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

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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

On Parables and Parabolas

Maya Angelou recently spoke at the NIH, where she weaved stories of her life. The speech was well-attended, its topic nebulous (“An Afternoon with”), its tone heart-warming.

Science professors often advise their students to tell a story. This is meant to unstuck students’ spinning minds, to get them thinking on a human-level, and to get them to contextualize results. “What’s the story here?” is often asked in response to research proposals and developing ideas. The question works so well that it’s become a cliché. The presumption being that there’s always a story, it’s just a question of finding it.

But the deeper presumption is that research is akin to storytelling. This interpretation over-stretches the all-too-often well-intended “what’s the story here?”, but it also uncovers the underlying dissonance between stories and research: Namely that stories are experiential while science is analytic.

When discussing scientific findings with fellow human beings, telling a research story never hurts, and certainly stories can help us get a glimpse at nature’s hidden clockwork. But at the same time they remain relatively indifferent towards nature herself, whose eternal laws and associations are not so whimsical as to be formed upon experience.

In this sense, scientific truth – the pursuit of which involves upending paradigms, half-truths, and rigid minds, albeit with Heidegger’s vision of our convergence towards the truth as if it were just beyond the horizon, all making for quite a story – in and of itself couldn’t be further from a story. In handling such truths, we need be imaginative yet thoughtful and delicate, lest we crudely weld man-made constructs of nature to fit into man-made stories. The later unfortunately is done all the time, even in science, and after long enough it strikes reality with a harsh dissonance. It is called wishful thinking.

-KJ 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

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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

Thru Fragments of Cinema: Objectivism Questioned

At 43 Jean Bauby suffered a stroke and awoke to find himself with locked-in syndrome – a rare condition, as terrifying as it sounds, in which the patient is almost completely paralyzed yet remains fully conscious and aware. Able to blink one eye, Bauby was taught to communicate one letter at a time with the help of an aid who recited the alphabet until he blinked. Using this system, Bauby authored the memoir The Diving Bell and the Butterfly; I recently had the pleasure of seeing the movie based on it.

“I decided to stop pitying myself,” wrote Bauby, “Other than my eye, two things aren't paralyzed, my imagination and my memory.”

As the narrative digs deeper into Bauby’s trapped mind, it becomes increasingly sensuous, marked by bright colors, strong breezes, swirling cinematography and score.

He’s also visited by various friends. Some of them, like his elderly father, go so far as to compare their condition to his - one of a soul locked within the body. He’s visited by a distant friend who was held prisoner under inhumane conditions for 4-some years. You can lose your body, he advises Jean, but nothing can steal your humanity.

The film has an unfortunate tendency to wander, but its impact remains. Its underlying tragedy is universal: that of not knowing what you have until it’s gone. The narrative goes in 2 figurative directions corresponding to the metaphors in the title: The diving bell sinks further underwater and the butterfly flies effortlessly up.



The film strikes a chord with me, similar to the book Zen & the Art of Motorcycle Maintenance, which attests to the hollowness of objectivism. My political beliefs are generally libertarian, and in high school I enjoyed a few Ayn Rand novels. They seemed empowering at the time. But despite their food for thought, the ideas lacked staying-power with me. From the start, I never understood why her novels were so much more famous than her essays. Novels teach through experience. They’re a perfectly suitable way to get a lesson across, but they’re anything but an objective medium. After reading other authors in college, Rand seemed shallow in comparison.

Rand is often associated with libertarianism – even Alan Greenspan (who describes his views as libertarian-Republican) was deeply influenced by her in his youth. But aside from individualistic values, I’m not sure how much Rand overlaps with libertarianism.

I hate to throw around such intellectual jargon – as if they were interesting in and of themselves – but to come back down to the real world, undue objectivity can often pose more harm than good. Nowhere is this more evident than in the economy.


A frequent myth is the belief that the value of money is objective - that it's fixed. This mistake has led to hundreds of years of mistrust against certain ways to use money. Money-lending is almost universally despised, across cultures and religions, as a greedy way of using money to make money. Despite this hatred towards money-lending, using money to make money, in almost any other endeavor, is considered the norm. This is why the economy is built upon money-lending. Banks play an integral role by distributing money to be used for its greatest potential. Their distributive actions run contrary to liberal concerns about skewed distributions of income; however, trying to “fix” their distribution of money has as dire consequences as toying with income distribution.

Value is subjective. This is why banking works – the value of a small business loan to a businessman of great potential is greater than the value of that loan to someone who won’t know how to use it. Likewise, the value of lending money for interest is worth more to a rich man with no use for that money than to a poorer man. The value of receiving lent money is worth more to someone who needs it and has a reliable credit history. The value of giving a loan to someone with reliable credit is greater than the value of giving a loan to someone of poor credit. Viewed purely objectively, the whole economy – perhaps even freedom - really makes little sense.

