Food, Fatefulness and Faith
What Pachinko can teach us about risk: Crypto Gresham’s Law; Cyber Competition; Standards, Frameworks and Justification; White Collar Character; Digital Communities
History has failed us, but no matter.
― Min Jin Lee, Pachinko
Risk Developments this letter:
Crypto Gresham’s Law
Standards, Frameworks and Justification
White Collar Character
Food, Fatefulness and Faith
From 1910 to 1945 nearly two million Koreans resettled in Japan, fleeing war, starvation and colonization in their homeland. Today there are still over 300,000 permanent resident, non-citizen, Koreans living in Japan. The historical novel, Pachinko, by author Min Jin Lee, is a collage of sociology, history, primary and secondary accounts covering four generations. The story covers many complex topics from class and identity to religion and crime. At its heart it is a story about outsiders, innovators and risk takers.
The story begins with a matchmaker pairing Hoonie, an “ineligible” 27 year old man with a cleft lip and club foot with the youngest daughter of a poor farmer who was on the verge of starvation, Yangjin. Hoonie and Yangjin operate a lodging house in a rural fishing village on an island in Korea during the Japanese occupation. Their only daughter Sunja, a plain looking, independent and determined woman, falls in love with a wealthy fish broker, Koh Hansu, who gets her pregnant. When she finds out that he is already married to a Japanese woman, she tries to cut him out of her life.
To save face and do what is best for her child, she marries a Presbyterian minister, named Isak, who is lodging at their house on his way to live with his brother (Yoseb) in Osaka.
Sunja and Isak settle in the Korean ghetto in Osaka and scrape out a hard life raising Noa (progeny of Hansu) and Mozasu (progeny of Isak). Isak is imprisoned due to his religious beliefs and Korean ethnicity. Sunja supports her family by selling Korean foods in the market. When Japan enters World War II, ingredients become scarce and Sunja is hired by a manager of a Korean restaurant, who has connections to continue getting supplies. This happy twist of fate is offset by Isak’s death upon release from prison.
As the war worsens, the wealthy Hansu reappears to reveal that he is the secret owner of the Korean restaurant. He then arranges accommodation for Sunja’s family in the countryside away from the increasingly violent and famished Osaka and reunites Sunja with her mom.
After the war, they return to Osaka where Noa passes university entrance exams and Mozasu drops out of school to work for Goro, a Korean bon vivant and pachinko parlor owner. Mozasu falls for a Korean seamstress and she gives birth to a son they name Solomon. Soon after, she dies in a traffic accident. Noa departs for Waseda University in Tokyo where he falls in love with a Japanese woman who uncovers Hansu’s yakuza ties.
This sudden confrontation, in short succession, with the fact that Hansu is his biological father and a gangster is too much for him to take. He drops out of school and breaks all communication with his family to start a new life, passing as Japanese in Nagano, working for (a Japanese) pachinko parlor owner. There he marries a Japanese woman and has four children before his past catches up with him.
Meanwhile, Mozasu has become a successful pachinko parlor owner and takes a Japanese divorcée, Etsuko, as his girlfriend. Etsuko’s daughter from her marriage, Hana, and Solomon begin a sexual relationship, but she uses him for his innocence, kindness and money before running off to a life of drugs, prostitution and crime in Tokyo. Solomon goes on to attend Columbia University, in New York and starts dating a Korean American girl named Phoebe.
Upon graduation, Solomon lands a job at a British investment bank in Tokyo. His boss pressures him to use his Korean connections to convince an elderly Korean woman to sell her land. The bank wants to underwrite the construction of a golf course and her home is blocking the way. When the woman dies, soon after selling, he is fired because of the perception (but no evidence) that his Korean pachinko parlor owning father had her assassinated.
With a fresh perspective and no job, he breaks up with Phoebe, goes to work for his dad in the pachinko business, and forgives Hana on her deathbed. The book closes with Sunja visiting her late husband, Isak’s, grave and learning that Noa continued to visit the grave even after he started his new life.
Outsiders, Innovators and Risk Takers
Lewis Hyde’s “Trickster Makes This World”, an ode to transgression, explains the valuable role in society that outcasts play. When cultures naturally stagnate, calcify and become brittle from tyrannical control mechanisms taken too far, like excessive shame, totalitarianism and concentration of power, the trickster reintroduces flexibility. Japan needs Koreans, in part to scapegoat and in part to do what the Japanese cannot. All nations, cultures and organizations need their heretics.
