Race, Racism and Investing
L: Doug we recently tested dangerous waters and talked on race while discussing Russia – and Russians. Your views on this subject will probably offend any number of people, but some things are worth saying, regardless. And, cold as it may sound, I think there are investment implications. Shall we speak of the unspeakable?
Doug: Sure. But as I said at the beginning of our conversation on Russia, the first thing to say is that any time you’re dealing with a large group of people, it’s almost always wrong to think of them as a group. Logically, the more specific your statement about a lot of people is, the more people within that group won’t fit the bill, and the more general – i.e. vague – your statement, the less useful it is.
I always do my best to treat each individual I meet as exactly that; the individual he or she is.
Thinking of people in terms of groups, Groupthink, is simply sloppy thinking, whether it’s “the proletariat” vs. “capitalists” or “African-Americans” vs… What? All Americans came from elsewhere. But we risk anger if we say “white people.” Groupthink is logically unsound, one error among many of the communists and socialists made.
L: I knew a white guy from South Africa, who immigrated to the U.S., who used to put “African-American” on all the forms. I sympathize with his desire to mess with stupid social expectations by putting square pegs in round holes.
Doug: Shaking people up can be a good thing; it can force them out of mental ruts, so they start dealing with you as they should, as an individual. But don’t expect them to ever thank you for it.
L: Heh. No. When I went to Rensselaer Polytechnic Institute, I put “other” for race on the forms. To me, “Hispanic” isn’t a race, it’s a culture (of which I am not a part, regardless of my genetic inheritance), and I always experience such attempts to group me by race to be more racist than the racism such information is supposedly gathered to fight. So, anyway, I usually put “human,” but I put “other” – and I kept getting letters inviting me to join the RPI Society of Black Engineers. Every time I got one, I was struck by how offensive it would be to so many people if there were a Society of White Engineers… But, back to your point, I didn’t think I’d make any friends marching up to their building to point this out to them. So I let it be.
Doug: Doubtless, a wise choice.
L: Groovy. But Doug, I’ve heard you say many times that you have more in common with polo-players you’ve met in Argentina, or cigar aficionados you’ve met in the Congo, than with the majority of the… er… European-Americans? Screw it. Let’s just say “white people.” Anyway, you have more in common with many visibly not-white people from around the world than with most of the white people down the street from your house in Colorado. An admirably color-blind statement. You said last week that you form your relationships based on what people’s values, ethics, spirituality, etc., are. But fess up, aren’t you more likely to find people who share your values among white North Americans who share the remnants of the culture of freedom America once had?
Doug: It might have been so a generation or two ago, but the libertarian values that made America great beat a steady retreat throughout the 20th century, and were largely out of fashion before the current young generation was born. And most of their teachers are actively hostile to these values. So, who knows – it might be less likely for a kid growing up in the U.S. to encounter these ideas and values than one growing up in China, where people value hard work, innovation, creative effort, etc.
L: I’m not sure the same is true of a child growing up in the Congo.
Doug: Maybe so, but that’d be because society there is so debased by corrupt government – not a function of race.
L: Okay, so you’re an equal opportunity investor, friend, and poker-player. You’ll sit down for a chat with anyone from anywhere, if the individual seems interesting to you. But if you happened to be walking alone at night in New York City, and took a wrong turn, ending up on a street with a group of large, young black men in what look like “gangsta” clothes, wouldn’t your adrenaline level rise? And might it not drop sharply again if suddenly a streetlight revealed that they were all carrying bibles? Is that prejudice?
Doug: No. Aside from the fact that the bibles might make me worry that they would chase me down the street, trying to save my lost soul, it’s not prejudice to assess your environment for potential threats – most of which will take the form of other human beings. People do get mugged in some places. That’s a fact, and being aware of that fact is not prejudice – it’s prudence. Prejudice would be deciding that those men were hostile before they made any hostile moves. Deciding to walk in a different direction even before a threat was made would not be prejudice, but a tactical decision based on the way our world is at present, not imagined knowledge about the individual men in question.
Prejudice. As always, we should work with a good definition before going on.
L: My Webster’s says that prejudice is 1) a preconceived judgment or opinion, 2) an adverse opinion or leaning formed without just grounds or before sufficient knowledge.
Doug: So, prejudice – pre-judgment – involves thinking you know things about people before they give you any evidence for those things being true. It’s not prejudice to consider a possibility, but it is prejudice to make assumptions and treat them as facts.
Let me put it this way, if I see a guy wearing an Arabic headdress, and I don’t start our conversation by offering him a glass of wine, that’s not prejudice. Or if I see a guy dressed like a Hassidic Jew, and I don’t offer him a ham sandwich, that’s not prejudice. They are displaying themselves in a way that gives evidence of their being members of certain groups about which some things are known. But if I told myself the Arabic guy was going to give me a hard time for me having a glass of wine, or that the Jewish guy was going to try to stick me with the bill for lunch, and was hostile with them in advance of them having done any such things, that would be prejudice.
