Monday, April 26, 2010

Adrift in the parkways of our minds?

Not far from where I write this is a very nice park, a true urban oasis: one of those elongated greenbelts that, together with the sweeping peripheral roads on either side, particularly lends itself to the description "parkway." For the past quarter-century, the park has been inhabited by a gentleman named Earl. It follows that this gentleman, now nearing 70, bears the whimsical/romantic label "Earl of the Parkway." Earl's exploits have been much-chronicled, such that he is today something of a folk hero, albeit a melancholic one, among those who live in areas adjacent to the park.

Strictly speaking, Earl doesn't have to live in the park. He has options. Many would thus say he chooses to live there. (Or, if we prefer not to use terminology that evokes issues of free will vs. determinism, we could posit simply and neutrally that Earl continues to live there,
regardless of whether alternatives objectively exist.) You might say that based on that decision alone, Earl is, ipso facto, nuts. And if a man is nuts, then you can't expect him to avoid doing the things that nutty people do. Things like, say, live in parks. The reasoning is circular but apt.

Therefore, it would seem that it falls to those of us who aren't nuts to protect Earl from himself, if we possibly can. At least we must try. Many locals bring food, clothes, etc., to the monument that generally serves as Earl's home base.

By now you know where I'm going with this. T
here are millions of incipient Earls out there. By that, I don't just mean that there are millions of people on the verge of homelessness, though that is certainly true nowadays. I mean that there are millions of people, perhaps tens of millions, perhaps more, who are equally trapped by who and what they are.* They are all a little nuts, stumbling through life as best they can, hostage to their flaws and foibles, and standing far closer than they'd ever admit to the precipice of utter self-destruction.

Is it not up to the rest of usthose of us who, relatively speaking, "have our act together" and are better equipped for lifeto try to protect all these lesser Earls from themselves?

If not, tell me why not.

These are the kinds of things I think when I read the angry, tea-stained letters about how "health care isn't a basic human right!" and how "I shouldn't have to pay my hard-earned money to support some jagoff who's too lazy to work!" I know these aren't easy issues, but I can't help thinking: If a man is lazy...well, the man is lazy. Just as the barroom brawler constantly sabotages himself by getting caught up in barroom brawls. S
ome people aren't very good at negotiating life. Whatever they can do, even if it is legitimately their best, isn't good enough. They may not exactly be square pegs, but their existence unfolds as an unending struggle to find compartments in which they fit neatly. In any case, they're not going to do a very good job of looking out for themselves or their families. Doesn't someone have to?

As I see it, the ambitious, hard-driving person can no more choose to be lazy than the lazy good-for-nothing can choose to be ambitious and hard-driving. Though at opposite poles in the spectrum, they are, like Earl, equally ruled by their essential natures. Can they be changed? Can the slacker be taught to be more diligent about life? Perhaps he can. But until he changes, he's not there yet.

A final point. My mother-in-law, who lives with us these days, is quite short, so she frequently needs my help to reach things. As we didn't pick our respective heights,
she doesn't deserve criticism for being short; no more than I deserve praise for being 6-4. That doesn't change the bottom-line: I can reach things that she can't. So when she needs help, I help her.

Wouldn't it be cruel for me not to?

* And again, if we appraise this through a strictly deterministic lens, that description
"trapped by who and what we are"applies to each and every one of us.


SustainableFamilies said...

What a kind post, and how very at the central core of people aversion to offering social assistance.

roger o'keefe said...

My God Steve, please tell me this isn't an argument for looking at things like laziness as disabilities!

Steve Salerno said...

Roger: Res ipsa loquitur.

Cal said...

I didn't know you were 6'4"! I thought you looked fairly tall in the video clip of you being interviewed by Tucker Carlson, but you were sitting down of course.

Too bad you didn't like basketball. You probably would have been able to dunk.

Steve Salerno said...

Cal: A more comical sight you have never seen than me trying to bring a basketball up the court. (Almost as comical: me trying to shoot.)

Seraphim said...

I enthusiastically agree that we should take responsibility for those around us, helping directly and personally and generously, and organizing local and national efforts for the same purpose.

