Steady state or dream state?

July 25, 2011

Readers of this blog know that I am a long-time reader of The New York Review of Books. Sadly this love is not because of that great publication’s coverage of finance and economics, which I think is skewed to the neo-Keynesian, socialist end of the intellectual spectrum. George Soros does not count.

No, I read the NYRB because of contributors like physicist and author Freeman Dyson, who teach us about other ideas, people and worlds, both real and imagined. “Dyson has spent most of his life as a professor of physics at the Institute for Advanced Study in Princeton, taking time off to advise the US government and write books for the general public,” notes his bio on the NYRB web site.

This literate and considerate man of science has told the human history of the world of physics in his contributions to the New York Review, most recently through an essay on two new books about his teacher and Nobel Prize winner Richard Feynman: “Quantum Man: Richard Feynman’s Life in Science” by Lawrence M. Krauss and  “Feynman” by Jim Ottaviani.

Dyson’s essay on Feynman, “The ‘Dramatic Picture’ of Richard Feynman,” is important on many levels. It is a personal tribute and a professional history of a man Dyson argues is now a superstar of physics on a par with the likes of Albert Einstein and Stephen Hawking. It is also an important discussion of Feynman’s insights into the nature of organizations and society, particularly how we differentiate between reality and speculation when it comes to public policy.

Following the 1986 space shuttle Challenger disaster, Dyson reminds us, a fatally ill Feynman gave his final months of life to serving the people of the United States by participating in the official investigation and fighting political efforts to conceal the institutional causes of the accident:

Feynman wrote an account of the cultural situation as he saw it, with the fatal division of the NASA administration into two noncommunicating cultures, engineers and managers. The political dogma of the managers, declaring risks to be a thousand times smaller than the technical facts would indicate, was the cultural cause of the disaster. The political dogma arose from a long history of public statements by political leaders that the Shuttle was safe and reliable. Feynman ended his account with the famous declaration: “For a successful technology, reality must take precedence over public relations, for nature cannot be fooled.”

Sound familiar? The same statement could be made about Washington’s complicity in creating the housing bubble and the shameful evasion of responsibility for the subsequent financial collapse. In terms of the world of ratings and analytics in which my firm operates, the same juxtaposition could be described as the difference between guessing about the future performance of a bank or company versus focusing on the visible facts of today’s financial and operational results.

But the sacrifice of Feynman at the end of his life to argue the perspective of science in the aftermath of the Challenger tragedy was not his greatest legacy, particularly to the layman who cannot fully appreciate many scientific achievements. Dyson describes how Feynman used pictures to describe the laws of physics, eschewing the mathematical equations used by his peers for more simple conceptual descriptions that are accessible to the average person. “Feynman,” to that end, is laid out as a comic book. Buy this book for your children, but read it yourself.

Even more important, Dyson reminds us of the distinction between the classical layer of human experience — the things we can see, touch and measure — and the quantum layer of reality, that which is impossible to measure with complete accuracy and therefore remains speculative. “The primary difference between the classical layer and the quantum layer is that the classical layer deals with facts and the quantum layer deals with probabilities,” Dyson writes. For Feynman, he concludes, “the road to understanding is not to argue about philosophy but to continue exploring the facts of nature.”

This distinction between the world of observable facts and the speculative worlds of quantum physics — and also unscientific realms such as politics and economics — is an important concept for all of us to ponder. So much of our public discourse about financial markets and fiscal issues like raising the debt ceiling is really just speculation, obscured by the pronouncements of supposed experts and their political sponsors. The beautiful vignette of Richard Feynman which is the latest addition to the literary legacy of Freeman Dyson gives all of us living in the “real” world of finance and public policy much food for thought.

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[…] The way Hazlitt derides the Keynesian concept of “equilibrium” reflects the view I have developed working with my colleague Dennis Santiago — namely that the human action we call “economics” is a lot closer to the physical concept of entropy than to metaphors such as bubbles. […]

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