Moses and Monotheism - by Sigmund Freud Part 1

This book was first published in 1939. My Mom just gave me a copy and I find it interesting .  Moses was a central figure in three of the world's "great" religions - Judaism, Christianity and Islam. I will give a thumbnail sketch of the first of the three chapters.

Moses an Egyptian

The Birth of Moses - Traditional Approach 
By way of background, Wikipedia gives the following text concerning the birth of Moses:

In the Exodus account, the birth of Moses occurred at a time when an unnamed Egyptian Pharaoh had commanded that all male Hebrew children born be killed by drowning in the river Nile. Jochebed, the wife of the Levite Amram, bore a son and kept him concealed for three months.^[6][8][9] When she could keep him hidden no longer, rather than deliver him to be killed, she set him adrift on the Nile River in a small craft of bulrushes coated in pitch.^[8] Moses' sister Miriam observed the progress of the tiny boat until it reached a place where Pharaoh's daughter (Bithiah^[6],Thermuthis ^[10]) was bathing with her handmaidens. It is said that she spotted the baby in the basket and had her handmaiden fetch it for her. Miriam came forward and asked Pharaoh's daughter if she would like a Hebrew woman to nurse the baby.^[6] Thereafter, Jochebed was employed as the child's nurse. He grew up and was brought to Pharaoh's daughter and became her son and a younger brother to the future Pharaoh of Egypt. Moses would not be able to become Pharaoh because he was not the 'blood' son of Bithiah, and he was the youngest.
Exodus and Flavius Josephus do not mention whether this daughter of Pharaoh was an only child or, if she was not an only child, whether she was an eldest child or an eldest daughter. Nor do they mention whether Thermuthis later had other natural or adopted children. If Rameses II is the Pharaoh of the Oppression, as was traditionally thought, identifying her would be extremely difficult as Rameses II is thought to have fathered over a hundred children. The daughter of Pharaoh named him Mosheh, similar to the Hebrew word mashah, "to draw out".

In the Moses story related by the Quran, Jochebed is commanded by God to place Moses in an ark and cast him on the waters of the Nile, thus abandoning him completely to God's protection. Pharaoh's wife Asiya, not his daughter, found Moses floating in the waters of the Nile. She convinced Pharaoh to keep him as their son because they were not blessed with any children.   (source Wikipedia)

Freud's Approach: Moses an Egyptian

Freud's approach was that Moses was not a Jew, but an Egyptian - and he supports this approach with three arguments:

1) The name "Moses" does not fit properly into the story. It was supposedly given to him by the Egyptian princess who found him and is usually attributed to being from Hebrew where it is written as  Mosche.  Freud quotes from Judisches Lexikon , "The Biblical interpretation of the name: 'He that is drawn out of the water' is folk etymology; the active Hebrew form itself of the name (Mosche can best mean only "the drawer out" [Moses as a baby was drawn out of the water - he wasn't the "drawer" - JSM] ) cannot be reconciled with this solution."  Freud continues "This argument can be supported by two further reflections; first that it is nonsensical to credit an Egyptian princess with a knowledge of Hebrew etymology, and, secondly that the water from which the child was drawn was most probably not the water of the Nile."

2) Instead of being from Hebrew, the name Moses is most likely related to the word "mose" in Egyptian, meaning "child". It is usually preceded by the fathers name. We see a similar pattern in the names of Egyptian kings such as Ramses (Ra-mose or child of Ra) or Thotmes (Thut-mose - child of Thut).

3) Freud's third argument relies on a concept he refers to as the "average myth" and it relates to the "fact" that most peoples develop myths around their most important heroes, kings religious figures etc.. This is a very interesting idea and is very similar to those of Joseph Campbell in his writings on mythology. I will note the Freud does not take credit for this idea.

The Average Myth

• the hero's true parents are from the highest station (such as a king)
• The hero's conception is hindered by difficulties such as abstinence or temporary sterility [I think virgin birth qualifies here - but that is a different story]. During the pregnancy an oracle or dream warns the father of danger related to the child's birth
• The father figure gives the order that the baby be killed or exposed to extreme danger. In most cases the baby is usually placed in a casket and delivered to the waves.
• The child is saved by animals or common people and suckled by a woman of humble birth.
• When grown, the hero rediscovers his noble heritage, has strange adventures, takes vengeance on his father and attains fame with his people.

