Tag Archives: economics

Refection’s ~ Communications in an Age of Dissent – Part the First

This post is an effort to “talk through” a recent conversation I had with a very dear friend regarding the outcome of the election. Because I sincerely respect this person, and his sources, it was necessary for me to re-examine some of my assumptions; to seek some point of view that would allow me to see “the other side.” This was heavy lifting, folks, but if I wanted my friend to see my point of view, I felt it incumbent on me to try to see his. We agreed, in the end, to sit down with a bottle of something or other in four years’ time and sort through our expectations to see what was learned. Yes, we are still friends. For now, here is my perspective on where we are in our country’s history. This first part is my internal conversation to struggle through some understanding of the other side.

George Bernard Shaw is quoted as saying, “The single biggest problem in communication is the illusion that it has taken place.”

waves-circles

Communicating can only occur when we break out of the circles of our own thoughts and accept that an opposing view may have merit – may even at its root share something of our own vision.

As this country, and the world, has struggled through the past year or two, many believed that if we just spoke louder, longer, and with more passion, the other side would understand. They would “get it.” Consequently, the rhetoric escalated, and in a drunken rampage we said things to each other we would have never considered appropriate or truthful in years past. For some overwhelming reason, many supported the winner because he “said it like it is.” But did he? Are we really a nation of people who vehemently hate our neighbors, or, for that matter, anyone who is not white, heterosexual, in perfect mental and physical health, Christian, and English speaking? Really?

There were also many who just walked away, and while denouncing what the machinery of democracy had become, pushed the process of deterioration further by refusing to participate. As mentioned in my previous blog, as a nation we started and ended in a no-win contest. That is where the communication thing comes in. We didn’t. From the very start, we just didn’t.

When I view our current situation from this perspective I see why we are not communicating – we are not speaking the same language. At all. First there is the issue of cascade thinking. This is a process by which a person believes the content of a story because it fits with the person’s preconceived notions. No matter how bizarre or off the charts a “news article” might appear; if it said something horrible about the opposing side, it must be true. I saw one post on social media that said, even the fake news shows she’s evil. If it’s fake news then how can it contribute to an honest opinion? Where is the logic in that?

Putting aside our tendency to remain within our own thought-circle (scientifically, it is very hard work for our brains to do otherwise), if we are going to become one nation again, we need to learn how to communicate. How to express concerns in clear, well supported logic, to reach that place where we can emotionally agree, and find some middle path to success. We can no longer assume that our deepest passions are foregone conclusions that everyone should understand and support. Here, then, is my take on this past election cycle. Remember, the next one began on November 9. Choose well your forward path.

Putting aside the angry, protesting, and outright Supremacist voters, what would make a thinking, logical, being vote for what half of us saw as a misogynistic, racist, anti-LBGT, demeaning, lying, bombastic, ultra-privileged, and uber-rich white guy? (This is a small collection of sentiments I have seen in the past several months, I’ll try to be as direct when we get to “the other side”). Understanding that provides a rather interesting framework in which to see the events of the past month or so, and why none of it seems to phase those who contributed to putting this person in the Oval Office. Here is something of what I learned by doing my best to listen.

There are a number of people in the country who are quite tired of “business as usual.” I think that is actually something we can all agree on. Whoever we supported, we were looking for change. Even if we wanted to see more work in the social services, quality of life, and equal protection under the law departments, we knew that some changes were very necessary. Having Congress at war with the White House was just not getting the job done however that was defined. This was one of the driving forces behind the outsider run Mr. Trump made. He was not Beltway material. He did not care (at least that is the notion he has projected) what agreements may or may not be in place – in his opinion, American business was the single most important criteria by which we should develop both internal and external rules and relationships. Well, in some ways we all feel that way. The health of our economy, whatever our end goals, is an important factor. How we get there is where we diverge in opinion.

