Great talk at Trinity College, Dublin last April. Worth making an “appointment to view”.

“What’s next?” asks Glen Newey on the LRB blog after the Sun publishes pics of Prince Harry in the nude.

The Prince of Wales in Photoshopped congress with a polo mare? Princess Anne on the can? This blogger is hardly one to shield the royals from the blastments of the public sphere. It’s not exactly what John Stuart Mill had in mind in Chapter 2 of On Liberty. There is the argument that the Sun is to liberty what cowpats are to fillet steak, an unavoidable byproduct, however unpalatable, of something there’s good reason to promote (vegetarians may substitute a different analogy). But, of course, you don’t just get the pat itself – you get its producer trying to pass it off as something wholesome. On the subject of plausible half-truths and their exposure, recall Geoffrey Robertson’s immortal observation that Rupert Murdoch is a great Australian in more or less the same sense that Attila was a great Hun.

Lovely blog post. Worth reading in full.

I don’t know who does the covers for the Economist but s/he is a genius.

Consider this one on the issue of August 11-17, 2012.

It shows the German Chancellor pondering a question that must be on every Eurocrat’s mind, but one that nobody dares to speak about: whether to ditch the Euro, and if so how to do it. I’m willing to bet that every Finance Ministry in Europe has a bulging secret file on the subject.

What’s fascinating about the picture is the amount of narrative detail it contains. Here it is close up.

Note the detail. First of all, the ‘strictly confidential’ Cabinet file (though it’s in a Whitehall-style red leather binder; I suspect the German Chancellery favours dark green leather.)

Next to her left arm is an envelope containing the airline tickets to the various capitals that need to be visited bearing the bad news. And the post-it note revealing the increasingly desperate calls from Mario Draghi, the Chairman of the European Central Bank.

And then on the other side, the black coffee and whiskey needed to fortify her for the awful decision she will eventually have to make.

Not many magazine covers can stand this kind of exegesis. I hope that the Economist plans one day to have an exhibition of its best work. Some of us would pay good money for a signed copy of a cover like this.

Here’s a good one. A month ago a guy called David Sacks sold Yammer, the social-networking-for-enterprises company he founded four years ago, to Microsoft for $1.2 billion. Mr Sacks then withdrew to spend some time with his money. But boredom got the better of him and so the other day he logged into his Facebook account and wrote this:

“I think Silicon Valley as we know it may be coming to and end. In order to create a successful new company, you have to find an idea that (1) has escaped the attention of the major Internet companies, which are better run than ever before; (2) is capable of being launched and proven out for ~$5M, the typical seed plus series A investment; and (3) is protectable from the onslaught of those big companies once they figure out what you’re onto. How many ideas like that are left?”

Now if there’s one thing that gets the digerati of the Valley into a stew it’s any suggestion that their Wonderland might one day cease to exist. So Mr Sacks’s little squib provoked a veritable storm of outrage, scorn and refutation. The response was such as to cause him to qualify his original speculation. “Human creativity has not changed”, he conceded,

“and there will always be new ideas and opportunities. But the question is, how many of those opportunities will be captured by startups versus incumbents? It seems like a statistical fact that when you go from virtually no incumbents to multiple well-run incumbents, an increasing percentage of opportunities will be captured by the latter. That’s the point I’m making about Silicon Valley — we may not be running out of ideas, but we might be running out of big new companies.”

I was pondering this and wondering where to begin (just for starters, had he never heard of Kodak, Microsoft, Clayton Christensen and the Innovator’s Dilemma?) but then I checked again and there was Marc Andreessen, one of the smartest guys in the Valley, rebutting Sacks, and doing it better than I could in a series of snappy bullet points:

There are only a few competent incumbents.

Each of those incumbents can only do so many new things before you get B and C teams screwing up.

Startups continually drain talent out of the incumbents, further impairing their ability to continue to innovate.

As the incumbents become more powerful, they increasingly prioritize stability over change — Peter Thiel’s argument — betting on incumbents over time equals bettting against technological change.

Innovator’s Dilemma — incumbents tend not to cannabilize themselves through disruptive innovation not because they are poorly run, but precisely because they are well run.

Precisely.

(If you’re interested, TechCrunch has a much more extensive list of the comments provoked by Mr Sacks’s pessimism.)

