Tag Archives: Friedrich Nietzsche

Nietzsche von Hayek on Merit

17 Apr

Friedrich Nietzsche, The Wanderer and His Shadow:

The value of work.—If we wanted to determine the value of work by how much time, effort, good or ill will, compulsion, inventiveness or laziness, honesty or deception has been expended on it, then the valuation can never be just; for we would have to be able to place the entire person on the scales, and that is impossible. Here the rule must be “judge not!” But it is precisely to justice that they appeal who nowadays are dissatisfied with the evaluation of work. If we reflect further we find that no personality can be held accountable for what it produces, that is to say its work: so that no merit can be derived from it; all work is as good or bad as it must be given this or that constellation of strengths and weaknesses, knowledge and desires. The worker is not free to choose whether he works, nor how he works. It is only from the standpoint of utility, narrower and wider, that work can be evaluated. (§286)

Friedrich Hayek, The Constitution of Liberty:

In a free system it is neither desirable nor practicable that material rewards should be made generally to correspond to what men recognize as merit…

The value that the performance or capacity of a person has to his fellows has no necessary connection with its ascertainable merit….

The possibility of a true judgment of merit thus depends on the presence of precisely those conditions whose general absence is the main argument for liberty. It is because we want people to use knowledge which we do not possess that we let them decide for themselves. But insofar as we want them to be free to use capacities and knowledge of facts which we do not have, we are not in a position to judge the merit of their achievements. To decide on merit presupposes that we can judge whether people have made such use of their opportunities as they ought to have made and how much effort of will or self-denial this has cost them; it presupposes also that we can distinguish between that part of their achievement which is due to circumstances within their control and that part which is not.” (157-159)

The Price of Labor: Burke, Nietzsche, and Menger

17 Apr

Edmund Burke, Thoughts and Details on Scarcity:

When any commodity is carried to market, it is not the necessity of the vendor, but the necessity of the purchaser that raises the price….If the goods at market are beyond the demand, they fall in their value; if below it, they rise. The impossibility of the subsistence of a man, who carries his labour to a market, is totally beside the question in this way of viewing it. The only question is, what is it worth to the buyer? (pp. 68-69)

Carl Menger, Principles of Economics:

Neither the means of subsistence nor the minimum of subsistence of a laborer, therefore, can be the direct cause or determining principle of the price of labor services.

In reality, as we shall see, the prices of actual labor services are governed, like the prices of all other goods, by their values. But their values are governed, as was shown, by the magnitude of importance of the satisfactions that would have to remain unsatisfied if we were unable to command the labor services. (p. 171)

Friedrich Nietzsche, The Wanderer and His Shadow:

The value of work.—If we wanted to determine the value of work by how much time, effort, good or ill will, compulsion, inventiveness or laziness, honesty or deception has been expended on it, then the valuation can never be just; for we would have to be able to place the entire person on the scales, and that is impossible. Here the rule must be “judge not!” But it is precisely to justice that they appeal who nowadays are dissatisfied with the evaluation of work. If we reflect further we find that no personality can be held accountable for what it produces, that is to say its work: so that no merit can be derived from it; all work is as good or bad as it must be given this or that constellation of strengths and weaknesses, knowledge and desires. The worker is not free to choose whether he works, nor how he works. It is only from the standpoint of utility, narrower and wider, that work can be evaluated. (§286)

The Smartest Guy in the Room

10 Mar

The current issue of Vanity Fair has a profile of William Ackman, the billionaire hedge fund manager who’s trying to bring down Herbalife. Ackman’s friends and enemies call him Bill; I know him as Billy.

You see, Billy Ackman and I grew up together in Chappaqua, New York. He was a year ahead of me in school. Our families went to the same synagogue. I knew his parents, and his older sister and my sister were in the same class. We weren’t friends, and he never made much of an impression on me. He was smart, but in the way many kids in Chappaqua were smart: he got good grades, obsessed about college, went to Harvard.

