The company I work for throws a pretty lavish Holiday Party. It was last night. Free drinks for the first 2 hours, appetizers, a buffet, music (too loud) & dancing in an interesting space, plus a taxi-chit for the ride home —all-in-all I'd call that pretty generous. Just about everyone drinks too much during the open bar period, so you really have to go nuts for that to be much of an issue. And people look forward to it, it's morale builder and widely appreciated I'd say. People who get transferred to another division will do almost anything to get themselves an invite.
But it's still an office party, which makes it fraught.
Skillfully negotiating any social interaction is a challenge. Doing so with your colleagues is an order of magnitude harder: there's the extra layer of explicit power relationships imposed over top of all the normal complexities of human interaction; then there's the weirdness of managing the gap between one's workplace persona, and the one we display in more normal social situations.
I went into this year's party with two main objectives. The first: don't get drunk. In this I succeeded, but, yeah, sort-of depending on your definition of drunk. I had at least 2 drinks more than I really intended or wanted but far from enough to make me stupid, or sick. Good for driving? No. So one or two weak-assed cheers me! But drinking more than intended gave me the opportunity I did get to think about how I react to social pressure.
It's a weirdness of mine (or is it?) that I seem to want to maintain a distance from people while not wanting to seem aloof or remote. I thus accept that extra drink so easily. Fear of judgement makes it hard for me to open up and just be who I am. And not just at work, I do it in most other groups I'm part of. So I don't want to be the guy who's not drinking (what a prude!) or the guy who's way out-of-control (how embarrassing!). No I'm middle-way guy. That's why Buddhism comes so easily.
Two years ago at this same Christmas party I sat down to talk with a co-worker who had gone a bit too far at that open bar (open a full 3 hours that year). I thought I was just being friendly and doing the circulate thing (better word than network). I realized quickly that my co-worker's excesses were due to an issue at home. A big issue. Never got the full details and I was reluctant to pry but also willing to support this colleague as best I could. The thing that really floored me though was being asked for general relationship advice because (slurred): you've got it all figured out, you've got it all together.
I was very deeply depressed at the time.
My career was in the dumps, as I thought everyone at work must know. My family life wasn't entirely ruined but it was heading in that direction, and I had neither idea nor energy for combating or reversing those realities. I felt I had no one to turn to and no one to who could understand, and here was a colleague looking at me as though I had the answers! It was an eye-opener.
I wish (and hope) I was able to provide some solace to my colleague, who is still working here —we both act now as though it never happened, which may be true on one side, given the level of intoxication— but I wish I had opened up more about my own struggles. Not for sympathy but because it might've been helpful to that troubled colleague to know about the vast gulf between perception and reality.
It maybe isn't surprising that my own turn around from depression started around that time. Learning about that perceptual chasm was strangely helpful to me, and so now with hindsight I wish I'd thought and been courageous enough to reciprocate. But it was a co-worker, and so the whole framework of work-relationships and how-will-this-look-tomorrow, and how-much-do-I-trust-this-person came into play also, and I shrank from being fully a friend (I hope too that part of my reticence was a genuine wish not to turn the conversation into one about me; and I also can forgive myself because it wasn't until much later that I had any idea how powerful that knowledge could be).
So my other main objective at this year's party was to be more authentic. To be present and fully available to those around me. Did I succeed? Nothing came up that really tested me. Nothing of course, except those 2 extra drinks.
Maybe next year.
An eclectic blog of owlish pseudo-wisdom on topics of the day, of the week, or of all time.
2012/12/13
2012/12/01
Operation: Christmas!
Sunday marks Advent 1. It's the Christian church's New Year's Day, and the day I consent to turn on our Christmas lights and start listening to Christmas music. Scroogish as that may be, 5 weeks of Jingle Bells is quite enough, thank you very much, and I really don't want to feel like screaming by the time December 25th actually rolls around and the Little Drummer Boy comes into my hearing for the 400th time. So I've put limits on the duration of the holiday season. Christmas needs to be smaller.
Last year a number of my Facebook acquaintances (and at least one family member) made a big show of the fact they were going to use the phrase "Merry Christmas" as opposed to, I suppose, "Happy Holidays" or perhaps "Go to Hell" (they weren't always clear). I think they were signing on in spirited defense of Christmas. And good for them! From a Christian perspective I think Christmas needs some defending. Maybe they're a bit late —because it seems the war has already been mostly won by the bad guys— but better late than never, and Christians should relish a lost cause!
The problem is this victory over Christmas hasn't been won by a few well-meaning school boards or other public institutions making the holiday smaller, it's been won by large corporations —that big eastern syndicate as Lucy says so memorably in A Charlie Brown Christmas— making it bigger. Whatever Christmas is today, it sure isn't a religious holiday, unless perhaps you're a member of the Church of Mindless Over-Consumption and Enforced Jollity. Christmas has become something so pervasive, so all-encompassing & enormous that it can't be restrained or limited by some puny public agency deciding to call things by names like Winter Festival Concert, or Holiday Tree. The "season" swallows about 15% of the year! Who knows how much of our disposable income is burned along with the yule log? Obviously it's enough to turn loss-making retailers profitable!
These earnest Christian acquaintances of mine aren't fighting the right fight. Or more accurately they're on the wrong side. In trying to get everyone to join them in saying "Merry Christmas" to all-and-sundry, far from defending the holiday, they're actually participating in this enlarging of the season. Dragooning non-Christians into saying "Merry Christmas" (or harassing them by saying it) isn't going to make the country more Christian. It's going to make non-Christian people resentful and additionally siphon away whatever religious meaning remains in the holiday (surely must be sucking air by now). Those who aren't already committed Christians will drain the word "Christmas" of its original connotations, increasing the space for that eastern syndicate to define the season in its profit-making interest.
Peace on earth, goodwill towards all? Yes, please! But why not save the rest of it for church, where it'll be understood and appreciated more!
