Wednesday, September 30, 2009

Animal Spirits

I read a book for a book club yesterday called "Animal Spirits." Written by a Nobel Prize winner in economics, it was unimpressive. In the introduction it compared the unreasonable behaviors in economies (the "animal spirits") to undisciplined behavior of children, demanding the firm hand of the parent. The parent here is the government. The blind arrogance of these academics is hard to understand. It's like Creationists who are going to hold their opinion until a new gospel is found; they simply will not take seriously any contrary evidence around them, like pathological denial. The entire nation is screaming about the arrogance of university elites and this guy writes a book whose core is that the average citizen is an unruly child who needs a good government spanking.
There are a lot of interesting, if superficial, observations in this book but essentially these evil emotions, influenced by genetics and poor education, draw the fire that I think, in straw man fashion, should be reserved for two other points. First, if ignorance and irrationality are big contributors to economic misfortune, why not focus on education as the cure? Is the problem too specific than the "government should do it" solution allows? Or has education failed for more basic, ugly reasons than only force can override? Secondly, how come the leaders are immune to the same animal spirits?
Out here in the world, we know they aren't.

Tuesday, September 29, 2009

Free Polanski!

Thirty one years ago Roman Polanski, then forty four, pled guilty to drugging and then raping a thirteen year old girl. He then fled to France, continued to work as a director with considerable success (an Academy Award in 2003 for The Pianist), and lived a life of high regard and respect. This week, on a trip to Switzerland to receive another award, he was arrested on the outstanding warrant from the United States and extradition procedures were begun.
A number of curiosities provide some cosmetics and jewelry to this ugly thing. The child was said to be "sexually experienced". The judge behaved terribly and last year a motion to overturn the conviction on the judge's misbehavior was initiated. The victim herself does not want to pursue this case, publicly forgave Polanski and earlier this year formally asked the case to be dismissed. (I do not know of any financial settlements that may be in play here.) For these reasons and others (the case is too old, too expensive to pursue, the state had many other opportunities to arrest him so this is capricious) many have demanded the case be dropped. France and Poland (he was born in France of Polish parents) have both objected.
One wonders how anyone could defend this guy. There are no extenuating circumstances here that makes this crime any less than it is. For that matter, how could anyone hire him, or have him to dinner? What possible mental and moral gymnastics would one have to perform to treat this man as just another guy? Or honor him with an award? How can anyone look at him and not be reminded of this terrible crime and the personal corruption it implies? Is this man beyond our reproach, an elite among his injudicable peers, above our simple opinions? Are these entertainers just fantasies to us? Do we weigh aspects of our lives separately, rape in the negative bin, Academy Award, horribly injured husband of Sharon Tate, paparazzi target in the positive bin so the scales tip away from the crime and cancel it out, numerator and denominator? Or has tolerance trumped judgement? Are we beyond character? Do personal defects become less of an essence and more of an affliction; there but for the grace of God....?
This year's award for innovative twin studies goes to.....(aside) this is so exciting my hands are shaking....to....Josef Mengela! (cheers)

Friday, September 25, 2009

Two Quotes

"The State is the coldest of all cold monsters, and coldly it tells lies, and this lie drones on from its mouth: ‘I, the State, am the people’.” -Nietzsche

“Like those of imperial Rome, America’s elites are an urban and international group, perhaps on their way to forming a distinct transnational class. They are cosmopolitan-citizens who often have more in common with members of that same class around the world than with other members of their own society. The elites of Washington, New York, Los Angeles, and Boston may be American by birth, but their wall hangings are from Peru, their sculptures from Nunavut, their literary fiction from Sri Lanka, their CDs from Brazil, their basmati from India, their wine from New Zealand. Their religious values, if they have any, may be drawn impressionistically from Eastern and Western traditions—an eclectic pantheon.” [Excerpted from Are We Rome?The Fall of An Empire And The State of America by Cullen Murphy, 2007, p. 147.]

These two quotes describe the tension in American politics today. On one hand the leaders masquerade as representatives of the people--their leadership houses as microcosms of the nation--and on the other hand have the same separation from the people as prerevolution aristocrats, with much more in common with their peers than their subjects. Here at the G20 they are truly at home. They move in armored caravans from luxury hotel to luxury restaurant, meet with each other, talk to each other, give awards to each other and proclaim to each other. Outside, a small group of children, sensing some indefinable outrage, scream incoherently. The rest of the city, usually active and vibrant, is abandoned.