Then there is the businessman thing. Long ago I learned that the only calculation that really counts in the business arena is that what comes in is greater than that which goes out, no matter how many zeros are attached. I find it difficult to conceive that a person who lost nearly a billion (at least on paper), and has a record of stiffing his vendors, could be considered successful. But, well, I’ve lost (for me) substantial sums in an effort to achieve goals, some of which might still pay out. I have an issue with stiffing people – whatever the reason. I have been informed, however, that the Trump organization does indeed hire persons of multi-cultural and multi-sexual identity and persuasion, and treats them well. The fact remains, he has built an empire that supports a privileged life-style, so when it comes to cash flow, he has it down.

We have a love-hate relationship with such success. Depending on our social status we may resent those who have amassed fortunes. There are successful people who devote large amounts of their fortunes to programs that support a better, more humane world. We seem to be more kind to the rich when they give something away. This does not appear to be the modus operandi of our current president-elect. Which is, again, one of the reasons so many voted for him. America was built on the Protestant work ethic, an ethic that demanded much of us, one that morphed into a “if you don’t work, you don’t eat” mind set. Except, that’s what happens in a communal setting as well. The cold reality is, if we insist that those who cannot contribute, or those who are doing their best for the very least, shouldn’t share something of the wealth of a nation, then we abandon the compassion that makes us human. No society can survive if it does not find a way to support those who are in need, or to ensure that those who are working do so at a rate that provides for the barest of necessities. If you are a Christian, you might check out some of the writings of the prophets from the Old Testament.

That leads us to the reason that all of the appointments, videos, tweats, and blusterings that half of us deem so offensive seem not to even phase our fellow countrymen. They wanted to break the back of “business as usual.” They want to see people who would think outside of the box, to look at foreign policy with a different eye, one that would see the nation as a producer of wealth and not a distributor of wealth. They see this man as someone who seeks advice from people who have experience from the outside of government – remember, they wanted an outsider and they expect him to find outsiders to advise him. These are people who have built successful empires here and abroad. Whatever we sort out about conflicts of interest over the next several months, or years, those who voted for him see a person who has experience in the world developing profitable relationships – not necessarily diplomat ones. When viewed from this perspective, I can almost see why they are complacent on so many other issues. They just see a different “bigger picture.”

These are a few of the things that I learned by listening. It does not mean I agree, or that I am happy with the outcome. What I do have is a clearer picture of how to approach those who are willing to have a conversation, who are willing to do that thing they so wanted to see – think outside the box. Next, I’ll try to put my thoughts in order to explain what I see as the motivations of the other half of the country.

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Reflections ~ How we think.

This is an exploring post. I have only just begun to read the things necessary to build these concepts in my own mind, but I so wanted to share what I have found. So, here we be in our own quiet alcove, discussing the workings of the mind, again. These are really important ideas, so join me for the hunt – a hunt for how we think and why it matters.

In the process of finishing my manuscript on the Book of Job, I have been researching what makes us tick. Why do we perceive an event, a person, a situation as we do? What is it that makes us believe that we are accurate in our assumptions and interpretations? Is there a way that we can test those assumptions and conclusions while still believing that we are right – and, perhaps, most of the rest of the world is wrong?

I have recently started a hashtag on Facebook, #BreakTheBox. I did this because I like to challenge commonly held presumptions. Not always because I think they are wrong, in whole or in part, but because I firmly believe that whatever you believe, you should know why you believe. That is very hard work – and here is the reason why.

Thnking

I am currently reading Thinking, Fast and Slow, by Daniel Kahneman. Professor Kahneman won the Nobel Prize for Economics in 2002 for his work on decision making. Along with his research partner, Amos Tversky, he revolutionized what we know about how we think, how we make decisions. Professor Tversky would have shared the prize, if he had still been living.

Here are the basics. Our perceptions of subconscious and conscious thought go far deeper than what we may expect. Kahneman uses terms fairly common in the field; System 1 (the subconscious) and System 2 (the conscious). How these two systems interact is the basis of everything we do and think – everything. That makes it critical to understand that interaction if you truly want to be the master of your fate, the owner of your mind.

