(BONUS AUDIO) “The Statistomat Pitch” by Chan Davis | Classic Science Fiction Story!
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I watched from my deep chair in the corner while he slid open his raincoat, lifted it neatly off his back — the casual shrug wasn't his style — and stood with it hanging from his forefinger. With a bright, apologetic smile, he hung it up in the alcove behind the door. I decided not to object to his using the hook without asking. It'd just slow things up.

The salesman smiled again, ducked out into the corridor and back in with a flat 24x20 briefcase and a large, oddly-shaped suitcase, his presentation charts and a mock-up of the computer, obviously. More apologetic faces, and he sat down. He said, "'It was very good of you, Mr. Borch, to give me this chance to tell you about our new personalized statistimet. I know you're a busy man.'

I raised my drooping eyelids just enough to see him properly. "'With all your responsibilities, I hope I'll be able to answer all your questions on modern estate planning. That's what I'm here for.' He smiled as if he were pausing for questions. But he didn't pause.

He intoned, "...the man of wealth has a special responsibility in our society. He is the trustee of invested capital, on which our economy rests. His proud charge is to direct and build his holdings wisely, and natural economic laws have just placed the nation's considerable estates in the hands of men equal to the charge. At the same time, such men owe themselves freedom from deprivation, and they owe themselves a financial plan adapted to their own..."

"Uh, preferences and tastes in freedom from deprivation. This is why we speak of personalized estate planning. Maybe this'll be still clearer, Mr. Borch, if we look at an example." "Here we go again," I thought as he hauled a packet out of his briefcase, opened it out into a little stand on the table, and flipped up the first chart.

Take the case of Robert Jones, who inherits $25 million from his father. The inheritance taxes are all taken care of by investment incentive deductions, so Mr. Jones has $25 million in liquid assets to invest. Right on the ball, I thought.

The hypothetical twenty-five million was just about twice the publicly known size of the Borch estate. Therefore, right in the league he could figure I'd like to be playing in. And the hypothetical Jones on the chart, confidently facing the future, was handsome and dignified, but not much more so than I was. Mr. Jones has a wife and one young son.'

They appeared beside him on the second chart, and they looked very pleasant. The salesman knew Jed Borch was unmarried. He has planned to his satisfaction a way of life appropriate to his standing. On the next chart, the Jones family was backed up by a half-acre bungalow, a lake, and wooded hills. His desire is for security, to ensure this pattern of living to himself and his wife and to his son. His personalized statistomat plans his finances accordingly.

On succeeding charts, Jones changed only in subtle lengthening of the firm lines in his face. His wife didn't change at all. But his son sprouted to a six-footer, and the bungalow grew some, too. A bar graph superimposed on the picture kept track of the investment.

By the time the boy was full-grown, it had risen to a modest $100 million. On the other hand, consider Michael Thompson. Starting with the same sum of $25 million, he may just as legitimately view different goals. Mr. Thompson is unmarried and has not yet chosen to what station he will aspire. Chapter 2 of the chart suggests this admirable-looking man — different color hair —

I was curious how much Statistomat would finagle for him, but not curious enough to sit through another dozen charts. When the salesman said, "'Naturally, he's willing to risk,' I interrupted. "'I don't want any risk.' "'Can't afford to,' I smiled slyly. "'Responsibility to society.'

Of course, of course, but you might be willing, like Mr. Thompson, to look beyond the more accepted channels of finance for the sake of the larger returns that can be realized by breaking new ground, as it were, participating in pioneering enterprises. Oh, sure, don't want to miss any bets. So far you couldn't see anything to complain about in his pitch, considering it alongside the pitch for General Computers' income, Mac.

In fact, it essentially was a general computer's pitch, but the brand name changed. Let's get to the point, I thought. I pointed to the odd suitcase. Uh, what's that? He was adaptable enough to give up the Michael Thompson story and open up the suitcase promptly and proudly. Oh, the computer, I said, almost encouragingly.

But he didn't let that stand. "No," he admitted, "this is just a life-size facsimile of the new Statistamat. I'm afraid the real thing is too valuable and too heavy for me to carry around, even to such an important interview as this."

"How heavy?" "I'd say about ten times as heavy as this one," he evaded neatly. "Now, on this facsimile, I can illustrate the ideas we've been developing. Here, you can see this screen and these knobs. I'll turn this switch on, and we can watch this part of it just as if this was the real computer." My surprise was genuine. His demonstration mock-up was a live one.