I noticed that the Pope’s butler has been rotting in sweltering Vatican cells until the other day, when a press officer announced that he has been placed under house arrest. Beyond that, I paid little attention, on the grounds that life is short and the Catholic Church’s odious little statelet isn’t all that interesting. But my friend Conor Gearty has been paying attention, which is only right and proper as he understands Human Rights law. Not that they go in for that kind of thing much in the Vatican.

The web site of the Holy See takes you to a Vatican City State site, the section on the governance of which begins with the simple statement that ‘The form of government is that of an absolute monarchy’ [‘La forma di governo è la monarchia assoluta’]. Short summaries of the further disposition of power then appear. The ‘Fundamental Law of Vatican City State’ promulgated by John Paul II on 26 November 2000 has more on the nature of the Vatican flag than on the rights of anyone who might be affected by the exercise of executive power. Both the Holy See and the Vatican City State have signed up to various international Conventions – but these have not included anything so specific as the European Convention on Human Rights, with its prohibition on inhumane treatment, its demand for fair trials and its requirement that detention be non-arbitrary.

I’m indebted to the many readers of the International Herald Tribune who spotted my obituary and emailed to convey their condolences. Just to put the record straight, I am not and have never been:

(a) 73
(b) a reporter
(c) an editor, or
(d) dead.

I do, however, claim a certain amount of sly wit.

In fact, the hack memorialised in the Trib is James M. Naughton who was

“a prank-loving White House and national correspondent for the New York Times during the Nixon, Ford and Carter administrations and later a senior editor at The Philadelphia Inquirer for almost two decades.”

My namesake also maintained that an occasional prank was essential to the spirit of journalism,

“and he enthusiastically abided by that belief, earning a reputation for twitting colleagues and candidates alike. He once turned up at a presidential press conference wearing the head of a chicken costume; another time, in Philadelphia, he had two motorcycles roar round his newsroom to liven things up. Good for morale, he said.”

A man after my own heart.

Premature obits have a long and honourable history in journalism. The classic case is Mark Twain’s celebrated riposte to his: “reports of my death have been greatly exaggerated”. One of my earliest mentors was the wonderful Claud Cockburn, who was very kind to me when I was an undergraduate in Ireland. In his respectable years he had worked for The Times and at one stage was sent to China to cover some obscure conflict in which he was reportedly killed, The paper duly published a brief obit, which he then read with glee and cabled the Editor saying “HAVE READ OBITUARY STOP KINDLY ADJUST SALARY ACCORDINGLY”.

In the summer of 1968 my girlfriend (later my first wife) and I stayed with him and his wife Patricia in Brook Lodge, their ramshackle but splendid house outside Youghal in Co. Cork. As we were leaving, Claud asked me what I proposed to do with my life. I replied that I was thinking of becoming a journalist. “Well then”, he said, solemnly, “you must remember that there is one golden rule for success in journalism: libel someone famous early in your career “.

Somerset Maugham said that before embarking on a new book he read Voltaire’s Candide as a way of cleansing his style. Other writers have used Hemingway or Tom Wolfe in the same way. I have often reached for Robert Hughes or Clive James when feeling jaded or pedestrian, not because I wanted to try and emulate their styles but because I wanted to inhale something of their approach to writing: serious without being pompous; a talent for muscular prose with an inbuilt-capacity to shock or surprise; unwillingness to take the great and the good at their inflated estimations of themselves; and a wonderful capacity for caricature. Who will ever forget Clive’s description of Arnold Schwarzenegger as “a condom filled with walnuts”? Or Hughes’s dismissal of Jeff Koons? (“He has the slimy assurance, the gross patter about transcendence through art, of a blow-dried Baptist selling swamp acres in Florida. And the result is that you can’t imagine America’s singularly depraved culture without him.”)

So I mourn the passing of Robert Hughes, who even when he was wrong, was wrong in entertaining and thought-provoking ways. Looking for a round-up of obituaries and tributes, I went straight to the wonderful Arts & Letters Daily, which is normally terrific at doing that kind of round-up (See, for example, what they did for Gore Vidal recently). But, strangely, they seem to have missed out on Hughes.

So here is my tentative substitute.

My favourite, though, is Nick Cohen’s terrific tribute in the Spectator

I’ve just finished The Places In Between, Rory Stewart’s astonishing account of his walk across the remotest part of Afghanistan, from Herat to Kabul. For much of the time, I found myself marvelling that someone should put himself through so much pain — and into so much danger — to achieve an idealistic goal. It’s both entirely admirable and completely nuts.

