How You Play the Game

I love the quick hook on a pop song. And I often pick up dinner at Chipotle or Quiznos rather than cook – or microwave – it. Such instant gratification is a part of us.

And yet I constantly find myself thinking that the only real value is long-term value, or more extreme, that the only thing that matters in the world is long-term value. This was my first thought upon seeing Redskin DT Albert Haynesworth facedown in the grass this Sunday afternoon. At a prime age of 28, 6 foot 6, and 350 pounds – mostly muscle – this made an impressionable image, albeit one that’s not uncommon in the NFL.

Albert Haynesworth

Redskins’ owner Daniel Snyder made Haynesworth his pet-project acquisition last summer, offering him $100 million for 7-years, the largest contract ever for a defensive free agent. And Haynesworth is an invaluable contribution to this NFC East defensive line – he is fast, huge, instinctive, and can plug the run and sniff out a QB.

As Haynesworth was carted off the field today, the broadcaster’s thoughts went to the "investment" made by Daniel Snyder, who is known for throwing around large sums of money, along with coaches and players as well. But it would do injustice to view the injury of Haynesworth – who arrived with a reputation for being injury-prone – as merely unlucky.

Dan Snyder

The problem lies not so much with unfortunate circumstance but with poor underlying philosophy. The real question is why Snyder put himself in a position where he was relying on one $100 million player, rather than 2 or 3 solid players who could build depth into the roster. It’s an issue of being myopic. Of foregoing long-term value for a short-term payoff.

George McPhee

By means of contrast the city of Washington has Capitals GM George McPhee, whose philosophy of building their hockey team from the ground-up may transform the way in which sports teams are run.

Hockey teams – unlike football ones – are much more prone to being transformed by one star player. And in 2005, that star player for the Caps was Alex Ovechkin. But underneath the media circus that followed him, McPhee focused on building his team from the ground-up.

In 2003, he scrapped the team’s premier line-up of aging veterans and fading stars. He acquired younger talent, particularly focusing on the Caps’ minor league team, the Hershey Bears. McPhee explicitly eschewed short-term success:

“For starters, I should say that rebuilding and talking about being patient is easier said than done,” said McPhee. “We had a plan. It was to tear down a team and build it back up.

“The program taken to ownership (Ted Leonsis) was a four-year plan. The plan was to be back in the playoffs by then and start to contend. We made it in three years, but we were prepared to need four.”

Snyder's Brand

Over Snyder’s first 4 years, he cycled through 3 head coaches; each acquisition of a new head coach brought promises of the start of a new era of Redskins glory. In reality, Snyder was merely taking potshots into the dark – as he did with new big-ticket players – hoping that one of his moves would hit the jackpot. Not only did that not occur, but the inconsistency only helped to further break down the franchise into a gathering of high-paid stars rather than a cohesive team.

The only break to his sporadic movements came in 2004 when he was able to lure former Redskins coach and local legend Joe Gibbs out of retirement for a few seasons. Following Gibbs’ second retirement, it is not clear whether we will see a return to Snyder's old ways.



The twist is that Snyder – a self-proclaimed longtime Redskins’ fan – is known as a shrewd businessman, his rise to the top marked by executive stints with Six Flags, Johnny Rockets, and Red Zebra Broadcasting. Over his tenure he has made the Redskins one of the most valuable football teams. According to Forbes’ yearly rankings, the Redskins are currently the 2nd most valuable NFL team; they are surrounded on the list by teams that actually win like the Cowboys (ranked first), Patriots (third), and Giants (fourth). And yet Snyder's attempts to build the Redskins are anything but business-savvy, resembling something like a series of get-rich-quick schemes.

Long Term Value

Buried in this expensive mess of a football team are a few life-lessons.

All too often, individual crises and incidents are mistaken as causes for subsequent misfortune, rather than effects of past doings. The collapse of the housing market – ingrained in the public’s head as a singular event – was seen as causing the financial collapse, just as the Great Crash is often seen as causing the Great Depression. Underestimated are the factors that led up to such incidents, such as poor housing regulation of the 90’s and irresponsible monetary policy during the 20’s. Some have blamed current circumstances on the government’s willingness to allow Lehman to fall. But as The Economist points out, a Lehman bailout would’ve strained some other part of the economy. An analogy can be made to medicine, which warns of mistaking symptoms for cause of illness.

Long term growth is particularly important in football, much moreso than in hockey. As player-size has increased, so has the frequency of injuries. A 350-pound QB-chewing gorilla on defense can no longer act as a franchise savior, particularly because the sheer size of his frame poses a threat to his own legs and joints.

Another piece of advice is that it is worthless to take individual pot-shots at one’s future. Playing the lottery everyday is never a sound strategy no matter how much money you have.

There is an intellectual component to this as well: Insofar as abstract intelligence contains any value, it should be used carefully and decisively to plan ahead, utilizing current resources as best as possible.

The phenomenon of the one-hit-wonder pop band epitomizes this view. On the one hand, it is possible to produce a singular piece, one moment of greatness, which can strike it big. On the other hand, there is social acknowledgment regarding the emptiness of a one-hit-wonder. A great band is distinguished from a one-hit-wonder in its ability to produce hit after hit after hit; their work comes from a novel group of artistic minds rather than an from an instance of luck. That’s why it is somewhat rare – but not unheard of – for a non-fiction writer to be a one hit wonder, as his art depends less on muses and spontaneity than on smarts and clarity of mind. It would have been rather odd – afterall – if following the publication of A Brief History of Time, Hawkins suddenly lost his pension for theoretical physics.