I wished my brother could see it. "'On this screen we record your time-dependent utility function. For your convenience, the input is mechanical, but from this point on all the Statistomat's computing is performed digitally.' I said, "'Huh?' "'Time-dependent utility function,' he repeated brightly. "'Oh, I can't be bothered. All that technical stuff, leave it to the specialists,' I muttered, making the trap nice and inviting.'

But he knew he had to explain. "Naturally, only the essentials need your personal attention," he said smoothly. "You express in the time-dependent utility function your financial policy — the broad overall outlines of the course you want to steer. This must come from you. This makes the difference between a Robert Jones and a Michael Thompson. You have a possibility of doubling your investment in a year, let's say.

How certain do you have to be of it before you prefer it to a more conservative investment? Even odds? 6-4? Or we might ask a similar question about a 10-year period. You see the point. But it depends on how much I've got.

I kicked myself. My brother would not approve my helping the salesman along like that. "Ah, yes, certainly. When you have a hundred million, an extra million won't seem nearly as important to you as when you have twenty-five. We understand. Our technical expression for this is that the value of money to the investor is not a linear function of dollars.

Logarithmic, some say, but that depends on the investor. Whatever relationship you select as a matter of fiscal policy, that is a part, a critical part, of the information which you give the Statistamat when you work out your time-dependent utility function, or risk function, as we call it for short.

No. Risk can't afford risk. Mr. Borch, I speak with confidence when I assure you that your estate can be subjected to as little risk when its direction is assigned to the Statistamat as in any other way.

I almost called him on that, until I reflected that he had really made only one specific claim, that you could feed just as excessively conservative a risk function into the Statistamat if you were compulsively conservative as you could into the GC Income Act. That might be true.

He went on, "'Two of the soundest business research agencies in the country have been invited to inspect all our operations and have okayed us not once but repeatedly, the SEC and the FTC. Darn right they've checked you, I thought. By law. And don't think they'll stop. But it didn't do any good to spot a steep slant in his formulations.'

He was a salesman, after all. Just so he stayed clear of demonstrable falsehoods and fraudulent tendencies, as defined by the 1978 Commerce Act, he was within his rights. He was staying clear. Some of his claims a stickler might want to check up on, but I wasn't going to bother any more to watch for things like that.

I thought the stickler would find in each case that he'd been wasting his time. This little salesman seemed awfully good at skating just at the edge. He really knew his profession. I didn't let my bafflement show. I just looked at him dully and made noises as if I was about to say something. I was, but I didn't know what. There just had to be something bad about this Statistamat venture.

Without, apparently, any new gimmick, a small new company was producing just as good a product as one of General Computer's best-managed divisions. How could Statistamat hope to deliver a normal profit? It wasn't reasonable. There must be badly cut corners, if not the product, then in the sales program or the servicing of customers, or else the investors weren't hoping for a normal return.

In that case, there was something funny in their motives, a long-range scheme to undermine GC or something. That might show up in the salesman's pitch. So I switched to, "'How do I know what stocks this thing'll tell me to buy?' "'Not tell you to buy,' he corrected charmingly. "'By you. The machine can be connected by direct wire to the exchange's computer.'

"Yeah, yeah, but how do I know what stocks I'll be getting? I want General Computers Preferred." He smiled. "Quite possibly you'll find yourself the owner of a considerable block of GC Preferred, provided, of course, your time-dependent utility function dictates a policy which —" "You mean," I said, with the very suspicious expression my brother always objected to, "you'd let your machine bid for GC stock for me?"

Naturally, the Statista match has often recommended purchases of GC stock. Let me explain to you an aspect of modern firm management which may be so specialized as to have escaped your attention.

Each firm draws up what's called a preference function. It is somewhat analogous to the investor's time-dependent utility function. It gives exact expression to the objectives of the firm. For any conceivable economic position the firm might be in, it determines, let us say, the weight the board places on a dividend this year as against a larger dividend a year from now or ten, and so on.

It is the criterion for all the optimization computations which pattern the firm's activities. Under a 1978 law, every corporation offering stock on the exchange must publish its preference function. All these preference functions are known to your Statistomat. In effect, it is as if they were all in Statistomat's memory, continuously updated, automatically. Naturally, for a particular kind of investor, only certain kinds of stock are suitable.

But Statistamat does more, and this is the point I think you'll find intensely interesting. After all, more than the firm's policy is important. Two firms may have identical financial policies, but very different dividend rates, either due to different degrees of success or to different kinds of partial success.

