Tag Archives: capitalism

So tell me more about this economic recovery thing

Forbes magazine, both in paper and on-line, has always struck me as one of the good places for intelligent people to explore economics and investing ideas.  John Mauldin, shown below, has a nice blog piece entitled:  Impossible Things And Our Economic Recovery. This is well worth reading and is presumably the first of a group of pieces he will write on the topic.  I encourage you to read it/them.

I responded with the following comment which may have a delay in being posted or may not appear at all.  Who knows?  I just write these things.  Forbes controls the “publication,” at least on their site.  So here’s the comment:

Well done, John. It’s all true, unfortunately. That so few people understand basic economics and continue to vote for the status quo is sad.

As you say, an increase in GDP depends upon an increase in (working age) population and/or workforce productivity. Back in 1999 Harry Dent’s book The Roaring 2000s Investor described the international demographic and technology trends we could expect to see play out in the 2000s. Country by country, I’d say he did pretty well with it. Dent’s book is now too old to be on the World Future Society’s current book list. Those folks who never read Dent’s book aren’t reading the rest of the WFS’s book list, either. (Here’s where we mumble something about those who do not study history, or the future in this case, are condemned to relive it, or play it out, or mumble mumble mumble…) Dent’s arguments, much like yours, rely on inescapable economic concepts.

The US has “outsourced” most of our manufacturing jobs. Big mistake. The US has created a pink puffy cloud of financial nonsense to spur personal consumption. Big mistake. The political structure of the US has enabled powerful, wealthy individuals to become ever more so. Big mistake. Increasing disparity in wealth translates into increasing political partisanship. Big mistake. The founding fathers are spinning in their graves.

Don’t you wonder what happens when somebody brings a war to our soil? Whoops, they already did that. I meant to pose the question: what happens when we can no longer manufacture anything of value? What happens when we don’t or can’t produce steel or silicon or the basic components of our modern lives? Maybe vertical integration isn’t always the best path for a corporation, but it has a lot of strategic safety for a country. It isn’t likely the US government will try to reverse our decreasing ability to manufacture. We are far along on our way to becoming a farming and service economy. That will not permit us, ultimately, to pay off our consumption debts. And if the rest of the world becomes angry because they believe the US is responsible for economic problems faced everywhere today, what leverage do these other countries have against us? A lot. Financially and production-wise.

The US has the benefit of observing economic laboratories around the world. Some have worked better than others. But the results of those lab experiments are not readily visible to the average American. Our media would rather produce cheap junk reality shows. One thing the world laboratory has proven is that universal healthcare is a good economic foundation for a country. But that doesn’t play out well with the power and wealth entrenched in the USA. The US used to have a small wealthy class, a small poor class, and a large middle class.  The middle has been crushed over the last 10 to 20 years. Now .1% of the US population controls some 20% of the country’s wealth. Big mistake.

I love the French. Their food, their wine, their art, their language, their French Revolution. Watching the Enron, Adelphia, Countrywide, etc. stories unfold, who wouldn’t want to see a guillotine factored into the proceedings?

Let’s just say it establishes a threshold beyond which tyranny is unacceptable to a rising middle class. Whoops, the US middle class is not rising and it lacks leadership to establish significant changes. So it goes. The US government reflects the best interests of the wealthiest citizens. Capitalism and democracy have lead to politicians being hired by the wealthy and their corporations in return for the campaign funds that get them elected. Long term big mistake. Looking forward to see if you have any ideas how we can dig ourselves out of this hole!

It Takes a Village and an English Teacher

I just finished reading Alexander McCall Smith’s book Tea Time for the Traditionally Built. I see on Amazon that he already has another book in that series (No. 1 Ladies’ Detective Agency) out: The Double Comfort Safari Club, which I look forward to reading. I dearly love these books about Botswana. The main characters are good people trying to do their best in a difficult world. As such they encounter good and not-so-good people and challenging situations, not unlike what you encounter yourself. In these books everything eventually works out, good is rewarded, evil punished, and we close the book feeling good about our shared humanity.

By the time I reached the middle of this particular book, I was thinking about how one could use this book in teaching a high school English class. There was a time when I wanted to, and expected to, be an English teacher. Life is what happens while you are making other plans, as John Lennon said. I remember as a child, teenager maybe, realizing to the pit of my stomach, that I had only one lifetime and that seemed likely too short to do all the things I (or anyone else) might like to do. It seemed to me that reading books would give me a condensed experience of other lives I would not be able to, or have time to, live. I have always judged a novel as “good” if I felt it expanded my reach beyond my daily world in some dimension. Suffice it to say I tend to look at just about everything through several different lenses. I think we all do that as time goes by. And that’s a good thing.

