Stack and Tilt

His experience … had disabused him of any hope that the government would intercede to prevent rich corporations from doing bad things to poor people.
The Big Short: Inside the Doomsday Machine 


Spend enough time with it, and eventually golf can seem to intersect with everything. “It looks like,” for instance, the character Vinny remarks at a pivotal moment in the new film, The Big Short, “someone hit a piñata of white guys who suck at golf.” In Michael Lewis’ original book, The Big Short: Inside the Doomsday Machine, Steve Eisman—renamed “Mark Baum” and played by Steve Carrell for the film—is Vinny’s nominal boss, but Eisman is also dependent on Vinny because, Eisman says, “‘I can’t add … I think in stories. I need help with numbers.’” The story told through these two characters, among others, is a story about numbers: how five trillions of dollars went up in smoke in 2008. But there’s also a hidden story that The Big Short only implicitly tells: a story about how objections to power became corralled into disciplines concerned with stories, not numbers—and how it turns out that numbers just might be more helpful than stories.

To put the point another way, the distinction between stories and numbers made by Steve Eisman just might be as ridiculous as the loans American banks made in the early twenty-first century—and even more toxic. It makes little difference, after all, to the man dying of thirst whether his lifesaving water got carried in a jug or a canteen, on camel or a truck. Yet because a great segment of the American population actually believes in the distinction between numbers and stories, it’s arguably become impossible to advance arguments that might have stood in the way of the financial meltdown. One of those stories would be the tale of two philosophers: one a Frenchman and the other a surfer.

The Frenchman is known today as “Condorcet,” although his full name was Marie Jean Antoine Nicolas de Caritat, the Marquis de Condorcet, who died mysteriously while in official custody in 1794. Elected to the National Assembly of France in 1791—two years after the beginning of the Revolution in 1789—he was a member of the moderate “Girondin” faction: those who believed in a republic, and not a monarchy, but were not willing to go so far as the Montagnard radicals. He is remembered today for his outspoken defense of the Enlightenment, and also for his early work in what has become known as the discipline of political science, particularly in regards to voting—work that, as it happens, also helps to explain just how it was that the 2008 disaster happened.

Michael Lewis’ book, like the film, explains what happened in the American housing market over the last few decades admirably clearly. (Though without the film’s celebrity cameos.) Essentially, Wall Street firms learned how to package house loans into enormous bundles of many different house loans—and then, turn those collections into bonds. Each of those collections were a kind of “tower,” and at the top of each tower—in Wall Street vernacular, a “tranche”—was the least-risky loans, the loans to people highly unlikely to default. This was the “triple-A” tranche; underneath that level was the “double-A” tranche, and so forth down to “the riskiest, triple-B tranche”: the tranche composed of loans made to people most likely to default on their debts.

Now, to skip past a great deal of exposition, the reason why the American housing market eventually blew up—and nearly took the world’s economy with it—was that, as Lewis writes, “the rating agencies”—i.e., those charged with saying what loans were “triple-A” or “triple-B”—“presented with the pile of bonds backed by dubious loans, would pronounce 80 percent of the bonds in it triple-A.” These could then be re-packaged into new towers of debt, all of which could then be re-divided into triple-A and so forth, down to triple-B again. The housing market, in effect, became a game of three-card monte, in which it became impossible to tell where the marble of “good” loans was among all the bad ones.

The question however is why investors ever agreed to stacking up multiple loans into towers in the first place—and that is where our dead French nobleman, the marquis, comes in. For it was Condorcet who explained most penetratingly why it might be beneficial to make big piles out of smaller ones—though Condorcet’s purpose was a political, not an economic, one.

In his 1785 work, “Essay on the Application of Analysis to the Probability of Majority Decisions,” Condorcet laid out the same logic that would later lead Wall Street slicksters to get the idea of bundling loans. In what would later be called “Condocet’s jury theory,” the aristocrat attempted to show—as James Hawthorne of the University of Oklahoma has written—

that if the number of voters … is sufficiently large and the average of their individual propensities to select the better of two policy proposals is a little above random chance … then the majority is extremely likely to select the better alternative.