Last year a number of my Facebook acquaintances (and at least one family member) made a big show of the fact they were going to use the phrase "Merry Christmas" as opposed to, I suppose, "Happy Holidays" or perhaps "Go to Hell" (they weren't always clear). I think they were signing on in spirited defense of Christmas. And good for them! From a Christian perspective I think Christmas needs some defending. Maybe they're a bit late —because it seems the war has already been mostly won by the bad guys— but better late than never, and Christians should relish a lost cause!
The problem is this victory over Christmas hasn't been won by a few well-meaning school boards or other public institutions making the holiday smaller, it's been won by large corporations —that big eastern syndicate as Lucy says so memorably in A Charlie Brown Christmas— making it bigger. Whatever Christmas is today, it sure isn't a religious holiday, unless perhaps you're a member of the Church of Mindless Over-Consumption and Enforced Jollity. Christmas has become something so pervasive, so all-encompassing & enormous that it can't be restrained or limited by some puny public agency deciding to call things by names like Winter Festival Concert, or Holiday Tree. The "season" swallows about 15% of the year! Who knows how much of our disposable income is burned along with the yule log? Obviously it's enough to turn loss-making retailers profitable!
These earnest Christian acquaintances of mine aren't fighting the right fight. Or more accurately they're on the wrong side. In trying to get everyone to join them in saying "Merry Christmas" to all-and-sundry, far from defending the holiday, they're actually participating in this enlarging of the season. Dragooning non-Christians into saying "Merry Christmas" (or harassing them by saying it) isn't going to make the country more Christian. It's going to make non-Christian people resentful and additionally siphon away whatever religious meaning remains in the holiday (surely must be sucking air by now). Those who aren't already committed Christians will drain the word "Christmas" of its original connotations, increasing the space for that eastern syndicate to define the season in its profit-making interest.
Peace on earth, goodwill towards all? Yes, please! But why not save the rest of it for church, where it'll be understood and appreciated more!
2012/11/20
New Adventures In Party Democracy
Two very nice gentlemen came to my door this weekend, to invite me to join, but not join, but sorta kinda join the Liberal Party of Canada. Particularly they wanted me to do so if I was excited about Justin Trudeau and his candidacy for the leadership of that party.
Don't know how I missed this, but it seems that any voting age Canadian (who is not currently a member of another national political party) can become a hemi-demi-semi-kinda-Liberal and participate in the leadership festival. You don't even have to pay anything to get this hemi-demi-semi-kinda membership. I was intrigued until I remembered I didn't fit the profile (re. non-membership in non-Liberal national party).
I'm not decided on the merits of Just Justin. He's certainly got a lot of the qualities one wants in a modern candidate for high political office, cosmetic though they may be. And perhaps there's something more solid there too. I'm really not sure. Going up against Stephen Harper you could do worse.
Still, I was brought back to thoughts about the dangers of this way of electing party leaders. I wrote about this a good long while ago (before the blog went into hiatus) in relation to the Liberal's last leadership decision. The post certainly wasn't prescient about how Michael Ignatief might do (although maybe I could argue he did better than Stephane Dion would've done) but I've seen nothing to convince me I'm not right on the basic point: party democracy has a very anti-democratic dark side. It disempowers the sitting Member of Parliament in favour of a diffuse party apparatus and thereby the Prime Minister. I would argue also that the negative effects include a big drop in the overall quality of candidates for office, since many smart, talented people, knowing that back-bench MPs are powerless unless they reach the cabinet level, stay out of the arena. This approach seems to take things even farther in that direction.
I want to think more about this, since I'm less convinced now than I was that geography-based representation is the best way to aggregate diverse opinion on national issues, but it's what we've got, and while we've got it it'd be nice to make better use of it.
Don't know how I missed this, but it seems that any voting age Canadian (who is not currently a member of another national political party) can become a hemi-demi-semi-kinda-Liberal and participate in the leadership festival. You don't even have to pay anything to get this hemi-demi-semi-kinda membership. I was intrigued until I remembered I didn't fit the profile (re. non-membership in non-Liberal national party).
I'm not decided on the merits of Just Justin. He's certainly got a lot of the qualities one wants in a modern candidate for high political office, cosmetic though they may be. And perhaps there's something more solid there too. I'm really not sure. Going up against Stephen Harper you could do worse.
Still, I was brought back to thoughts about the dangers of this way of electing party leaders. I wrote about this a good long while ago (before the blog went into hiatus) in relation to the Liberal's last leadership decision. The post certainly wasn't prescient about how Michael Ignatief might do (although maybe I could argue he did better than Stephane Dion would've done) but I've seen nothing to convince me I'm not right on the basic point: party democracy has a very anti-democratic dark side. It disempowers the sitting Member of Parliament in favour of a diffuse party apparatus and thereby the Prime Minister. I would argue also that the negative effects include a big drop in the overall quality of candidates for office, since many smart, talented people, knowing that back-bench MPs are powerless unless they reach the cabinet level, stay out of the arena. This approach seems to take things even farther in that direction.
I want to think more about this, since I'm less convinced now than I was that geography-based representation is the best way to aggregate diverse opinion on national issues, but it's what we've got, and while we've got it it'd be nice to make better use of it.
2012/11/19
Why "The Wolery"?
In the Winnie-The-Pooh books, Owl is the character all the others regard as wise. He lives in the grandest house in the Hundred Acre Wood, and has impressed them all with things like his ability to spell his very own name: Wol. As Pooh puts it, "If anyone knows anything about anything, it's Owl who knows something about something". In The House at Pooh Corner, his home, impressively called The Chestnuts blows over in a storm, and all you really need to know about Owl is that while others go off to find him a new place to live, he sets about thinking up a good name for it. He comes up with "The Wolery".
Owl is the embodiment of what we now would call a pundit. He has the reputation of wisdom because it appears he can do some of the things wise people are thought to do (i.e. write), and he always talks about the things he thinks he knows with great authority. If the Hundred Acre Wood had a 24-hour news channel, he would have his own show, a little out of prime-time maybe, but it would be long-running and serious.