The discrepancy between luck and genius is often portrayed in movies like Oceans 11, where heroes will do anything for one last chance at greatness, one last opportunity to strike it big. Their failure in these stories is marked by their myopic view: If your whole future relies on one individual con operation, one publication, one game, one football player – or even just one decision, to be made by yourself or by someone else – then you cannot blame your failure (or success) on the outcome of that one event. Rather, you are to blame for putting yourself in the sort of situation in which so much rests on so little. This is why in the best of Aristotelian tragedies the fault lies with character, not with circumstance.

Inhibitions

Of course one cannot downplay the counterargument, particularly when it comes to living in the moment. People do win the lottery, corporations do get windfall profits, and individual athletes do save franchises.

Digging a little deeper, a primitive breakdown of the human brain reveals that its more advanced regions – the ones that distinguish human intelligence – are inhibitory in nature. In a sense, drug intoxication prevents these higher areas from functioning, leading to a lack of inhibitions.

The term lacking inhibition has cultural connotations, but it’s backed by science as well. It is a very awkward phrase when you think about it, as it implies that getting drunk or high doesn’t so much cause you to do stupid actions, as it prevents you from inhibiting those stupid actions. In the drunkard, inhibitory functions of the advanced brain are temporarily disabled; in an individual with brain damage, they’re permanently disabled.

This ties into constructs of depression and anxiety, which are often conceptualized as an over-activation of these parts of the brain: Stress is often caused by thinking too much and an inability to live in the now. Just as alcohol can turn off those advanced parts of the brain, so can other feel-good drugs, prescription or otherwise. This is all a simplification of course, but the point is to get a good look at principles that underlie long-term valuation.

Personally I tend to over-intellectualize things at times, but after seeing Haynesworth face down in the grass this afternoon, I couldn’t rid my mind of this notion of long-term value. Perhaps it is my way of not wanting deal with the Redskins’ pitiful loss to the worst team in the NFL.

'It's Not Whether you Win or Lose, But How you Play the Game'

This phrase is often seen as a euphemism to justify losing a game. And yet there is much about it that escapes the eye, such as its focus on process over outcome. The phrase usually refers to the team that loses a well-played game, but equally important is the team that wins a poorly-played game.

The latter was exactly the case last week, when the Redskins barely beat the Rams, a team whose mediocrity places them in the same class as the Lions. Embodying the phrase were the home fans’ boos to the Redskins following a touchdown-less 9-7 victory over the Rams, which was no less the home game opener.

Not unlike chess – albeit minus its us-them mentality – sound judgment and decision-making require a sober look into the future, combined with a gathering of relevant knowledge and resources, and a respect for dissenters. In many contexts - such as the price of a stock - current circumstance is only important insofar as it speaks to future value. In this sense, winning a poorly played game does more harm than good.

-KJ

______________

Media (in order of appearance)

Photo: (1)Albert Haynesworth; (2)Daniel Snyder; (3)McPhee Scowls Down, 05/01/2009, by cyldeorama; (4)An Angry Jim Zorn; (5)IH161460, 05/21/2009, chickhawkdown; (6)Arizona Lottery and Powerball, 04/22/2008, by Monte Mendoza; (7)Poster from 2001 movie Oceans 11; (8) 20060508 - Carolyn's MRI - Image 8 of 15 - Detailed Carolyn brain, 08/26/2006, Rev. Xanatos Satanicos Bombasticos (ClintJCL); (9)Depression, 05/18/2008, stillstressed; (10)Lombardi Pride, 08/25/2007, akahodag.

Video: (1)Video of the song Sunshine (Adagio in D Minor), from Space Ambient channel, song by John Murphy, from the 2007 movie Sunshine. Sphere: Related Content

The World's 2nd Largest Economy

There are signs of what some call “a collective identity crisis” in Japan. Income disparity, growing numbers of impoverished pensioners and child poverty.

Tough economic times have highlighted the potential of developing nations, China in particular, while Europe is seen as bulky and traditional, struggling to keep up with the Jonses. Japan however is overlooked – still thought to be a victim of its ‘lost decade’ – and now – seen by some – as the setting for a modern portrayal of The Grapes of Wrath. The Economist goes on to say

Hamamatsu, a coastal town south-west of Tokyo, has its share of shattered lives. Workers were laid off right down the supply chain almost as soon as home-town outfits like Yamaha and Suzuki saw export orders slump last year. The lay-offs included many Brazilians of Japanese descent, who had flown to Japan because factories needed cheap, part-time labour rather than expensive Japanese workers on full contracts. The jobless Brazilians live with each other if they cannot pay the rent, and the church provides the neediest with food parcels. At a Catholic church recently, they were making soup to share among those, like themselves, eking out the last of their savings. That included homeless Japanese men, who, unlike the Brazilians, cannot face turning to friends or family for shelter.

Halfway through the feature, I was shocked to read that unemployment in Japan is 5.7%, “low by international standards but a record in Japan.”



Humans perpetually struggle to improve our lot in life – that’s half of the fun in living, at least half the time. When relating to fellow human beings, it’s unfair withhold empathy based on another's lot in life. Afterall, suffering is relative – no matter how bad things are they can always get worse – and suffering is subjective: Its existence cannot be denied.

And yet I could not get this 5.7 figure out of my mind. Unemployment in the US – considered dangerously high – is nearing 10%. The discrepancy points to the relative - perhaps subjective - nature of seemingly objective statistics. There’s a tendency to grasp for numbers as undeniable facts, as stable pieces of evidence which pin us to the ground in an ever shifting world. And used with care they're invaluable.

But consider now the size of this discrepancy – unemployment in the US being around 40% higher than in Japan – next to Japan’s parallel economic struggles and identity crisis: In some ways we are completely different from Japan and yet in other ways very like them. And don’t forget that Japan’s economy remains the second largest in the world.