Statistamat also has available to it a sound estimate of the firm's expectations. Who does the estimating?

based entirely on Commerce Department reports. That's as impartial as you can get, Mr. Borch, and it's also one of the best-informed sources in the country. This information is processed at our home office on one of the largest automatic computers in the world. You see, Statistamat Incorporated is deeply conscious of its responsibility to give flawless service to the men who control and direct America's fortunes.

The little salesman sounded overconfident again, so I thought I'd shake him up. "What does General Computers use for their... whatchamacallit?" "The General Computers in CommMac uses exactly the same sources of information," I said in a bored voice. "What do you do different?" "The principles of investment planning are scientific principles, Mr Borch, and anybody working in this field must follow them."

"Let's hear you desperate," I thought. But my voice just got drier. "Guess I might as well get an 'Of course there are differences!'" "Uh, yeah?" "Oh, yes, yes! You see, even though the principles are the same, still, if only one company was offering this service to investors, then what? It'd jack up the prices?"

But that was over-eager. He backed away immediately. "'Certainly not, Mr. Borch. Who could suggest such a thing? We all know General Computer's spotless reputation as one of the most heavily capitalized corporations in the country. Besides, by now we should be free of wild brain-truster theories about the evils of monopoly.' He smiled sanctimoniously. I drawled. "'So what if only one company was selling these machines?'

My brother would be grinding his teeth at this follow-up, but I thought I just about had the salesman boxed. I'd better. He was catching on. He answered, "'Even though the same principles are applied, there are bound to be individual differences in their application. If all users of estate-planning computers had relations with the same firm, all these minor fluctuations would be in the same direction for all of them.'

Although the investment mixes would be far from identical, they would be more alike than economic principles require. On the other hand, the investor who has the courage to associate himself with an alternate set of analyses may be comparatively alone in the course he chooses. Thus he may benefit, when this course chances to be better than expectations, by having to share the reward with relatively few others.

at him. I said, "You mean this thing might buy me different stocks from what the GC Wichimacallit would? Why, yes, it would be surprising if there was not at some point a difference in the two solutions. That was the point you raised so well. And you mean your answer might make me more money? Why, yes, in the case that is in the way that I was discussing. Mm-hmm."

"'But then you think GC gives out wrong solutions?' "'Not wrong. Solutions that aren't the best.' "'That means wrong, huh?' "'Why, yes. I mean, I suppose that—' He stopped. I smiled. I dropped my Jed Borch personality, which the little salesman probably much preferred. "'You know who you've been talking to?'

"'FTC?' "'An FTC investigator,' I said professionally. Without waiting for him to ask, I showed him my card, with the impressive embossed words across the center, Fair Trade Corps. Then I pressed a button, and instantly two cops were in the door and at the salesman's shoulders. The salesman said, "'What's the charge?' "'You know what it is.' "'The charge, please!' I shrugged.

"'Fraudulent tendencies to wit, unfair, untrue, and scurrilous maligning of a competitive corporate body, individual, and or product. Okay, boys.' They handcuffed him and hustled him out without even picking up his luggage and his raincoat. He tried to look confident, but I thought the law-abiding public wouldn't suffer much longer from the connivings of Statistamat Inc. I settled back into the deep chair and turned with a triumphant grin toward the door of the room's closet.'

It opened. My brother, dressed in the distinctive charcoal green suit of a general computer's junior executive, stepped out, turning off the tape recorder as he came. He was grinning, too. "'You had me biting my lip,' he admitted. "'But you came through all right. It's a good thing, too. It always gives me an especially grateful feeling when I see society saved from a deviant like that.'

Not that there was any danger they would have challenged Income Max market leadership, but even if they had continued in existence as small as they are now, they would have taken away some customers. Our responsibility to our stockholders is not just to make profit; it's to make the maximum possible profit to optimize, of course." My brother's gaze was distant as his keen mind searched for the deeper lessons of the day's work.

He said, maybe we should get the public release of those Commerce Department reports discontinued. I'm Rodney Williams. And I'm Travis Holloway. Welcome to the Wealth Break Podcast, a real conversation about finance.

Let's be honest. Building wealth doesn't look the same for everyone. I feel like sometimes being broke is a cycle and that we might have to revisit that. And we're not stopping at success stories. What happens when it doesn't go right? How do you cope with it? Because wealth isn't just about money. It's about creating a life where you thrive and help others do the same. Listen to the Wealth Break podcast on the iHeartRadio app.

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