Change, Change, CLANG - Change for Fools

It seems like the key to managing large, complex systems is to make sure that no individual can change or impact them. This does, however, have its drawbacks.

It is important that complex systems not be overly fragile or subject to damage by the acts of one rogue or incompetent, So, they are typically made fairly robust against any disruption. This is a good thing. Or can be, if not for the fact that most any change initially shows up as disruptive.

For the same reason that these big corporations or financial systems or airplane designs or governments or computers are fairly secure against disruption, they are also hard to change. This would be significantly better news if the world did not change and they did not have to adapt and evolve.

Because it seems that for whatever goals a system has - it is only a matter of time before the goal to which all other goals is subordinated is the goal of self-preservation, or resisting change.

Market Plunge & Baby Boomers Bust

"Do what you love," they said. "Find work that you enjoy."

Now, finally, they tell us that this is because we are going to work into our late 80s.

10 years ago, about 80% of retirement plans were pension plans. If you work for 30 years and you are 60 years old, you'll get, say, 90% of your salary until you die.

Today, about 80% of retirement plans are 401(k), or IRAs. If you save for 30 years and you are 60 years old, you could be rich or you could be a pauper - no one knows. And the money you've saved might be enough to finance your retirement and your children's retirement - or might scarcely be enough to finance your grocery store habit through the end of next month.

This market crash is coming at a terrible time for the baby boomers who have just begun turning 60. To have the market drop by 30 to 40% just years before you were going to retire is terrible. No one has talked about the fact that their retirements have just been delayed by years. By the time the dust settles on this year, they may be the group that pays the biggest personal price.

Strategy or Tactic? The Difference Between Obama & McCain

From Friday night's debate:

OBAMA: But understand, that was a tactic designed to contain the damage of the previous four years of mismanagement of this war.
...

MCCAIN: I'm afraid Senator Obama doesn't understand the difference between a tactic and a strategy.

OBAMA: We had a legitimate difference, and I absolutely understand the difference between tactics and strategy. And the strategic question that the president has to ask is not whether or not we are employing a particular approach in the country once we have made the decision to be there. The question is, was this wise?

So the question is, do you want to elect a president who thinks that his strategy ought to begin with the question of how best to win a war or who thinks that his strategy ought to begin with the question of what – including war, investment in research into alternative energy, tax cuts, health care, etc. – is going to do the most to improve quality of life?

A president should not focus on the best strategy for educating the youth, extending longevity, enhancing the safety of pensions, or creating transportation solutions that minimize commuting time and carbon footprint. The president should focus on the best strategy – among these and various other options – for improving quality of life.

For Obama, the change in the approach to the Iraqi occupation is a tactic and the decision to make the world safer by invading Iraq is a strategy. For McCain, the decision to invade and occupy Iraq is a given and how best to do that is a strategy. McCain remains the good soldier. He is not, it would seem, running for president so much as Commander in Chief.

Paul Newman Dead

One day I'd flown into Provo, UT, and was eating lunch with a guy who told me this story about a woman who worked for him, someone we'll call Jennifer (because that was her name).

Jennifer took the day off from work to ski Sundance, Robert Redford's ski resort. She was alone and joined by a man on one ride up the lift. As she rode, she glanced back at the chair behind them and was startled to see Robert Redford.

One of the reasons that Redford enjoys that part of Utah is that the locals give him room and don't cluster around him requesting autographs, photographs or even phonographs.

"Oh," Jennifer said the man beside her. "Isn't that Robert Redford?"

The man beside her looked back and said, "Yes, I think it is."

"Oh, this is so exciting," Jennifer said. "I have never seen him before."

"Yes," the man said. "That is exciting."

"Do you think that I should wait for him at the top and say 'Hello?'" she asked.

"You could," said the man with a smile.

"I don't know," she said. And she fretted aloud for a time before deciding to just ski down rather than wait. "I don't even know what I would say," Jennifer confessed.