KJ

_______________

Media (in order of appearance)

Photo: (1)Hamamatsu Castle, 11/12/2008, Pine 57; (2)Poster from 2003 film, Lost in Translation.

Video: (1) Music video, shpytahmon channel, by the Gorillaz of the song "Hong Kong" from their 2007 album D-Sides. Sphere: Related Content

Reagan Revolution 2.0?

Repetition of history is often a given. The question is not so much whether, but how and when. To the latter, our accelerated technology driven world might answer: “Sooner than you think.”

Of particular interest is the similarity between today’s pattern of economic-political events and those of the 1970’s and 80’s: Both involved broad Republican power leading to their by overreach and loss of power; the worst economic collapse since the Great Depression; England's return to conservatism. In the late 1970's, the last event preceded America's return to the Right as well. We've yet to see if the same shoe will drop today.

In 1974 Nixon left office on the heels of the largest political scandal in American history. He left the economy in sharp recession, and although you can’t blame a recession on any one person, his poor economic policy certainly didn’t help. Bitter aftertaste from Watergate allowed the Democratic Party to take charge with Jimmy Carter. The economy continued to slump over Carter’s term, while England grew restless and the conservatives took charge. Thatcher was elected prime minister in 1979, and shortly thereafter Reagan was elected in 1980 – their combination sparking the “Reagan revolution”.

Today’s sequence of events, although not the exact same, shares some uncanny similarities: W Bush left office in 2009 widely unpopular. It was not due to scandal per se, but there was a palpable sense that, similar to what occurred under Nixon, the Republican Party had gained a whole lot of power and under his lead shot itself in the foot, a blow from which it’s still recovering. Similar to Nixon, Bush also left the economy in a state of disrepair; and although you can’t blame a recession on any one person, Bush’s previous policies (particularly on housing) certainly didn’t help.

England is also witnessing a hard and abrupt shift towards Conservatism, one of historic proportion. The immediate cause of this is the expenses scandal, but that can only explain for so much. It is important to view such developments as non-coincidental, particularly in a democracy: Sometimes people need a reason to turn against a party on a dime. Sometimes parties in power become complacent. In following sequence, it is worth asking whether, similar to the late 1970's, England's conservative shift will precede the same in America.

Although one shouldn’t jump to conclusions, it’s difficult not to compare today’s events with those of the 1970’s and ‘80’s. The speculative implication, of course, is that a conservative Reagan-like personality will emerge come next presidential election.

Avoiding such fantastical speculation, the analogy further likens Obama to Carter, a president who is frequently conceptualized as a failed idealist: Perhaps one with the right mind, but in the wrong place at the wrong time to use it to address crisis after crisis.



It is still too soon to judge Obama – and the public, likewise, is giving him his due time to perform. But emerging recently – and well written in a series of Economist articles focusing on areas in which his efforts have been stifled by poor execution and lack of detail and foresight – is a lingering suspicion that Obama will leave the country in no better shape than when he entered office.

This seed of lingering suspicion grows much bigger in light of the soaring popularity with which he entered office, particularly among young people. Such a failure should it occur would be seen as widely symbolic as his election. And such a failure should it occur would no doubt leave the Oval Office wide open for a rising Republican star (perhaps along the likes of Bobby Jindal).

At present Obama’s legacy remains to be written in stone. But time is running out. Much of it will rest on his performance over this upcoming year: “Crunch Time” as The Economist puts it. In the meanwhile Americans continue to hold their breath.

Judging from output alone, it took over 10 years for the US economy to return to pre-1974 levels. These sorts of recessions have a way of working themselves out but only in the very long run. Such is often the time required for an economy to unwind and reposition itself, a process which arguably took the whole of Reagan’s first presidential term. That the rate of job and capital loss will slow down is a given, but it’s very unlikely that we’ll see the economy prop itself back up over the next few years. The speculative implication is that the recovery won’t begin until at least the next presidential term.

The worst of the crisis is likely over. And yet we still find ourselves at a crossroads with little indication of where we might be heading. Only history will be able to tell us if we’ve been here before.


-KJ
_______________

Media (in order of appearance)

Photo: (1)Richard Nixon; (2)Jimmy Carter; (3)Ronald Reagan; (4)The Economist, April 1st 2009 Cover; (5)Hazy Trees, Katwingz20.

Video: (1)Carter Crisis in Confidence Excerpt from 1979 speech, 11/11/2008, metbans. Sphere: Related Content

The Future of the Economy

The untold story of the financial crisis is the transition from manufacturing to services. This won’t mean the death of the economy – as some skeptics proclaim - and it shouldn’t even come as a surprise.

Historical View

To gain some perspective, the Great Depression had a similar underlying theme as the country transitioned from farming to manufacturing. Agricultural products were considered tangible necessitates; the rugged American farmer was seen as a cornerstone of the economy; and, it was argued, the country’s best interest lay in keeping the farmer alive. Supporting the farmer was considered patriotic – the same sort of pathos which, ironically, we currently see in the manufacturing sector.

The sequence of events was remarkably similar to that of America’s car companies – a former leading industry begins to falter during an economic boom, depression hits, and it suddenly implodes.

Looking back, we can at least feel some comfort that, as useless as our current attempts to bail out the Big 3 have been, they pale in comparison to the damage caused by trying to salvage the farming industry. Leading the way was the Federal Farm Board (FFB), which was setup before the crash.

The FFB began with $500 million dollars dedicated for loans to farmers. After the Great Crash, prices for agricultural products, like most consumer goods, took a nose-dive. Farmers complained that they couldn’t turn a profit. The FFB was then placed in the awkward position of trying to keep farmers alive while raising the prices of their goods. In order to accomplish the latter, they tried to limit farmers’ output by buying and storing huge quantities of agriculture goods, encouraging farmers not to farm, and going so far as to encourage the destruction of farmland. In 1930 it even tried to raise cotton prices by seizing 1.25 million bales of cotton for 1 year; this had no effect on the price.

