphere: Related Content
Titled "Lessons from the Brain Damaged Investor", it said that researchers from the Stanford Graduate School of Business, Carnegie Mellon University, and the University of Iowa had concluded that people with an impaired ability to experience emotions might be able to make better financial decisions than other people under certain circumstances.
Intrigued, I thought I would follow up at some convenient time. That has finally arrived, and I found that the research had been published the previous month in the peer-reviewed journal, Psychological Science, so we can be confident that the study is "scientifically valid", at least from the viewpoint of the peculiar mixture of science and art that is called psychology. Actually, the research is part of a fast-growing interdisciplinary field called "neuroeconomics" that explores among other things the role biology plays in economic decision making, by combining insights from cognitive neuroscience, psychology and economics.
The fifteen brain-damaged participants who were the focus of the study had normal IQs, and the areas of their brains responsible for logic and cognitive reasoning were intact. But they had lesions in the region of the brain that controls emotions, which inhibited their ability to experience basic feelings such as fear or anxiety. The lesions were due to a range of causes, including stroke and disease, but they impaired the participants' emotional functioning in a similar manner.
In the study, the participants' lack of emotional responsiveness gave them an advantage when they played a simple investment game. The emotionally impaired players were more willing to take gambles that had high payoffs because they lacked fear. Players with undamaged brain wiring, however, were more cautious and reactive during the game, and wound up with less money at the end.
The trouble with biologists and psychologists is that they do not understand real-world finance. The way their game was constructed "rewarded" taking high risks. In the real world, high risk can sometimes equal high reward, but it can also mean high loss, or complete loss, of capital.
The highest-risk form of investment is straightforward gambling, and the returns from that are well established. If you are in love with gambling, then the best way to "play" is not to place bets, it is to set up a company that organises gambling games or, better, invest in a company that is already successful at gambling. (NOTE: I am not recommending that you be involved in gambling at all. I personally consider gambling immoral – not necessarily to participate as a gambler (that is merely financially stupid but if you enjoy the activity I can't see that a moderate amount of the activity does any harm – the problem is only that one can get "hooked" on gambling, but then one can also get "hooked" on chocolate or coffee or anything else, so it is not the coffee or the gambling that is the problem here, but one's tendency to get "hooked"); however, organising gambling as a commercial activity is immoral because it exploits the weakness of those who are most vulnerable to the "attractions" of gambling, such as emotionally and financially weak people.)
Having considered the study, I can only conclude that the researchers "fixed" the results by "fixing" the rules of their game. If you construct a game in which those who take high-risks win (which is not necessarily the case in the real world) then you will get high-risk takers winning.
The only thing that the study proves is that brain-damaged people are less able to take a balanced view of the nuances of a situation, and so are more likely to take higher (and probably unrealistic) risks.
So all that the study proves is that brain-damaged people are likely to take high risks – but we did not need the experiment to tell us that!
Modern academic activity is unfortunately now too full of such rubbish. My advice to anyone thinking of investing their lives in such research is to stay away till the researchers can learn some basic lessons about logic, experimental design and real-life economics, finance and investing.
In fact, we have known from experience for at least a hundred years that successful investing requires objectivity. To put it differently, it requires the ability to look at all the facts and come to one's own rational conclusions. It requires the ability not to be swayed by emotions such as fear or greed or ambition or what might be called the "herd factor".
On the other hand, the successful investor does have to take the "herd mentality" into account rationally as a factor in making any investment decision today, because so much of the market has stopped being driven by fundamentals. Most of the market is in fact driven by emotions as more and more "small investors" are doing their own investment and disinvestment. As these inexperienced and professionally untrained and perhaps even psychologically-unsuitable investors have entered the market in greater and greater numbers, they have changed the nature of the market from a more or less rational field, to an increasingly emotion-driven field.
The challenge as an investor is how to "sense" where the market is going, when there are no (or few) fundamentals to guide you. The current housing bubble in metropolitan areas around the world clearly illustrates the challenge. We know that, from the viewpoint of fundamentals, house prices should have started coming down a long while ago. The key questions are: WHEN will they actually start coming down and how far will they fall.
A parallel case was the IT bubble from 1998 or so till Spring 2000. No one knew when the "bust" would begin or how low prices would fall, even though it was clear (certainly from 1998) that the situation was a real bubble. But we had apparently serious students of economics, technology and finance telling us that we were in a "new economy" where the old rules did not apply. The old rules certainly did not apply in this market for a couple of years or more, but then they struck with a vengeance.
So investors who were stupid, emotionally-challenged or even brain-damaged could profit for a couple of years from a market gone mad. And they did profit. Many executives ended up in top positions simply because they were functioning in an area which "benefited" from that madness. Many CEOs earned millions who should never have been CEOs in the first place. Many companies were bought and sold that should never have been bought or sold (think AOL-TimeWarner). The ability to be genuinely objective is unfortunately too rare, whether among investors, executives or CEOs. It is easy to be influenced by what is currently fashionable or by your class or your nation or your own family.
However, the good thing is that everyone can play and you might be lucky or unlucky with your timing. The "irrational exuberance" regarding shares the late 1990s has, since then, been replaced by the "irrational exuberance" regarding housing now. Only a fool will invest in housing now. But fools can get lucky. (I am just buying a house myself at present, but that is for domestic reasons and because I have no option in the location where I need a house).
The interesting question, as more and more people enter the investment market and realise that ones needs to be either lucky or "brain damaged" in order to be successful is the following: "What are the consequences of living in a brain-damaged society such as we are producing today?" Sphere: Related Content
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