L: Okay: assessing possibilities, based on visible cultural and other data, is not the same as judging people before you know them. Let’s move on from prejudice and get back to race. In our conversation on Russia, you said that Russia’s problems could go beyond culture to the impact of Soviet and even Tsarist policies on the gene pool. That may be completely true, but isn’t it a kind of Groupthink, and racist to boot?
Doug: I didn’t say that groups don’t exist. Of course they do, and there are many groups of people in the world with well-defined characteristics. It’s reasonable to conclude that a guy dressed like a Hassidic Jew is probably a Hassidic Jew, and it’s necessary to make such assumptions in day-to-day life. If we don’t, and we stop to test each individual assumption, we’ll never get anything done. But just because I acknowledge the group’s existence and, in this case, don’t offer the guy a ham sandwich, I still treat him like the individual he is, and if he asks for a ham sandwich, I’m fine with that. Groupthink is not a problem of acknowledging the existence of groups, including human groups; it’s treating individuals as though they were the group, or as though they necessarily hold all the traits that define the group.
And if it’s racist to acknowledge that human groups exist, including racial ones with genetic commonalities, then we are all racists, whether we admit it or not.
L: Webster’s says racism is the belief that race is the primary determinant of human traits and capacities and that racial differences produce an inherent superiority of a particular race.
Doug: So, again, it’s about Groupthink. It’s not racist to acknowledge that there’s a subset of the human race with darker skin and curly hair, but it is racist to think you know something about an individual because he looks that way. And what’s bothersome about racism isn’t acknowledging differences, but the belief that one’s own race is superior. Near as I can tell, there’s no superior race. So I just look for excellent individuals with whom I can enjoy spending time.
L: Right then. Investment implications?
Doug: Broadly speaking, the big conclusion is to short cultures that, on average, discourage individual achievement and have no work ethic. Even if such a society has not existed long enough to impact the gene pool, if it exists at all it has impacted the meme pool, and that’s bearish.
I’m not judging any individual Russians, but saying that I’m not optimistic about Russia. For the same reason, I’m bearish on the U.S. America was once the land of the free and the home of the brave, but it has degraded into the country of intellectual lap dogs and welfare recipients. There’s a large minority of Americans who have The Right Stuff and are still struggling to set things right, but that’s hard to do once you’ve been trussed, stuffed, and placed on the sacrificial altar to satisfy the hungry lust of needy voters.
L: So what cultures are you bullish on? This is not the same question we’ve taken up on your favorite places to live – I’m not asking about quality of life now, but about The Right Stuff to build a better future.
Doug: Well, I think China has a lot of short-term problems, but over the course of the 21st century, it’s a good bet that it will surge ahead to lead the field.
L: As you know, I’m partial to a number of former Soviet republics, but I need to go back and look at their demographic trends. What I do like about them is that they have living memory of real, naked socialism, and they know it doesn’t work. In places like Belarus, people want to get ahead, are willing to work hard, are very smart, and I have met many people with strong personal ethics. It’s hard for me not to be optimistic for them, even though they’ve got a horribly obstructive government.
Doug: You may be right, but I think most, if not all, of the Baltic states have the same demographic problem the rest of Europe does.
L: Population implosion. Who-da thunk it in the 20th century? At any rate, as far as the places and cultures you’re bullish on, the general idea is to watch for strengthening rule of law, stabilizing business environments, etc. and then invest in those markets? Or would prices be high by then, making it better to speculate now on the cultures that seem to have The Right Stuff, while prices are low?
Doug: Too early to say. That’s something we’ll be tracking in The Casey Report as we go.
L: Okay. But this seems like a good time to repeat your mantra of getting your ass…ets out of the U.S., or as much of them as you practically can, as soon as you can.
Doug: I’m afraid that’s the way the odds say to play it. We’re already seeing the tightening currency controls we talked about last year, and it’s going to get worse. Much worse.
L: Roger that. You know, I’ve always thought of America as a beautiful young woman, full of hope and promise and all the greatness in our species. I even considered the name for a daughter – it was that beautiful to me. But a real woman of flesh and blood would age, in time, and I never wanted to see America as an old woman, bent with age and the care of years. Unfortunately, I’m starting to see her that way anyway.
Doug: I know exactly what you mean. But, as gloomy as I may sound about America, I am extremely bullish on humanity, in and of itself.
L: That’s right. America herself may not rise again, but some of her children, and the best and the brightest from around the world may make a new beginning, just as those who fled the tyrannies of Europe hundreds of years ago did in America. Maybe we’ll do it on Mars. Hey, if I stake a few of the Martian canals, will you buy a lot in my development project?
Doug: Only if I can play Polo.
L: I’m not sure if the lower gravity would make it safer, or more dangerous…
Doug: One way to find out.
April 26, 2010