Tangibility of Services

I imagine that before the Great Depression, one could make the same argument against the foreseeable manufacturing revolution as one can make today against the upcoming service-based economy: Services are non-essential and an economy cannot be built on such intangibles.

On the contrary, the only tangibles in any economy are supply and demand. This holds regardless of how concrete a given product is.

Part of the confusion has to do with what, exactly, we mean by services. At times its distinction from manufacturing is blurry. People are also quick to point to failing service sectors – advertising can be lucrative, but its success is strongly tied to that of the overall economy; journalism, another quintessentially American industry, has received a heavy blow; and IT support is overly prone to outsourcing.

These smaller service sectors may reveal some clues, but the central veins of a service-based economy – as key today as auto making became after the Great Depression – are healthcare and education. As intangible as services may seem, the modern American cannot live without these 2 services. They are the bread-and-butter of a service economy.

Healthcare & Education

The rising cost of healthcare and education is heavily debated. Regardless of where you side, it can be agreed upon that a large portion of the cost resides in systematic inefficiencies linked to public policy. At the same time, the mere fact that Americans continue to pay such high costs for healthcare and education is testament to their growing importance.

The importance of these services is forgotten when pundits speak only of the rising “costs” of healthcare and education, although it is forgotten for a good reason. In the final quarter of 2007, for instance, Apple reported revenues of $3.4 billion from iPod sales; and yet you wouldn’t say that during those 3 months the iPod cost the nation $3.4 billion. Yet by means of contrast, what remains alarming about healthcare and education is that, however you look at it, we haven't found a way to let them thrive. Some sectors do flourish, but on the whole the industries really do “cost” the economy quite a lot of money.

Our current problem is that we haven’t figured out a way to integrate these areas into the economy. The question is not “how do we minimize the costs health care and education upon the economy?”, it’s “how do we make them a part of the economy?” Lots of government regulation and subsidies, I suspect, aren’t the answer. But either way the debate is too focused on minimizing their negative impact.

The success of the automobile industry hinged on not only better cars, but on cheaper cars as well – this was the famous recipe to Ford’s success, that he was able to tap an economy of scale. In contrast, healthcare and education in the US are, by any measure, diseconomies of scale. And yet as national employment continues to decline - with manufacturing taking the biggest hit - service-based employment is growing substantially, and projections suggest that it will continue to accelerate with healthcare and education leading the way. Looking forward, it’s hard to imagine a successful future economy without these 2 industries on board.

-KJ

_____________
Media (in order of appearance)

Photos: (1)CROP CIRCLE MAKER - Matthew Williams, 06/07/2007, Mark Berry; (2)USA 2005 (October 1st) Nevada, Reno, National Automobile Museum, 02/25/2008, by Paraflyer; (3)The Causes of the Great Depression/FDR Memorial Site, 09/15/2008, Tony the Misfit; (4)2008AUG121654, 08/12/2009, bootload; (5)Gesundheit, 04/01/2009, by Gunnar Ries; (6)iPod Family, 02/09/2007, by CokeeOrg; (7)Class, 12/04/2007, by Nik Lee. Sphere: Related Content

Restoring Economics

In a sense, no one really knows what’s going on with the economy; and even if they do, they don’t know what to do about it. But academia is partly responsible for the public mystique about the economy. In formalizing learning, academia has the unfortunate result of making some subjects overly complicated. There are no in-built checks to make topics simple; and I’ve come across many egotistical professors, who, in an attempt to exploit their power, relish in making concepts more difficult than necessary.

Yet the following class discussion with a professor, from an undergrad course on corporate finance, demonstrates how people can approach economics without that much formalized knowledge. It was quoted at the start of a book review for The Ethics of Money Production.

It was one of those rare moments when the entire class listens attentively and participates in the discussion. That it occurred with this particular class was even more instructive to me personally. This was a principles-of-finance course, required not only of finance majors, but of all students pursuing either a major or minor offered by the school of business at my institution.

While the typical principles class contains some highly motivated students who aspire to careers in finance, banking, and accounting, it is also filled with a fair number of students who look upon the course as a sort of dreaded, compulsory disruption to their nonfinance curriculum. But on this day, they were unified and engaged. A rare moment indeed!

At this point, the reader might consider this a strange way to begin a book review. The anticipated segue is provided by a voice in the back row of the classroom, where a rather quiet and normally imperceptible student began the following exchange with me:

"You know, we hear all about these bailouts and stimulus packages coming out of Washington."

"Yes, I know."

"Hundreds of billions, even trillions of dollars, right?"

"That's right."

"They don't really have the money, though, do they?"

"No, they don't."

"And so they are just going to print it, aren't they?"

"Yes, the banking system is going to print it and loan it to the government."

"Out of nothing, right?"

"That's right."

"But that's not right, is it?"

Just to be clear, the student was not suggesting that the premise was not right, as in not correct. He was asserting that this massive production of money out of thin air was not right, as in not ethical.

(from The Right & Wrong of Money Production, 2/18/2008, by Michael King)

Although not everyone might agree with the student, it doesn’t take much background knowledge to follow the discussion. We all know what he’s getting at.

In contrast though, you do need a lot of background knowledge in order to take such an economics course. Specifically, you need strong math skills and you have to be prepared to apply them. One of the first concepts you’re likely to learn is that of the production possibility curve. This is touted as a useful concept early on, because it can be used as a theoretical model to map the economy on both the macro and micro-scales. At the same time, you’re hit with such boring and dry explanations as the following (from Wikipedia)

The move from point A to point B indicates an increase in the number of computers produced, but it also indicates a decrease in the amount of food produced. Assuming that productive resources do not increase, making more computers requires that resources be redirected from making food to making computers. If production is efficient, FA of food and CA of computers could be made (as Point A shows), or FB of food and CB of computers could be made (as Point B shows).