Another danger of unbridled objectivity is the use of statistics. This is bared out in the common concern about lying with stats – obviously stats don’t lie themselves, it’s the people who use them that lie. Numbers are of course very objective. But their use – both in gathering and making sense of them – is considered more of an art.

Even Greenspan wrote that he supplemented statistics about the macroeconomy with more subjective measures. During the oil crisis of the Nixon years, he created measures to estimate weekly fluctuations in GDP, which included surveying small business owners about their present difficulties and concerns. The later were of comparable value to objective numbers. During the internet boom of the 1990’s, Greenspan noted that despite rises in GDP, surveys showed that workers were becoming more skittish about the economy, largely due to increased employee turnover. This discrepancy led him to conclude that the rising GDP & stock indexes gave the public an overly rosy depiction of the economy.

The takeaway point is that when the stats don’t seem to match reality, the fault is more often found with the former than the latter. This has vast implications, particularly for medicine, which alienates whatever it can’t explain as psychological or somatic. A large chunk of medical progress in the 20th century consisted reclassifying phenomena from psychological/somatic into medical. The fallacy however is that, at any given time, the categorization of conditions as psychological or somatic is thought to reflect the nature of the conditions rather than the progress of science. This has led to many misunderstandings between doctor and patient, and between researcher and object of study.

The vast difference between a human and a computer attests to how off objectivism is. It’s almost a tautology to say that we live in a subjective world. Objectivity is simply one tool among others. It can be a useful tool to help us crawl out of our locked-in subjective holes, but it can also lead to as many misconceptions as truths.

Even emotions – one of the cornerstones of subjectivity – evolved for useful objective reasons. Ignoring your emotions because they’re too subjective would be to block yourself off from one of your most carefully honed tools. I find them useful for intellectual discourse: When an idea just doesn't feel right (or wrong), you can use that as a springboard for further inquiry, and guide yourself in the right direction. Of course you can’t say that something is wrong because it feels that way. But you can use those emotions to then identify objective explanations. Objectivism's distinction between reason and irrationality is meaningless; as both reason and supposed irrationality can have the same utilitarian purpose in their proper contexts.

And what role do dreams play in a purely objective world? Consider what occurs when wake up and feel you've had an incredibly moving dream, but you try to describe to a friend to little avail. The dream's objective content somehow can't stand up to its subjective impact.

Objectivism’s biggest mistake is focusing on the “bottom line”. Because life occurs in everything above the bottom line. Humans come and go; they’re born and they’re dead; they consume calories and they expend calories; that’s the bottom line, that’s the objective perspective, as if from a disinterested party observing us from the moon. Obviously that perspective does injustice to the value of life. Robert Pirsig’s solution to the discrepancy between objective and subjective reality was to meld the two by focusing on the point where they meet. That’s quality, he believed. It's the value gained in voluntary exchange. It’s life. It's the loss that Jean Bauby suffered in the objective; the gain he won in the subjective.



-KJ

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Media (in order of appearance)

Photo: (1) Movie poster from the 2007 film, The Diving Bell and the Butterfly; (2)Photo of Jean-Dominique Bauby, 1997; (3) curving, swirling, 04/09/2006, by David Pham; (4) Logo from book cover of Zen & the Art of Motorcycle Maintenance; (5) Portraits of Ayn Rand and Allan Greenspan; (6) Movie poster of the 2004 film The Merchant of Venice; (7) tools, 08/30/2006, by Striatic; (8) Blue Marble (Planet Earth), 01/25/2008, woodleywonderworks; (8) M.C. Escher's 1948 lithograph Drawing Hands.

Video: (1) Music collage, 02/08/2009, filmlasse with music from the 1959 film The 400 Blows. Sphere: Related Content

Starbucks vs. Harley Davidson: What you see and what you don't

We live in a consumer-driven economy, liberals often say, and how much more can we produce until we’re too chock-full of gadgets and gizmos? This concern is easily manifested in a company like Starbucks: How can they grow when they’re already located on every street corner in every city? Such concerns, like so many misunderstandings about the economy, come back to Henry Hazlitt’s single lesson about economics: What you don’t see is often more important than what you see. We’ll begin by talking about what we see, which is too many Starbucks stores.

