Royal Bank LetterPublished by Royal Bank of Canada

The Elements0f FOLLY

Folly is c~s old a l

Adam and Eve and asnew as today

headlines. How c

we combat thisperennial blight?

Here is a handy

to how to avoid it,mosily by beingn

aware of the tricksthe wind can play...

hen modern peo-ple talk about thenews of the day,they are usually

talking about folly. It shouldbe noted that news is notan accurate reflection ofeveryday reality: headlinesare not made of the thingsthat routinely go right, butof the things that morerarely go wrong. The realnews - the stuff that peoplewant to hear and chat about- is composed of accidents,political and economic crises,crime, war, and other forms

of conflict. Folly may be found at the heart of thesearresting developments more often than not.

Social commentators in days gone by identifiedfolly for what it was, and cited historical precedents aswarnings against repeating them. The short attentionspan of today’s consumers of news leads its purveyorsto treat follies in particular contexts, as if they wereunique. But it is not difficult for a historically informedperson to detect the presence of folly in a newsworthyevent, trend or situation. It shines through the editor-ial fog like a red traffic light.

In a society that almost seems to have lost itsmemory in the pursuit of what’s new, the consistentpattern of folly in current affairs is seldom called topublic attention. Anyone who points out that a seem-ingly fresh development is fundamentally the same assomething that happened centuries ago risks beingbrusquely told to "get with it." While looking ahead tothe future, modern pundits tend to forsake the bene-fits of looking back beyond the recent past.

Does it matter? Yes, where folly is concerned,because it is an ever-present source of ruin. We mod-erns forget and overlook it at our peril and expense. Bybeing conscious of it and of the mischief it wreaksamong us, we as citizens can exert whatever influencewe can on our public officials to steer them clear of it.Better still, an understanding of its nature may help usto avoid it in our own lives.

But first we must know what we are talking about.Folly is an elusive concept that comes in many vari-eties. Though the word is etymologicaIly linked to"fool," there is a quantitative difference between follyand simple foolishness. Anyone can act foolishlysometimes. People under the spell of folly act fool-ishly again and again.

The primary dictionary definition of the word is"foolish belief or act," which adequately covers thesmall-scale folly that takes place daily. It is largely toguard against the damage this does to the bodypolitic that we have rules, laws, police forces, judges,juries, and jails.

The secondary definitions in dictionaries comecloser to what historians and philosophers mean bythe word: "useless and expensive undertaking" or"action that ends or can end in disaster." Mentioningno names, it is not hard to think of useless undertak-ings close to home that have been responsible forheavy drains of taxpayers’ money. And we do not haveto run our memories back very far to find cases ofquestionable business ventures that have ended infinancial disaster for the investors concerned.

Even these refined definitions, however, fall short ofdescribing the whole phenomenon. That is because thereis something mysterious about folly which precludesspelling it out in completely rational terms.

The mystery is that it tends to be repeated in the faceof compelling evidence that it will reap dire conse-quences. If folly were a legal concept, it would becalled recidivism, a recidivist being an offender whorepeatedly commits crimes in the knowledge thatdoing so is almost certain to land him back behind bars.

Similarly, if folly were a disease, it would have to beclassified as chronic. For it has recurred year after year,century after century, since the beginning of therecorded history. Indeed it is such a standard andbasic feature of the human condition that it is one ofthe first subjects man ever wrote about.

The world’s first published author, Homer, dealtextensively with it, as did the immortal playwrights forwhom its unavoidability became the leading theme inGreek tragedy. Homer’s tale in the Odyssey of theGreek conquest of Troy makes a dramatic illustrationof how irresistible it can be. The Trojans were vehe-mently warned that the wooden horse the Greeks hadgiven them had soldiers hidden inside it. But they didprecisely what they were told not to do when theyhauled it within their city walls.

Barbara W. Tuchman used the fall of Troy as thefirst case study in her 1984 best-seller, The March ofFolly. In it she made the point that modern folk stilltend to regard folly fatalistically, only instead ofblaming it on the gods, they blame it on the sub-conscious: "[Psychologist Sigmund] Freud has broughtus back to Euripides and the controlling power ofthe dark, buried forces of the soul, which not beingsubject to the mind are incorrigible by good intentionsor rational will."

The theory that folly is inherent in human natureraises the question of how our species has ever beenable to advance in the face of the set-backs it so regu-larly occasions. The answer is that just enough peoplehave always learned just enough from past follies notto re-commit them. So if folly is chronic, it is by nomeans incurable, given a healthy vigilance for itssymptoms when they begin to show.