In reference to figures like these


This is just the start of the long and arduous journey that the undergrad takes to complete his intro to economics. Is it any wonder then that the public at large seems to be grossly ignorant about economics? After all, if they didn’t take one of these boring courses, they most likely heard horror stories from peers who did.

The frustrating part is that, as the above dialogue demonstrates, economics doesn’t have to be boring. We all deal with money, prices, and incentives. Add a little guided thought on top of that, and it’s not hard to teach economics in a wholly engaging manner. Thomas Sowell accomplished this in his book, Basic Economics.

Sowell can be divisive and you might disagree with him on points, but all he asks of the reader is a hint of interest into current events and he’ll get you thinking about the wider economic role of actions like banking, risk-taking, measuring the macroeconomy, and investment. He uses everyday news articles, along with common sense, to build upon the reader’s intuitive understanding of economics.

The phrase intuitive understanding economics may seem a little odd. After all, what’s intuitive about the something like the production probably plot? Very little, and that’s why it doesn’t belong at the front of an introductory course. But insofar as everyone engages in the marketplace, intuition - not math - is a rather suitable place to start.

You’ll often hear the argument that education is an integral aspect of a democracy; and without it, our citizens can’t make informed decisions when they go to the polls. Nonetheless, those who subscribe to such notions tend to be more liberal, and it shows in their quality of education. In high school you’re more likely to learn about FDR’s New Deal than the Federal Reserve; and in college, economics is presented as a dismal mathematics model while courses in political science are more welcoming and palatable.

Part of this, I suspect, is because universities err on making things overly complicated and verbose. If mathematics can possibly be integrated into a major, then it absolutely will. The university has nothing to lose by erring on too many courses and prerequisites. And when there are a plethora of potentially interested students, this can be a way to weed some of them out.

Insofar as public education has a social obligation to produce informed citizens (and maybe it doesn't, but this is presumably why it exists), it's partly to blame for the public’s current ignorance about the economy. Few citizens can readily grasp the importance of banks and the Federal Reserve to the economy. This has a two-fold effect: It shrouds economics in a veil of unnecessary complexity hidden to the public's scrutiny; and it allows public policy experts take advantage of this ignorance. Such a rapidly growing ignorance can even be considered dangerous in the same sense that many would consider an ignorance of politics dangerous.

The Washington Post, for instance, just had an editorial which urged consumers to spend rather than save their hard-earned money. The author tries to guilt-trip the reader into spending based on the presumption that saving money would cost the economy some 53,000 jobs. It doesn’t take very sophisticated knowledge about economics to see the fallacy in that one – namely, that you can’t have a sound economy when each individual household is living beyond their means. But without such knowledge, what do you say to the family that sympathized with the author’s points, and spent their way into years of debt in order to help the American economy? And then encouraged their neighbors to do the same? Afterall, the author does sound pretty convincing when he writes:

Borrow and spend, borrow and spend is what got us into this mess. Apparently, borrow and spend will get us out of it.

He then goes so far as to encourage individuals to glue together their torn up credit cards. I couldn’t believe what I was reading! Even if you subscribe to the (Keyensian) view that spending on consumer goods fuels the economy, what good would come from spending on increasing interest from credit card debt?

Although I’ve never been a fan of public education, economics is an area in which it has utterly failed. And for this the nation has suffered.

-KJ


_______________
Media (in order of appearance):

Photo: (1) Production possibility curve; (2) Sleepy, 06/13/2008, by Barbcalie; (3) Grocery cart, 11/30/2007, by Buxmama; (4) Federal Reserve Building, 05/20/2006, by Dystopos; (5) NYC National Debt Clock, 06/24/2006, by WallyG.

Video: (1) Stimulus: Because all economies have performance issues., 02/04/2009, Reason TV. Sphere: Related Content

Obama and the Post-Baby Boomer World

Look at the tears of the cold-hearted Jessie Jackson.

We all know that Obama’s inauguration marks a new age of race relations in the US. I was even tempted to vote for him solely because of his skin color (this coming from a Caucasian). The political race card isn’t superficial: Imagine if every black person in the US felt just a bit more “welcome” here with a black president. Just think about the economic implications.

Obama’s presidency comes at a time when America’s demographics are changing. America is becoming less white. It’s no coincidence that our first black president was elected when he was: The baby boomers are moving on. The passing of the baby boomers, I suspect, will mark Obama’s presidency more than anything else in the US, even more than race relations. The baby boomers are the largest age cohort in the US. It’s not just that they’re more white. They’re also wealthier. And older.

In 1969, Nixon claimed that he appealed to a silent majority of constituents – hard-working older Americans who didn’t protest the war and who had real American values. That silent majority was in fact the baby boomer generation. And they’ve been skewing politics ever since. Young liberal protesters – some even the children of baby boomers – have been dumbfounded by them, ever since protesting the Vietnam War.

How sharper than a serpent's tooth it is
To have a thankless child (King Lear, Act I, Scene IV)

But you have to hand it to the baby boomers. They were born right after one of the scariest times in history, and America’s post-World War II growth in opulence is mostly attributable to them. In their time our economy has shifted even further from being based on physical labor to skills. This shift allows individuals to have longer careers. It gives women a larger role in the workplace. It puts a premium on education. Most of all, it puts a premium on experiential knowledge. Unlike previous generations, it allows the older to be wealthier. The baby boomers’ passing – both literally and figuratively – will be like the loss of a father or a mother to society.



