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The Age of Fallibility: Consequences of the War on Terror

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I had never heard of George Soros until I read an editorial he sent in to the Wall Street Journal. The editorial piqued my interest and so I looked him up and discovered this book.

The Age of Fallibility is very well written and presents very complicated theories in an easy to grasp from. Soros writes with the mentality of someone that really wants to get his point across: He tells you what he is going to talk about, talks about it, and then tells you what he just talked about. This has the affect of seeming a bit repetitive, but at the same time, you realize that the ideas are actually sinking in.

The first half of the book is dedicated to Soros' theory of reflexivity. Basically, reality isn't a fixed thing that we work around, it is constantly changing because of our actions and our thoughts. The idea of an open society is one that accepts that we will never reach a "perfect" solution to anything and so we must always work together to improve what we are doing, understanding that each improvement we make will require additional improvements.

The second half of the book is geared towards asking what is currently wrong with America, what is wrong with the world, and what we can do to fix it. Soros gives an in depth look into all three topics and makes some very good points.

To say that George Soros is anti-American is just silly. He merely points out the ways in which Americans can improve in our domestic and foreign policies. This is part of the open society model. There is always room for improvement. Pointing out that something can be improved is not the same as being against it.

The book got over my head a bit towards the end. I don't know enough about Russia to follow a lot of the points made there. Overall, this is a great book for someone who is interested in what is currently happening in this country and the world and would like to know more.

People in other reviews have claimed "Soros hates Americans", however this is far from an accurate reflection of his beliefs. Soros *IS* the consummate rationalist. If U.S. policies that inflict massive harm on people around the world changed, he would revise his opinions. He is not irrational. He merely points out the harm the policies cause.

With geniuses like Gandhi, Roosevelt, Einstein, and Popper now passed away, Soros has emerged as one of the smartest still living people on the planet. Soros has made billions of dollars by simply predicting trade imbalances and trading on the side of them as they corrected. His theories, while not infallible, have a predictive and reliably accurate quality that is unsurpassed by the statements of any other living human being.

Soros teaches us to always ask questions.

Namely ... how "free" is the family cowering in their basement with their children awaiting death as their city is being bombed by "freedom fighters"?

Soros probably writes too many books and doesn't spend enough time crafting them. Certainly he stuffs each book with too many ideas and topics, some of them decidedly under-developed. For all that, the insights are well worth the slog.

If you've read his earlier books, in particular The Alchemy of Finance, you already know his philosophy and can quickly scan the first 70 pages of this book for new nuggets and then go on to his take on the current situation in America. Even if you're new to his blend of theory and practice, you may be better off skipping the passages that don't mean much to you. There's something useful for everybody here, so don't get bogged down, go ahead and piece together the good bits.

What particularly appealed to me is the application of his conceptual framework to the American political scene. The framework is about the two-way interaction between thinking and reality: We can't know what's going to happen, whether in markets, elections or wars. But our thoughts direct our behavior thereby shaping reality, which boomerangs back to our minds.

A simple example: people think [...] stock will rise so they buy it and it does and people think it will rise even more. Such is the stuff of market bubbles. Misconceptions become reality.

Soros applies this dynamic, arguing that Americans went along with Bush feel-good nostrums because they don't like to face unpleasant facts. Political reality was re-made in the same sense as demand for [...] causes a real bubble. Soros argues for a change in attitude.

The odds are probably against him. However, as he writes, one trades in order to win but one takes political positions because one believes in them. Now that's not really correct--plenty of people mouth political messages because they're paid to do so. But not Soros, more glory to him. All this is an overly simple sketch; read the book at least in part to get the flavor.

Soros begins by stating that the main obstacle to a stable and just world order is the U.S. The Bush administration is setting the wrong agenda - nationalistic, emphasizing use of force and ignoring global problems requiring international cooperation.

A major underlying cause is that America has become a "fee-good" society, unwilling to face unpleasant reality. Reagan was probably the first "feel-good" President. Soros contends that truth is not as self-evident as the Founding Fathers thought - it can be manipulated. (Other authors make a clear and detailed case on how this is done - eg. Gore's "An Inconvenient Truth," and Mooney's "The Republican War on Science.")