What I didn’t know was this:

In 1984, when he was a junior at Horace Greeley High School, in affluent Chappaqua, New York, he wagered his father $2,000 that he would score a perfect 800 on the verbal section of the S.A.T. The gamble was everything Ackman had saved up from his Bar Mitzvah gift money and his allowance for doing household chores. “I was a little bit of a cocky kid,” he admits, with uncharacteristic understatement.

Tall, athletic, handsome with cerulean eyes, he was the kind of hyper-ambitious kid other kids loved to hate and just the type to make a big wager with no margin for error. But on the night before the S.A.T., his father took pity on him and canceled the bet. “I would’ve lost it,” Ackman concedes. He got a 780 on the verbal and a 750 on the math. “One wrong on the verbal, three wrong on the math,” he muses. “I’m still convinced some of the questions were wrong.”

Ackman has made billions of dollars since 1984. According to Vanity Fair, he owns a $22 million mansion in the Hamptons, an estate in upstate New York, a co-op in a “historic” building on Central Park West, and a private Gulfstream 550 jet. He started his own hedge fund with a quarter-million dollars from Marty Peretz, who was his professor at Harvard (the only reason I could possibly imagine for taking a course with Peretz is that you think he might some day help you in just this way). He goes bone-fishing (whatever that is) in Argentina. He likes to say things like “Tennis, I practice. Presentations, I don’t.”— which I gather is hedge fund for “shaken, not stirred”—and “You know what? It’s time for me to do something for cancer.”

But with all that, he still remembers his SAT scores—and the number of questions he got wrong—as if he took them yesterday.

You see, Ackman is one of those guys for whom phrases like “smartest guy in the room” mean something. That’s a phrase I’ve been thinking about of late. I know smart people, but their minds are so various and incommensurate, it’d be impossible to rank them according to intelligence. They’re all smart, but in different ways: one sees deeply, one sees quickly, one sees things no one else sees.

But Ackman operates in a world—and it’s not just Wall Street; you can also find it in DC, the media, the law, and some parts of academia—where rankings of this sort mean something. They have to: no matter what the endeavor, someone always has to come out on top or in first. Whether it’s the most money, the biggest house, or the fastest cyclist.

It happened last summer when Ackman decided to join a group of a half-dozen dedicated cyclists, including [billionaire hedge-fund dude Daniel] Loeb, who take long bike rides together in the Hamptons. The plan was for Loeb, who is extremely serious about fitness and has done sprint triathlons, a half-Ironman, and a New York City Marathon, to pick up Ackman…The two would cycle the 20 or so miles to Montauk, where they would meet up with the rest of the group and ride out the additional 6 miles to the lighthouse, at the tip of the island. “I had done no biking all summer,” Ackman now admits. Still, he went out at a very fast clip, his hypercompetitive instincts kicking in. As he and Loeb approached Montauk, Loeb texted his friends, who rode out to meet them from the opposite direction. The etiquette would have been for Ackman and Loeb to slow down and greet the other riders, but Ackman just blew by at top speed. The others fell in behind, at first struggling to keep up with the alpha leader. But soon enough Ackman faltered—at Mile 32, Ackman recalls—and fell way behind the others. He was clearly “bonking,” as they say in the cycling world, which is what happens when a rider is dehydrated and his energy stores are depleted.

While everyone else rode back to Loeb’s East Hampton mansion, one of Loeb’s friends, David “Tiger” Williams, a respected cyclist and trader, painstakingly guided Ackman, who by then could barely pedal and was letting out primal screams of pain from the cramps in his legs, back to Bridgehampton. “I was in unbelievable pain,” Ackman recalls. As the other riders noted, it was really rather ridiculous for him to have gone out so fast, trying to lead the pack, considering his lack of training. Why not acknowledge your limits and set a pace you could maintain? As one rider notes, “I’ve never had an experience where someone has gone from being so aggressive on a bike to being so hopelessly unable to even turn the pedals…. His mind wrote a check that his body couldn’t cash.”

