History, Critical Race Theory and the 1619 Project

The recent controversies over Critical Race Theory and the 1619 Project of the New York Times call into question how we interpret history and how it is best portrayed to students at various times in their education.

What is history?  Is it a set of events?  Merriam-Webster defines history as ‘a chronological record of significant events (such as those affecting a nation or institution) often including an explanation of their causes’. Is history subjective?  Can there be a truly objective analysis of history?

Any historical period has an infinite number of events.  The very act of choosing which events to list in an historical account is already an ‘interpretation’ of history, a subjective view.  Moreover, a mere list of chronological events does little to help one understand what actually occurred during an historical period.  The historian is not a chronicler, but rather an interpreter, an analyst.  It is the job of every true historian to attempt to comprehend the underlying significance of events, to depict the mood, the atmosphere, the Zeitgeist that influences and motivates human activity

Long ago societies recorded their history by creating myths and heroic sagas for the purpose of indoctrinating their young in a specific way to serve the community.  Accurate depictions and analysis were neither desired nor attempted. 

Modern historical accounting has evolved over the last couple of centuries as an ever-increasing volume of information, letters, documents, etc. has become available for analysis.  The way that history is recounted also evolves as society’s consciousness evolves.  Our perceptions of conquest, enslavement, colonization, exploration, religion, science, economic growth and other components of history have undergone significant changes.  Those changes impact our interpretation of history and cause us to take a closer look at events and relationships that may have seemed less significant to earlier historians.

For example, the history of the American colonial period was, for much of our nation’s existence, portrayed in terms of the development of the economic and political evolution of the white colonists, with occasional references to Native American hostilities.  The virtual annihilation of the Native American people and culture, which in modern terms could easily be categorized as genocide, was not deemed historically significant.

Now one can argue that the virtual annihilation of the indigenous people by the colonizers was no different or more heinous than what had been done by conquering nations throughout history up to that point.  But to argue that this aspect of our nation’s history should not be studied in more detail is a call to whitewash history.

The same is true for the analysis of slavery and all its ramifications.  There is certainly no doubt that slavery has had tentacles throughout our country’s development and played a major role in many if not most of the major events.  The goal of the NY Times 1619 project – ‘to place the consequences of slavery and the contributions of black Americans at the very center of the story we tell ourselves about who we are as a country’ – is a worthy exercise in historical analysis.  Should it become the primary means of viewing the nation’s history?  Should it take precedence over other analyses that focus on the development of concepts of liberty, freedom and equality?  No, and there is no danger that it would.  History is much too complex to be viewed through a single lens.

Critical Race Theory (CRT) is too complex for a full discussion here.  The objective of CRT is to identify systemic aspects of racism (i.e. laws, policies and other institutional implementations of racism - intended or unintended) that have impacted the plight of African Americans. 

Critics complain that CRT’s goal is to portray everyone as racist, but that is not the case.  If we truly want to address the problem of race in America, then we need to identify the remaining institutional barriers to African American progress and eliminate them.  For example, the fact that education budgets in the USA are locally funded is effectively a racist policy because we continue to have segregated communities and black communities are significantly poorer than white communities.

If our civilization is to continue to progress, then it must be honest with itself about both its successes and its failures, its heroism and its villainy.  We know that our ancestors had a different level of social consciousness and morality than we have today.  Many of their actions were deplorable.  But they also made possible the more enlightened and peaceful world we live in today.  Humanity was and still is full of contradictions.

The objective of a critical analysis of America’s history is not to drag its name in the mud or slander its favorite sons, though recognizing our forefathers as all-too-human and taking them down off their pedestals is a very healthy thing to do.  No one wants to make our children into America-haters.  But how are we to continue to form a more perfect union if we cannot acknowledge both the good and the bad of what has transpired?

History’s role is neither to glorify nor to condemn.  Its role is to understand!  The history we teach to our children and indeed, the history that we learn as adults, must help us identify the best way forward for our society.  This can only be done with a sober, clear-eyed approach that offers a multiplicity of views and interpretations for us to consider.

