Building off its first mention in yesterday’s post, let’s look at the concept a bit closer. Though the detailed definition is still being refined, in essence you Antitransformationalism encompasses is the concept that there needs to be an active opposition to those very smart, but modestly ignorant/arrogant people who seem to have decided that they either do not need to study history or the hard-won lessons of those who have come before them – are they are just so much smarter than anyone else who has ever lived that they simply do not need the past.
Founded on the bedrock assumption that there is nothing new under the sun – that most any problem you can encounter in the POLMIL world would be quickly understood by Alexander the Great, Napoleon, Frederick the Great, Nelson, Sun Tsu, and even the Great Khan. The technology and tools have improved, but the base of everything, the human condition, has changed little. Evolve into a more perfect professional. Don’t Transform into irrelevance.
With that bedrock, you must embrace new technology and concepts, but use them in a manner consistent with established avenues to success and within the constraints of financial, physical, and political realities. Evolutionary progress (US Navy vs. Confederate Navy) in numbers will defeat revolutionary perfection (US tanks vs. German tanks in WWII) in smaller numbers. Victory in the future is reliant on a firm knowledge of the past (US rediscovering counter-insurgency – again).
Now, leaving the POLMIL world, let’s look where Antitransformatinalism is taking hold (though they are not calling it that) in the world of finance. In the Sunday Financial Times there is a tremendous piece called “Doomed to Repeat it?”
Like combat, nothing focuses the mind like pretty little theories being blown up by cold, hard reality.
For as investors and financiers recoil in shock from this summer's violent market swings, and as a crisis in the subprime mortgage lending sector has triggered gyrations in stocks, many are now reaching for the history books with a newfound enthusiasm - or desperation - to assess how this crisis will play out. "Everyone is muttering about 1987, 1998 or 1929," says one senior hedge fund manager. "I don't know much about 1907, but probably I should."At last though, it seems as if the Antitransformationalists of the financial world are getting some traction.
From some perspectives, this sudden fascination with the past marks something of a U-turn. After all, the financial sector has spent much of this decade operating with a short-term view that was focused on the future, not the past. Indeed, as recently as this spring, it was rare to find any financial trader who spent much time pondering events more than a decade old - or beyond the data points typically found on a trading terminal.
That partly reflected the fact that financial traders are often too young to remember many economic cycles. However, more importantly, many of the instruments that have been in the eye of the recent market storm have only risen to prominence this decade. Thus the "historical" data bankers feed into their computer models to assess market swings, or measure their levels of risk-taking, is often based on just a few years of records. That can potentially distort the way these computer models work, since it means that bankers are effectively presuming that the future will be similar to the past - but based purely on very recent experience. "What is remarkable is that the risk models currently applied [in some markets] do not reflect the experience of the autumn of 1998, only a few years ago," says Harald Malmgrem, a Washington-based economist.
However, the other reason for the recent lack of interest in history is that many bankers have believed - at least until recently - that this decade's burst of market innovation had rewritten the rules of finance.
As a result, the indifference towards the past is being replaced by a violent thirst for historical knowledge, as financiers reacquaint themselves with the unpalatable truth that almost every bubble is accompanied by a belief that innovation has changed the rules - a belief that typically proves to be false. "This neo-modern credit market is not very dissimilar after all from its classical predecessors," says Jack Malvey, an analyst at Lehman Brothers. "The catalysts differ, but market reactions feel similar [to crises before] . . . in our view long-term economic and capital markets history is the best teacher and best model [to understanding the present]."It may not be sexy, but like counter-insurgency – it is the difference between doing it right to others – or having it done right to you.
Ignorance of the past is intellectual stupidity. In our line of work it gets people killed and wars lost. Why do I worry? I have YN3s out there who are better read than the LT standing OOD who graduated from Annapolis. He knows more about the where and why than the 3.85 Electrical Engineer graduate that is “leading” him and in a few years may have Command. That is why it worries me. It also worries me that we have very important people with Birds and Stars who still, after the last 4 years, think the Navy has nothing to learn from the Army about how the fundamentals learned in the past still apply. They and their fellow travelers think that War is New and everything must be Tranformational. Well, it is time to stand athwart the quarterdeck and yell, “Stop!”