But the strongest impression left by Mr Stewart’s tale is of the utter fatuity of the US/UK/Nato project in Afghanistan. His account of what life is actually like in the remote fastnesses of that wretched country is truly startling, at least to this uninformed Westerner. As another reader said to me, much of Afghanistan isn’t even a medieval society: it’s pre-medieval.

Stewart walked from village to village, on one of the most treacherous paths in the world. In some villages he was treated generously; in others the famed Muslim hospitality was, to say the least, grudging. Some people clearly contemplated killing him, for for various inscrutable reasons, didn’t. Most of the people he met were poor and illiterate, and obsessed with religion. But even in some of the poorest areas, there were serious discrepancies in wealth and status between villagers, most of whose lives were truly nasty, brutish and short. Women were effectively invisible (Stewart saw only a handful of them during the entire duration of his trip), marriage between first or second cousins seemed to be the norm, and some villagers had never even set foot in the next village along the path. Just about the only piece of modern technology that anyone had experienced was a Kalashnikov assault rifle.

Despite the remoteness of their locations, many of the people Stewart encountered had also been involved in a bewildering range of armed conflicts over the last few decades. In Dahan-e-Rezak, for example, he stayed in the house of the headman, one Seyyad Agha, who had been a military commander for twenty-four years:

“First, he had fought the Russians, with a group funded by Pakistani Intelligence, then, “because they weren’t killing enough people”, he had fought for a group partially funded by the British. Then the Russians withdrew and he fought the pro-Russian Najib government and the rival Northern Alliance groups. When the Taliban took over the province, five years ago, he decided, he said, to ‘retire from fighting’. This probably meant that he had been the Taliban commander in the area, but he would have denied it if I had asked.”

But Seyyad had a radio and as Stewart settled for sleep in the crowded guest house,

“someone put the BBC Dari service on the radio. Bill Gates was making a speech on American policy towards technology monopolies, which was being translated into Dari. The men listened intently. I wondered what these illiterate men without electricity thought of bundling Internet Explorer with Windows”.

Towards the end of the book, Stewart quotes a passage from the UN Assistance Mission for Afghanistan, the goal of which is “the creation of a centralized, broad-based, multi-ethnic government committed to democracy, human rights and the rule of law”.

The UN folks are — like the Development personnel from the various Western governments involved in Afghanistan — talented, hard-working, well-meaning people with university degrees in subjects like international law, economics and development. They come from middle-class backgrounds, work on high-minded policy proposals on ‘democratization’, ‘capacity building, ‘gender’, ‘skills training’ and ‘sustainable development’. The trouble is, says Stewart, that they know

“next to nothing about the villages where 90 per cent of the population of Afghanistan lived. They come from post-modern, secularised, globalized states with liberal traditions of law and government. It was natural for them to initiate projects on urban design, women’s rights and fibre-optic cable networks, to talk about transparent, clean and accountable processes, tolerance and civil society and to speak of a people ‘who desire peace at any cost and understand the need for a centralized multi-ethnic government’.”

Oh yeah? Ponder this:

“There were five if us in the guest room and for two hours we sat in silence. It was an overcast afternoon. Seyyed Umar sat by the large window, clicking his rosary. He shifted his head to look down at the black ridge, the mud below the river and the tracks in the snow. Occasionally he sighed or cleared his throat. Outside, a door creaked, a horse whinnied. Half an hour later, two ragged men came up the hill with donkeys and the children of the village threw snowballs at them. The men who were exhausted and at the end of their day’s journey smiled.

Seyyed Umar and the others could not work in the fields because of the snow; they had lived here together since they were children; nothing had happened recently that was worth talking about and they were illiterate so that they could not read. They waited in silence throughout the long afternoon for the call to prayer, dinner, and bed.”

Given the reality — the utter hopelessness of any attempt to turn this vast, pre-medieval country into even the crudest approximation of a coherent state by throwing money and armed force at it — the windy cant our politicians spout whenever they visit British troops in Afghanistan is truly nauseating. They are even preparing to do a deal with the Taliban, the elimination of whom was the ostensible justification for the US/UK intervention in the country. To date, 422 young British men and women have paid with their lives for the hypocrisy of our political elite. And many more will die before this farce is finally brought to an end.

