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Review of The March of Folly: from Troy to Vietnam

For an investor, the value of Tuchman’s The March of Folly lies in the question: Why do people in power regularly pursue policies that are widely understood to be contrary to self-interest in spite of the fact that there are clear alternatives?

It will be a rare day in the financial markets when attention to that question does not pay a dividend.

Tuchman’s purpose was not the financial markets. Her interest was to demonstrate the fact of recurrent folly, and to illuminate the social and psychological forces that bring this about.

As a historian, her focus is to define the elements of folly using historical examples – building an anatomy of folly – and to prove that folly is an inescapable theme of the human condition.

She accomplishes this with precision and wit, by taking readers on historical voyages through ancient Troy, then to Rome, where the decadent Catholics Popes provided fodder for the Protestant Reformation, and to the British Parliament during the time the U.K.’s American colonies were slipping away, before bringing readers to Washington, where the Vietnam quagmire deepened.

Tuchman had a selection problem since acts of folly have been so commonplace.

To qualify for her analysis, policies adopted must have been perceived as counter-productive in their own time, a feasible alternative course of action had to have been available, and the policy had to be that of a group.
Readers of Daniel Kahneman’s Thinking, Fast and Slow will recognize much (all?) of the decision-making of Tuchman’s characters, although she takes the theoretical and lays bare the wooden-headedness and illusions of omnipotence.

Investors willing to cast aside the dogmas of academic finance, reliance on the pronouncements of authority figures and putative certainty of computer models will be well served by Tuchman’s question: “What manner of folly are they committing today?”

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