The "War on Terror" has become a central focus in a war on truth. Not only does it create more enemies, it has used to justify spying, torture, lying to the public, suspending critical thinking, and centralizing power within the Executive Branch.

Soros sees the U.S. economy as stretched to the limit - based on easy credit (eg. low/nothing down) that cannot be relaxed any further. In addition, a housing bubble has led to an oversupply and hyped prices - likely to collapse in 2007.

Meanwhile, the U.S. continues to believe it can solve one world-wide problem itself (the energy shortage), and ignore another (global warming).

An intelligent discourse with some good points.

This book has two pieces. The first half is a mix of philosophy and analysis, centered on the theme of open society. Societies can be divided between those that accept uncertainty and its consequences (open) and those that reject and deny (closed). Soros sees America as an open society in peril of closing due to a population tempted by the false certainty of closed society. The movement towards a closed society was most clearly evidenced by the presidential election of 2004, where Americans embraced the false certainty and incompetence of the Bush administration.

Interesting ideas, but too quickly drawn. What are the advantages and disadvantages of open and closed society? What kind of people gravitates to one or another? How do shock events like 9/11 affect peoples' preferences? Different segments of society will have different preferences, what is the tipping point that pushes society as a whole one way or another?

The second half is a survey of Soros' foundation work, and his going forward concerns such as global warming and a general energy crisis. It didn't engage me. I wish this latter section had been discarded and the first half expanded.

Recommended for the first half.

What are the errors in thinking in our current 'war on terror'? To receive an exacting analysis, try George Soros' THE AGE OF FALLIBILITY: CONSEQUENCES OF THE WAR ON TERROR. His analysis pinpoints ways in which the country has lost its direction and some of its values in pursuing such a campaign, analyzing the Bush administration's approach and public sentiments alike. A hard-hitting survey for any interested in the current state of American thinking.

Diane C. Donovan
California Bookwatch

Most of the meat of this decidedly philosophic opus by one of the world's most successful financial wizards concerns the differences between the closed and open societies that govern us. The closed society is characterized by traditional modes of thought while the open society is characterized by critical thought. Traditional thinking is unchanging. The past is like the present which is like the future. We think the way our fathers thought and their fathers before them. Knowledge is based on authority. In the open society change is constant. Knowledge is based on the scientific method which yields facts that are always subject to change. In the closed society knowledge is certain and absolute. In the open society knowledge is never certain and always subject to new discoveries.

Yet ironically in the open society (the European Union, the United States, et al.) pure reason does not rule, partly because the pure product of the rational mind is unobtainable because of what might be seen as Russell's paradox acting in the human world. Bertrand Russell discovered (after Godel) that self-referencing systems lead eventually to paradox. What Soros is arguing is that because our perception of the world is self-referential to some extent--that is, how we think about the world colors our perception of the world--we can never see the world "as it really is," and so our view is fallible. In fact, in most aspects of life, especially in the social, economic and political spheres, our perception actually changes reality, and so reality is a "moving target" and as such can never be captured. He calls this "reflexivity." He also dubs it the "human uncertainty principle" since our perception of the world, as our perception of quantum events, alters what is being perceived.

Soros goes on to argue that all cultures are built upon what he calls "fertile fallacies." The cultural ideas are false but they are successful (for a while) because of a positive feedback system, similar to the boom and bust phenomenon in financial markets. People believe that tulips have great intrinsic value, ergo, tulips have great intrinsic value and become worth more than gold. For a while. Eventually "reality" kicks in and the bust comes. So it is with cultures. Nazi Germany boomed magnificently (compared to the immediate aftermath of WWI), but soon went bust because it was built on fallacies. Ditto the Soviet Union.

All this Soros explains carefully and at some length. Then comes the important point: open societies can better avoid the boom and bust syndrome because unlike closed societies they are not built on some fallacious idea of eternal truth. Instead, like science they are always open to falsification and change, whereas close societies resist falsification and change.