So why call a blog The Wolery? Notwithstanding the fact I just plain like the name (and Winnie the Pooh) I have to admit to having a little bit of the Owl in me (and a fair bit of Eeyore too, if you really want to know). I tend to like my big words, serious, rambling conversations, and those lovely big ideas that aren't really so big. I think a bit too well of my own thoughts and ideas (which are almost always, in the end, someone else's thoughts or ideas). This blog is partly here for me to get some ideas out into the world, and partly to help me find my voice as a writer. My fear is that I might tend toward some of the worst aspects of punditry (over-certainty, reductionism, arrogance). So my blog's title is meant to remind me of those not-so-endearing tendencies, and hopefully will help me rein them in, keep me honest, and humble in the face of a complex & chaotic reality. I hope my audience, if I ever find one, will also aid in that quest.
PLES RING IF AN RNSER IS REQIRD
2012/11/13
Now THAT'S technical writing!
XKCD shows that a vocabulary of the 10,000 most commonly used words is all you need (at least for rocket science):
Fiscal Realities Are Usually Imaginary
Listened to Ontario Minister of Education Lauren Broten this morning.
I cringe whenever I hear a politician say something about "fiscal realities" in the tone of someone bravely facing up to an unpleasant but permanent and immutable Truth. It's rare that this is actually the case. Politicians are the ones who decide what the fiscal reality is, so it's almost always disingenuous of them to whine about it, or ask for a pass because of it, when they themselves decided on it.
In Ontario right now, we are facing a large imbalance in our finances which admittedly cannot continue indefinitely, but which is also not yet a true crisis (no one is threatening to stop lending the province money). The government however has decided to attack the imbalance aggressively, using its legislative muscle to overturn the contractual rights of public sector workers and roll back salaries and other benefits they enjoy, while curtailing their ability to bargain through their unions over the shape those roll-backs might take.
As a piece of public policy I think this is very heavy handed, and continues the bad precedent of using legislatures to force change that could well have been achieved through negotiation. But what I want to say here is that it's not "fiscal realities" that are forcing the government into making "hard decisions" but rather something almost completely the reverse. The government has decided to prioritize maintaining current (or slightly reduced) levels of revenue (taxes + borrowing) ahead of maintaining current (or slightly reduced) levels of public service, particularly in education, for what seem to be the craven and cowardly fear of the way a high budget deficit plays in the press.
In other words, it's the fear of making hard decisions that has forced the government into embracing the canard of fiscal realities; the political equivalent of "the devil made me do it".
The government wants you to think there are no choices in the face of what it calls: reality. What's actually real is its ranking of competing priorities.
I cringe whenever I hear a politician say something about "fiscal realities" in the tone of someone bravely facing up to an unpleasant but permanent and immutable Truth. It's rare that this is actually the case. Politicians are the ones who decide what the fiscal reality is, so it's almost always disingenuous of them to whine about it, or ask for a pass because of it, when they themselves decided on it.
In Ontario right now, we are facing a large imbalance in our finances which admittedly cannot continue indefinitely, but which is also not yet a true crisis (no one is threatening to stop lending the province money). The government however has decided to attack the imbalance aggressively, using its legislative muscle to overturn the contractual rights of public sector workers and roll back salaries and other benefits they enjoy, while curtailing their ability to bargain through their unions over the shape those roll-backs might take.
As a piece of public policy I think this is very heavy handed, and continues the bad precedent of using legislatures to force change that could well have been achieved through negotiation. But what I want to say here is that it's not "fiscal realities" that are forcing the government into making "hard decisions" but rather something almost completely the reverse. The government has decided to prioritize maintaining current (or slightly reduced) levels of revenue (taxes + borrowing) ahead of maintaining current (or slightly reduced) levels of public service, particularly in education, for what seem to be the craven and cowardly fear of the way a high budget deficit plays in the press.
In other words, it's the fear of making hard decisions that has forced the government into embracing the canard of fiscal realities; the political equivalent of "the devil made me do it".
The government wants you to think there are no choices in the face of what it calls: reality. What's actually real is its ranking of competing priorities.
2012/11/07
Did you yawn and miss it?
Barack Obama mentioned global warming in his victory speech last night! Specifically he included a line on the destructive power of a warming planet. It went by pretty quickly, but it was there. May we start to hope the issue is taken up again? A carbon tax? Cap-and-trade? Other carbon abatement programs?
There's still that small matter of a hostile Congress, but: fingers crossed!
There's still that small matter of a hostile Congress, but: fingers crossed!
2012/11/02
Pacificism and the Poppy
The old veteran stands, medals clinking quietly in the subway station selling poppies to mark Remembrance Day and raise money for vets less fortunate than he is. I buy one and stand attentively while it's pinned on my jacket, trying not to notice the discomfort.
I wear a poppy at this time of year to show some awareness of the sacrifice of so many in our nation's conflicts. Some of those conflicts had the patina of justice about them, many did not. Regardless, innocents became soldiers and fought, died, or were maimed or psychically scarred to the point they could never take back up the lives they might have lived. Willingly or not, they made a sacrifice, their families made a sacrifice, the posterity they might have built became a sacrifice. That should be remembered.
It is increasingly rare that those who bear real responsibility appear anywhere near the bloody fighting. So inevitably our innocents kill & wound their innocents. Innocent civilians are more and more often targets (a.k.a. 'collateral damage') in wars we fight far from home, ensuring an unconscionable asymmetry in the harm we suffer and the harm we inflict. That should be remembered also.
Some people might see my poppy and think I support war. I support an end to war. I wish I knew some way to signal that without disrespecting the service of that old veteran and his clinking medals.
I wear a poppy at this time of year to show some awareness of the sacrifice of so many in our nation's conflicts. Some of those conflicts had the patina of justice about them, many did not. Regardless, innocents became soldiers and fought, died, or were maimed or psychically scarred to the point they could never take back up the lives they might have lived. Willingly or not, they made a sacrifice, their families made a sacrifice, the posterity they might have built became a sacrifice. That should be remembered.