The man wished her a good day as she skied away and as she waved to him, she began to wonder where she had seen him before. He looked familiar but she couldn't quite place it.

About halfway down the hill, it hit her. She had just ridden the ski lift with Paul Newman, who waited at the top for his friend Bob. I can only imagine that Redford and Newman got a great laugh out of the fact that she recognized Redford from 50 feet away and yet did not recognize Newman, whose face was only inches from hers.

Paul Newman died today, at 83. He seemed like a class act, turning his fame into a wildly successful non-profit business, a man who did not see a conflict between being an international icon and family man. That's sad news for Hollywood - and the rest of the world.

Video: Keynesian Economics & the Great Bailout of 2008

Again, I try the video experiment.

As I videoed this, the negotiations for some kind of intervention seemed to be stalled or even breaking down. I completely support the notion of debating and challenging the Paulson plan. I cringe at the thought of the free market advocates just derailing any kind of plan, as if there is not some financial system that we need to protect. The neoconservatives convinced that this problem can be left to markets are the same ones who saw nothing wrong with the invasion and occupation of Iraq.

First Day of the Last Year

It is the first day of school. For my daughter's last year as an undergrad. Sigh.

Bernie and the Bad Psychology of Republican Politics

Maddie's eyes had a twinkle as she poured the packets of sugar into her diet coke. "That Omama guy had better look out now," she said happily.

"Excuse me?" Bernard asked, looking confused as he touched his hearing aid.

"McCain has announced that he's putting on his campaign suspenders! He's getting serious now."

"Um," I offered hesitantly. "I think that you might have that wrong."

"Huh?" Maddie frowned. And then she followed my eyes to her glass and laughed. "Oh! This?" she waved the sugar packets. "I just add the sugar because they say that the artificial sweetener in diet coke is not good for you, so I add the natural stuff."

"No," I said. "John McCain suspended his campaign. There was no mention of a wardrobe malfunction or costume change."

"Although," Bernard drew himself up, running his thumbs through his own suspenders, "there is nothing wrong with suspenders."

"If you want people to know you were born before World War II," I mumbled. "But it might be time for someone in Washington to don a cape," I added.

Bernard leaned forward. "McCain's problem has nothing to do with his wardrobe. His is a psychological problem."

"What?" I asked, my attention momentarily diverted by the arrival of my Reuben sandwich.

"It's called all or nothing thinking," Bernard said. "I read about it. It is a cognitive disorder."

"You and your books!" Maddie said with a shake of her head.

Bernard gave her a look and continued. "This really happens. Some kid gets a B on her report card and suddenly, she thinks that she'll never get into medical school and since she can never be a doctor, she'll never find any career that interests her and since she has no future now she doesn't even want to go to school. It's called all or nothing thinking," Bernard said. "It is one of the worst kinds of distortions of reality, because reality is rarely so stark - a choice between bliss or your own personal purgatory."

"What does that have to do with the way John McCain dresses?" Maddie asked.

"Nothing!" Bernard said. "I'm talking about his speeches over the last couple of weeks. And Bush's speeches. Two weeks ago, the fundamentals are sound, everyone should just stop worrying and go shopping. This week, we're in a financial crisis. We have to pay $1.3 trillion to bailout out banks and brokers! You know how much that is? Out of 170 countries, $1.3 trillion would make you the 10th largest economy on the planet! Just smaller than Canada, just larger than Brazil and tied with France! Suddenly, we go from everything is fine to teetering on the edge of disaster?"

"So, you think that McCain's problem is psychological?"

"Yes! Those Republicans have nothing but contempt for subtlety, and yet life is always shades of gray."

"So why don't they just say so?" I ask, as it turns out, stupidly.

"Because the people who vote Republican don't want nuance, complexity or subtlety. They have no patience for it. They pay for the simplification of reality. That's why they put candidates in office - to assure them that life is predictable and makes sense."