System 1 is the quick thinker. By accumulating all of the information that you are in contact with, the things your senses bring to you, and sorting through that sea of data to arrive at – what makes you comfortable, what feels right. As you can see, this is the basis of our intuitive thought. It is an efficient way for our brains to work because it happens quickly and, for the most part, the reactions are based on past experience. It also allows us to make seemingly instantaneous decisions for our own safety or well-being – such as flight or fight choices.

This is also, at times, an unreliable decision-making process. It can be influenced by such things as presentation of the data (was it in a clear font with soothing colors and using grammar in the comfort zone of the reader). Or, how often the data, or something similar, is encountered. Such as a surprise meeting in one location being less surprising the second time in a different location. System 1 is all about averaging things out and making quick decisions based on, well, gut.

Although not strictly statistical in its processes, for the sake of efficiency, this System 1 also relies on a short-hand version of the data. For instance, in the drafting of a bell curve (natural distribution), once the information regarding probability is acquired, our mind locks on to the higher probabilities and ignores the possibilities. So, once we determine that the incarceration rate of young black men in American is statically higher than whites, Asians or Hispanics, we assume that ALL young black men are prison candidates. Consequently, when events happen in the conscious world, our decisions are guided by a presumption made on incomplete data. This becomes an even stronger influence as we gravitate to information that reinforces what we already know, beliefs and interpretations that are within our comfort zone.

Kahneman describes System 1 as highly associative. It links bits of data to previous information and then builds on that link, whether or not there is a clear correlation. In one example he mentions a test question asking the reader if a man who is described as quiet, introspective, and a loner would most likely be a farmer or a librarian. Statistically, there is an overwhelming response that this is a librarian. Here’s the catch. In my mind it was the farmer. Why? I know both, but I am as familiar with farmers as I am with librarians and so I had a wider associative memory on which to base my assessment. Statistically, there are more farmers than librarians meaning that the probability is higher that the person described is a farmer. That, however, is something that System 2 must discover.

This is not a condemnation of our subconscious mind. This is how our minds are built and it works this way to be efficient with the resources at hand. Here, then, is the catch. Unless you want to be guided by your over-reactive, intuitive subconscious, you need to more actively pursue thinking with System 2. This takes work and our minds are notoriously lazy — they like to find the easy way out. And it does not matter how intelligent the thinker is. There are also physiological reasons why our conscious minds cannot maintain a constant level of focused attention. What, then, is the answer?

We can engage in reprogramming our subconscious. This doesn’t mean we have to question each and every thought and impulse. What it does mean is that we should actively pursue the verification of the associative influence on which our decisions are made. When we hear something that seems right, we should try to understand why this is so. Have we actually thought about the logical end result of our decision or association? How much dis-information is shared on social networks without verification because the piece at least sounds like what the person wants to hear?

To give you food for thought, I leave you with this:

Roses are flowers.
Some flowers fade quickly.
Therefore some roses fade quickly.

Well, maybe, maybe not… Some roses might fade quickly, but the presumptions detailed here which led to that conclusion are not directly related; and therefore, not a basis to decide. You see, the fading flowers might not be roses…

Rose dl

Photo Credit: JM Randolph, WANA Commons, Flickr

#BreakTheBox

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30 Cubed – The Analyst

header slim

Fixing it. Sometimes the lure of a chance to, well, do it over and do it right is intoxicating. The human curiosity of how we might make the math come alive in the “real” world taunts us. Surely the math can’t lie. If time has no arrow in the equations, then why do we still see an arrow?

Given the current state of affairs in my life, time travel was beginning to look more than desirable; it was looking downright necessary. My job was out the window, my wife had shown me the door, and most of the friends I had were avoiding me in case I was contagious. And the thing was that I knew when things went bad. Well let’s face it, a lot of people knew, when but I seriously suspected it before it all came crashing down. I grumbled about it almost daily. My wife was sick of it. Maybe that’s why she kicked me out. “I told you so,” are not words that endear you to people or create deep bonds.