The parallels between Koreans in Japan and Jews in Europe are uncanny. Ghettos, non-citizen status, stereotypes about untrustworthiness or greed, and prohibitions on intermarriage are pervasive in both cases. These outsiders reflect the greatest fears of their respective societies and at the same time serve as an outlet for pent up demand, aggression and above all, blame. It is no surprise then that outsiders, who lack access to traditional opportunities, are some of the greatest entrepreneurs and innovators.
Sunja is forced by poverty to begin selling Kimchi in the market, and when cabbage is hard to find, she pickles other vegetables. One month she can’t find any vegetables, but manages to acquire some black sugar to make taffy and other desserts. She makes an ersatz oven with a metal box to heat the sugar on her Kimchi cart. Women in Korean and Japanese culture were expected to stay at home, but since her husband had died, she was free to break social norms, earning enough to put her son Noa through high school. People often confuse entrepreneurs for thrill seekers, but it is not as if Sunja sought out risk. She was able to take risks that others could not because she had less downside, and she did everything in her power to minimize the risks she did take.
There are however, those who choose to seee out risk; commonly, gamblers, fighters and criminals. Being an outsider is already dangerous and difficult, but it also forces one to be associated with those who are social outcasts for good reason. This adds further pressure on “good” outsiders to overcompensate in duty, achievement and self-sacrifice. The parallel between Jews and Koreans may again be useful too explain this point.
Just as Europe in the medieval ages had strong taboos against usury, Japan prohibited gambling. In each case, those discriminated against in traditional society filled the demand. Pachinko parlors became one of the main outlets for gambling. First introduced to Japan as a childrens’ game, Pachinko is a cross between a Galton Board and Pinball. The player uses a flipper to launch ball bearings to the top of a peg board embedded with various cups to aim for. Early on, prizes were typical state fair rewards, but eventually cigarettes, alcohol and ultimately cash became the usual winnings.
Being an outsider inherently means being a minority and living in constant relativity to the majority. We have spoken about identity and the mirror stage here before, but a quick refresher on Jacques Lacan’s theory may be helpful. Lacan postulated that there is no unified understanding of the self, until we learn to recognize ourselves as a whole in the mirror. It is only through the other that we can fully understand and integrate components of our identity.
For the outsider, this experience is especially fraught. There is a kind of fight or flight exhibited by Sunja’s two sons Noa and Mozasu. Noa deeply feels the pressure of being the first born son in a Korean single parent home. He overachieves in academics and athletics. He is a model child and an incredible conformist, as we later learn when he attempts to hide his Korean roots altogether. Mozasu is the opposite. He wears his differences as a badge of pride and fights anybody who gives him a hard time for it. Naturally, the conformist outsider is a harder performance to pull off than the contrarian outsider.
Because Mozasu becomes so successful by embracing his differences, his son Solomon is naive about his status as a Korean in Japan, until he is humiliatingly forced to register as a non-citizen when he is 14, despite being wealthy, a native Japanese speaker and the second generation in his family born in Japan. After college, his boss at the investment bank makes a speech to him after after a poker game (warning, strong language):
There’s nothing fucking worse than knowing that you’re just like everybody else. What a messed-up, lousy existence. And in this great country of Japan—the birthplace of all my fancy ancestors—everyone, everyone wants to be like everyone else. That’s why it is such a safe place to live, but it’s also a dinosaur village. It’s extinct, pal. Carve up your piece and invest your spoils elsewhere.
Min Jin Lee is makes Mozasu’s boss an example of the perfect antithesis of the ideal person. A Japanese investment banker who unironically believes themselves to be different than everyone else and lacking any sense of duty, social obligation and community. He is a risk taker, not out of necessity, but because he seeks action.
A Brief Tangent on Action
Action in the Goffmanian sense is a topic we have discussed here before (prior to most readers subscribed, so do check the link). In his difficult to find essay “Where the Action Is”, Goffman lays out the mechanics of action: risk seeking, chance, problematicness, consequentiality and fatefullness. Chancey activities, resolved through play, hold opportunity and risk. A problematic situation is one with uncertainty (think of a coin mid-toss). A coin toss is chancy and problematic, but the stakes are what make it consequential.