It is increasingly rare that those who bear real responsibility appear anywhere near the bloody fighting. So inevitably our innocents kill & wound their innocents. Innocent civilians are more and more often targets (a.k.a. 'collateral damage') in wars we fight far from home, ensuring an unconscionable asymmetry in the harm we suffer and the harm we inflict. That should be remembered also.
Some people might see my poppy and think I support war. I support an end to war. I wish I knew some way to signal that without disrespecting the service of that old veteran and his clinking medals.
2012/11/01
What shall we call it?
I recently learned that the term climate change came into common usage through Frank Luntz, a man who specializes in helping right-wing politicians (and cartels) tune their language to the emotional response they want or need (he also came up with "death tax"). Luntz's focus groups thought that climate change was less threatening than global warming; although, I don't think he did any of his research in Canada, where the idea of warmer winters isn't nearly as unpopular as he might've found it was in, say, Florida. Long-story-short, the Dubya administration started using climate change and now it has all but replaced global warming in mainstream media usage. (Aside: politicians lead most effectively through careful use of language).
Extreme weather events are becoming ever more commonplace, and this year both "red" and "blue" states in the U.S. have experienced them, though nothing gets attention quite like subway flooding in Lower Manhattan. Hurricane Sandy may turn out to be a turning point in climate politics, so it might be a good time to rethink how we describe the phenomena we are experiencing. As I alluded earlier, I think global warming isn't as threatening to Canadians as it might be to sub-Saharan Africans, Fijians, or even Frank Luntz's focus groups, but climate change is itself too clinical and antiseptic (probably what Luntz was going for, of course). Different regions are going to experience the effects of global warming differently (Europe may well get colder) with a few "winners" and a great many losers. For most people the felt issue isn't going to be an abstract degree or two of higher average temperatures world-wide, it's going to be the increasing unreliability of the seasons, and the weather; it will be the freak storms, droughts, wild-fires, and wild-life (water moccasins in Toronto?). So I'm proposing we ditch technician's climate change for a term both more accurate to real experience, and yes, more threatening: climate instability. Or perhaps, Anthropogenic Climate Instability; maybe Human-Induced Climate Instability?
Any other ideas?
2012/10/31
Can we do more Halloween, please?
Barring a last-minute change of heart, this will be the first year in almost 2 decades that neither of my children will be donning costumes and doing the trick-or-treat thing on our street. They really do grow up fast! But I'm surprised to find myself no less excited for the coming candy-mageddon even without one or more costumed kids to shepherd around!
Since we moved into our house some 17 years ago I've really come to love Halloween. There's no other occasion in the calendar year that gets you out and meeting your neighbours like Halloween. Our street must be particularly high on the Trick-Or-Treat Index, which helps, no doubt. Our childless (and many childful) neighbours import nieces & nephews, grand-kids, cousins once-or-twice-removed, even their friends' brats to partake of the sugary generosity on offer, and I don't mind at all (small caveat: they better be shelling-out too). It makes it a bigger party! The adults too get into, ehem, some candy of their own, strolling down the streets toting illicit libations in thermos bottles. Despite the fact our neighbours also variously host parties & gatherings at Victoria Day, Christmas, & Labour Day, I never meet or talk with more neighbours than on October 31.
Now, if only Hurricane Sandy will please lay off the rain for a few hours.
Trikkertreet!
UPDATE: Although it rained lightly throughout the night, the only noticable effect on the party was some compression. Trick-or-treatering started promptly at 6 and ended earlier than normal, but the volume was about the same as ever. Also, congrats to ghostly Enid's host for the best new installation award! Kept making me think of this song though.
2012/10/26
And you wonder why they can't get rid of fighting.
News comes today that the NHL has revoked its latest offer to the players. Time to call a spade a spade: the National Hockey League is a bully.
More specifically, they are a cartel.
A cartel is an organization of otherwise independent entities, formed expressly to limit competition by controlling the production and distribution of a product or service. Cartels attempt to gain for their members most of the benefits of a monopoly, including monopoly power over terms of trade. The lockout is an example of the cartel exercising this power. This is important to remember next time someone tries to make it out that the NHL lockout is somehow analogous to industrial action in some other sector. Unless they're talking about the OPEC oil embargoes of the 1970s they're talking out of an orifice other than their mouth.
Many people take a "plague on both their houses" attitude to the whole thing, and fair enough, you don't have to like the players' or the NHLPA, their union --an argument can probably be made that the cartel benefits at least some of the players. But if you find yourself more explicitly on the owners' side, I hope you're clear about what it is you're supporting. It certainly isn't capitalism or the operation of the 'free market' more generally, rather it's the naked exercise of power to restrain wages and claim windfall profits.
For myself, I can't seem to help it, I hope they players can hold together and "win" this fight. Why? These are guys who are the absolute best at what they do. What they do is play a "kid's game" but people pay to watch, and it's not crazy to think that the guys playing it should get a pretty significant chunk of what's paid. There are about 750 players on NHL rosters each year, and maybe another 400 who are "on the bubble" so call it around 1200 people in the world who are able to play at that level, out of who knows how many hundreds of thousands who played at least semi-seriously at some point in their lives. Of people in the appropriate age range who ever played with some idea of maybe making it a career, NHL players are the cream, the 0.01% at least.
Before we consider how much they should make, consider how much someone in the top hundredth of the top percentile makes in other professions. Think about the elite in law, medicine, business, finance! Yikes! Now consider how many of those elite professionals have as high a probability that their next case, surgery, deal, meeting, might be their last as an elite professional?
So what's the appropriate compensation?
I'll try and address that soon.
For myself, I can't seem to help it, I hope they players can hold together and "win" this fight. Why? These are guys who are the absolute best at what they do. What they do is play a "kid's game" but people pay to watch, and it's not crazy to think that the guys playing it should get a pretty significant chunk of what's paid. There are about 750 players on NHL rosters each year, and maybe another 400 who are "on the bubble" so call it around 1200 people in the world who are able to play at that level, out of who knows how many hundreds of thousands who played at least semi-seriously at some point in their lives. Of people in the appropriate age range who ever played with some idea of maybe making it a career, NHL players are the cream, the 0.01% at least.