In all of this I think Soros is making a brilliant argument. As he himself says, the argument is not original with him--he acknowledges a deep debt to Karl Popper the philosopher of science who wrote The Open Society and Its Enemies and was a mentor to Soros. But what I think Soros is doing here that is original is presenting the argument in a compelling political and social context.

There is so much of a non-philosophic nature that I would like to quote from this book. Soros's observations on politics and the current world order are insightful and penetrating. He is one of the deep thinkers of our time and a man who expresses himself fearlessly. Because of his great material success in the world and the activist stance he has taken internationally, he is a man that many people listen to, even those who find his views disagreeable. Here are a few of his thoughts:

"The idea of death is not the same as the fact of death. The idea of death is the denial of consciousness, and the fact of death is not the denial of life but its natural conclusion." (p. 42)

"I set up an Open Society Fund and defined its objectives as follows: to open up closed societies; to make open societies more viable; and to promote a critical mode of thinking." (p. 53)

In Chapter 3 Soros asks the question, "What's Wrong with America?" and comes to the conclusion that it is a failure of leadership which is the result of "a failure of followership," which is a general way of saying that the Bush administration has greatly failed the American people, but also that the electorate has failed because it has elected people like Bush. But in the next chapter, "The Feel-Good Society," he really nails it. Quite simply the American people have become gluttons of consumption who can barely get off their couches, who do about as much critical thinking as cows chewing their cuds. (His expression is less graphic.) He sees the Bush administration's "war on terror" response to 9/11 as "phantasmagoric" (p. 102) in that Bush has us fighting against an abstraction instead of going after the people responsible for 9/11. Soros writes, "Since the war on terror is counterproductive, it is liable to generate more terrorists or insurgents than it can liquidate. As a result, we are facing a permanent state of war and the end of the United States as an open society." (p. 106) (cf., Orwell)

On Afghanistan: "...we formed alliances with warlords, and it is their authority that we helped to establish; in this way, we consolidated an economic and political system based on the illegal cultivation of narcotics." (p. 149) On Iraq, "Iran is the major beneficiary of the invasion, which removed its enemy Saddam Hussein from power, tied up American forces in a task that they are ill-prepared to perform, and tightened the supply of oil" [making Iranian oil more valuable]. (p. 112)

Soros also addresses the problems of energy supply and global warming, which of course are interrelated. He touches on the nuclear threat which he sees as now more menacing than during the Cold War.

In his analysis of human thinking and reality, Soros is comfortable with his reality of making money through immoral means. He claims that the money market of finance lacks moral restraints and players must win at any cost, even by siding with wrong parties. Sure he does not delve into a conscientious issue such as the money he accumulated by immoral means might have been stolen from others. That would be simple and naive stipulation that sidetracks his stream of thoughts.

Yet, on political issues, he believes that he still has strong ethical framework that might make the world better place. As if he could toggle his moral switches between monetary thuggery and political idealism. He is transparent in his analysis that human selfishness has haunted him for so long to the extent that he did not wish that his philanthropic organizations survive him. Repeatedly, you sense his concern of old age and death and the purpose of leaving behind his contribution without his control. His deeply ingrained sense of constant search for potentially winning trends in politics parallels his behavior in finance.

Economics underlies every international transaction, in his views. The war on terror is distracting America from the unexpected development in Russia. Soros fears that the eminence gas and oil wealth of Russia might lead to a new, different, and dangerous regime driven by wealth, greed, and desire for regaining national strength. Russia foments disaster in the Middle East by aiding Iran, Israel, and Hamas in a plot to destabilize the energy resource, he claims. Yet, the proponents of American Supremacy (his definition of the neocons) are living in the feel-good mood of appealing to consumerism.