The economic effects are just being realized, and barring any major changes in immigration policy, it will likely extend far beyond weighing down an inefficient health care system. Competent older workers are the most valuable people in our economy. Think about how their loss will have idiosyncratic effects in every industry in the economy.

I can’t help but suspect that the world will have a new feel to it. Maybe this is just because I’m in my mid-20’s and I’ll be experiencing that world in the fullest. But I suspect that the election of Obama is merely our first taste of the world after baby boomers. I suspect that there have been cultural shifts and movements that have been stifled because society has disproportionally more older people, who carry much more economic weight. I wonder whether our economic growth in previous decades was fueled by the disproportional size of the baby boomer generation. I wonder whether we’ll still be one of the wealthiest countries in the world. I suspect that the we’ll become even more technology and internet-oriented.

I think part of it might be a little like the shift from Microsoft to Apple. See, a few years ago my mom bought an iPod, and she still can’t figure it out, this following multiple lengthy lessons from myself. But that’s understandable, because iTunes originally made the most sense for people with large CD or digital music collections. Nonetheless, Apple has become one of the world's largest tech companies in spite of all the people like my mom who aren’t attracted to it. Just imagine what the world will look like when everyone can use an iPod.

Maybe we were all so amazed that we elected a black president that we didn’t catch onto this. But in retrospect it’s obvious: Barack Obama is the first president to be elected by primarily non baby-boomers. It’s not just that lots of young people supported him – young people have always leaned liberal – it’s that those people finally outweighed enough other people. Looming large is the question: what will the post-baby boomer world look like?.

-KJ

______________
Media (in order of appearance)

Photo: (1) Rev. Jesse Jackson in tears, 11/05/2008, by Andrew Mager; (2) Richard Nixon in the Oval Office, 1972; (3) BlackAppleLogo, 07/25/2008, Ken Fager; (4) Crowds on 18th Street - 2009 Presidential Inauguration, 01/20/2009, by Agnostic Preachers Kid; (5) Obama Poster Painted on Brick..., 05/03/2008, by Hattie Page.

Video: (1) Music video, 05/28/2008, Penguuinz, of the song "The Long Day is Over", by Norah Jones, from her 2002 album Come Away with Me. Sphere: Related Content

Top 15 of 2008

I thought about doing one of those year-end lists (like best CDs of the year) but I'm never very in touch with what's been released any given year. And furthermore half the time I find myself amazed by old things as if they were new (like a few years ago when I discovered Marvin Gayes' 1971 R&B classic, What's Goinig On). Society has a strong preference for the new, but sometimes old ideas can seem all the more relevant. So I decided to make a list of just top stuff in my life this year. Some are ideas and areas of study while others are new media and entertainment. Think of them as influencers in my life this year. In that sense, they're all things that proved to be novel to me in 2008 (that's why you won't find the sun rising) like little surprises or discoveries for the year. And in that sense as well I hope some of them you might find novel in your life.

______________

15. Dogs

Previously I never understood why people become so attached to them, though I never gave it much thought. But with new roommates I'm now living with a bunch of dogs and they’re a whole lot of fun like good buds. Dogs definitely make life just a bit richer.

14. The Washington Redskins

Being fully away from any form of school I’ve been able to get back into football. I enjoyed following the Skins throughout high school, but now that my mind’s a bit more matured I suddenly see there’s so much more to the game. This has become my new religion insofar as I set aside time each Sunday and think about it all week...and insofar as it’s not really a religion.

13. The Stock Market

Stock prices fluctuate in relation to demand for them not in relation to how good a company is. On a very intuitive level, this has never made sense to me, and it still doesn’t. But this year I’ve become intrigued with finding good intro books, reading about the market, researching companies, and even buying my first couple of shares. It’s essentially a mind-puzzle, a very tempered and controlled form of gambling. But boy is it intriguing. Sometimes I’ll just go to finance.google.com and watch the numbers change.

12. iTunes Genius

iTunes Genius is like an automated DJ who works with your digital music collection. You “play a song, click the Genius button, and iTunes creates a playlist of other songs from your library that go great together. Genius playlists help you discover songs in your library you never knew you had — and rediscover forgotten favorites.” Each song transition is tasteful and perhaps even artistic. It’s not perfect as it doesn’t recognize every song, and you can only use it for one song at a time. But its playlists really rival my own, some of which I've spent some time on. Even if you prefer to make your own mixes, you can use Genius to generate new ideas when you're stuck.
11. Motley Fool Caps

Motley Fool CAPS is an addictive stock market stimulator in which you vote on which stock picks will out- or under-perform the S&P. It’s as close as you’ll get to a true social networking community focusing on the stock market. And it’s taught me a good bit the market, both through making picks and reading others’ commentary. Tons of people use it and many stocks have thousands of predictions. For instance, Apple is currently the most frequently rated stock with 19,512 members for it and 1,593 members against it. TMF collects the data to generate all sorts of stats on players and stocks. It's only been around since 2006, and they're constantly tweaking it for the better. No one is even sure yet how it’ll turn out: Will it provide accurate real-world predictions? Will the highest rated stocks win out in the long run? In the meanwhile though who cares because it’s more fun than real investing.

10. Good cappuccinos

I’m not one to make elite aesthetic distinctions – they're often just puffs of ego and semantics. But this year a friend introduced me to a coffee shop that makes “real” cappuccinos and boy what a difference. Ones that look like this:

Cappuccinos are supposed to be thick and made with whole milk. The whole point in adding milk is so the dairy fat can bring out the flavor of the coffee. I'm hooked, and Starbucks' – who recently made skim milk their default for cappuccinos – now taste pretty empty to me.