Before we consider how much they should make, consider how much someone in the top hundredth of the top percentile makes in other professions. Think about the elite in law, medicine, business, finance! Yikes! Now consider how many of those elite professionals have as high a probability that their next case, surgery, deal, meeting, might be their last as an elite professional?
"Oops, he really mangled his signature there, Bob! I hate to say it right now after what we've just witnessed, but you just gotta wonder if he'll ever be able to come back from that!"Finally consider the lack of control players have over where they play. Each year the very best young players are pretty much forced to go to work for the very worst teams. Perhaps they're lucky, like Sidney Crosby who got drafted to a team in a cyclical downturn. Perhaps though they go to a team that has a long and illustrious history of turning great prospects into pumpkins. Mentioning no teams by name.
So what's the appropriate compensation?
I'll try and address that soon.
2008/12/23
Calculated Risks
In my professional life I work in a financial institution on systems designed to measure financial risk. This last year --the last 3 months more-so-- has therefore been a very interesting one, as a lesson in the difference between theory and practice. Now, I should begin by saying that it is something of an open secret in the business that our risk models aren't very realistic. Almost everyone I've ever spoken to has an intuitive sense (if nothing more) that the real world doesn't work the way the model says it does. Not everyone is bothered by that fact, but almost everyone has some sense of it.
In finance, the risk on a portfolio of holdings (a mix of cash, stocks, bonds, derivatives) is measured by repricing it under different scenarios. Each scenario varies the price of some or all of the factors that affect the value of the various holdings. After a number of such scenarios have been priced, the range of results are ordered by the size of the gain or loss in value of the total portfolio. Somewhere toward the bottom of this list we say: Aha! This is our risk! Exactly how far down the list we go varies with the purpose of the measurement but the principle is always the same: the Nth worst result is what we consider to be our 'realistic' risk in the given context.
Several points worth commenting on emerge from this method. I'll stick to the most obvious: that the measurement cannot possibly be any better than the set of scenarios on which it is based. Because of this, coming up with a good scenario set is a huge part of the challenge of risk measurement. One relatively simple method of building scenarios is simply to replicate the variations in prices actually observed in the market place in the past, for a given 'window' period. A more complicated approach measures the relationships (or correlations) between all the various factors at work, and then spins a complex web of outcomes into a set of scenarios. Both these approaches rely on past observed relationships between factors, either implicitly (by replicating the results of these relationships) or explicitly by using them as input to the 'spinning machine' that creates the scenario set.
The problem with this is a variation on the old statistical saw that 'correlation is not causation'. Basically, the fact that two stock prices (for example) are correlated in a given period, doesn't mean that either of the two companies behind those stocks are necessarily dependent on the other, or that the observed correlation will hold up under duress. A fairly easy illustration is that in a strong bull market, stocks rise in a way that tends to create an observable, statistically significant positive correlation between many disparate stocks. The effect is stronger within an economic sector. When the economy sours, well, lets just say those correlations are quickly revealed to be overstated.
All this means that in times of stress, when financial risk is greatest, our risk models are at their most unreliable. Now how's that for an encouraging thought? You ask what can be done? The problem is that generating these scenarios is a fiendishly complex process as it is, with tens of thousands of variables. Adding more exponentially increases the complexity and quite possibly* doesn't substantially improve the predictive power of the models. So what is to be done? Perhaps we just need to pay a little more heed to that intuition I mentioned at the outset. Perhaps if all our reports contained that little line of boilerplate so common on other financial documents: "past results are no guarantee of future performance" we might not be in quite as bad a situation as we appear to be. Mea culpa.
_________________________
*I hope to continue this thought later.
In finance, the risk on a portfolio of holdings (a mix of cash, stocks, bonds, derivatives) is measured by repricing it under different scenarios. Each scenario varies the price of some or all of the factors that affect the value of the various holdings. After a number of such scenarios have been priced, the range of results are ordered by the size of the gain or loss in value of the total portfolio. Somewhere toward the bottom of this list we say: Aha! This is our risk! Exactly how far down the list we go varies with the purpose of the measurement but the principle is always the same: the Nth worst result is what we consider to be our 'realistic' risk in the given context.
Several points worth commenting on emerge from this method. I'll stick to the most obvious: that the measurement cannot possibly be any better than the set of scenarios on which it is based. Because of this, coming up with a good scenario set is a huge part of the challenge of risk measurement. One relatively simple method of building scenarios is simply to replicate the variations in prices actually observed in the market place in the past, for a given 'window' period. A more complicated approach measures the relationships (or correlations) between all the various factors at work, and then spins a complex web of outcomes into a set of scenarios. Both these approaches rely on past observed relationships between factors, either implicitly (by replicating the results of these relationships) or explicitly by using them as input to the 'spinning machine' that creates the scenario set.
The problem with this is a variation on the old statistical saw that 'correlation is not causation'. Basically, the fact that two stock prices (for example) are correlated in a given period, doesn't mean that either of the two companies behind those stocks are necessarily dependent on the other, or that the observed correlation will hold up under duress. A fairly easy illustration is that in a strong bull market, stocks rise in a way that tends to create an observable, statistically significant positive correlation between many disparate stocks. The effect is stronger within an economic sector. When the economy sours, well, lets just say those correlations are quickly revealed to be overstated.
All this means that in times of stress, when financial risk is greatest, our risk models are at their most unreliable. Now how's that for an encouraging thought? You ask what can be done? The problem is that generating these scenarios is a fiendishly complex process as it is, with tens of thousands of variables. Adding more exponentially increases the complexity and quite possibly* doesn't substantially improve the predictive power of the models. So what is to be done? Perhaps we just need to pay a little more heed to that intuition I mentioned at the outset. Perhaps if all our reports contained that little line of boilerplate so common on other financial documents: "past results are no guarantee of future performance" we might not be in quite as bad a situation as we appear to be. Mea culpa.
_________________________
*I hope to continue this thought later.