What you See

Starbucks originally hooked me on coffee. I was in 8th grade and a location next to my school was giving out samples of their new Frapuccino with brownie bits. Since around that time, Starbucks expanded to over 16,000 locations worldwide. Its horizons seemed endless, as numerous books popped up about the genius idea behind the business, no doubt perhaps conceived in the cozy intellectual confines of the coffee shop’s atmosphere.

But in 2006, way before our current recession, it was clear that Starbucks had over-expanded itself. Since then, it’s closed over almost 1,000 stores and has plans to close hundreds more. In the meanwhile, Starbucks has certainly lost its edge. The issue seems simple enough, and the conversation almost one-dimensional: They need to open more stores. More stores means more money. But the economy - maybe even the world - isn’t big enough. They can only open so many stores in the same city before there’s no room left to expand. Companies rely on growth. What are they to do? In the meanwhile, they’re worried that the Starbucks brand has become stale and too expensive for a society in recession.

What you Don't

The solution to the path that Starbucks should have taken struck me while I was reading about The Harley Davidson Company in Motley Fool’s recent book, Million Dollar Portfolio. The following quote summarizes a bit of the history of Harley Davidson before getting into their success:

In 1901, a 21-year-old William Harley designed a motor to put onto a bicycle. He was soon joined by his good friend Arthur Davidson, and together they started a company that would eventually build motorcycles. Over the next 70 years, the company was private, surviving the ups and downs of the American economy, with major contributions to the war efforts of both World I and World War II. By the 1950’s and 1960’s, though, the company saw its reputation diminished, as it was associated with the Hell’s Angels and other less savory characters.

In 1967, the company was bought by American Machinery and Foundry (AMF), which produced leisure equipment such as snow skis, golf clubs, and bowling balls. AMF mismanaged the company to the point of near death, and sold it for $80 million in 1981 to a group of private investors, including Willie Davidson, a descendant of the original Davidson family. They rebuilt the company, placing a new emphasis on quality that had gotten away from them for decades. Customers returned. In 1987, Davidson and Friends took the company public.

That was the beginning of a spectacular ride. Shares of Harley at the end of 2007 were worth roughly 110 times what they traded for when the maker of the Fat Boy first went public…(p. 85-6)

What was responsible for this turnaround?

For the better part of two decades, Harley had the opportunity to do the right thing with its profits – sink them back into the business, making new and better products, and reaching out to loyal customers. In fact, the true glory years for Harley’s stock were those when management limited how fast the company made bikes. Rather than make all the hogs it could sell, Harley increased production at a rate of only %10 a year, lower than what the marketplace could bear. The ensuing scarcity of bikes raised the value of those machines that did make it to the market. For the better part of a decade, customers were willing to pay more than the manufacturer’s recommended price. (p. 86)

Something clicked when I read this, as I realized that Starbucks’ problem was not over-expansion, but a lopsided view on the meaning of growth.

Certainly more locations is one way to increase profit, but did it never occur to them to improve their product, similar to Harley Davidson? Starbucks' extra cash placed them in a position to improve their product, or at least to make it more efficiently. Or they could have experimented with real cappuccinos, which are generally thicker and have less foam, rather than switching to automated machines. Or they could have lowered the price of their products, which would have enabled them to compete more effectively with McDonalds and Dunkin Donuts. Instead, they’re stuck with too many stores which need to charge an arm and a leg for a cup of coffee in order to make a profit.

None of these strategies were guaranteed to work, but they get at a very basic aspect of economics: Differentiating between what you see and what you don’t see. Starbucks chose to err on the former by expanding everywhere, rather than the latter. However, the alternative strategies – which err on what you don’t see – were certainly viable, as seen in the success of Dunkin Donuts. In a very real sense, both were strategies behind growth. Yet do you hear liberals decry that Dunkin Donuts is taking over the world with their expansion of quality and lowering of price?

As Harley Davidson’s history shows, companies don’t just grow by getting physically bigger and taking up more space. As Hazlitt proclaimed in 1946, growth in areas that you don’t physically see right in front of you are often the most important types of growth.

The More Important

I want to end on this concept because I’m entranced by it.

Mankind necessarily begins with the concrete and what’s right in front of him, and over generations he forms laws of nature, which get at what Plato called underlying forms. Plato believed that the forms behind the manifestation of reality are inherently more important than physical objects, because the forms govern their existence. In other words, the law of gravitation is more important than the objects which are being gravitated, because the law allows us to understand the objects.