Aw, see? That’s where the problem was, bonds. One of the things that any mathematical or physics theoretical specialist will tell you is to not apply the math unless the entire scenario fits. Some seriously damaged soul had taken a mathematical algorithm that defined how bodies of a certain mass react and applied it to bonds. If bonds have any mass it can only be defined by the amount of puffery used to sell the things. Why, then were we using the math of gravity (as we knew it) to define bond markets? It was insane and it kept me up at night.

It’s taken me months of research, quiet investigation and not a few bribes. I have, however, found someone that is sure they have a functioning pathway to the past. They were quietly looking for volunteers because one person had to stay in the present while one went into the past. I was game. And I knew just where I wanted to go.

—————————–

Wall Street in the late 1990s was on fire. There was a perception in the country that things were really moving up. I knew then and I know now that the real numbers were far gloomier. Expendable income in the majority of households had not risen in a decade or more. But people believed. And when they believed they spent money. I was there to find the one person that would change the course of the future. The MBA who thought it was a good idea to mix physics with finance. Surely I could explain the facts of life and economics over a nice Manhattan lunch and return to a saner world, a world where I still had a job.

His name was not widely known. A student in a university taking an MBA with a serious interest in economics. He fell in love with math. He had been looking for a way to determine future yield on bond markets. Something reliable in an emotion driven market. (You didn’t really think that market investments were driven by logic, now did you)?

I had to convince this person that the idea he was about to take to Wall Street was the worst economic decision the world had seen since the crash. I found him in an off-campus diner, chatting with another student. Placing myself to hear the conversation I realized that this was the physics student that would drive him off course. Friendly as I could be I introduced myself as a visiting professor of economics. During our lunch I did my best to point out the pit falls of combining the fields in the manner they were attempting. Believing I had made my point I took my leave and found my way back to the portal.

I found things as they should be in the lab. My guide, however, was nowhere to be seen. Perhaps I didn’t return exactly as expected, so I went in search of information. Walking down the hall I saw a television on in what appeared to be a break room. Several people were watching the program on the screen and I stepped in to listen. There was the student, now a few years older and he appeared to be under arrest. Moving closer I heard the newscaster rattle off some statistics that only made sense in one context. The camera pulled out and on the building behind him an all too familiar logo came into focus. Oh, he had learned all right. When I suggested his formula would cause havoc in the bond market he simply switched tactics and sold his paper, and his life to Enron. I had arrived too early. And most of it was going to happen again.

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Book Review ~ Times That Try Our Hearts and Minds

Book Review ~ Frederic Bastiat A Man Alone by George Charles Roche III, can be found for under $10.00

AmanaloneAs is my habit I scanned the web for book reviews on my subject before beginning to write my own.  Sadly, I didn’t find much of anything.  I find it sad because the subject of the book, Frederic Bastiat, was a brilliant economist and political theorist that served as a statesman during part of the upheaval occurring in France after its many revolutions.  Yes, there was more than one French revolution.  I see it’s time for a brief history lesson.

The first French Revolution began in 1789 and was initiated to bump the Bourbon’s off the throne and put the rule in the hands of the people.  It managed to do little more than create general chaos which set the stage for a dictator, a Mr. Napoleon Bonaparte.  By 1799 he was well on his way to becoming a new empirical force.  By 1815, the life of the average Frenchman had changed little.  After the Treaty of Paris ended the Napoleonic rule, the French were returned to monarchial rule under another Bourbon, Louis XVIII, brother to the long beheaded king.  Back to privileges of property and class and the vast majority of French (70% were peasants) saw little difference between the oppression of the monarchs or that of the “republic.”

Next the French were subjected to the rule of Charles X who started off his “constitutional monarchy” by promoting the “divine right of kings.”  He established laws that returned property to the upper classes and made attempts at controlling the press.  These actions were only the start of his campaign to regain a firm grip on the country.  The French were getting a bit tired of these battles for control of their tax dollars.  In the legislative elections of 1830 the king was repudiated.  He promptly attempted to dissolve the legislature and make any discussion regarding the authority of the crown illegal.  That was the tipping point and the king was invited to leave the country.  He did so.