A problematic and consequential activity that cannot be avoided is what Goffman calls a fateful activity. Individuals encounter fateful activities constantly, and an easy life is one that avoids fateful (i.e. uncertain and consequential) activities. Fateful encounters, however, cannot always be avoided, and those who seize these forced moments of fate are practical gamblers.
Goffman goes on to suggest three means of dealing with fate: care, providence and defense. Care is the act of minimizing fateful activities. Providence is “the Calvinistic solution to life: once the individual divides his day’s activities into those that have no effect and others having small contributive consequence, nothing can really go wrong.” Defense is the stoic approach of steeling one’s self to the psychological damage by preparing for the worst outcome. These techniques are adapted to deal with fate, but what of self imposed problematic and consequential activities?
By action, Goffman means “activities that are consequential, problematic and undertaken for what is felt to be their own sake.” Why would one voluntarily seek action? Goffman posits that it is because “...qualities of character... emerge only in response to fateful events.” He enumerates these qualities as courage, gameness, integrity, gallantry, composure and stage confidence. Action for the purpose of demonstrating these qualities are called character contests.
He concludes the essay thus:
“On the arcade strips of urban settlements and summer resorts, scenes are available for hire where the customer can be the star performer in gambles enlivened by being very slightly consequential. Here a person currently without social connections can insert coins in skill machines to demonstrate to the other machines that he has socially approved qualities of character. These naked little spasms of the self occur at the end of the world, but there at the end is action and character.”
Land, Food and Action
In contrast to Mozasu’s boss, we have his father and mother, Isak and Sunja. They are the platonic ideal of community. Isak is the male ideal, Christ-like in his self sacrifice, and Sunja is the spiritual keeper of the flame. As a young girl, Sunja sought action, in her tryst with Hansu, to escape her hum-drum life of poverty and unimportance, then she suffered the consequence of a life reclaiming her character.
As a poor outsider, she had little opportunity to avoid fateful activities, as the book’s obsession with land makes clear. Owning land puts one in control of their destiny. Land owners can grow the ingredients needed to survive and make products sold in the market. When they move to the Japanese farm, they are laborers, who cannot accumulate the wealth necessary for education. It is fitting that Solomon’s fateful encounter centers around land in Tokyo.
Land is intimately connected with community. Japan is an island, which makes it easy to exclude people from their community. When Koreans did come to Japan, they faced much discrimination in real estate, which prevented them from getting a foothold in society. It is no wonder the Korean land owner in Tokyo refused to sell to a Japanese businessman. It would be a betrayal of everything Koreans fought so hard to achieve in Japanese society.
For Koreans in Japan, without access to land in their home country and Japan, they had to find other means of defining their community. That is why food is so important in many diaspora communities. Sunja’s kimchi cart, the Korean BBQ restaurant and home cooking were a way to maintain tradition, values and community. To an American, such as Phoebe, who does not cook or eat Korean food at home, this is incomprehensible.
Returning to the comparison between Mozasu’s boss and his parents, we can see that for Koreans in Japan, fatefulness was forced upon them by their circumstances, while the Japanese sought out character contests in pachinko parlors. The most ire is reserved for Japanese who appeared to be involved in character contests, but in fact risked nothing, putting all risk back onto the Koreans such as Mozasu.
I have already alluded to the Jewish and Presbyterian (i.e. Calvinist) influence on Sunja’s family and its importance to character, community and action. It is notable that the author chose Hebrew biblical names (Joseph/Yoseb, Isaac/Isak, Noah/Noa, Moses/Mozasu, Solomon) for all the men. Food is the means by which the landless can define their community and faith is a powerful means of dealing with fateful action.
All of this is to say, who is a good risk taker? A good risk taker must both manage the risks they take, voluntarily or not, and demonstrate socially approved qualities of character. Perhaps in our own lives we should more closely examine the link between these two meanings of “good risk taker.” Beware those who engage in character contests, without consequence and seek out the outsiders who, despite their best efforts to avoid risks, have demonstrated their character qualities through food, fatefulness and faith.
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Crypto Gresham’s Law
Statics luminary Andrew Gelman linked to a great XKCD comic about fitting curves in statistical models this week and referenced Gresham’s Law. The Law, that bad money drives out good money, is an application of a race to the bottom found in many risk taking situations like monetary policy, markets for lemons, insurance and cybersecurity. It is no surprise that a market with as much action as crypto lately is attracting some bad money.