Apparently this story “is so widely known in the hedge-fund eco-system that it has practically achieved urban-legend status.” You might think people who make and break economies over breakfast would have something else to talk about. But when every last activity in life is a race, and someone must always win or lose, a weekend ride becomes just as much a revelation of the whole as a morning trade.

What’s odd in Ackman’s case is how loathed he is by his colleagues. So much so that they’ve banded together to take him down in this Herbalife deal.

Ackman says he suspected, when he “shorted” (i.e., bet against) Herbalife, that other hedge-fund investors would likely see the move as an opportunity to make money by taking the other side of his bet. What he hadn’t counted on, though, was that there would be a personal tinge to it. It was as if his colleagues had finally found a way to express publicly how irritating they have found Ackman all these years. Here finally was a chance to get back at him and make some money at the same time. The perfect trade. These days the Schadenfreude in the rarefied hedge-fund world in Midtown Manhattan is so thick it’s intoxicating.

So why is Ackman the object of such hate?

It’s Ackman’s perceived arrogance that gets to his critics. “The story I hear from everybody is that one can’t help but be intrigued by the guy, just because he’s somewhat larger than life, but then one realizes he’s just pompous and arrogant and seems to have been born without the gene that perceives and measures risk,” says [Robert] Chapman. “He seems to look at other members of society, even legends such as Carl Icahn, as some kind of sub-species. The disgusted, annoyed look on his face when confronted by the masses beneath him is like one you’d expect to see [from someone] confronted by a homeless person who hadn’t showered in weeks. You can almost see him puckering his nostrils so he doesn’t have to smell these inferior creatures.

Notice what Chapman says: Ackman treats his colleagues as if they were the homeless. In other words, it’s fine, even expected, to treat the homeless—and all the other little people—that way. As Ludwig von Mises wrote to Ayn Rand: “You have the courage to tell the masses what no politician told them: you are inferior and all the improvements in your conditions which you simply take for granted you owe to the effort of men who are better than you.” What’s not fine is to treat the big people that way.

Ackman’s mistake is that he takes the “smartest guy in the room” business too seriously. He really thinks he’s that dude. So much so that he’s willing to treat the other guys in the room as if they weren’t. That’s a no-no, and now they’re going to take him down for it.

Nietzsche understood this dynamic all too well. In an essay from 1872, “Homer’s Contest,” he remarked upon the centrality of competition to the Greek state. Not economic competition but other forms of contest: military, athletic, aesthetic, and so on. The idea was that “every talent must develop through a struggle” with one’s peers, but the point of that struggle was to serve the good of the state.

From childhood, every Greek felt the burning desire within him to be an instrument of bringing salvation to his city in the contest between cities: in this, his selfishness was lit, as well as curbed and restricted.

But when a competitor’s ambition is so unhinged, when he not only tries but actually manages to make his way to the top, and stay there, he must be removed. For the good of the state. That, says, Nietzsche, is the origins of the practice of ostracism. And if his competitors can’t do it, the gods will: they step in and take him out.

Why should nobody be the best? Because with that, the contest would dry up and the permanent basis of life in the Hellenic state would be endangered….the preeminent individual is removed so that a new contest of powers can be awakened: a thought which is hostile to the “exclusivity” of genius in the modern sense, but which assumes that there are always several geniuses to incite each other to action, just as they keep each other within certain limits, too.

Back to Wall Street: If the “smartest guy in the room” is going to serve the purpose for which it was coined—to spur little Billy Ackman’s to work hard, get into Harvard, and make lots of money—it has to remain an elusive prize. Something to strive for, never to be claimed.

No one, it turns out, can ever really be the smartest guy in the room. For two reasons. First, to make sure that everyone keeps fighting to get in, and stay in. Second, to make sure that everyone who doesn’t get in is kept out.