9. metacritic.com

Metacritic.com combines critics' reviews on any given movie, music album, video game, or TV show. Each item gets a combined score across all critics, similar to rottentomatoes but with more media and a more user-friendly layout. I’ll often check it out before – and sometimes after – seeing or purchasing related media. The service is topnotch, since being bought by CBS, who've supplied it with more than adequate bandwidth, better quality control, and new features.

8. Coldplay’s album Viva la Vida

Like a revelation unfolded in sound. The collaboration between Coldplay and producer(/ambient maestro) Brian Eno worked perfectly. Coldplay and Eno are each intellectual aurally-aware introverts – sometimes to a fault – but here they build off each other quite well.



7. Improv acting classes

A few months ago I capriciously decided to give improv acting classes a try, as inspired through this article at CNN. It's taught me some unique life lessons, which I wrote about previously, but moreso it’s just a great release.

6. Slumdog Millionaire

The world is getting more connected, and we could only go on for so long before some artsy director pondered "why not make an American version of a Bollywood film?", and Slumdog Millionaire is the glorified result. An intense journey through the deepest reaches of poverty and fantasy, it’s the sort of film that could only have been released – or made money – this decade. Americans are truly getting smarter with each passing generation. Movies like Slumdog Millionaire or the Dark Knight are too complex and edgy to have been widely accepted a couple of decades ago. I loved them. We’re demanding more from pop-culture Mecca’s like Hollywood, and they’re giving us the goods. For more see Steven Johnson’s book Everything Bad Is Good for You: How Today's Popular Culture Is Actually Making Us Smarter. Check out Slumdog's soundtrack as well.

5. iTunes audio-books

I enjoy music and my iPod gives me freedom to listen to it anywhere. But I’ve recently begun digging iTunes’ audio-books as much as its music. At first I thought that I’d rather just listen to my favorite tunes everywhere and get into a groove. But audio-books have slipped into my daily iPod use with surprising ease. Just be sure to pick ones that aren’t too complex to listen to on the go. For example, an audio version of Newton’s Principia Mathematica won't work.

4. New Balance motion control sneakers

A few months ago I decided to give these shoes a go. They're called motion control shoes, because they have extra support around the arch in order to force your foot into correct pronation. They’ve completely corrected my posture, solved a running injury that I’ve had for years, and allowed me to run again. Who would’ve thought? The New Balance store by me has exceptional customer service as well, far exceeding similar high-end running shoe stores that I tried.

"Graphite Rollbar® is a boomeranging positioned piece of graphite in the midsole which maximizes rearfoot stability. Rollbar can be combined with a TPU medial and/or lateral post for motion control."

3. Economics

Economics suddenly intrigues me to no end. I don’t know what it is, but this topic seems to pervade everything. This year I’ve spent some time trying to finding the right books to teach myself about economics, and so far my picks have exceeded my expectations. Among the top is Thomas Sowell’s Basic Economics.

2. Sleep

This year I’ve reached new plateaus in how good my sleep feels. Wrote Vladimir Nabokov, “Sleep is a rose the Persians say.” (For more see a previous post).

1. Robert Pirsig's Zen & the art of Motorcycle Maintenance

I've returned to this book for the first time since a teen and it hits the spot like a popsicle on a hot day. I first read it a decade ago but it seems so much more relevant now. You can feel yourself learning with each page. And I even see how its lessons – which I’d forgotten explicitly came from the book – left their mark on my thinking since I was teenager, such as: the importance of analysis, both regarding its benefits and limits; the notion of honest work; quality and gumption; the limits of ego, opinion, and rigid-thinking. Other lessons are particularly relevant to my life now: the notion of moving laterally in life instead of forward; that roadblocks in life or in the mind are equally or more important than success; the severe limits of the empirical sciences. His discussion on lateral movement is exactly what I find so fascinating about free markets and alternative uses of scarce resources. But the book's reach extends far beyond.

-KJ
_______________
Media (in order of appearance):

Photo: (1) Jason Taylor, 08/16/2008, jf; (2) iTunes Genius logo; (3) CAPPUCCINO, 07/22/2007, by kina3; (4) Movie poster from the 2008 film Slumdog Millionaire, fair use rationale to provide commentary on film; (5) 365/365: Audiobooks, 01/09/2008, by David D Muir; (6) New Balance motion control technology; (7) Cover from Pirsig's Zen and the Art of Motorcycle Maintenance.

Video: (1) Music video from caleismachinegun of the song "Lost" by Coldplay from the 2008 album Viva La Vida. Sphere: Related Content

What are you fighting for?

So many people these days have a chip on their shoulder. It’s not always a bad thing – there’s nothing inherently wrong with believing in something and wanting to improve the world. But I can’t help but think they’re missing the bigger picture. The other day, for instance, my neighbor got pissed that I was parking on her public dead-end road. There weren't any houses around, although a bit further down the road branches off into 3 or 4 individual cul-de-sacs. And this was a safety issue because the shoulder across my house, where I usually park, was too prone to side-swiping. Nonetheless, she called me an asshole and drove off before I could process.



It’s not that I was offended, but it piqued by imagination: Does this lady worry about other people’s parking spots all the time? What are you fighting for?, I wanted to ask her, in the double-sense of what’s the object of your fighting and why are you even doing in it. Surely if I’d moved my car, her largest problems in life would remain unresolved. She’d just have some other chip on her shoulder.

But lots of people have chips on their shoulders, and sometimes I almost feel like other people expect the same of me. There are, I suppose, lots of things to be mad about, lots of causes worth fighting for. But there are infinitely more causes not worth fighting for. All too often, the fervor in which people fight for a cause is disproportional to its actual importance. Even people parking by others’ houses is quite a contention area in America, as you can see in this google search.