To his disappointment, the far-from-equilibrium state that chattered his childhood life in Hungary is mirrored in the neo-conservatives' politics in his new homeland. The Nazi Germany was misled by a crazy dictator because its people failed to recognize his fallibility. The communist bloc had replicated the Nazi error by claiming ownership to a perfect truth. Similarly, the Americans are misled by the neocons because of their failure to question the false premises of the war on terror. Consumerism, he claims, stimulates people's desire at the expense of demand and that lead to feel-good-society. Reagan started that trend which is an alteration of the can-do-society of Truman's era, in Soros' views.

Soros predicts that our human race should have grown up to the "age of fallibility". That implies our recognition of our flawed sense of reality and the need for infinite improvements to our participation in society. That should be a natural development of the "age of reason" that started the era of Enlightenment, he claims. His Judaic faith that implies infallibility belongs to God alone and his economic shrewdness that taught him much about human fallibility, both, could be the source of his generalized prediction.

Whether Soros is a stateless statesman or a global conspirator on financial dominance, this book depicts his thinking, shrewdness, and free mindedness. He recognizes people's distrust of those who could not be held accountable. Yet, the scope of his insight into global economic affairs renders this book invaluable. He could trace the energy supply of all European countries to Russia and weave many complicated threads into legible political scenarios.

Soros' stern objectivity enables him to switch sides swiftly and figure out what he would be thinking had he been on the opposite side. He claims that the American people would be viewed by the opposite side as terrorists who are manipulated by Bush's government. He exemplifies that by the Russian destruction of Grozny, Chechnya, and the American destruction of Fallujah, Iraq. Since wars kill innocent people while terrorists hide, thus dealing with terrorists should not be through waging wars. That advances the goals of terrorists by increasing the number of victimized innocent people with anti-American sentiment. The war in Iraq killed 2600 Americans and many thousands of innocent Iraqis, he claims. Soros then admits to the difficulty in convincing people that waging wars creates short term feel-good-times but carries serious danger for the future of nations.

Mohamed F. El-Hewie
Author of
Essentials of Weightlifting and Strength Training

First of all, it must be said right off that this is not a book about trading. Soros is most famous in the financial markets for his managing of the Quantum Fund and making a billion shorting the Pound in the 90s when the currency broke from the Exchange Rate Mechanism (ERM) which was in place then as a precursor to the eventual Euro introduction. Anyone coming in with the author's trading/investing history in mind thinking he might talk about that type of thing in this book is going to be disappointed. While he does mention events like this and others for which he is famous - or notorious, depending on your viewpoint - neither trading nor the markets are the focus of this book.

The Age of Fallibility is at its core as much a philosophical treatise as an exploration of global affairs. Soros has a pretty well developed world view and philosophy. His `reflexivity' approach to events (markets and otherwise) has been expressed in his earlier books, and is further refined in this one. That is the part of the book which will appeal to traders and investors, as it helps to explain how he looks at the larger movement of markets and how predictable patterns of behavior can be seen. For those who like to take a big picture view of things, it is definitely something worth reading.

As for the remainder of the book, that is a combination of explaining open society, exploring global politics, and attacking America's foreign policy, as the title would imply (though no major global player is left out of the discussion or immune from criticism). If you are an open-minded sort then you will find Soros' views very interesting. In particular, I found his discussion on the concept of the "war on terror" very interesting.

No matter what you think of Soros or his politics (and many folks rightly or wrongly have a negative view of him), the fact of the matter is the man has a perspective on things few can offer based on his experience operating his various organizations. As such, he is definitely someone to whom we should at least listen. If you can do that, I guarantee he'll have you thinking at several points in the text. If not, then this may not be a book you'll want to read.

I personally started the book wondering if the arrogance I found in his earlier market focused books would be apparent in this one too, but I found it wasn't. The style was very engaging throughout and what he had to say thought provoking. If that's what you look for in a current events type of book, then you will like this one, all the more for the fact that though the book was written in 2006, it has enough of a macro scope to it to make the subject matter still quite meaningful now in 2008.

Soros' book is insightful into a human fallibillity that has been destroying our legislative process. The political fallout of this intentional path is at hand. If you really want to know why our political system is impotent, read this book.