Or, as the introduction to a textbook of Condorcet’s work has put it, “the better the jurors’ judgment and/or the larger the majority, the more certain one can be that a decision is correct.” In other words—contrary to the adage—Condorcet is arguing that the more cooks, the better the resulting dish.

That, to put it mildly, is not what many people today think: as the proverb goes, our expectation is that the more people involved with a decision, the likelier it is to be a bad one. Condorcet himself agrees with that notion—so long, he argues, as the people involved are worse than random at finding the correct solution. In that case, he says, then yes: the more people involved the less likely it is that the group will arrive at the right answer.

If the group, however, is composed of people who are better than random at finding the correct solution, then Condorcet tells us that the more people involved, the more likely it is that the group will find the correct answer. (It doesn’t guarantee that the group will, mind—it just makes it more likely.) The reason why is the same reason that Wall Street wanted to lump bad loans in among the good loans: the idea in both cases is the elementary one that, with enough good loans, the likelihood of a bad loan’s failure will be counteracted by the likelihood of a good loan’s success.

Or to put it another way, it’s similar to the reason everyone hated the smart kid in high school who would “blow the curve” on the big test: that kid’s results could raise the overall average of the class, and thusly a score that otherwise would be “average” will now be “below average.” By putting enough loans together, Wall Street argued that they could overcome the risk that all, or any, of the individual loans that underlay the bonds would fail.

As Condorcet could have told them, however, the mathematics behind Wall Street’s argument only make sense given the assumption that the individuals (whether loans or voters) within the groupings (towers of loans or groups of voters) were more likely to be “good”—that is, vote correctly, or, in the case of loans, not default—than “bad.” If more “bad” loans (or dumb voters) are stacked together, Condorcet would say, then it becomes more, not less, likely that the whole tower will implode—and, to extend the metaphor into perhaps-impolite territory, “pancake” those caught beneath it. Effectively, Michael Lewis’ book (and the movie made from it) describes how Wall Street did just that: by collecting lots of bad loans together, investment banks in New York and elsewhere effectively built the “Doomsday Machine” that Lewis alludes to in his book’s title.

Now, it’s right about here that many will break with Condorcet: how, they will triumphantly ask, can we tell if we have a set of voters more likely to get the “right” answer than flipping a coin would? And of course, at first examination that is a very difficult question to answer. It’s just here, however, that luckily enough the late surfing philosopher, Donald Davidson, can ride Condorcet’s wave all the way to the beach: through what Davidson called “radical interpretation.”

Although the phrase “radical interpretation” might seem to refer to some kind of surf-influenced theory of reading, in fact Davidson’s idea is very down-to-earth. All it requires is for the reader to imagine herself confronting someone speaking a completely unknown language—one without translators or dictionaries that could help introduce the new language. How to even begin? What, for instance, is even a word in the new language—and what just a grunt? Or, to put the point more concretely, by using an example taken by one of Davidson’s instructors, W.V.O. Quine: if a person speaking the new language happens to point to a nearby rabbit, and makes a sound, does that sound refer to the rabbit—or to the act of pointing?

In such a case, Davidson says, it might appear that we could get no traction on figuring out an interpretation. And yet, there is one thing (he writes in the essay, “Thought and Talk”) we know for an absolute certainty: “We can, however, take it as given that most beliefs are correct.” We might not know what it is that this new person is saying, in other words, but we can know that most of that person’s (or any person’s) beliefs about the world are true. Why? Well, because that person is alive.

The implication in short is that, by surviving, any animal—and human beings are a kind of animal—has demonstrated that they are sufficiently “in tune” with their environment. An animal that, say, believed water was poison, and thus avoided water so strenuously as literally to die of dehydration would, obviously, be “out of tune” with the environment. The fact that something is alive is therefore evidence that, while in some case that animal might think something in error, overall that animal must be doing something “right.” The suggestion then is that most people, while they might believe some foolish things, for the most part believe true things: otherwise, they’d be dead.