Justice Scalia: American Nietzsche

27 Jun

This is Part 2 of my series on Justice Scalia, Diva of Disdain.  Part 1 is here; an introduction to the whole is here.

Like many originalists, Scalia claims that his jurisprudence has nothing to do with his conservatism. “I try mightily to prevent my religious views or my political views or my philosophical views from affecting my interpretation of the laws.” Yet he has also said that he learned from his teachers at Georgetown never to “separate your religious life from your intellectual life. They’re not separate.” Only months before Ronald Reagan nominated him to the Supreme Court in 1986, he admitted that his legal views were “inevitably affected by moral and theological perceptions.”

And, indeed, in the deep grammar of his opinions lies a conservatism that, if it has little to do with advancing the immediate interests of the Republican Party, has even less to do with averting the threats of judicial tyranny and judicial anarchy. It is a conservatism that would have been recognizable to Social Darwinists of the late nineteenth century, that mixes freely of the premodern and the postmodern, the archaic and the advanced. It is not to be found in the obvious places—Scalia’s opinions about abortion, say, or gay rights—but in a dissenting opinion about that most un-Scaliaesque of places, the golf course.

Casey Martin was a champion golfer (he’s now an ex-golfer) who because of a degenerative disease could no longer walk the eighteen holes of a golf course. After the PGA Tour refused his request to use a golf cart in the final round of one of its qualifying tournaments, a federal court issued an injunction, based on the Americans with Disabilities Act (ADA), allowing Martin to use a cart.

Title III of the ADA states that “no individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation.”

By the time the case reached the Supreme Court in 2001, the legal questions had boiled down to these: Is Martin entitled to the protections of Title III of the ADA? Would allowing Martin to use a cart “fundamentally alter the nature” of the game? Ruling 7–2 in Martin’s favor—with Scalia and Thomas in dissent—the Court said yes to the first and no to the second.

In answering the first question, the Court had to contend with the PGA’s claims that it was operating a “place of exhibition or entertainment” rather than a public accommodation, that only a customer of that entertainment qualified for Title III protections, and that Martin was not a customer but a provider of entertainment. The Court was skeptical of the first two claims. But even if they were true, the Court said, Martin would still be protected by Title III because he was in fact a customer of the PGA: he and the other contestants had to pay $3,000 to try out for the tournament. Some customers paid to watch the tournament, others to compete in it. The PGA could not discriminate against either.

Scalia was incensed. It “seems to me quite incredible,” he began, that the majority would treat Martin as a “‘custome[r]’ of ‘competition’” rather than as a competitor. The PGA sold entertainment, the public paid for it, the golfers provided it; the qualifying rounds were their application for hire. Martin was no more a customer than is an actor who shows up for an open casting call. He was an employee, or potential employee, whose proper recourse, if he had any, was not Title III of the ADA, which covered public accommodations, but Title I, which covered employment. But Martin wouldn’t have that recourse, admitted Scalia, because he was essentially an independent contractor, a category of employee not covered by the ADA. Martin would thus wind up in a legal no man’s land, without any protection from the law.

In the majority’s suggestion that Martin was a customer rather than a competitor, Scalia saw something worse than a wrongly decided opinion. He saw a threat to the status of athletes everywhere, whose talent and excellence would be smothered by the bosomy embrace of the Court, and also a threat to the idea of competition more generally. It was as if the Homeric rivals of ancient Greece were being plucked from their manly games and forced to walk the aisles of a modern boutique.

Games hold a special valence for Scalia: they are the space where inequality rules. “The very nature of competitive sport is the measurement,” he says, “of unevenly distributed excellence.” That inequality is what “determines the winners and losers.” In the noonday sun of competition, we cannot hide our superiority or inferiority, our excellence or inadequacy. Games make our unequal natures plain to the world; they celebrate “the uneven distribution of God-given gifts.”