Freud expands on this framework and gives a long list of mythological and historical figures that fit within it.  Freud states that in the average myth, it is the first family, the one that exposes the child to danger, that is usually a fiction created by the myth. The lowly family into which the child is adopted is his real family.

In this case, Moses of myth was born of lowly Jewish parents and was adopted into a noble household. The Egyptian family (the second family in the myth) was the real family. Moses was an Egyptian from the very start and that the part about the Jewish mother was a myth created to support his later stature in the Jewish culture.

Freud concludes the first section conceding that the evidence of Mose's Egyptian birth is far from proof - but that the entire story is shrouded in religious mystery.  He certainly believes that it is a reasonable argument - and if it is true, it sheds a completely different light on the story of Moses and the Jewish faith. His next chapter is If Moses Was an Egyptian.

Random Thoughts
I find it interesting that Freud, the father of psychoanalysis, looked into cultural beliefs (the mind of society)  as though he were looking into an individual's mind.  There is an implied idea that society is a consciousness.

I also find it interesting that Freud, a Jew, would even take on this topic - And he notes in the book that he does so with some reservation. But he did it anyway and it sounds like from the many references he quotes in the book, he wasn't the only one.
Finally, I find it interesting that my Mom, a Christian, would pass this book on to me. But I believe that if faith rests in the heart rather than in religious doctrine, the mind is free to explore.

I love the history of Rome

I was listening to Professor Bob ("History According to Bob" podcast) today talk about one of my favorite topics - the late Roman Republic, and he made an interesting point. He was talking about the first triumvirate  - the political alliance between Crassus, Pompey and Caesar which lasted roughly seven years following 60BC.  Prof. Bob's interesting point was that the triumvirate was formed in an attempt to break the stranglehold that ultra-conservative republicans had over the Senate.  The way Prof Bob described it was that a relatively small group of ultra-conservatives (which included Cicero and Cato the Younger) had banded together to block any reforms and any actions that appeared to lessen the control of the Senate.

Pompey and Caesar, independent of each other, were proposing certain reforms which were being blocked - in spite of the reforms' overall popularity and general senate support. But the ultra-conservatives, through coercion, filibuster and political dealing stopped every attempt. Prof Bob's point was that both Caesar and Pompey were not acting against the Republic, they were just trying to make needed reforms, and they were going through the normal channels. But because they couldn't get through the "no reform" wall, they had to go around it - and by acting together, and with the help (i.e money) of Crassus - they had the unified political power to force the reforms through.  The irony is that by stopping all reform, the ultra-conservatives made the First Triumvirate necessary. And the First Triumvirate can be thought of as one of the first steps towards the destruction of the Republic and the establishment of the Empire.

Reformists or Just Politicians?

Pompey had just come back from the eastern Mediterranean where he had just completed two very successful military campaigns. While in the east he negotiated several excellent treaties and had also promised settlement rights to his veterans.  Now he needed the Senate to ratify his deals - but Cicero and company were against this headstrong young man making such deals without the traditional Senatorial oversight and held them up. Had Pompey done what his predecessors had done (Sulla and Marius) he would have kept his army and marched into Rome and forced the Senate to approve his deals. And had he been Sulla or Marius, about 1/3 of the Senate would be dead by the end of this. But no - Pompey was a good Republican and was sick of the murder and mayhem of the prior 50 years - so he did everything by the book - only to be stopped by small group of "traditionalist".

Caesar at this point wasn't the military genius of later years but was nonetheless very popular among the general population. He had proposed some very popular land reforms to counter the trend of farm land falling into the hands of the wealthy Senators, leaving a growing population of unemployed, poor citizens in the city.  Again, Cicero and company were against all reform.

I don't know why Crassus was in the deal, though since he was by far the richest man around ("as rich as Crassus" is a phrase still used today), I can see why Pompey and Caesar where happy to have him around. Apparently Crassus and Pompey weren't on the best of terms and Caesar, the weakest of the three triumvirates, was the glue that held the three together.

So by standing in the way of the man with the army (Pompey), the man with the people (Caesar) and the man with the money (Crassus), the ultra-conservatives accelerated their own eventual downfall.

Or at least that is one conclusion. I must say that even as I wrap up this episode of history with a tidy bow, I know that such conclusions are not to be trusted. As much fun as it is to look back at history and say "event 'A' leads to event 'B' and then ultimately to 'C'", we really don't know. But it is still fun to think about.