Wednesday, September 23, 2009

Love is Like Oxygen

Carbon monoxide, CO, is a colorless, odorless and tasteless gas that is poisonous to mammals. It has a peculiar property so cleverly incorporated into the novel "Coma": Its human victims appear healthier than average because the gas replaces CO2 on the hemoglobin molecule with CO and gives the blood a rosy quality despite the fact that no oxygen is transferred at the tissue level. Essentially CO binds to the hemoglobin, makes the blood look red and rich yet never releases oxygen. The victim suffocates despite his bright and flushed countenance. Describing it as insidious underestimates it; it is a killer with a disguise. It looks like what it is replacing so its homicidal effects are camouflaged. It mimics the appearance of well oxygenated blood while functioning as its opposite. It is the ultimate conflict between form and substance.
I've heard this used as an analogy to government acting as a substitute for private enterprise but it does not hold up well. Government can behave as a producer, an inventor and as an engine of economic growth--it is just very inferior. The motive for substituting government into an economy is never to improve it; it is always to sacrifice the economy to some other purpose, usually a bigger social safety net, sometimes simple personal aggrandizement or, worst, a theory. But CO is a lovely analogy to inflationary debt. The borrowed money provides leverage; the economy expands and shows all the appearance of good health. Carelessness, imprecision and overgrowth follows. Not until the value of the underlying assets are exposed as insufficient does the anemia become apparent. Then, decline and death.

Monday, September 21, 2009

The Willie Sutton School of Economics

I have spent some time looking at hard assets. This is a capitulation for me because these assets are unproductive, defensive and generally of little use to anyone. Sure, they have some uses in catalytic converters, electrical connections and coins worth less than their mineral content but assets are mainly bets against productivity, the other side of the inflation coin. Inflation is a subtle tax on savings; assets usually escape --and sometimes grow. Worse, inflation harms the lender most: It freezes his holdings in a currency that shrinks, then repays him in a currency that has shrunk. No wonder there is limited credit; no one wants caught owed the Old Maid Dollar when the game stops.
Our huge debts will be paid or defaulted on--then paid. There is no escape. But the average guy will not pay it; it will be the saver, the guy with the vision to deprive himself of something in the near term to grow something for the long term. The guy who has believed in and contributed to the "system." Because that's where the money is. And his involuntary contributions to balance the excess--through the inflationary destruction of his savings--will make him a disillusioned and hostile man.

Friday, September 18, 2009

Poker, Golden Eggs and the Famous Goose

An interesting allegory from the world of gambling:
When Mississippi legalized gambling, a casino moved in, followed by professional players. One of the first table games the casino created was Texas Hold 'em, a game where two cards are dealt to each player, then three cards are dealt up on the table--community cards that each player can use or not with his own hand--and then two more cards are progressively dealt to the community cards for common use. The best five cards are used by each player and then the best hand wins. There are four rounds of betting, one when the two cards are dealt to each individual, one when the three community cards are dealt and one with each of the two subsequent community cards. In each betting round three raises are allowed. For a game of 10-20, where the first two rounds are ten dollar bets and the second two rounds twenty dollar bets, and if there are the usual ten players at the table, the pots can get big. Most professionals can play forty hands an hour. The casino takes five percent from each pot, called the "rake", to pay their overhead--dealer, cards, rent, taxes, etc.
Ten players, forty hands an hour, five percent a hand means the casino took the equivalent of two hands an hour, almost fifty hands a day.That money left the game, not to return.
The casino did well initially. There were always 10-20 tables going twenty four hours a day, ten players a table. Then the number of players began to drop, the casino closed tables to consolidate the players. Then the casino staggered the tables hours. Finally the game disappeared. At that casino, Texas Hold 'em 10-20 is no longer available.
When the casino tried to figure out how they lost this important game--important for both their income and their image--they learned that the rake siphoned off money from the players--and the game--and simply bled the players dry. In their effort to profit from the players, the casino wrecked the game.
For "rake" read "tax".