Hazlitt was saying something very similar, only in relation to economics: What we don’t see is often more important than what we see. We visually see Starbucks everywhere, but we don’t visually see the quality of coffee increasing. Hazlitt elaborated with an analogy to a broken shop window: If a shop’s window breaks, we see extra business go to the repair man. Judging just from what we see, broken windows are good because they produce business. What we don’t see, however, is more important. We don't see the foregone opportunities given up by shop owner. Perhaps he now has to make his goods more expensive, or he can’t expand his business. Economist John Maynard Keynes - whose influence has exceeded Marx in determining liberal economic policy - was notorious in his inability to grasp Hazlitt's law. He once famously suggested that we should bury money under ground, so that industries can form by digging holes to get them out.

I’m fond of intellectualizing issues, often to a fault (see this post and every other). For this reason, though, I’m often amazed at how intellectual liberals fail to grasp anything about the economy that's not in plain sight in front of their eyes; because Hazlitt’s law is the bare essence of intellectualization, by moving the discussion to the underlying principles, rather than just what’s out there in front of you. How can you be intellectual and fail to grasp that there’s more to the world than just what you see?

Nonetheless, liberals often chide at attempts to get at the underlying forms of the economy, such as Adam Smith's notion of the invisible hand, under the presumption that it's an oversimplified attempt to avoid reality. On the contrary, however, discussing physical economic things without reference their underlying economic form is like trying to move a rotating object without thinking about gravitational forces. Stated more succintly, its easy to change something's outward physical appearance, like an item's price, but its not easy to alter the form, like the information that a price conveys.

Of course, applied to the economy, this mistake is not specific to intellectual liberals. Many economists and politicians, in the tradition of Keynes, overemphasize consumer goods and end-products, which we see, over investments and savings, which we don't see. One instance of this was when former President Bush urged Americans to go shopping after 9/11 upon the assumption that this would stimulate the economy. Contrary to Bush's intention, buying random things when you don’t need them is pointless, and spending beyond your means is in fact harmful for the economy. When you buy a product that you need and can afford, you’re signaling to the manufacturer – along with anyone involved in its profit – that the product is valuable. You're telling them that you enjoy their product more than you would have enjoyed your extra money somewhere else. You're signaling them to make more of that product, or to keep doing what they were doing. Buying useless products that you can’t afford just adds noise to that signal, and it depletes from your savings. Savings again represent what you don’t see: They don’t just sit in a bank vault. They’re loaned to businesses or people, or are reinvested into the economy. That money is given a purpose, and in line with Hazlitt, that purpose is arguably more important than your consumption, particularly if you don’t need or want that consumption.

This misconception is magnified in the use of GDP – gross domestic product – to measure the macroeconomy. GDP is the total measure of exactly what you see: product. It doesn’t include what you don’t see, particularly savings and investment. When a window breaks, or another Starbucks opens, GDP increases, regardless of any depletion in savings; when a company like Harley Davidson focuses on making better motorcycles (and spends on R&D), GDP suffers.

Economist Mark Skousen, among a few others, hotly debates the usefulness of GDP. Using a statistic called gross output, he estimates that end-product consumer goods account for only a third of the economy. And this makes sense, because changes in the GDP usually lag behind changes in the stock market by a few months. It takes money to make money, and it also takes money in the right hands as well. That's why savings and investments are more important than consumption.

Right now most every company is in trouble, although to varying degrees. Starbucks used one strategy for expansion, though it certainly wasn’t the only strategy, and in hindsight it probably wasn’t the wisest. Harley Davidson management has recently turned south as well, as they’ve somehow managed to pile on a huge amount of debt while being aware of their shrinking baby-boomer customer base. But the important lesson is that these companies had options, as growth doesn’t always occur in areas that you see. Often the best things in life – love, joy, happiness – you can't see directly at all.

-KJ

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Media (in order of appearance):

Photo: (1) Careful, 11/10/2006, by Carlos Aldana; (2) Fuel, 09/30/2006, by Nathan Makan; (3) 1907 Harley Davidson, photo by Rmhermen; (4) Harley Davidson Heritage Model 2004; (5) DUNKIN' DONUTS, 12/03/2006, by Paul Downey; (6) Concave modular origami : collection so far, 11/17/2008, by fdecomite; (7) Shattered Lens, 03/06/2006, by kandyjaxx; (8) Westfield White City, 11/25/2008, by Manuel. 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

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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

Lucid Quality

I had my first lucid dream the other night, or at least, the first that I remembered anyway. It was rather banal: I dreamed that I’d gotten up and eaten breakfast, realized that I was asleep, and then returned to my dream where I was attending a musical at the Smithsonian or something. When you describe a dream to others, it never sounds as profound as it was in the moment. It’s all about how it registers to the dreamer. At least, the dream seemed to mean something to me…at the time. Sometimes a good deep sleep feels so damn good that I wonder whether sleep is the purpose of life.