"You are talking in circles again, Bernie." Maddie reached over to pat his hand and turned towards me. "Even when he was a kid we could never follow him. He could never make things simple. For him it was always layers of complexity."

"Reality is complex!" Bernard insisted.

"So you say, Bernie," Maddie tucked her head down and took another bite. "So you say."

-----
“The neurotic person distorts reality, makes demands upon it, imposes premature conceptualizations upon it, is afraid of the unknown and of novelty, is too much determined by his interpersonal needs to be a good reporter of reality, is too easily frightened, is too eager for other people’s approval, etc. It may be expected that as a culture improves, thereby improving the health of all its citizens, truth seeking should improve.”
- Abraham Maslow

Just the Facts

Why people have grown cynical about politics
A Los Angeles Times investigation revealed that much of the money collected by professional fundraisers does not get to charities. "Philanthropy watchdogs say fundraisers should never keep more than 35 cents on the dollar, but the Times found the overall average was 54 cents, and for missing children charities, fundraisers kept 86 cents. (Fundraisers for an organization called Citizens Against Government Waste kept 94 cents.)"

Which one of these candidates didn't know how many houses he owns?
Percentage change by 2012 in the after-tax income of the top 0.1 percent of the U.S. earners, under Barack Obama's tax plan: -5

Percentage change under John McCain's tax plan: +12


Why the government may have to buy $700 billion in bad mortgages:
Percentage change between 1989 and 2007 in the median price of an American single-family home: +130

Percentage change in the median down payment: +3.7

Well, okay - not just the facts:
And since I'm quoting from The Funny Times, here is the caption to a cartoon featuring a women talking to two smiling friends at a cafe: "My ideal man is kind, sensitive, intelligent, six-two, a hundred-eighty pounds, and made of solid milk chocolate."

Why Not Program-Specific Government Bonds?

Scott Adams of Dilbert fame makes an interesting suggestion at his blog. What if the rich were given an option to, say, buy homes with bad mortgages and required to rent them out? It would sort of be a tax but it would offer the rich the hope of a return, taking some of the sting out of "paying" extra taxes.

But what if investors had more options than a simple government bond? We have 37 kinds of ketchup but only one kind of federal bond? Why not a bond that finances alternative energy and another that finances war and another that finances transportation infrastructure? It would be even better if the bonds not only paid the traditional interest rate but offered a premium based on the performance of what they financed.

For example, let's say that there was a bond for community college programs to train trades people for plumbing, electrical, and carpentry work. If graduates from the program were employed in the trades at a rate of 85% or higher (to pick a number out of the air), you would get a premium of 1% on your annual return. If the rate of successful placement were 96%, you would get a 4% premium. The more promising you thought the program, the more likely you'd be to invest.

This would put markets to work as a means to finance government programs, letting investors "vote" on programs they felt would yield better returns, would create more value for the community.

And once that is in place, I see no reason why we couldn't go further with this, allowing taxpayers to indicate, when filing taxes, where they would like their money to go. I suspect that the Pentagon would get less and the National Science Foundation or National Institute of Health would get more. And I suspect that future generations, who would benefit from this research and investment, would thank us.

There is No Excuse for This Sort of Post, Really

Miley Cyrus may abandon her stage name of Hannah Montana. Just so everyone is clear, I have first dibs on it when she does. I’ve talked to the marketing director at R World and he assures me that posting as Hannah Montana would drive more traffic to the blog.

Having tired of TV, radio, recorded music and other home entertainment options, Bernard has begun to hold open-mic evenings three nights a week at his home. He tells me that the talent is pretty hit and miss, but he’s meeting lots of interesting people.

Today at Home Depot, I was excited to see that they had a Blog Materials section. It was, alas, a visuo (the visual equivalent of a typo): the section was actually labeled Bldg. Materials.