That’s a truly significant, if usually ignored fact, about the state of being alive: as the British biologist Richard Dawkins once remarked, “however many ways there may be of being alive, it is certain that there are vastly more ways of being dead.” What being alive means, after all, is that you (for I presume you are alive) are the final product of an incredibly vast series of improbabilities over oceans of time—and that is not nothing. Merely by surviving, voters might demonstrate that they fulfill the minimum condition prescribed by Condorcet: they have (or their DNA has),  consistently done better than chance. What that leads to is the thought that, while packing loans together is obviously a risky proposition, packing voters is not: unlike collateral debt obligations, expanding the vote is an investment that, nearly necessarily, must pay off.

The argument is a simple one: in the first place, we know that voters must be better than chance in making decisions about their own lives—at least as they have gone so far. Each voter is herself a product of thousands, if not millions, of years of other presumably better-than-chance decisions. We could perhaps therefore presume that such voters are more likely than not to be better-than-chance decision-makers—fulfilling Condorcet’s preconditions. Furthermore, we also know that if those preconditions are met, then we thus also know that making more of them—that is, making more voters—must also result in a greater likelihood of the correct option being chosen, whether that is the right candidate selected or the right alternative picked in a referendum. QED.

Or so, at least, it could be argued. What’s interesting to me about the present is that despite everything that has happened to the United States—and for that matter, the rest of the world—since 2008 (and, perhaps, before that), no one has advanced, so far as I am aware, a similar sort of argument in public. Of course, that could be ascribed to the argument’s own weaknesses: whereas the above is an armchair line of thought at best, it’s at least debatable how competent individual voters are in reality. That is not even to approach the criticism that while in some global sense the logic of the above might be sound—a fairly large assumption—there could be no way to tell in any concrete sense whether these particular voters have actually demonstrated competence or are just merely themselves the result of chance. Any sufficiently hardheaded operator could easily advance counterarguments just as superficially appealing as the above argument might (or might not) be.

And yet.

Any counterargument after all would effectively be taking on the storytelling problem of The Big Short: the fact that, as for instance Jake Coyle of the Associated Press pointed out in his review of the film, the “heroes” eventually realize that “to their horror and immense profit … they’ve effectively bet against America, and won.” To say that you don’t believe in ensuring that every American votes, in other words, is to doubt the wisdom of the American voter, which is also to say that you don’t believe in Americans.

Or, that you don’t believe in America.

So why doesn’t the Left, if there is such a thing, advance an argument like that? Well, to my mind it’s because to a lot of the best, most articulate and sharpest undergraduates today, the sciences are presented as “the enemy” of the political: as the cognitive psychologist Steven Pinker noted a few years ago in the pages of The New Republic, while everyone knows that to the Christian right “reviled is the application of scientific reasoning to religion,” it’s less well-remarked how  “the intrusion of science into the humanities has been deeply resented.” In order to talk about politics in America these days then it’s first necessary to refuse to talk about science—even though, in many ways, an understanding of science is most crucial kind of knowledge the United States (and the world) will need in the future.

The problem of America, then—perhaps the reason why The Big Short could even happen—is that there are too many American Steves, and not enough Vinnies. Both “the left” and “the right” have gone out of their way, for decades now, to denounce the supposed tyranny of the sciences—what’s sometimes called “scientism.” According to those who make this critique—and they belong to “both” sides of the political aisle—the nation is about to fall prey to a set of robotic would-be rulers who will stifle all “creativity,” a trait only possessed by artists and businessmen.

But then again, maybe it’s just that those people suck at more than golf.


Please let me know what you think! Also, if you are having trouble with posting a comment, please feel free to email me personally at Thanks for reading!

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