Garrison Keillor plays with the tremendous value of being an English major. And he’s right, of course. Not only does an English major learn to communicate clearly, but they learn to observe, predict, and not only experience the fictional world, but examine it as it is experienced. That is good practice for leading a closely examined life, by the way. (Assuming you agree with Socrates that an examined life is worthwhile and not with Kurt Vonnegut who fears it might a clunker, also.) So the function of an English teacher, and what I wanted so much to do, is to teach young people to communicate in written and verbal modes, recognizing the way the human mind is structured to perceive things. Equally valuable and even more fun is reading books with a class. We tell young people that you can’t write well if you don’t read a lot. Vocabulary and sentence structure are learned through broad exposure to reading.

Cultural and social concepts are explored in reading, also. I fear for our world that so much of today’s media is worthless garbage. But then again, that thought has been around since TV first squatted in our living rooms. TV and video games have huge impacts on our children, especially where both parents are working. The impact is largely driven by commercial interests which do not have either the child’s or the society’s interests at heart. (And that’s why Sesame Street was shown on PBS, not on a commercial station.)

The fun in teaching a good novel is that it provides the opportunity to discuss the values, assumptions, and judgments in the story. The opportunity is there for an English teacher to guide students to think about cultural and social norms: what they are, why they are, what results from such norms being accepted or rejected. A novel depends on conflict. Life is full of conflict, real and imagined. Learning to recognize conflict, understand it, and see that we have options when faced with conflict are important things for young people to learn.

I started dropping bookmarks into the story at points where I could see an opportunity to confront a lesson with a class full of hormonal teenagers.  Let me share a few with you.  From Chapter 11:

Mma Ramotswe sensed that Mma Tafa was glad of the company. She knew that it was not always easy for women in such places, where the easy companionship of the village had been replaced by the comparative anonymity of the town. Such a woman might spend much of the day without any contact with other women — an unnatural state of affairs, in Mma Ramotswe’s view. We are born to talk to other people, she thought; we are born to be sociable and to sit together with others in the shade of an acacia tree and talk about things that happened the day before.  We were not born to sit in kitchens by ourselves, with nobody to chat to.

This could be an opportunity to ask whether Mma Ramotswe, the detective, is right or not. Do they agree or not? Does being sociable mean something different today in their world than they might imagine it meant to their parents and grandparents? What is it about human social behavior that is nourishing to the human spirit?

A few pages further on, as the two women are talking:

“So it is the job of women — and that means you and me, Mma — to find out what our husbands really want to do, and then to tell them about it. That is our job, I think, Mma.”

Mma Ramotswe wondered about Mr. J.L.B. Matekone. He was a mild man — famously so — and she had never heard him speak about the things that he wanted to do. Did he have ambitions? He must at some time have wanted to have his own garage, and he must have worked towards the achieving of that goal. Then he had wanted to marry, and had proposed — eventually — which suggested that he must have nursed matrimonial ambitions. But apart from that, she wondered what unfulfilled desires lurked in his breast. Did he want to learn to fly a plane, as the owner of another garage had done? She thought not. He had been terrified on that occasion when Mma Potokwane had lined him up to do a charity parachute jump, and so it was unlikely that he wanted anything to do with aeroplanes. Did he want to learn to cook? Again she thought not; Mr. J.L.B. Matekoni had shown no interest in doing anything in the kitchen. Or did he want to go somewhere, perhaps to Namibia, to the sands and dunes of the coast down there, to the sea itself? He had never spoken of that.

The thought of Mr. J.L.B. Matekoni nursing secret, unfulfilled ambitions saddened Mma Ramotswe, as did the thought of people wanting something very much indeed and not getting the thing they yearned for.  When we dismiss or deny the hopes of others, she thought, we forget that they, like us, have only one chance in life.

How much this differs from the modern media experience of being able to restart a video game after “dying”, or replaying a favorite TV show, or seeing a favorite actor who dies in one show resurrected in another. The fragility of human life and its ambitions, happiness and unhappiness are worth discussing. It is valuable to bring such matters to conscious discussion with young people. Otherwise the lessons of our modern culture mostly downplay the importance of these ancient human truths. Basic human truths rarely have commercial value. And commercial value is what drives our media. Even NPR must appeal to its audience enough to stay in business. (Awareness of commercialization and how marketing drives consumption is something that is taught, for the most part, only in English classes at the high school level.)

There’s an old saying about plays and movies, “If you want to send a message, use Western Union.” We know it’s an OLD saying because it’s all about telegraphs, but it is also about direct and indirect communication, which is also worth discussing with young people. So many lessons, so little time. A paragraph in Chapter 14 would be fun to discuss:

She returned his glance. A year ago she would never have imagined that either of the young men — Charlie or Fanwell — would understand such feelings. They liked speed and noise and loud music; they liked talking about girls and bars and football teams. Now it was different, and she realised how easy it is to misjudge the young, to imagine that they share none of the more complex emotions that shape our lives as we grow older. Well, they do, she said to herself; they have those feelings too, and suddenly they become capable of seeing them in others.

