George Soros

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I would like to recommend an author. I had known something of the man for a number of years, but I’d never read any of his books. The man is George Soros, a billionaire probably best known at this point for donating $15 million to defeat George Bush.

Even if you disagree with him or dislike him, Soros has such an interesting mind that he’s worth reading. He is an unconventional thinker and is not afraid to challenge the platitudes that underlie global society.

For example, it is a given among classical economists that markets, if left alone, will always tend toward equilibrium. No, they won’t, Soros says, because markets are inherently unstable, nor does laissez-faire capitalism fairly distribute the goods and services of society.

What capitalism does, unrestrained by government or morality, is make some people very rich and most people very poor.

Soros, as he admits in one of his books, has made so much money in the markets that he can say what he pleases. Having survived two closed societies — Nazism and communism — Soros, a Hungarian Jew, has been devoting a large part of his fortune to fostering open societies. Since I am far from being a financier or a supporter of global capitalism, I figured I could learn something from this guy. And I have.

He has developed an interesting idea he calls "reflexivity." He cites the boom-and-bust cycle as one example of it. As best I can understand him, people have both perceptions and expectations of certain outcomes. However, their expectations can affect the outcome in any human transaction. During the high-tech bubble, people expected high-tech stocks to keep going up, and because people were buying them, they did. Eventually, however, it became clear that most of those companies couldn’t sustain the value of their stock. Then expectations reversed, people dumped the stocks, and the prices went down.

He therefore makes a sharp distinction between science and what is incorrectly called social science. Science deals with natural laws, which are not and cannot be affected by human expectations or beliefs. Theories can be tested by experiment. In human interactions, however, expectations and beliefs can and do affect outcomes.

I can give you an example. In the 1950s, Americans were reconciled about the Civil War. It was generally agreed that it was a good thing the union was preserved, but that the Confederate soldiers deserved respect for their bravery and sacrifice. No one thought anything of displaying a Confederate flag. In public concerts, bands often played "Dixie," followed by "Battle Hymn of the Republic."

Beginning in the 1990s, when the National Association for the Advancement of Colored People decided to attack all Confederate images as symbols of slavery, people’s thinking changed. Today, few bands would dare play "Dixie," and displaying a Confederate flag can be an invitation to a fight. Well, the facts of history didn’t change, but what changed was how people thought about it.

I might have done a poor job of stating Soros’ premise, but if even Paul Volcker, former chairman of the Federal Reserve, says that Soros’ The Alchemy of Finance is not an easy read, then who am I to argue? Soros’ other books include Open Society: Reforming Global Capitalism, The Crisis of Global Capitalism: Open Society Endangered, Soros on Soros: Staying Ahead of the Curve, Underwriting Democracy and Opening the Soviet System.

I’ve always thought of reading books as having a conversation with the author. Well, if you’re going to the expense of buying a conversation, it ought to be someone intelligent enough to teach you something. Soros can certainly do that. He’s not an ideologue, and he’s not trying to sell you anything. What he does is expose how an interesting mind works on tough problems.

By the way, Powells.com is a good source of books. It’s an independent, family-run outfit that sells both new and used books. I always try to give my business to family-owned firms if I can. Giant corporations are part of the problem, not part of the solution.

Charley Reese [send him mail] has been a journalist for 49 years, reporting on everything from sports to politics. From 1969—71, he worked as a campaign staffer for gubernatorial, senatorial and congressional races in several states. He was an editor, assistant to the publisher, and columnist for the Orlando Sentinel from 1971 to 2001. He now writes a syndicated column which is carried on LewRockwell.com. Reese served two years active duty in the U.S. Army as a tank gunner. Write to Charley Reese at P.O. Box 2446, Orlando, FL 32802.

© 2004 by King Features Syndicate, Inc.

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