2008/12/16
No time for a band-aid
It might turn out that in a few months the ominous clouds we all seem to be seeing will turn out to have been just a nasty squall and the figurative sun will be warming our wallets just as the literal one begins to melt this winter into memory. Care to place a bet on that? Thought not.
There are two kinds of recessions. The common or business cycle recession caused by a simple imbalance of supply and demand that can be corrected by a few months of increasing unemployment and relatively minor pain. And then there's the structural recession, a much more nasty beast caused by more fundamental imbalances and often a change in the actual source of 'surplus value' that really drives wealth creation.
The proximate cause of the problems we face is the bursting of a financial bubble inflated by rotting loans and the gassy chemistry of derivative instruments designed to cover the bad smell of the former like a dose of Febreeze in a downmarket gym. On their own, bad loans, even in large numbers don't necessarily indicate structural problems, since some number of people and businesses can reliably get themselves into trouble in any business cycle. What seems to be behind this bubble though is a middle class struggle to maintain a set of expectations for themselves that the real economy can't support. Those people (FULL DISCLOSURE: I'm one of them) saw their incomes stagnate and even fall behind the level required by their own material expectations, and responded either by not saving at all or by using other people's money (loans) to keep up. This was okay in their (okay, our) minds because the assets they (yeh, we) did own were reliably increasing in value so their (our) equity (in housing, stocks, whatever) kept increasing, often at a rate that exceeded the increase in debt. I think most of us know that this kind of thing is inherently unsustainable, but we also think we're smart enough to cash out in time to avoid the inevitable crunch. (Is it surprising that this crisis is hitting just as the leading edge of the baby boom is turning 60?) So nearly everyone in the middle-aged middle class, raised to expect constantly rising expectations, raised their expectations just at the time retirement was raising it's enticing head, realized they didn't have enough, and tried to finesse the difference with a little harmless speculation. To be clear: many of us were not crazy or particularly foolish speculators. But we were placing bets on an unforseeable future with the capital we need to make it to that future.
Fair enough as far as it goes, but of course the issue driving all that behaviour is the erosion of economic supports for the middle class itself. That small problem of 20 or more years of little to no growth in real income in the bottom, middle and even upper-middle income slices of the population. This is partly explained by tax and other policy choices starting in the 1980s up to Dubya's tax cuts, which favour in extremis the top percent (or half-percent) of the population. But I don't think reversing those choices (sensible though that may be in lots of cases) would really address the crux of the problem.
My read on our situation at the moment is that the source of that surplus value I mentioned earlier has shifted in a way that is greatly disadvantageous to the middle class. In the early and middle part of the 20th century surplus value was created in the industrial processes of the great extraction & manufacturing companies. Surplus value came from successive refinements and efficiency improvements in those processes, and in the latter half of the 1900s the middle class benefitted thanks to the rise of organized labour, and later still the rise of the white-collar management and professional 'salarymen' who were increasingly needed to control the increasingly complex manufacturing systems.
Now, it seems that we have reached the end of the era in which wealth was created principally by improvements in industrial efficiency. Of course there are efficiencies to be found in industrial processes, many of which will be significant generators of wealth for some companies. The point is that these gains will be much more limited and not as likely to benefit the larger economy in the way the assembly line (the obvious example) did, spreading from its initial development to every corner of manufacturing as its principles were more and more widely applied, refined and improved upon. I think of it as manufacturing becoming a commodity; meaning, manufacturers have to work very very hard just to keep up with the competition. This is very similar to the plight faced by the small family farmer, circa 1930.
So the challenge we face is to reinvent the economic foundation for a large, stable middle class. I don't claim to have an answer (although I think Richard Florida and others like him are on the right track) but I think it's useful to see the challenge for what it is. Huge. Intimidating. Not band-aid sized.
More later.
There are two kinds of recessions. The common or business cycle recession caused by a simple imbalance of supply and demand that can be corrected by a few months of increasing unemployment and relatively minor pain. And then there's the structural recession, a much more nasty beast caused by more fundamental imbalances and often a change in the actual source of 'surplus value' that really drives wealth creation.
The proximate cause of the problems we face is the bursting of a financial bubble inflated by rotting loans and the gassy chemistry of derivative instruments designed to cover the bad smell of the former like a dose of Febreeze in a downmarket gym. On their own, bad loans, even in large numbers don't necessarily indicate structural problems, since some number of people and businesses can reliably get themselves into trouble in any business cycle. What seems to be behind this bubble though is a middle class struggle to maintain a set of expectations for themselves that the real economy can't support. Those people (FULL DISCLOSURE: I'm one of them) saw their incomes stagnate and even fall behind the level required by their own material expectations, and responded either by not saving at all or by using other people's money (loans) to keep up. This was okay in their (okay, our) minds because the assets they (yeh, we) did own were reliably increasing in value so their (our) equity (in housing, stocks, whatever) kept increasing, often at a rate that exceeded the increase in debt. I think most of us know that this kind of thing is inherently unsustainable, but we also think we're smart enough to cash out in time to avoid the inevitable crunch. (Is it surprising that this crisis is hitting just as the leading edge of the baby boom is turning 60?) So nearly everyone in the middle-aged middle class, raised to expect constantly rising expectations, raised their expectations just at the time retirement was raising it's enticing head, realized they didn't have enough, and tried to finesse the difference with a little harmless speculation. To be clear: many of us were not crazy or particularly foolish speculators. But we were placing bets on an unforseeable future with the capital we need to make it to that future.
Fair enough as far as it goes, but of course the issue driving all that behaviour is the erosion of economic supports for the middle class itself. That small problem of 20 or more years of little to no growth in real income in the bottom, middle and even upper-middle income slices of the population. This is partly explained by tax and other policy choices starting in the 1980s up to Dubya's tax cuts, which favour in extremis the top percent (or half-percent) of the population. But I don't think reversing those choices (sensible though that may be in lots of cases) would really address the crux of the problem.