What a great opportunity to have a class write about a time when they felt they suddenly understood something new or to discuss how something might look different to a young person than to an older person.

When I was young I did a few weeks of student teaching in a high school, thinking I would become a teacher. I remember talking with the class about something and how their parents were once their age, too. We kept exploring that idea for a few minutes and I could absolutely see a wave of understanding wash over the whole class. Something in their eyes, their whole expressions just changed. They had a thought they had never had before. For a moment they recognized that their parents really, honest to God, were their age once. They had heard that statement many times, I’m sure, but never connected with it. What a rich experience for both students and teacher!

I don’t want to give away the story line, but there are a couple instances where the detective, a traditionally built woman, describes how she believes she can always trust the truth and observations of small children. That would be fun to explore with young people who are old enough to have opinions on the matter themselves.

HBO and the BBC have done a TV series based on these beautiful stories. Although I haven’t seen the videos and will probably prefer the books when I eventually do see them, I expect that video is the Classic Comics of the 21st Century. The story might be there, but I wonder about the lessons. An English teacher could help transmit awareness and cultural tradition, regardless of the media under consideration. It does take a village to raise a child, to transmit the cultural norms of the society. On the other hand, it takes a great teacher to have a lifelong impact on a person. English teachers are in a rare position to do that.

While we’re discussing rare teachers who impart life lessons to their classes, kindly allow me to introduce you to Mrs. Elvoid “Ellie” Mayers who taught History in the Rockland, Massachusetts school system for many years. She is currently the chairman of the Norwell Town Democratic Committee. And she is exactly the sort of person you would want to transmit the best of our cultural values to your children. If you watch these flash videos done by some of her former students, you can see the obvious love and respect for her along with a sense of fun. And here’s Ellie at a more serious moment with Massachusetts Governor Deval Patrick:

I continue to believe that the Village, electronic and otherwise, presents a set of social norms to our young people based on consumption and capitalism. A good teacher, on the other hand, can guide young people to examples of our culture that explore not just the best of human nature but the richness of its complexity. An English teacher’s tools include great novels. A History teacher’s tools are pretty impressive, too. Just saying.

Thoughts on how Economics is like Biology

I’ve been doing a lot of reading and rereading of economics books as I follow the course of  the current US recession.   Like everyone else,  I’m thinking about how we got here and how the rest of the world got where they are today.   The more I learn,  the less sure I feel about anything.   Having said that,  the one branch of science that gives me comfort is psychology… what we know about how the human mind works,  alone and in groups.

Rather than continuing to work out that train of thought any further at the moment,  a timely article appeared in last Sunday’s Boston Globe: http://tinyurl.com/qsmke9

Interesting article titled “Why Capitalism Fails” and interesting comments.    I’ve been reading the John C. Bogle (founder of Vanguard) 2009 book ENOUGH this weekend.    (Highly recommended)    Bogle also mentions Hyman Minsky,  so this was a very timely article for me.   Communism,  socialism,  and capitalism are all interesting ideas,  each founded on flawed views of human nature as I see it.    For the most part people are good and well-meaning.    But there’s always going to be a Madoff,  a Ponzi,  a management team like Enron or AIG,  profiteers like Merrill Lynch or Putnam Funds,  and so on.

Government is not an economic system,  it is a cooperative means of achieving safety and stability for people who have banded together in a common geography.    As such, ours in the US hasn’t been working all that well lately.    It would appear that some sort of capitalistic system is,  overall,  better suited to achieve human advances,  given human nature.    (For example:  Humans are competitive.  Humans enjoy advancing their own interests and those of their friends and family. )  But that capitalistic system needs a lot of regulation and oversight.    There is an unholy alliance between capitalism and democracy revolving around money and elections.    The US founding fathers recognized that more than we do today,  because they actually discussed and understood the economy and politics of their day.   Our current citizens clearly do not.  Life is very complex today and that complexity is not taught in schools nor is it “covered” in the media.  The media are complicit in the problem.

Economics is a lot like biology in that everywhere you look, an economic niche is filled.    At any given snapshot in time,  the economic system is what it is.    When the system is threatened,  those who are doing well will fight like crazy to keep it as is.    Without enough enforced regulation some people will crowd out more than their share of the economy.   That is what has happened.

As a country we need to rethink the nature of our economy, our industry, our commerce, and our financial system.    If a system costs more than it contributes in benefits to the society it needs serious modification or at least regulation.    Part of me fears there’s a fat chance that’ll happen with the “right wing” having captured the market on fear and mistrust to keep a stranglehold on the USA.    Part of me hopes that our government can develop a bipartisan regulation of our financial system.  I want my country back.

If you read this, please share your thoughts.  Thanks.

(New title in response to Lin Dolin!)