"Too Big to Fail" a book by Andrew Ross Sorkin - A Review and Comments

I just finished Too Big to Fail and found it enjoyable, but not so much that I would definitely recommend it. I think I enjoyed it more than many people would because I was  in the financial industry, did business with all of the firms mentioned in the book and I was familiar with a few of the people. 

The book covers the financial crisis from the failure of Bear Stearns in early 2008 through the failure of Lehman and AIG and it ends with the introduction of the TARP program in late 2008.  There is a little back story on the career of a few of the major people such as Bernanke, Paulson, Geithner and Fuld (at Lehman) but most of the book is structured as sequential snapshots of conversations and meetings. The pacing of these snapshots is leasurely at first but by the end is frenetic as the book switches back and forth in minute to minute conversations as people desperately try to stop a immanent economic catastrophe. I found this pacing annoying because I had a hard time following the timeline. Early on, there could be months between snapshots but by the end they were minute to minute - and it wasn’t clear just when things were happening. But this escalating pacing did provide what little sense of story the book had.




This book is a documentary - not a story. It covers a lot conversations among a long list of people most of us have never heard of and in whom we probably have no interest. And it covers events which, if viewed in isolation, without proper context, have little meaning. So while I say this book is a documentary - it is arguably not a good documentary because a good documentary should give the reader a sense of context as to what led up to the events, what sort of environment they took place in and why they were important. 

That said, I found the book interesting - but I have a painfully intimate knowledge of the institutional money flows that keep businesses afloat and the economy running.  So I already had a sense of context. I imagine that most people who follow the markets will also have enough sense of context to enjoy the book - but perhaps may not understand the sense of imminent catastrophe that drove the actors.

I have a few takeaways:

1) People were amazingly naive for an amazingly long time.  Keep in mind that the institutional money markets had the equivalent of a heart attack in the late summer of 2007 and never recovered. This was more than 6 months before Bear Stearns fell and more than a year before Lehman failed.  The institutional money market is like the blood flowing through the body of the economy. It is taken for granted, but if it stops flowing, it isn’t long before the major organs fail. The body in this case had enough money in its system to last 6 months, then the organs started to fail.  Concentrating on poor asset quality and the mortgage market is like a Doctor concentrating on a broken arm or perhaps even cancer. Bad, but certainly not immediately fatal. The immediate problem was that patient was dying from lack of blood flowing through the body.

2) People were so fixated on hedge funds selling short financial stocks and fraud in the mortgage industry that they seem to have ignored the far more important fact that  money - the blood of the system, had stopped flowing. As evidence of this, the book relays many conversations where CEOs are ranting about short sellers driving down their stock price and as though that was the real problem. And yet none of the companies were at risk of collapse because their stock was going down. The companies were collapsing because they were running out of money - as in cash. And even while they were trying to sell any and every asset in the company to pay off the next bill coming due, they ranted about short sellers.  Financial companies always have big bills coming due - they are 70% to 99% financed by debt. They don’t need to pay off the stockholders. They need to pay off their debt coming due.

3) It seems that Goldman Sachs alumni are everywhere. The book never pointed to this being a real problem, but I can sure see that when it looked like “even Goldman Sachs” would fail within the week, then the line in the sand was drawn right then and there.  No one could imagine a world without Goldman Sachs.

4) Senior executives didn’t seem to understand their own business. [no surprise] This was particularly clear at AIG when they woke up to the fact one day that Securities Lending was going to cost them a boatload of money and it sounded like they didn’t even know what Securities Lending was. The whole “short-sellers” controversy that CEO’s ranted about was just an indication they didn’t realize the real issue. The regulators weren’t any better. They ignored the fact that AIG was insolvent for months before it finally fell. They were looking at Lehman when “surprise surprise”  AIG collapses. All of these events followed a fairly clear trajectory and the regulators should have been able to connect the dots.

5) Even when the ship is sinking - people still think “will my deck chair be comfortable”. CEO’s cared about short-sellers because they drove down stock prices and that is where the CEO’s had their wealth. Never mind that the company is dying - how is the stock doing.  Also, even in the final dying moments of the firms, people still stalled and delayed so they would have a great job in the new company. 

6) In the final days before TARP, Geithner ran the show - he was the real deal maker. He sounds like an egomaniac and someone eager to make the “necessary” decision. Paulson sounds like he was in denial but then “woke up” and made TARP happen.  In the book, Bernanke sounds like someone always running a few weeks behind events. Cox at the SEC and Fuld at Lehman were punchlines to a bad joke.