Tuchman is concerned in her book with folly of thepolitical sort, which she calls "the pursuit of policycontrary to self-interest." She traces the phenomenonfrom the fall of Troy to the American debacle in VietNam. Her key contention is that social and technolog-ical progress has had no effect on the workings of follyover the ages. What King Rehoboam did in losing theIsraeli Empire circa 930 B.C., the British did in the1700s in losing their American colonies. What theBritish did then, the Americans did in the 1960s and’70s in losing the war in Viet Nam.

What did they do? Here, for future guidance, is apartial checklist drawn from Ms. Tuchman’s findings:¯ They proceeded on the basis of fixed notions, and

they could not be budged from them.

¯They attempted to gain ascendency over others byforce rather than finesse.

¯They placed exaggerated importance on not showingweakness.

¯They wilfully ignored evidence that events were notproceeding as they had calculated.

¯They misinterpreted facts to suit their own biases.¯They refused to listen to contrary opinions.¯They ceased to weigh possible gains against losses;

that is, the size of the possible losses they faced grewout of proportion to the possible gains.

?uchman duly noted some other characteristics offolly-friendly conduct: constant over-reaction; exagger-ation of the danger of not following the chosen courseof action, and invention of excuses to persist in it. Hersubjects became fixated by their effort, and sacrificedeverything to it, including their integrity. People benton folly are overpowered by ambition, anxiety, status-seeking, and face-saving, she observed.

Folly is at its most glaring among those in power, ifonly because more is recorded about them than aboutordinary citizens. Top military commanders providerich material for its study, because the extreme pres-sure on them in time of war makes them unusuallyerror-prone. Former British Army officer Norman Dixononce wrote a book examining military defeats calledOn the Psychology of Military Incompetence. He foundexactly the same character traits in losing generalsin every era: rigidity, conformity, traditionalism,antiqntellectualism, indecisiveness,and stubbornness.

Military folly has often hadto do with being carried awayby a commitment. Canadianshave reason to rememberDieppe, the raid on the coastof France in 1942 in whichhalf of the invading Canadianforce, more than 2,000 men,were captured, wounded orkilled. The raid was to havebeen made six weeks earlier,but was cancelled due to badweather. Word of it leaked out,but, with all the wheels in motion,its commanders decided toproceed with the raidwhether the Germanswere forewarned or not.

Losing sight of the objectiveWorld War I can be looked upon as a folly in and of

itself, but the waging of it by the Allied high commandhighlighted several detailed aspects of it. One con-cerns "the law of unintended consequences." Massivebombardments were supposed to clear the way forinfantry attacks; instead, they churned up the mud,making it nearly impossible for troops to move forwardand leaving them as helpless targets for enemycounter-fire. "The British Army...by its own bombard-ment and barrages, created in front of itself its ownobstacle," one historian wrote.

Another consistent military failing (which isalso present in civil and personal affairs) is anoverestimation of one’s own strength and anunderestimation of the strength and determinationof one’s adversary. British generals in World War 1continually drew the conclusion from selective evi-dence that the German Army was about to crack.While acting on the basis of that misinformation,they became isolated from the actual conditionsof battle. "Impossible orders [were] issued by gen-erals who had no idea of what the execution oftheir commands really meant," a front-line officerrecorded bitterly.

In yet another common exercise of folly, thecommanders lost touch

with what they had setout to accomplish. Thebattle of Passchendaelein 1917 originally hadas its objective thecapture of the German-

occupied Belgium coast.British troops were to

burst through the Germanline and join up with anotherBritish column which hadmade an amphibious land-

ing. The landing wasaborted, but theother side of the

offensive waspushed forward

regardless. Beforelong, the strategicplan was forgot-:en, and the objec-

tive switched towearing down

the enemy.

As a result 400,000 allied troops were condemnedto horrible deaths and injuries fighting over a fewyards of mud.

The boomermm effectFolly is often distinguished for the herd-like behav-

iour of people who embark on it. World War I beganwith young men on both sides marching offto the bat-tle, each convinced that his own side could not lose.Rushes to disaster are usually propelled either bypatriotism or by the prospect of financial gain, as inthe mad mass speculation in tulip bulbs in 17th cen-tury Holland. in the classic folly of the Darien venture,both impulses came into play.

In June 1695 the then-independent Parliament ofScotland incorporated a company to establish a trad-ing colony in Darien on the Isthmus of Panama. Theprecedents were grim: previous attempts to establishScottish entrepots in the New World had signallyfailed. Yet Scots organizations and individuals from allwalks of life subscribed some 400,000 pounds to thescheme, an estimated half the capital of the nation.The problem was that no one concerned had ever beento Darien. The warnings of explorers that it was theleast inhabitable place in the tropics were dismissedon the grounds that it could not possibly be as hot,rainy and disease-ridden as they said.