Hedge fund manager and former Trump advisor, Scarammuci is launching a new crypto fund. Not only has crypto taken the financial world by storm (again) over the last year, but the original action seekers are also paying attention. A patent was granted for a bitcoin slot machine, just in case you didn’t have enough opportunity to demonstrate your character by tweeting about crypto:
One of these days I’ll do a real full piece on cryptocurrencies, because I have serious thoughts, but today is not that day.
One big issue that won’t go away in cybersecurity is that companies have little incentive to spend properly on security. As Matt Stoller points out, SolarWinds chronically underfunded its own cybersecurity while selling a cybersecurity and network management product. It’s a fair and needed critique, but there are a few things wrong with his take that private equity is to blame (and also a couple quibbles with who he claims was affected by the breach).
Private equity deserves little praise, in my opinion, but it is not Thoma Bravo’s fault that SolarWinds exists in a market based system without incentive to spend on security. Perhaps one should be upset that PE often takes risk without consequence or questions of possible insider trading. Still, competitive markets all share this feature, not just companies levered up to the hilt.
This brings up an interesting point. Who exactly is doing cybersecurity well? Between the number of government agencys, technology firms, universities and defense contractors hit in the SolarWinds breach, one has to wonder. One sector conspicuously absent (with the exception of Citifinancial) is banking. The absence of evidence is not the evidence of absence, but it seems that large banks are better at cybersecurity than either government or more competitive industries.
It is an odd feature of late capitalism that monopolies are often the only actors that can afford to take the long view and price externalities accordingly. Just look at the climate change debate being led by asset manager BlackRock, for example. Does this mean we should hope for more monopolies? Perhaps, but rather than be at the mercy of benevolent dictators, may I suggest some government intervention, both to internalize costs and to provide public defense?
Standards, Frameworks and Justification
One feature of risk professions is that it’s difficult to ask people to be accountable without being given authority. People working in problematic and consequential fields would prefer to have the power to manage risks (care, providence and defense) or at least not take the blame when things inevitably go wrong.
Treadway, an industry group formed to fight fraud, is releasing more prescriptive advice to follow on its COSO risk management framework. This whole cottage industry around best practices exists to justify authority to make decisions, or at least, provide cover when they don’t get the authority they seek.
Standards and frameworks work nearly the same way. One former IBMer is pushing for an AI standard (they call it an open platform) to prevent the big three cloud providers from locking in customers. If everybody agreed that AI systems should work a particular way, conveniently governed by his startup, it would be much easier to avoid risk of lock in or at least say “I told you so” when crucial design considerations are questioned after the fact.
This problem is not unique to the private sector. Among the alphabet soup of government cyber operators, the Pentagon is attempting to build a Joint Common Access Platform (JCAP) to coordinate, centralize and manage risks of running cyber operations. IT service provider, ManTech, won the $265M dollar contract to build JCAP which will presumably bring cyber ops, which have historically been run from the intelligence community under the defense umbrella.
At least if something blows up, somebody gets to say, “I told you so.”
White Collar Character
Some consequential activities become more problematic (popular use) the less problematic (Goffman’s term) they become. Amazon hired a lobbyist with ties to the incoming presidential administration. Company directors and officers continue to buy insurance policies with company cash that shield them from suits. Executives that presided over shady accounting avoid bonus clawbacks. Opportunists find soft landings from the Squid to the Swamp to the Big Blue Cloud.
Europe has called off the truce with American internet companies, as France begins levying taxes on U.S. big tech again. In a digital world, where community isn’t defined by land, it’s difficult to know who is an outsider and who isn’t. France isn’t about to start taxing companies with substandard food (although that would be very French), so they are attempting to fit a land based community view onto a digital world.
Twitter, meanwhile is going the opposite direction as they build out digital spaces with the acquisition of Breaker, a Clubhouse competitor. Twitter’s position looks a lot more realistic than France’s, but right now we’re still in the coin-in-the-air stage. Covid put a lot more coins in the air, and 2020 was a whole problematic year. Now we’re gripped with the reality that it’s 2021 and the coins are still in the air. Instead of waiting to see where they land, maybe it’s time to embrace food, fatefulness and faith.