7) My interpretation of the events surrounding the BofA / Merrill combination is that Ken Lewis, the CEO of BofA, was an idiot. Merrill Lynch was failing!! It could have been bought from the Government the very next day for free and with probable Government guarantees attached. But Ken Lewis was so wrapped up in his victory dance that he was buying THE Merrill Lynch at a “cheap” price that he completely missed the fact that THE Merrill Lynch was now worthless.  And it doesn’t sound like the Government promised him anything. They were hoping BofA was going to buy Lehman. It sounds like the Government wasn’t even that aware that Merrill was about to fail until it almost did.

8) Although the book was full of egomaniacs, jerks, nice guys and idiots, there were no real “bad guys” and no real “good guys” as related to the crisis. Everyone was just caught up in something they had never experienced before and was responding in their own individual way, usually just looking out for themselves or just trying to get through the day. No one plotted to destroy the world.  

9) There was a point where the people in the book, well at least most of the people, seemed to have woken up to the problem. It’s like there was a light switch. First it was “we will not support...” and then it was “oh shit...” 

When this “oh shit....” realization finally hit, no one really talked about what “oh shit...” meant. It is pretty clear that at a minimum their “oh shit...” meant that all the investments banks would fail. Morgan Stanley was within days of failure and Goldman Sachs would fail “30 seconds” behind that. Then what?  Wachovia Bank was already failing and had to be merged,  Citi and Bank of America had major issues. Were they next?  Other than the unthinkable event of Goldman Sachs failing, the closest the book came to really descibing the full “oh shit...” scenario is that GE would soon fail. But the book never went farther and it implies that the major players kept their mouth shut on just how bad it could be. I believe they kept their mouth shut because they were truly afraid and they didn’t want to voice their real concerns from fear it would accelerate the problem.

So I will give my full version of “oh shit...” If allowed to run unchecked, the small amount of money still flowing through the system would have shut down completely. Investors, due to a combination of prudence, legal requirements and due to their own cash needs would be forced to stop investing in anything that wasn’t Government backed. The investment banks would fail within a week - this meant Morgan Stanley and Goldman Sachs. Citi and BofA would have had major funding crisis within days primarily due to their need to fund massive commercial paper programs. The Government would have been forced to step in at some point - though in this scenario, only small depositors would be covered so there would be trillians of dollars lost to investors and large depositors. All other banks would soon face a funding crisis and would be forced to operate with “negative capital”.  GE would have been unable to roll its short term-debt within weeks and would be forced into bankruptcy. (actually most of this was already being talked about) All commercial finance companies would fail along with GE. With the collapse of commercial funding, businesses would be forced to liquidate assets and stop their activities. Even companies who didn’t borrow would see their customers disappear. Layoffs would begin in real earnest.

But then it gets really scary. Municipalities would not be able to issue debt and make payrolls. Basic services would gradually be cut back. Pension funds, foundations, universities, health systems would take massive losses across all asset classes, but worse yet, most their cash is invested in short term debt of financial companies which are no longer paying off. Without cash, pension payments and payrolls are missed. In fact all companies put their payroll and working capital cash in banks and money market funds.  These companies can’t make payrolls.   The courts would be come clogged. The Government would be forced to call out the military to handle a suddenly impoverished under-policed populace. Foreign governments would begin to default... (Greece, Hungary, Egypt, Spain, Iceland, England, Russia...)   Let’s just say it gets a lot worse even from here.  The world collapses along the same mechanisms that in better times make it work.

I believe this is what really scared the shit out of Paulson and company. He looked over the edge and saw the abyss.  What was unthinkable in our normal world, became the all too possible.

So that is the real meaning “Too Big to Fail”. If a failure leads to even the possibility of global financial and social meltdown, then its just too big and can’t be allowed to happen.

10) In school, we are taught to think using the paradigm of a “normal” distribution - the traditional bell curve.  If you think of the world as following a normal distribution of events, then no natural failure is truly too big. Bad things can happen, but they aren’t really really bad and eventually everything will return to normal.  This is the world view of those who say “let them fail - we will recover”. In this pretend world, truly catastrophic failures can’t happen on their own. So if they do happen, they must be caused by someone doing something massively evil. I would say that this is the base-case view of most people, even those who don’t know what a normal distribution is. It is certainly the view pushed by the media and politicians.