Darien was chosen because it was presumed tooffer a corridor between the Atlantic and PacificOceans. Five ships loaded with colonists and anassortment of goods to trade for the riches of the Eastlanded on the Panama coast in November, 1698. Fourmore ships followed, but when they arrived a yearlater, they found nothing but ruins and a massivegraveyard. The second draft of colonists perished liketheir predecessors from tropical diseases, shipwrecks,Spanish attacks and blockades, and starvation. Bythe time the colony was finally abandoned in 1700,2,000 men, women and children had been lost, andall nine ships sunk.

The venture yielded a perfect example of theboomerang effect. It started as a national crusade toensure Scotland’s independence from England. Itended in a national bankruptcy that pushed the north-ern nation into a union with England in 1707 onunequal terms. Presumably the Scots could havemade a much better deal if they had negotiated theunion or some other arrangement when they werestronger. The incident brings to mind the Spanishmaxim: "What the wise man does in the beginningthe fool does in the end."

What can a person learn ?Parallels of this sort between collective and indi-

vidual behaviour are woven throughout the literatureof folly. The difference between individual and collec-tive folly is, after all, only a matter of scale. Whichraises the question of what we as individuals can learnfrom the record in order to avert it personally. As akind of public service, here is a list of relevant do’s anddon’t’s (mostly don’t’s) in modern layman’s terms:

Don’t kid yourself. Self-deception is the engineof folly. Bear in mind the old saying that there is noone you can dupe more easily than yourself. Also thatyou are always your own worst advisor, which leads tothe rule that you should always seek the advice of peo-

ple with experience, and heed whatthey have to say.

Don’t indulge in wishful thinking."You believe that easily what you

hope for earnestly," the Romanphilosopher Terence wrote.Often, folly begins with wish-ful thinking about otherpeople’s reactions to theactions we propose totake. Distinguish betweenyour desires and your

logic, rememberingthat desire hasthe handupperpsychologically.

Don’t throwgood money after bad.

Those World War 1 generalspoured scores of thousands ofmen into battle long after noth-ing could be gained by intensi-fying their effort. There comes apoint at which to cut yourlosses. To find that point, con-sider whether the possiblegood you expect to do foryourself is greater or lesserthan the possible bad.

Admit your mistakes.No one can counthow many lives orhow much money hasbeen lost because

people refuse tochange course

,,, after their mis-

takes have become clear to everybody but themselves(see above, self~deception). This resistance to admit-ting error offers a partial solution of the mystery of whyfolly crops up so persistently.

Don’t go by theory. Theories are as likely as not tobe dead wrong, and they should not be used asthe basis of action until they have been thoroughlytested. In a famous essay, Francis Bacon commentedon the foolishness of "taking a questionable proposi-tion as an indubitable starting point." Only whenthe most obvious questions have been answeredshould you proceed.

Face the facts, especially facts that get in the way ofyour desires. Folly-prone people have the habit oftwisting facts around to justify what they want to do.The mind being notoriously apt to play tricks, contraryfacts are sometimes forgotten. Charles Darwin had anantidote to this dangerous absent-mindedness: when-ever he came upon data unfavourable to his hypothe-ses, he carefully made a note of them, knowing thatdisagreeable information easily slips the mind.

Don’t go into denial. In pop psychology, denial isneither resisting nor forgetting dissonant facts, butsimply ignoring them. Since denial is self-generated, itcannot be guarded against by the interested party.Best to talk things over with an experienced personwho can speak objectively.

Don’t get carried away. A characteristic of cases ofmass hysteria such as the Darien affair is that the greatmajority of those involved are quite convinced of theinevitability of success in the face of evidence to thecontrary. Then peer pressure takes hold. It never doesany harm to question what "everybody" is thinking,saying, or doing. Practice what Descartes termed"methodic doubt."

Needless to say these handy hints only scratch thesurface of the avoidance of folly, as do the points madein the above discussion of it. In a more sensible world,there would be schools and university facultiesexclusively devoted to the subject, so great is its powerto bedevil our lives.

Failing that, the repetition of the same mistakesthrough the generations at least calls for a broaderknowledge of history among students and the generalpublic. The Greek greats were wrong in thinking thatfolly is inevitable. Rather it is something that weshould use all the knowledge at our command toguard against.

Current and past editions of the Royal Bank Letter are also available on theRoyal Bank Financial Group web site, at www.royalbank.com/news.

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