My read on our situation at the moment is that the source of that surplus value I mentioned earlier has shifted in a way that is greatly disadvantageous to the middle class. In the early and middle part of the 20th century surplus value was created in the industrial processes of the great extraction & manufacturing companies. Surplus value came from successive refinements and efficiency improvements in those processes, and in the latter half of the 1900s the middle class benefitted thanks to the rise of organized labour, and later still the rise of the white-collar management and professional 'salarymen' who were increasingly needed to control the increasingly complex manufacturing systems.
Now, it seems that we have reached the end of the era in which wealth was created principally by improvements in industrial efficiency. Of course there are efficiencies to be found in industrial processes, many of which will be significant generators of wealth for some companies. The point is that these gains will be much more limited and not as likely to benefit the larger economy in the way the assembly line (the obvious example) did, spreading from its initial development to every corner of manufacturing as its principles were more and more widely applied, refined and improved upon. I think of it as manufacturing becoming a commodity; meaning, manufacturers have to work very very hard just to keep up with the competition. This is very similar to the plight faced by the small family farmer, circa 1930.
So the challenge we face is to reinvent the economic foundation for a large, stable middle class. I don't claim to have an answer (although I think Richard Florida and others like him are on the right track) but I think it's useful to see the challenge for what it is. Huge. Intimidating. Not band-aid sized.
More later.
Overheard on the TTC
I don't just beat on people man. I mean they gotta be hurtin' me first y'know. Or just buggin' me.
2008/12/11
What's a GG to do?
Media rhetoric notwithstanding, Canada's national political situation is not in a constitutional crisis as much as it is in the middle of an interesting lesson in how our system of government works. So far the system is functioning pretty much as it's supposed to, and showing how resilient and flexible it can be. I do hedge a bit in saying 'so far' because I recognize that we are much closer to a true constitutional crisis than we have been since the patriation of the constitution.
What would it take to turn the situation into a true constitutional crisis? Something would have to happen that challenges the ability of the system to respond in a way that is both legal and widely acceptable to Canadians. Since our constitution is an odd mix of written and unwritten (conventional) rules that date back hundreds of years in many cases, it is hard to imagine what that something might be. It really is a well tested old goat of a system. The only possibility of a true crisis, as it seems to me, is a failure of the second test: something happens that is widely unacceptable to the population or an important part of it. In simple terms, someone would really have to put their foot in it.
At the moment Michaelle Jean, the Governor General, has kept her boots clean. She made the correct decision in acceding to Stephen Harper's request to prorogue parliament. Personally I don't like it on the level of basic political justice --a Prime Minister ought not to be able to avoid a confidence motion simply by gathering up his marbles and going back to Sussex Drive-- but it was the right thing to do. Refusing a sitting Prime Minister's request would have been a surprise, and surprise is rarely the basis of sound policy. As a Liberal appointment with some slight taint (fair or, more likely not) of association with separatists such a course would have truly opened the door to crisis. There were good prudential reasons for granting the request also. Foremost is that the job of the Governor General really amounts to appointing a stable and functioning government, and little else. Granting this request not only gives Stephen Harper some breathing room, but also allows the coalition to prove itself as a stable alternative to the Conservatives. That is looking less and less to be the case.
So from here it now appears the most likely course is back to business-as-usual in a minority parliament. There is one bear trap out there as I see it though, and that would open up if the Prime Minister loses a confidence motion shortly after the house resumes in January, and then asks for a new election. In such a case she would have three options:
The second option is perhaps the riskiest. The opposition parties outnumber the Conservatives by 20 seats, but the two coalition partners together trail by 30. This isn't a good balance, and likely won't last the duration of the signed coalition agreement. It is also apparently viewed as illegitimate in large sections of the country. The longer the government can avoid defeat, the less the likelihood of this option being chosen.
The final option is the least likely without the Prime Minister's acquiescence, and carries with it a peculiar set of risks, but it's also, I think, the best possible outcome. It is clear to just about everyone that it is Stephen Harper much more than his party, that has lost the confidence of the house. Asking another member of his party perserves the results of the last general election, chastens the sitting PM, and spares the population in general the expense of another likely inconclusive general election. I suspect the opposition parties would (in private) welcome the outcome. The risks? Well they're related to my pet peeve.
- Grant a dissolution and call an election.
- Ask the opposition coalition to form a government.
- Ask another member of the governing party to form a government.
The second option is perhaps the riskiest. The opposition parties outnumber the Conservatives by 20 seats, but the two coalition partners together trail by 30. This isn't a good balance, and likely won't last the duration of the signed coalition agreement. It is also apparently viewed as illegitimate in large sections of the country. The longer the government can avoid defeat, the less the likelihood of this option being chosen.
The final option is the least likely without the Prime Minister's acquiescence, and carries with it a peculiar set of risks, but it's also, I think, the best possible outcome. It is clear to just about everyone that it is Stephen Harper much more than his party, that has lost the confidence of the house. Asking another member of his party perserves the results of the last general election, chastens the sitting PM, and spares the population in general the expense of another likely inconclusive general election. I suspect the opposition parties would (in private) welcome the outcome. The risks? Well they're related to my pet peeve.
Wouldn't it be nice if the Prime Minster could be easily and cleanly replaced by someone chosen from and by his caucus? Instead, 143 duly elected Conservative members are helplessly tied to Harper whether they want to be or not. And Canadians face the prospect of an unnecessary and expensive election not many of them want. So who does this system serve?
2008/12/09
Party Democracy: Oxymoron
So Bob Rae is going to step aside and allow Michael Ignatieff to become undisputed leader of the Liberal Party of Canada. Rae may be doing nothing more than reading the writing on the wall, or he may be motivated by a genuine sense of the kind of duty and honour that motivates true statesmen; either way, he did the right thing giving Canada a shot at something like an organized and effective opposition come January 26th.
Well done Bob!