Enter stage right a young man by the name of Alexis de Tocqueville who had studied the French series of revolutions and had spent time in the new American country.  He felt that the basis of the whole contest which had raged throughout the land for over 41 years was basically a battle between France’s nobility and her middle class.

This then was the beginning of another cycle of struggle for France and the revolution of 1830 placed a common citizen at the head of a “constitutional monarchy.” Looking for a “citizen king,” Lafayette (as the interim advisor) chose Louis Philippe.  This man was a cousin of the Bourbons and a member of the Orleans family.  He had royal credentials but was willing to serve as a servant king, dropping robes and froufrou and becoming a monarch “by will of the people.”

Eventually, the whole arrangement was nothing more than a family joke.  No one thought highly of “merchants” running amuck in the palace and the “king” certainly got tired of mouthing the words to the revolutionary theme.

This is the political morass that nurtured Bastiat.  In the early 1830s he traveled extensively and studied the economic impact on the European states as tariffs and controlling legislation took effect.  In 1844 he visited Paris as he was attempting to publish a work on Richard Cobden.  Cobden was an English philosopher that believed in the perfectibility of human nature and in the viability of a free trade system.  Bastiat, as part of a French free trade movement, submitted his work to Journal des economists. Peer review indicated a clear and quite brilliant mind in the fields economics and political theory.  It was obvious to them that the author has a firm grasp on the country’s economic issues.  After that, getting published was not a problem and he poured out articles for additional French journals and a book on Cobden.

From that point on Bastiat’s career was a public one.  Over the next several years he grew in importance in the French Free Trade movement and became the director of the free trade association.  This then sets the stage for the era of his greatest contributions.  He also became a member of the National Assembly during some of the most turbulent years of French history.  In a search for stability, leadership in the Assembly chose to try a French form of socialism.  A new leader stepped into position in the Assembly, Lamartine.

Lamartine chose to support the working force in the streets of France and try to push something through the Assembly that would finance some kind of job improvement.  He wanted the Assembly to finance a national exposition which would employ many people and give them money to spend, thus giving the economy a boost.  Bastiat was terrified.  He fought back against every measure to further impoverish the country and to provide support to the people without actual output.  The socialist elements in the Assembly, however, were determined to employ every Frenchman.  Thus something called the “National Workshops” was established based on the premise that there was a “right to employment.”

In 1848 France again suffered revolution as the failing economy demanded that the Assembly “do something” to save the country from bankruptcy.  That something was to disband the now powerful National Workshops.  Instant revolution and the French again took to the streets and members of the Assembly faced every bit as much danger as the monarchy of old.  The country and the Assembly were saved by no less than the French countrymen.  From the book, “Men of every class, armed in every conceivable manner, these Frenchmen knew that their country could not stand another triumph of the Parisian mobs.”

And still the struggle continued.  Those who would wish to allow the economy to grow on production, and those who would use government to generate the movement of funds to support the starving and failing middle class.

This book is a well written history of the economic and political atmosphere of the time.  The prose is interspersed with writings of Bastiat and his compatriots as they argued for their beliefs and their convictions.  It is every bit as applicable today as it was then.  If you are interested in history, and if you would like a better understanding of the conflicting economic and political ideologies at war in our country today, this is a must read.

I leave you with one of my favorite quotes from Assemblyman Bastiat:

“We see then, that in almost all of the important actions of life we must respect men’s free will, defer to their own good judgment, to that inner light that God has given them to use, and beyond this to let the law of responsibility take its course. “

The law of responsibility – interesting concept, don’t you think?  Power corrupts and absolute power corrupts absolutely whether that power is held in the hand of one or many.  So, perhaps, government is a search for some balance that works, if not perfectly, at least effectively.  By the way, the man in the White House does not have absolute power; he shares it with two other branches of government, the legislative and the judicial.  If you are terribly upset with the direction the country is going, or if you see things that you believe might help, I suggest you look at the voting records of the legislature and the decisions of the judiciary every bit as much as you look to the oval office.

Feedback is a good thing and I love to hear from you wherever you post your comments!

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