Hallmark has begun to sell same-sex wedding cards. To me it seems obvious that sexual orientation is not chosen. If it were, all men would choose to be in relationships with women and, I’m sure, so would all women. If it were not for genetic compulsion really, who would choose to be in a relationship with a man?

Judeo-Christian is a term often confused with Judo Christian, the ancient martial art of compulsory proselytizing.

The graffiti read, “For a good time, call 619-555-xxxx,” so Jerome called. After he said “Hello, I’m calling for a good time,” this small voice said, “7 PM is usually a pretty good time.” Jerome did not call back.

My $5 Billion Idea

It took the U.S. government 200 years to finally spend $700 billion a year. It took Treasury Secretary Henry Paulson a few days to propose spending this much to buy bad mortgages and George Bush a few hours to say yes. I have an idea for propping up mortgage markets – and by extension financial markets - that might be less expensive.

George Bush wants to spend another $700 billion of your money. And he needs you to agree to this now - this week. [This with the rest of the week's new spending is equal to about $1.3 trillion. If you are not outraged you are not paying attention.]

How much is $700 billion? To put this in perspective, it was not until 1982 that Reagan approved a federal budget of more than $700 billion (and not until 1985 that he collected revenues greater than $700 billion).

This is more than we spend on all categories* of discretionary spending except for defense.

It seems to me that when a salesman tells you that he needs you to commit to $700 billion (or more) by the end of the weekend, you might be getting rushed into a deal that can't stand much scrutiny.

The economy could slow as a result of financial markets, but it won't be immediate. Call me an idiot, but I don't know why we have to act this week in order to stem economic slow down. In fact, I think that another $700 billion in deficit spending might do as much to hinder economic growth over the next few years as stimulate it.

I'd like to make a more modest proposal. I have an idea that could save you (the American taxpayer) hundreds of billions. Maybe. (And all I ask is 1% of the savings – hence the “$5 billion idea” post title.)

The Bush / Paulson idea is to buy about $700 billion in mortgages, propping up a market that could take down broad swaths of American financial markets. One problem with this plan is that it'll likely drive up the price of mortgage securities - which will make the bailout even pricier. There might be a cheaper way to do it.

When Walt Disney wanted to establish Disney World, he set up a secret company that bought individual farms. Had the farmers all known what Walt was up to, he would have paid a multiple of what he did. Why not do something similar to prop up the mortgage and financial markets?

The Treasury Department could buy mortgage securities, but no one would need to know how much they were going to buy. Prices would stabilize, perhaps even rise a little. And the government could buy a small amount or large, depending on the performance. Everyone would know that the government was going to intervene, but no one would know how much they were going to buy or when. Knowing that the government was intervening should keep markets from tanking; not knowing by how much should keep markets from artificial highs that will just cost taxpayers more and would still need eventual correction. (This would basically be like monetary policy in government bond markets temporarily extended to include mortgage-backed securities.) And this would give the policy makers time to assess this situation and perhaps devise a better plan.

It could be that the government would need to spend $700 billion anyway, but this is not a foregone conclusion. And at a minimum, this would give the next president some room to maneuver. A new bill that increases discretionary spending by 75% in a single week would basically make it impossible for the next president to do anything of consequence – whether it is Obama’s plan for expanded health care or McCain’s plan for more tax cuts. (Which may well be what they want.)

Rushing into this bill seems too reminiscent of rushing into the invasion of Iraq. No one has convinced me that the Paulson / Bush plan is the best option or that it needs to be enacted before it has been scrutinized.

Oh, and I promise that if I do get the $5 billion finder’s fee, I’ll host a most bodacious party for you R World regulars. It may involve renting a small Caribbean island and about 3 months of snorkeling, sailing, and deep and silly conversations.