In the Court’s transposition of competitor into customer, Scalia saw the forced entry of democracy (a “revolution,” actually) into this antique preserve. With “Animal Farm determination”—yes, Scalia goes there—the Court had destroyed our one and only opportunity to see how unequal we truly are, how unfairly God has chosen to bestow his blessings upon us. “The year was 2001,” reads the last sentence of Scalia’s dissent, “and ‘everybody was finally equal.’”

Like the Social Darwinists and Nietzsche, Scalia is too much a modernist, even a postmodernist, to pine for the lost world of feudal fixities. Modernity has seen too much flux to sustain a belief in hereditary status. The watermarks of privilege and privation are no longer visible to the naked eye; they must be identified, again and again, through struggle and contest. Hence the appeal of the game. In sports, unlike law, every day is a new day. Every competition is a fresh opportunity for mixing it up, for throwing our established hierarchies into anarchic relief and allowing a new face of supremacy or abjection to emerge. It thus offers the perfect marriage of the feudal and the fallible, the unequal and the unsettled.

To answer the second question—does riding in a golf cart “fundamentally alter the nature” of golf—the majority undertook a thorough history of the rules of golf. It then formulated a two-part test for determining whether riding in a cart would change the nature of golf. The dutifulness and care, the seriousness with which the majority took its task, both amused and annoyed Scalia.

It has been rendered the solemn duty of the Supreme Court of the United States . . . to decide What Is Golf. I am sure that the Framers of the Constitution, aware of the 1457 edict of King James II of Scotland prohibiting golf because it interfered with the practice of archery, fully expected that sooner or later the paths of golf and government, the law and the links, would once again cross, and that the judges of this august Court would some day have to wrestle with that age-old jurisprudential question, for which their years of study in the law have so well prepared them: Is someone riding around a golf course from shot to shot really a golfer?

Scalia is clearly enjoying himself here, but his mirth is a little mystifying. The ADA defines discrimination as

a failure to make reasonable modifications in the policies, practices, or procedures, when such modifications are necessary to afford such goods, services, facilities, privileges, advantages, or accommodations to individuals with disabilities, unless the entity can demonstrate that making such modifications would fundamentally alter the nature of such goods, services, facilities, privileges, advantages, or accommodations that the entity provides.

Any determination of discrimination requires a prior determination about whether the “reasonable modification” would “fundamentally alter the nature” of the good in question. The language of the statute, in other words, compels the Court to inquire into and decide What is Golf.

But Scalia won’t have any of it. Refusing to be bound by the text, he prefers to meditate on the futility and fatuity of the Court’s inquiry. In seeking to discover the essence of golf, the Court is looking for something that does not exist. “To say that something is ‘essential,’” he writes, “is ordinarily to say that it is necessary to the achievement of a certain object.” But games “have no object except amusement.” Lacking an object, they have no essence. It’s thus impossible to say whether a rule is essential. “All are arbitrary,” he writes of the rules, “none is essential.” What makes a rule a rule is either tradition or, “in more modern times,” the edict of an authoritative body like the PGA.

In an unguarded moment, Scalia entertains the possibility of there being “some point at which the rules of a well-known game are changed to such a degree that no reasonable person would call it the same game.” But he quickly pulls back from his foray into essentialism. No Plato for him; he’s with Nietzsche all the way.

It is difficult to reconcile this almost Rortyesque hostility to the idea of golf’s essence with Scalia’s earlier statements about “the very nature of competitive sport” being the revelation of divinely ordained inequalities. (It’s also difficult to reconcile Scalia’s indifference to the language of the statute with his textualism, but that’s another matter.) Left unresolved, however, the contradiction reveals the twin poles of Scalia’s faith: a belief in rules as arbitrary impositions of power—reflecting nothing (not even the will or standing of their makers) but the flat surface of their locutionary meaning—to which we must nevertheless submit; and a belief in rules, zealously enforced, as the divining rod of our ineradicable inequality. Those who make it past these blank and barren gods are winners; everyone else is a loser.

Tomorrow: How and why Scalia is the real affirmative action baby, and how liberals enable him.

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