Postscript: Rory Stewart is now a member of that aforementioned political elite — as MP for Penrith and the Border. Despite this, he’s still talking sense about Afghanistan. Trouble is: nobody in government is listening.

James Carville, Bill Clinton’s masterful campaigning guru, once said this:

“I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody.”

He said that in 1993 and, to be honest, I didn’t really know what he meant at the time. Now we all understand it, as we watch our (European) governments cringe in terror as they endlessly speculate how to tailor economic policy to appease the bond market. The fact that this is daft should have been well known ever since Keynes’s General Theory, which appeared in 1936, but it seems to have escaped our leaders.

Discussing the behaviour of rational agents in a market, Keynes used the analogy of a newspaper beauty contest in which readers are shown photographs of women and asked to choose a set of the six “most beautiful”. Readers who pick the most popular face are eligible for a prize.

The naive strategy is simply to choose the pictures one finds most beautiful. A more sophisticated strategy is to increase one’s chances by picking the women whose images conform to conventional or popular theories of attractiveness. An even more sophisticated strategy is to choose the women that one thinks the other competitors will regard as the most attractive. And so on, in every-ascending levels of abstraction.

So, Keynes writes,

“It is not a case of choosing those that, to the best of one’s judgment, are really the prettiest, nor even those that average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practice the fourth, fifth and higher degrees.”

Our governments appear to view the bond market as if it were a Golem — “an animated anthropomorphic being, created entirely from inanimate matter” (Wikipedia) — whereas in fact it’s much closer to Keynes’s beauty contest. Which means that trying to placate the Golem is a fatuous, nay witless, enterprise, for the simple reason that the bond market isn’t a Golem. It’s something quite, quite different — and much more complex.

Interestingly, journalism has been remarkably uncritical of governments’ hallucinations about the Golem. It’s not clear why this has been so. Maybe it’s perhaps most hacks have no idea of how the bond market works. (Our media showed the same fatal lack of curiosity about the ratings agencies in the run-up to the banking crash, btw.) Or perhaps it’s because editors think that readers and audiences aren’t interested in such arcane stuff.

Whatever the explanation, the New York Times broke some welcome new ground today with a fine piece by Katrin Bennhold in which she tried to explain what actually goes on in the bond market and how its traders view the world.

The bond market has emerged as a mighty protagonist in Europe’s economic crisis, representing a seminal shift in power from politicians to investors and a relatively obscure cohort of bankers. Their collective day-to-day judgment can now topple governments and hold the key to the survival of the euro.

If that market seems an unfathomable Goliath to outsiders, in interviews bond traders themselves confessed to being fearful and confused.

Some of the traders to whom Ms Benhold spoke said that they worry that too many of their colleagues lack the skills to decipher conflicting signals from Europe’s leaders in an industry ever more dependent on perception and political guesswork. The short-term fluctuations of bond rates, they concede, are not always an accurate reflection of value and risk. Yet traders are being taken as the last word by politicians on any range of government policies — and are often misinterpreted, they said.

“We used to be able to measure everything to the nth degree,” said Tim Skeet, managing director of fixed income at the Royal Bank of Scotland. “These days, nothing is measurable. This has become less about number-crunching and more about the oracle of Delphi.”

Economists tend to treat the bond market as a rational player imposing budget discipline on politicians. Politicians portray it as having the conscience of a mob, accusing “bond vigilantes” of undermining Europe’s recovery and its cherished welfare state. The reality is more nuanced.

That sounds right to me.

And then there’s the pernicious positive feedback loops built into the situation.

With so much leverage at its disposal, the bond market’s judgments can have the power of prophecy — that is, they can be self-fulfilling, influencing events even as traders assess them from the trading floor.

If investors and traders judge Spanish bonds to be risky because Spain’s government may default, they help make it more likely that Spain will indeed default, by raising its borrowing costs.

“Whatever the Spanish government does — and it has done a lot — it doesn’t actually help much, because the market is pretty much convinced a full-fledged bailout is required,” said Nicholas Spiro, managing director of Spiro Sovereign Strategy, a consulting firm in London that specializes in sovereign credit risk.

Great piece, worth reading in full.

Footnote: Carville is a great source of pithy quotes. For example:

“Republicans want smaller government for the same reason crooks want fewer cops: it’s easier to get away with murder.”