I savor these times when people can afford to worry about such inconsequential issues. But there is something incredibly ugly about these minor squabbles. And I see it in various people, in the obstacles they unnecessarily make for themselves and others. Up-close they're ugly, but from a distance they’re pretty funny. I’ve begun a small collection:

• Topping the list is the Topfree Equal Rights Association, their stated mission is to “help women who encounter difficulty going without tops in public places in Canada and the USA.” Laws which require women to wear tops, they claim, are confining. It’s an equal rights issue, they say. Men can go around without shirts, so why can’t women? For them it’s also about comfort, convenience, well-being, and “ownership and control of [women’s] breasts”. (Now, as a guy I kind of support this, but not for stated reasons.) Their argument is completely logical (although there are some holes, such as the fact that, evolutionarily, breasts are a sexual organ), but in light of the billion other issues that people are fighting for, who cares?
• Lack of bias in language. For the past decade, the American Psychological Association has taken this to new heights by divorcing pathological language from any negative traits. For example, when discussing schizophrenia, you have to write, people with schizophrenia rather than schizophrenics, so as to avoid defining people by a pathological condition. This might be reasonable - ignoring the fact that, left untreated, people’s lives are often defined by such conditions – but then there are other guidelines that further separate pathology from negative consequences. For instance, you’re not supposed to write people suffering from multiple sclerosis, but rather people who have multiple sclerosis, even though everyone who has multiple sclerosis is also suffering from it. More examples can be found here. Taken to the extreme these guidelines devoid words of their meaning because pathological conditions are by definition negative. Currently however they merely make for ugly sentences in the name of political correctness.
• Handicap parking. A website community, Handicapped Fraud, has been established to report incidents of illegally parking in handicapped spaces. They’ll also get on your case if you have handicap that isn't visually verifiable. Regardless of the website, handicap parking laws are already pretty absurd; depending on the size of any lot, they require anywhere from 2% to - in the hypothetical of a lot with 2-spots - 1/2 of the spots to be handicapped. It's a business expense issue, not an equal opportunity one. It hurts smaller businesses more; while people with handicaps have already, arguably, benefited disproportionally more from the automobile. In addition to high associated fines, wrote the website creator, “offenders seem to slip in and out of their illegal handicapped parking spaces, with no questions asked. Breaking the law every day with no repercussions.” There are a lot of really angry people at that website.
• All federally funded research has to ask 2 questions about race/ethnicity: Are you Hispanic/latino? And then, identify your race. This is because many Hispanic/latinos have multiple ethnicities. At the same time, so do many people of non-hispanic descent. While this measure was intended to streamline data collection, it falls short for the same reason most silly government guidelines fall short – because the government is no expert in the area. The guideline was first promoted through the Office of Management and Budget (?) in 1997, tested by the census bureau in 2000, and then required in any study funded through the NIH. Surely should the scientific consensus on ethnicity change – and after all, America is a changing landscape – the government won’t be quick to adjust.
• School Bus traffic stop laws. You might have heard about these because the punishments are so severe. In many areas you can get up to $1000 and a month of jail time for passing by a stopped school bus that’s either loading or unloaded kids. In essence the school bus functions as a moving stop sign, which pops out whenever the bus is stopped, however these rules still apply if the flashing stop sign doesn’t work. And it doesn’t matter if it’s a bus for kindergarteners or high schoolers. Childhood safety is surely important, but I’ve yet to see any studies on the safety of a moving stop-sign that applies to passing cars in both directions.
  

Those are just humorous outliers - examples of people fighting, and fighting really hard, for things that don't really matter. But they make me wonder how many other beliefs – held by me or by others – are as vain. Battles against things like drugs, gay marriage, or corporate America all strike a similar cord with me: What are they fighting against?

Sayre’s Law summarizes related phenomena as follows: “In any dispute the intensity of feeling is inversely proportional to the value of the stakes at issue.” I like that law. It throws the fighters directly on their heads, and I don’t think it undermines my perspective but maybe it does. A corollary to the law states, “That is why academic politics are so bitter.”

Coldplay - New Music - More Music Videos

Usually in our modern society, very little is at stake. This is in part due to our affluence. A successful economy functions to keep our individual stakes small, it hedges risk. Banks minimize the risks involved in loaning money just as insurance companies minimize the risks involved in getting sick. Our largest corporations are partially owned by millions of stakeholders; if they make an irrational move and the shareholders disapprove, they stand to lose a lot of money. Speculators from Wall Street protect farmers from the risk of volatile price swings. Clearly we’ll never be immune from risk – business cycles still exist – but you can’t deny progress. We’ve been able to relocate risks further upstream, before they occur. Things like liquid assets and health insurance provide buffers against risk. Only in their relative absence we’re left, to varying degrees, to face real risks like famines and epidemics.

But all the more reason, I think, to make sure that our battles are worth fighting. It’s all the easier in our society to find new battle fronts – be it in the mind or in the body politic - but it’s become even harder to ensure that they’re worthy battle fronts. Robert Pirsig proposed that the answer to this dilemma is to use those extra resources to bolster the quality, rather than the quantity, of how one spends one's time. Else we’ll go about chasing phantom concerns such as the location of your neighbor's parked car or women’s right to go topless.

-KJ

_______________
Media (in order of appearance)

Photos: (1) Dead End, 04/22/2008, by Loric Wilson; (2) Photos of topfree people, 07/25/2007; (3) Handicap Parking Spaces, 11/23/2007, Road Side Pictures; (4) Stopping for Students to Board a School Bus at 7:02 AM, 09/22/2005, Old Shoe Woman; (5) Half Quality, 02/02/2008, by Beige Alert.

Video: (1) Music video, by Radiohead of the song "No Surprises" from the 1997 album OK Computer; (2) Music video, by Coldplay of the song "Lovers in Japan" from the 2008 album Viva la Vida. Sphere: Related Content