Investment Ethics - What is True Capitalism?

Capitalism is the economic engine of the world.  There is no denying that fact.  Of course, there are significant parts of every economy that are part of the ‘state’ and therefore not subject to private investment and management, but the true driving force is capitalism.

Here is my simple description of how capitalism works in its pure form: 

•  An entrepreneur with a dream or idea starts a company
• People invest in the company and become part-owners because they believe that the company will grow, create ‘value’ and become profitable
• People work for the company for wages based on the market value of their labor
• The investors receive some portion of the profits (dividends) based on their share of ownership
• The value of the shares of ownership grow or decline based on the current profitability of the company and the market perception of its future potential for growth.

In an ideal world, that is how capitalism and investment would work.  In theory, our goals as investors should be to encourage the creation of jobs and valuable work output (i.e. value creation) in our society and benefit when those goals are achieved.  If the company does well, then all the investors should benefit.  If it fails, then all should face the consequences.

But investment is often independent of, and even at odds with what I would call the ‘capitalist spirit of creating value’.  Investment is more like gambling.  Most people are perfectly happy to make money regardless of the success or failure of the company in which their investment lies. 

Examples of this are numerous:  the short sellers are the most egregious example.  When short sellers make a profit off the failure of a company, they are not benefiting from any sort of ‘value creation’, which is the whole purpose of capitalism.  On the contrary, they are simply taking money from other people who are not aware of the impending decline of the investment.

Trading in investments like bitcoin is another example.  There are many investments that produce no identifiable value, or dramatically exaggerate value in order to produce a FOMO (fear of missing out) in potential investors. These investments are the equivalent of a casino.  The casino mentality is a ‘get-rich-quick’ mentality, typically at the expense of others who are getting-poor-quick!  And sadly, most people are perfectly happy to obtain money in this fashion.

When there is no value creation – no new products or services created and providing value to the world – the investment game is zero sum.  For every winner there must be a loser.  One can argue that the poor schmucks who lose are themselves to blame for their losses, but this is certainly not an ethical stance.

Perhaps I am being puritanical here. I have never enjoyed gambling and I find no pleasure in ‘winning’ when my winning means that others must lose.  I never buy lottery tickets and Las Vegas is the last place I would choose to go for a vacation!

Interestingly, real estate is also somewhat of a strange investment.  No ‘new’ value is being created in property or housing as these assets age.  In theory, their value should be a constant, adjusted only by inflation.  Yet real estate has been the path to riches for many people simply because of the laws of supply and demand, and the relative scarcity of real estate in desirable locations as populations grow.  In my view, real estate investors are also parasitic, increasing their wealth at the expense of others.  Another case of the haves screwing the have nots.

And finally, to firmly cement my contrarian views, I will condemn the entire financial services industry for its absurdly high salaries and commissions.  How much value they actually create requires a fairly complex analysis that I am not able to conduct.  But if I were a betting man (and clearly I am not!) then I would bet a large part of my wealth that their added value (which is a service) is a tiny fraction of the trillions that they skim off of financial transactions.  One has only to view the list of the world’s wealthiest people to see how many are hedge fund managers, bond traders, investment bankers, venture capitalists, and other types of so-called financial wizards to realize that they have substantially rigged the game in their favor.

Investment is generally a good thing for everyone.  But it is also clear that the wealthier one is, the more one may benefit from investment.  Access to information, often 'insider' in nature, and opportunities to invest in higher yield investment options are available much more frequently to the wealthy.

The world’s capitalist economy is complex and unjust in many ways.  Alas, there is no simple way to fix it.  Revolutionary doctrines and socioeconomic models have been spectacular failures.  So, we keep plodding along with capitalism and try to make it as humane as possible.  But perhaps if people could feel ethically compelled to make investment choices that truly add value to the world rather than simply enrich themselves, then capitalism would improve significantly.