[*More than all categories combined. That is, the money we spend on the executive, legislative, and judicial branches, small business administration, the corps of engineers (which didn't have enough money to properly protect New Orleans from Katrina), the national science foundation, commerce department, environmental protection agency, social security administration, the departments of interior, labor, treasury, transportation, agriculture, justice, energy, state, homeland security, housing and urban development, veterans affairs, education, and health & human services, and NASA - combined - is less than what Paulson and Bush would like to spend on bad mortgage debt.]

Lee Coulter - 2010's Breakout Artist

When my wife Sandi first used her iPod, she was on the treadmill, getting a running measure of her pulse. "Oh," she confessed later, "I had a weird thing happen. When Jack Johnson's song came on, my heart beat rose by 10 beats per minute." Tonight at Lestat's, we discovered a talent who, on the Jack Johnson accelerated heart beat scale, was probably a 15.

Listening to Lee Coulter, I could hear elements of some of the rhythmic play of G. Love and lyrical fluidity of Jason Mraz and, of course, the smooth feel of Jack Johnson. His lyrics are smart and actually provoke laughter and paint images. It would not surprise me at all to hear I Would Love, Jeep Song, or She Fell in Love with the Mirror being played (repeatedly) on the radio next year.

Lee is from Australia but now lives in San Diego. As we waited for the show, we heard a sound check that seemed to never end, wondering why a band would play and play just to get the mix and volume right. As it turns out, Lee and his band were playing together for the first time. To my ears, they have something that could explode.

Here is I Would Love, a video of Lee playing solo. The song was enhanced by the band, but it'll give you some idea of how lyrically smart he is. If you want to hear more, go to Lee's myspace page. There you can download the song Earthquake, with special guest Stepchylde, who was inspired in his performance with Lee and the band tonight.

When Lee breaks out in the next 18 months or so, you regular readers of R World can say that you knew about Lee way back in 2008. "Some pseudo-futurist predicted that he'd be big," you'll say. "Turns out he was right."

Enjoy.

Why the Bailouts Don't Seem to Be Calming Markets

The value of financial derivatives is about $500 trillion.
Global GDP is about $70 trillion.
The U.S. Economy is about $13 trillion.
The U.S. Federal Budget is about $3 trillion.

Is it any wonder that markets seem to doubt the U.S. government's ability to actually stem the tide of financial crisis? The whole of our government's budget is not enough to cover a movement of even a few percent in global financial markets.

During this age of globalization, when financial markets around the world are increasingly interconnected, we should have been moving towards global regulatory mechanisms, replicating the success of Keynesian policies within national economies. Instead, conservatives have been busily deregulating even within national economies.

Rock & Roll Bombs

Keith Richards was 1 when he was evacuated from suburban London to avoid German buzz bombs. What are the odds that a pioneer of rock and roll's loud sound would have first become conscious of the world during a time of loud explosions and great excitement?

Bob Dylan (credits? blames?) the atom bomb for rock and roll. He said,

I know [the atom bomb] gave rise to the music we were playing. If you look a ll these early performers, they were atom-bombed fueled. Jerry Lee, Carl Perkins, Buddy Holly, Elvis, Gene Vincent, Eddie Cochran ...

How were they atom-bomb fueled?
They were fast and furious, their songs were all on the edge. Lyrically, you had the blues singers, but Ma Rainey wasn't singing about the stuff that Carl Perkins and Jerry Lee were singing about, nobody was singing with that type of fire and destruction.

With that as background, here is the inimitable genius David Byrne (I'm fairly certain that Jane Fonda got the idea for the aerobics craze from a Talking Heads concert).

A Day of Excess

Today is my birthday. I was thinking about keeping a low profile in the hopes that the gods of aging will miss the house and fly over, leaving me un-aged. But birthdays are for excess. Eating and drinking to excess sounds tedious to me, and exercising or dancing to excess sounds dangerous. So, I decided instead to post to excess this morning.

My first day of blogging, I made 9 posts. The next, 7. My daughter rightfully declared that ridiculous and since I have actually tried to rein in my propensity to post. Today, though, given it is my birthday, I decided not to hide the idearhea. Enjoy.