It’s become a hippie cliché to go around saying things like, “How do you know that reality isn’t just a dream…man?” This line of thought was started by Descartes (“it’s possible…that all those images, and in general all that relates to the nature of body, are merely dreams or chimeras.”), who went on to create objective realities as widely applicable, exacting, and sobering as the Cartesian coordinate system. Suffice it to say, I tend to think of myself as more in touch with reality than with pseudo-intellectual dead-end ideas. But just the notion of a lucid dream – where you realize in your sleep that you're dreaming, but you keep dreaming – it does make you think, doesn’t it?



This quote has been on my mind for a few months now, it’s from an interview with the Flaming Lips:

We like to sleep. Who doesn’t? I hate it when we run into these people who are like “I hate TV, and I hate sleeping, and I hate these things” because they want to show you how serious and how hard they work all the time. But I don’t trust them. I don’t. People who don’t like to sleep - I don’t trust that they value anything. (i-tunes Original)

To some degree I’m sure we’ve all taken up that mentality at least at one point in our lives: If I could just cut back on my sleep I could accomplish so much more in life. I remember thinking that way at some times in college.

Nowadays it strikes me as ass-backwards. Maybe you have to go through a prolonged period of receiving good sleep to realize that. Or maybe you have to go through a period of getting terrible sleep. But the notion that spending time to sleep is somehow holding you back – even if you’re a busybody – seems paradigmatic of so many logical fallacies in life. On the one hand, you can see exactly why some people would think that way, and on the other hand, it's easy to tell why it's so incorrect. This is why I've recently starting thinking that deep sleep is an end in life, rather than a means toward an end.

Treating sleep as your enemy gets at a very basic error in human life: Confusing quantity for quality. It’s tough because quantity and quality often overlap, each affecting the other. But too often the focus is on quantity, if only because it’s easier for the mind to grasp.

Consider two completely different areas where quantity is severely mistaken for quality:

Obesity and dieting. How often have you heard that if you consume more calories than you burn, you’ll gain weight? This maybe true in the most technical sense, but in everyday life, the body lives on more than just calories alone. The logical implication from this overemphasis on calories is that you could go on a sugar-only diet, and if you ate nothing else, and limited your intake of sugar, you’d lose weight. But it’s just not that simple. The body demands a variety of nutrients. And under various idiosyncratic conditions, the body requires more or less amounts of food. One of these conditions, interestingly enough, is sleep: It’s thought that insufficient sleep increases appetite, likely blunting satiety. Not to mention other things that affect calories required, such as menstrual periods, stress, age, muscles, the common cold, and the weather. Just focusing on calories in and calories out is a gross oversimplification, a paradigm that loses more than it contributes.

Government-created jobs and inflation. Anyone reading this blog with any regularity knew this was coming, but it’s the exact same thing: Creating new jobs to stimulate the economy, without thought of the necessity for these jobs, is once again a focus on quantity over quality. Captain Capitalism's blog has a great post about how a job is valuable to begin with because of the necessity that exists in getting it done. The Captain goes further to point out that artificially creating jobs is just like inflation. In the real world, jobs and money are valuable because of their quality, not their quantity. Diminishing quantities of jobs are usually due to their diminishing qualities (e.g., demand), not the other way around.

These are just 2 areas, but they highlight the importance of well thought-out long-term solutions over quick-fixes. Indeed, in the short-term, you can lose weight pretty well by eating less calories, and you can improve the economy by creating jobs and money out of thin air. But these fail in the long-term: When you eat less, your metabolism decreases so that your body holds onto its fat. And when an economy has an unnecessary amount of jobs and paper money, more of it becomes useless. As these examples demonstrate, there are real world implications of mistaking quantity for quality, and often the end-result is the exact opposite of that desired. Indeed, these are the sort of short-term solutions that people come up with when they’re short on sleep.

It's never just about the bottom line. Never. We're born and we die. Just looking at the bottom line, net result: zero. It's always a question of what occurs in between the input and the output. A human body takes in calories and it expends them, just as a corporation takes in money and it spends money. Somewhere in the middle is a creation of quality.

-KJ


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Media (in order of appearance)

Photo: (1) krakow: dream of mirrors, 01/28/2008, by smiff; (2) Dream on, dream on., 07/27/2007, by Porcelaingirl; (3) Organic tea nutrition fact sheet, 12/29/2005, by Bruno Girin; (4) Steel Worker Houston Texas 1, 04/03/2006, by billajacobus1; (5) le morning dream, 11/19/2008, by boris.

Video: (1) Music video from xxJustChloex, of the song Vein of Stars, by The Flaming Lips, from the album At War with the Mystics, released in 2006. Sphere: Related Content