But Bob, in doing the right thing (and earlier while resisting doing it) did you have to haul out and swear fealty to that hoary old Canadian tradition of 'Party Democracy'? I'm referring to the practice of having the Party membership select its parliamentary leader entirely outside of parliament. And lest anyone think I'm picking on the Liberals, it should be pointed out that this practice is (to the best of my knowledge) universal in Canada. (In fact, most Canadians seem to think there isn't any alternative). The Liberals are actually somewhat archaic and hold conventions to select leaders. Other parties have a one-member, one-vote policy, conducting leadership elections by phone or over the internet. The Liberal method at least ensures that elected members have a stronger (although far from sufficient) voice in the process.
"But that's democratic," you say. Is it? That's certainly what the parties want you to think. But let me ask: who do you, a Canadian voter actually vote for? You vote for someone to occupy a seat in Parliament and represent your views to the government. As a fair-minded person, you expect that person to be more aware of the complexities of the issues of the day than you have time or perhaps inclination to be. You expect her to be sensitive to the needs of your riding and mediate those needs with the needs of other groups, regions, or interests (don't laugh). What you probably don't want is a seat-warming, ready-aye-ready ignoramus simply toting and spouting the party line at every opportunity and jumping up to vote as told by The Party. Sound like anyone you know? That is what this system encourages.
You see, the elected MP enters Parliament hobbled. The Leader is all powerful and cannot be removed by the people he actually leads, only by a shadowy backroom (as it appears in the case of the Liberals) or by a vast and diffuse mass of The Membership. Our thoughtful representative can't apply much real pressure on the leader in this situation (yes, she can argue her positions in caucus). If the leadership, which answers only to the party, isn't inclined to listen, it won't.
Now I admit that much of the time this doesn't make a whole lot of difference. Most members know and support the party that nominates them to office. Once in office they support most of the policies their leadership proposes and where they aren't comfortable with any of those policies they make peace with them as part of the essential give-and-take compromise of real governing. But lest anyone think it never matters, I have two words for them: Stephane Dion. Here's a guy who was elected leader of the so-called natural governing party of Canada with almost no support from the then more numerous party caucus. How's that working out guys?
By all accounts most of the current caucus wants Michael Ignatieff. I bet that works out much better for them in the next election.
Well done Bob!
But Bob, in doing the right thing (and earlier while resisting doing it) did you have to haul out and swear fealty to that hoary old Canadian tradition of 'Party Democracy'? I'm referring to the practice of having the Party membership select its parliamentary leader entirely outside of parliament. And lest anyone think I'm picking on the Liberals, it should be pointed out that this practice is (to the best of my knowledge) universal in Canada. (In fact, most Canadians seem to think there isn't any alternative). The Liberals are actually somewhat archaic and hold conventions to select leaders. Other parties have a one-member, one-vote policy, conducting leadership elections by phone or over the internet. The Liberal method at least ensures that elected members have a stronger (although far from sufficient) voice in the process.
"But that's democratic," you say. Is it? That's certainly what the parties want you to think. But let me ask: who do you, a Canadian voter actually vote for? You vote for someone to occupy a seat in Parliament and represent your views to the government. As a fair-minded person, you expect that person to be more aware of the complexities of the issues of the day than you have time or perhaps inclination to be. You expect her to be sensitive to the needs of your riding and mediate those needs with the needs of other groups, regions, or interests (don't laugh). What you probably don't want is a seat-warming, ready-aye-ready ignoramus simply toting and spouting the party line at every opportunity and jumping up to vote as told by The Party. Sound like anyone you know? That is what this system encourages.
You see, the elected MP enters Parliament hobbled. The Leader is all powerful and cannot be removed by the people he actually leads, only by a shadowy backroom (as it appears in the case of the Liberals) or by a vast and diffuse mass of The Membership. Our thoughtful representative can't apply much real pressure on the leader in this situation (yes, she can argue her positions in caucus). If the leadership, which answers only to the party, isn't inclined to listen, it won't.
Now I admit that much of the time this doesn't make a whole lot of difference. Most members know and support the party that nominates them to office. Once in office they support most of the policies their leadership proposes and where they aren't comfortable with any of those policies they make peace with them as part of the essential give-and-take compromise of real governing. But lest anyone think it never matters, I have two words for them: Stephane Dion. Here's a guy who was elected leader of the so-called natural governing party of Canada with almost no support from the then more numerous party caucus. How's that working out guys?
By all accounts most of the current caucus wants Michael Ignatieff. I bet that works out much better for them in the next election.
2008/11/11
Blog slogging
I put the cart before the horse in publishing my piece on party democracy yesterday. No introductory "Why I'm writing this blog" piece to start things off and justify why exactly the world needs yet another blog, this blog, now.
The problem is of course, that it doesn't now, and it likely won't in the future.
When I sat down to start this blog some now embarrassingly large number of weeks ago, I was caught between my own inner urge to write, and the horrible realization that I didn't exactly know what I was planning to write about. A blog should have a theme, a cause, oh come on, a pet peeve surely? Simply everyone on the web has one!
Of course I realize that what I really want is to be relevant and important. And the desire to be relevant and important is a colossal bit of vanity on my part, but there it is. Paralysis ensues and nothing gets written because others are saying all the Important & Relevant things, and I can't possibly hope to have a bigger insight or say it better than them, so why bother?
Still don't have an answer to that one. I suppose I have Bob Rae to thank for getting me started and revealing I do own at least one pet peeve. I expect to elaborate on it in the future, but it won't by any means be an obsession. I have many interests, and I've noticed in now over 40 years that these interests are cyclical. They wax and wane with the phases of the moon, the seasons, the sunspot cycle --there's a veritable astrology of my little obsessions-- and I'm sure this blog will chronicle their ascendency more accurately than I could chart them independently.
Writing is cathartic. Especially when done for publication I find it clarifies and improves thought. It helps one work through ideas and their consequences. In this way (I expect) writing a blog is a process more than a product, and so the readership (if it materializes) is in a certain way secondary for the blogger. Ideally the readership becomes a vital and important partner in that process --especially in keeping yours truly here firmly anchored and down-to-earth.
I do hope (and fear) that this blog will be read and commented upon by someone outside my immediate circle of family, friends, and acquaintances. But what Bob helped me see is that the only thing that matters truly is that it be of some small importance to me.
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