But if you think of a world built using networks (such as a financial system) then the distribution of possible events isn’t normal distributed - it follows a Pareto/power-law distribution. And under this paradigm, events can truly become too too big - where a single event can dramatically affect the entire system. - even destroy it.  And under this paradigm, catastrophic events can occur naturally. You can always find scapegoats after the fact, but they are not really the cause.

More on Pareto Distributions

In 1896, Vilfredo Pareto researched the distribution of income and wealth patterns of different countries and in different times. Through this research he found that, across the population of a country, both income and wealth are distributed in a special pattern - one that follows a function: log(N) = log(A) + m log(x) [where N represents the number of people with wealth greater than x, and where A and m are constants]. After fitting the data to this function, Pareto found that about 20% of the people controlled roughly 80% of the wealth in a country - and that this relationship held across the different times and places he studied. This finding was the birth of the "80/20 Rule."

Pareto’s equations didn’t stop there though. They didn’t just predict the data at the 80/20 point and stop. They predicted an entire probability distribution. If you follow the logic of the Pareto Principle:

• the bottom 80% of the population controls only 20% of a country's wealth = “the poor”
• the top 20% of the population controls 80% of the wealth = “wealthy”
• the top 4% of the population (20% of 20%) controls 64% (80% of 80%) of the total wealth = “very wealthy”
• the top 0.8% of the population controls 51% of the total wealth = “the super wealthy”

This type of distribution isn't just limited to income and wealth distributions. We see Pareto and power law distributions in the financial markets, geology, physics, politics, traffic patterns, the internet and biology - just to name a few. For example, you might see the Pareto distribution in the occurrence of forest fires in California. If we applied the same 80/20 pattern here you might find that:

• the smallest 80% of the fires in California cause only 20% of the damage - most of these fires would not be reported or even noticed.
• the largest 20% of the fires cause 80% of the damage
• the top 4% of the fires cause 64% of the damage
• the top 0.8% of the fires cause 51% of the damage - these are the ones that make the news.

As a disclaimer. I used the 80/20 rule here just to illustrate the basic idea of the Pareto distribution. In reality, the idea of a Pareto distribution encompasses an infinite number of distributions which follow the function given above - but you can think of them as all having roughly the same shape and ideas of the 80/20 rule.

One thing is clear - this new type of distribution is not normal. By that I mean it isn't a “normal” distribution or bell curve you might have studied in college. A "normal" distribution tends to be well behaved in a statistical sense. It describes environment where wild events happen very rarely and when they do, they aren't so wild that they mess up the averages. Pareto distributions (and power law distributions) on the other hand can describe environments where wild events are also rare, but when they do happen they can be very, very wild - far wilder than would be conceivable using a normal distribution. Out of the thousands of earthquakes that occur every year, most are not even felt, but then one occurs which destroys a city. Or after months and months of "normal" financial markets, we get a massive and rapid selloff. These events wouild be typical of power law distributions.

What causes these distributions to show up? We don’t know yet. But one theory is that they all come from types of environments that can be structured as networks. I believe that the Pareto/power law distribution is in fact a signature or fingerprint of a networked environment. Along the same line of thinking, if you are dealing in an environment that operates as a network, you should expect to see this type of distribution to show up. If this theory is true, it provides the answers as to why we see the 80/20 rule so often in business settings. Business environments are all about networks - supply chain networks, computer networks, networks of traders, all sorts of networks but most importantly - social networks.

Why I named this the Pareto Project

“Give me the fruitful error any time, full of seeds, bursting with its own corrections. You can keep your sterile truth for yourself.” -Vilfredo Pareto

I named my website after Vilfredo Pareto (1848 - 1923) - an Italian economist, sociologist and philosopher. My interest in Pareto originally stemmed from the probability distribution which bares his name: the Pareto Distribution. This distribution is often referred to by other names such as the Pareto principal or as the popular business rule-of thumb: “the 80/20 rule”.

From a business context, the amazing thing about the 80/20 rule is that it shows up so often - so often in fact that an entire industry exists to promote the idea that “80% or your business results come from 20% of your effort” or some such phrase.

But as it turns out, it isn’t just business settings that the Pareto distribution shows up - it seems to show up almost everywhere. It, along with the closely related probability distributions known as “power-law distributions”, shows up in business, financial markets, the structure of the internet, sociology, economics, politics, physics, geology, biology...

Over the years in virtually every topic that I found interesting - I ended up finding these probability distributions. And since this site is devoted to “topics I find interesting”, the name “Pareto Project” seemed appropriate. Plus, I just like the way it sounds.