Thursday, September 17, 2009

G20

The G20 meeting will be held in Pittsburgh next week. This group is made up of the largest economies, generally, in the world and can be loosely defined as an organization devoted to building and sustaining individual economies while encouraging world financial stability. They bravely hold these meetings despite showing no evidence that they either understand or can control the financial factors involved. Nor are they deterred by the complex and inherently contradictory economic philosophies that the make up organization membership.
These meetings are routinely attacked, rhetorically and physically, by various and sundry groups with a similar contradictory makeup including groups favoring one world government, groups opposed to one world government, fascists, communists, anarchists and groups with single interests like animal rights. The tactics are mainly disruptive and seem to emphasize excrement. The net effect is that the meeting designed to foster economic growth usually results in the disruption of all economic activity in its meeting place. Indeed, Pittsburgh has closed off its downtown, its hospitals have gone on short staff and most of the businesses within rifle shot have closed for the week.
Apparently eighteen cities declined the honor of hosting this event. In that light one wonders who benefits from such a focused tsunami. If they met more often would the current disaster been averted? As Obama raises imports taxes on China tires, will the two countries sit beside each other cordially? With the world roiled by the U.S. hellbent on debasing its currency, will the G20 help? Will the economic benefits of the group's stay at Nemocolin filter up through the depressed areas of the Monongahela Valley to the businesses of Pittsburgh, shuttered and vandalized?
It's more likely that this event is a junket for both the politicians and the protesters and that both groups should be properly seen as participants in a social event, like Mardi Gras. Both groups follow historically honored behavior and tradition, both are properly costumed, the event shuts down all commerce and takes weeks to recover from. If this event is such a pageant, a bit of planning could protect innocent bystanders from their self indulgence. It could be held periodically in a desert --like Burning Man--and the political connoisseurs could be bused or flown in from nearby luxury ranches and hotels. Or shipboard. A little effort could make this a safe event for all without depriving the participants of their true aims of good food and drink, luxury hotels and the apparent pathological need to see themselves on television.

Wednesday, September 16, 2009

The Fundamentalist

I went to a lecture this week on Creationism. I saw Stephan Jay Gould talk on this topic once and was disappointed. So I was with this talk. The scientist has a peculiar problem: He has all the facts and the Creationists do not care. That is an astonishing modern opinion. Not only do they not care but they think your opinion, however factual, will damn you to hell forever. Nor do they just oppose you and your facts, they want to help you. They want to free you from your myopic scientific accuracy. The scientist's reaction to this is intense ridicule (because the Creationist is beyond debate.) But when faith can move mountains, the Olduvai Gorge is a cinch.
The real story in Creationism is who are these people? And what does this thought process mean?
Fundamentalism is a gift of Luther: He mandated the individual interpretation of the Bible. No ermined middlemen for him. (It was Galileo's original sin: He published his beliefs in Italian, not Latin.) Now a whole subculture fills the towns and hollows that believes the earth was made in six days and that dinosaurs and man cavorted together vegetarianly before the Fall. They are a hard, certain breed. They fight America's wars. They spilled out of the Appalachians, murdered an entire race and settled a completely hostile land. Tom Wolfe, in his essay on Junior Johnson, remarks that in the Korean War the area of greater New York had a single congressional Medal of Honor winner; De Kalb County had twenty three. The author Max Byrd said of them, "Where others have love in their hearts, they have rage."
The nature of this country, its underlying sinew, has always been obscure to me but it is easier to see when the fundamentalist is there. It is hard to see the American Revolution as a logical outcome of human social evolution; it is isolated and unique. The fundamentalist is a breed native to this country; the king, old church rules demanding a biblical translator, are perfect targets for this rugged, flint-eyed crowd. They don't fight science, they dismiss it. They are not a cult or some shard of a society; they are a coherent, integrated, intense mutually supportive community that is closer to a new foreign speaking immigrant population. I can see their ancestors shambling in and out of battle lines at Valley Forge, trying to get the crops in but, when convenient, spoiling for a fight. This personality, held down for so long by various rules, codes and superstitions didn't suddenly start believing in the Rights of Man; they always believed it, they just suddenly were better armed. I wonder about this country's nature, not so much with them here as when they are gone.