Leithner Letter Nos. 90-92
26 June - August 2007

And the whole apparatus for spreading knowledge – the schools and the press, radio and motion picture – will be used exclusively to spread those views which, whether true or false, will strengthen the belief in the rightness of the decisions taken by the authority; and all information that might cause doubt or hesitation will be withheld. The probable effect on the people’s loyalty to the system becomes the only criterion for deciding whether a particular piece of information is to be published or suppressed.

Friedrich Hayek
The Road to Serfdom (1944)

I want to pause here and talk about this notion of consensus, and the rise of what has been called consensus science. I regard consensus science as an extremely pernicious development that ought to be stopped cold in its tracks. Historically, the claim of consensus has been the first refuge of scoundrels; it is a way to avoid debate by claiming that the matter is already settled. Whenever you hear the consensus of scientists agrees on something or other, reach for your wallet, because you’re being had.

Let’s be clear: the work of science has nothing whatever to do with consensus. Consensus is the business of politics. Science, on the contrary, requires only one investigator who happens to be right, which means that he or she has results that are verifiable by reference to the real world. In science consensus is irrelevant. What is relevant is reproducible results. The greatest scientists in history are great precisely because they broke with the consensus.

There is no such thing as consensus science. If it’s consensus, it isn’t science. If it’s science, it isn’t consensus. ... Finally, I would remind you to notice where the claim of consensus is invoked. Consensus is invoked only in situations where the science is not solid enough. Nobody says the consensus of scientists agrees that E = mc2. Nobody says the consensus is that the sun is 93 million miles away. It would never occur to anyone to speak that way.

Michael Crichton
Aliens Cause Global Warming (17 January 2003)

Harry Landis is 107 but could pass for 80. ... Whatever explains it, his longevity has earned Landis a footnote in American history: about 4.7 million Americans served in the military during the World War I era, but Landis may be one of only three still alive.

He has lived through the invention of aeroplanes, television, interstate highways and cell phones. But the biggest change? “Money has decreased in value,” he says. “There is so much of it.”

Florida Man Thought to Be One of Three Living U.S. WWI Vets
The Lakeland Ledger (14 April 2007)

Speculators Extrapolate, Investors Think “Regression to the Mean”

Leithner & Co. Pty Ltd is a private investment company that adheres strictly to the Graham-and-Buffett “value” approach to investment. Its goal is its method: to undertake investment operations which are based upon thorough research and cautious assumptions; to provide reasonable safety of principal and offer an adequate return; and to inform shareholders regularly, fully and in plain language about these investment operations. Like most Australian corporations, its financial year begins on 1 July and ends on 30 June. The approach of winter is therefore an appropriate time to conduct two exercises. The first is to contemplate the twists and turns, triumphs, trials and tribulations of the financial year drawing to a close; and the second is to subsume these events under principles, revisit these principles, learn one’s lessons and adjust one’s sails for the next twelve months.

For the past year – indeed, for more than five years – my appraisal of most events and developments has been unfashionably severe and my assessment of the road ahead correspondingly cautious. Letter 24-25 (26 December 2001 - 26 January 2002), for example, stated “in many countries, including Australia, Britain, Canada and (especially) the U.S., the boom of the late 1990s sowed the seeds of bust. Australia’s boom ended in 2000 and signs of bust gathered pace in 2001. ... [Our] plans for 2002 are based on the premise that many of the excesses of the 1990s remain unrecognised and therefore unpurged, and that the bust may be extended and sharp.” It continued “renewed misallocation of resources ... may manifest itself in 2002 through a ‘recovery.’ Whatever the euphoria it incites in financial circles, such a recovery neither causes economic growth nor creates wealth. Rather, it misdirects Australia’s small and eroding pool of funding and thereby weakens the potential for longer term and sustainable prosperity. Leithner & Co. will [therefore] be in no hurry to sing ‘Happy Days Are Here Again.’”

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Chris Leithner


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