A little light holiday reading with BullionVault's director, Paul
Tustain...
The New Paradigm for Financial Markets: The Credit Crisis of 2008 and
What it Means by George Soros (Amazon: 1586486837)
Fooled by Randomness by Nassim Nicholas Taleb (Amazon: 0141031484)
The Fabric of Reality by David Deutsch (Amazon: 014027541X)
THE FIRST THING you notice from the three arbitrary choices
I made for holiday reading this summer is a mutual reverence for Karl Popper.
Popper was (I now know) a famous philosopher of science whose
message was something like "You can never prove a theory; you can only
disprove it.
"Moreover," says Popper's work, "if the theory
doesn't attempt to predict results which, if demonstrated untrue, show its
falseness, then it wasn't a useful theory in the first place, and might as
well be astrology."
Now let's turn to my three holiday books, and we'll start with
George Soros.
George Soros is very rich. From what he does
and writes, I would say he is an exceptionally nice and decent man, too. I
have no doubt he has a genuine desire to leave the world a better place.
Unfortunately, however, his book doesn't really do this.
The problem here is that Mr. Soros is not happy with his
acknowledged status as a great speculator. He yearns – rather touchingly –
for recognition as a philosopher, and to this end he devised a theory of
"reflexivity" which seems to crop up in everything he writes.
It is the worst type of theory, claiming to explain what has
already happened. But because it offers nothing genuinely analytical it has
no predictive power.
None of that would matter if the book itself were mainly about
the subject advertised in the title – the credit crunch – on which Mr Soros
writes with typical insight. Regrettably, that insight is contained in the
final dozen pages of the book, and you will be well and truly exhausted by
the long-winded and earnest attempt at philosophy before you get there.
The credit crunch content and reference in the title must have
been marketing devices recommended by his publishing agent. Too bad.
Nassim Nicholas Taleb – I would guess – is
almost completely opposite to George Soros. He is not as rich, and probably
lacks the human qualities which make Soros endearing.
Taleb writes with over-confidence bordering on arrogance. He
doesn't plead with you to take his theories seriously, and he'd probably look
down his nose at dissenters.
Taleb also has an unnecessary habit of dropping in repeated
literary references whose objective seems to be to boast his intellectual
credentials. This ought to make his book irksome, but strangely it doesn't.
Taleb is writing on an original and worthwhile subject (which, thankfully,
tallies with his title) and he has taken the time to gather his data and make
his case.
Once you're on his side, the frequent missiles are aimed at
everyone but you, and then the book even becomes entertaining.
Read this book because it will train you quickly to see through
the meaningless statistics with which so many products, people and ideas try
to sell themselves. It left me with the strangest impression. Could the great
man – Soros himself – be at least partially the result of a world which is
"Fooled by Randomness".
Finally, David Deutsch. He's of far higher
intellectual standing than either Soros or Taleb, having a raft of important
scientific papers to his name. The point of his book – The Fabric of
Reality – is to demand that science offers explanations in tandem with
the opaque mathematical theories which explain observed results.
That sounds pretty reasonable to anyone who hasn't had a look
under the surface of quantum physics, where experimental results set an
enormous challenge to would-be-explainers. And so Deutsch is dragged by his
own explanatory mission to an extraordinary description of reality - the
"multiverse".
The general idea is that the universe (which used to mean
everything) is actually only things which we can observe. Whereas the
multiverse, in contrast, includes all the things that we will never see and
which it is physically impossible for us to access or measure.
Lots of people who have struggled with understanding quantum
physics have settled on a multiverse. Few have concluded that the atoms in a
zillion parallel universes have arranged themselves as a zillion copies of
you and me each in its own rather narrow universe, doing almost exactly the
same things as us, but differentiated by random quantized results at the
sub-atomic level.
Frankly this is all rather silly, and Popper – with has
reputation for verifiability – would surely have worried about the damage to
his blossoming brand upon seeing his name in Deutsch's dedication.
Nevertheless, there is one repeating aspect of this book which I
found intriguing. Deutsch is an acknowledged expert on virtual reality. His
book – for all its craziness and complexity – does persuade me that I am a
fairly sophisticated virtual reality generator.
You see, there is nothing "real" about
"blue", nor about "wet" or "sweet". The
sensation of each is a creation within my consciousness, and it has evolved
biologically to keep the genes which make brains being reproduced.
So what is genuinely real? That is what The Fabric of
Reality is about. I don't believe the book approaches the answer, but it
does raise questions, and few things are more agreeable to me (and perhaps
George Soros, too) than idling away a bit of pool-side time with the book
face-down, pondering questions, prompted by what I just read, of how everything
actually works. This book produces those moments.
Surely that's worth £10.99 – or even just $10.88 for US buyers –
of anyone's money.