Nazi Propaganda, Modern Advertising, and the Psychology of Manipulating the Masses

One reason that the liberal economies rose to prominence while Germany self destructed under the Nazis is that they used the powers of mass psychology to stimulate visions of consumption rather than world domination.

We really did learn a great deal about psychology early in the 20th century. Sadly, what we’ve learned has largely been mis-used. The Nazis may have been the first to use the power of psychology. Specifically, they applied these principles to propaganda and the manipulation of mass media as a tool to create the consensus trance, to define national opinion. Used as a tool for stimulating delusions of world domination, the Nazis caused Germany to self destruct, killing about 60+ million people before they were done.

The Allies – the UK and even more so, the US – used this newfound power of mass psychology for something better. Rather than focus the masses on world domination, they focused the masses on consumption. Advertising, branding, and admonitions to “go shopping” keep us all focused on the importance of making and spending more money. This way, the masses are still manipulated but rather benignly. I’m almost positive that’s better.

Obama and McCain Unqualified to be CEO?

Carly Fiorina, former CEO of an $80 billion company, said that the presidential and vice presidential candidates competing to run a $3 trillion federal budget would not be qualified to be CEO. (Curiously, the market seems to have had a similar opinion about Fiorina. During her tenure, HP’s market value dropped in half. After she left in 2005, the stock rose by 224%)

My initial reaction to this was scorn for Fiorina. Here, I thought, is another CEO who actually believes her own compensation package. But then I woke up this morning to news of the bailout of AIG – something that will cost taxpayers $85 billion. It is true, I thought. Any president who could nod his head at that kind of a bill would not be able to run an $80 billion a year company.

Time to Draft Spitzer?

About 18 months ago, I predicted that McCain would be president from 2008 to 2012 and that Elliot Spitzer would be president in the 8 years after, until 2020.

In spite of the obvious problems he had governing his penis, I still like that idea. As former attorney general of New York, no one did more to go after bad financial institutions and rogues and no one seemed to better understand the importance of getting financial regulation right. As the financial industry continues to make a giant sucking sound that threatens to bring the rest of the economy down with it, maybe voters will come to appreciate the importance of this kind of understanding in a politician.

Maybe some day expertise on financial regulation will be as valued as experience as a sports broadcaster.

Don't Games Usually Have Rules?

Those Republicans hate regulation. That hatred seems a little awkward to explain now that financial markets are teetering on the brink of economic catastrophe.

Conservatives more than anyone pointed out that it is ridiculous to have the referees play the game when they railed against socialist government that nationalized companies and industries. That is fine and good. But it is nearly as foolish to play a game with no referees.

McCain recently said that greed on Wall Street is the problem at the heart of the current financial market woes. That is just foolish. Greed is always there. We all want higher returns. People don’t cheat because they want to win – everyone wants to win but not everyone cheats. The problem on Wall Street is one of oversight and regulation. It should be simple: we don’t let the referees play and we don’t leave refereeing to the players. Anyone fan can tell you that competition is enhanced by good rules and fair officials. Enhanced, that is, unless you like it when your golf tournaments look like ultimate fighting matches.

In Praise of Confident Incompetence

Dahlia Lithwick, who normally makes a great deal of sense, is advocating that Sarah Palin be a Supreme Court justice.

Sarah has a 6 year degree – a BA in broadcast journalism. Someone who has not even studied law is going to be a good Supreme Court judge? Does this mean that someone with an AA would do well in a lesser position, serving on a State Supreme Court for instance? (Why are we so enamored of inexperience and a lack of education in the arena of politics? How much bumbling incompetence do we need before it begins to lose its charm and appeal to the average American voter? Apparently more than 8 years, he says,to himself.) I guess as long as a person is confident, it really doesn't matter how unprepared they are.

Some days I wonder if I’m the only person in the U.S. who doesn’t know where to find hallucinogenics on short notice.