But since I want this to be done in the most effective way possible, to provide the most significant, genuine, lasting good to the most people possible, the LAST thing I would want to do is entrust such an effort to a government agency. It produces all the wrongs results.

It applies a one-size-fits-all approach to situations that are nuanced almost by definition.

It lends itself to be scammed by people who have developed the habit of working the system, while remaining inaccessible to the people who need it most but can't figure out how to navigate the nightmare of application forms, qualification requirements, and indifferent agency workers.

It relieves the general public of any sense of personal responsibility -- "Shouldn't someone be doing something about that?"

Most importantly, it extinguishes the fire of the people who are most motivated to help. Instead of being energized to help directly and to see the results of my help, I am demotivated when I see how my resources are taken by force and squandered in an inefficient bureaucracy.

So while I applaud your obvious kind intentions, I am somewhat surprised you don't see the sham potential in handing over responsibility for helping people to a faceless entity without any soul.

Steve Salerno said...

Seraph: These are very good points you make, and they serve as reminders of the pitfalls of emotion-based oversimplification. I'm not necessarily saying that I agree with you. I'm just saying that the issue clearly is broader and more complex than I drew it in my post.

roger o'keefe said...

To Seraphim, thank you for saying in much more persuasive detail what I tried to express solely through exasperation. All of your points are excellent and highly pertinent here. You don't anything by treating fully grownup people like perpetual children.

Stever Robbins said...

Seraphim: I guess I take issue with the premise that if something is run by the government, it's automatically poorly run. Or the implication that if something is run by the private sector, it must be well run.

I hear these statements all the time and have yet to hear anyone back them up with any hard data, other than choosing specifically-selected data points that support the general assertion, and then generalize from the hand-picked data to the foregone conclusion.

A very, very highly placed person with extremely intimate details of the health insurance industry told me that they purposely make their forms as confusing as they can legally get away with, because it gives them an excuse not to pay. They actually told me that flat out.

Perhaps you'll argue that that isn't incompetence; it's extremely competent, it just works against the social contract (not to mention the spirit of the legal contract the insurance company enters into with their customers).

But I'm not going to generalize from that person's comment to say "All private solutions are therefore malicious and should be regulated."

If anyone wants to claim anything about the relative efficiency of government versus private solutions, I'd like to see data backing up the assertion that clearly can apply to the specific area (e.g. healthcare or whatever) under debate.

Otherwise, it's just grand-sounding words that are every bit as much fluff as the opposite assertions. (That regulation is always the answer, etc.)

Anonymous said...

I've heard this argument alot, that if you help people you make them dependent and lazy. To me it's just a good excuse to do nothing. "Oh, I don't want to help you because I'm really doing you a favor, I'm making you more self-reliant, you'll see". What b.s. Let me translate that for you: "I got mine, now you go get yours".

I don't know how about all these arguments about how poorly the government does things. I do know that one thing the government can definitely do is act as a central agent for making sure something that needs doing gets done. We have to ask ourselves is it better to have something done imperfectly than to not have it done at all?

Seraphim said...

Stever: Perhaps I painted with too wide a brush. I do know of some local and state agencies that do their job effectively and efficiently. However, I can't think of a single example on the federal level (can you?). And even on the state and local level, the well-run agencies seem to be the exception rather than the rule. Filling out forms at the DMV or the public health services doesn't seem any easier than filling them out for a private company.

I'm not arguing that all private entities are well run. I do think that private agencies are generally better run that public ones, but as Dilbert will tell you they also suffer from over-bureaucratization.

It seems the most effective organizations are the ones that have global reach and scale but push implementation and accountability down to the most local scale possible. This applies both to government and to the private sector.

Yes, I agree, it would be great to have more reliable data to support the arguments on either side of this issue. Anyone know where to get such data?

I think a big part of the problem is corporatism AKA fascism: too many octopus arms locked in embrace between giant corporations and giant government agencies, colluding against the rights and freedoms of the individual. This has been a huge issue in health care since the early 1970s when the federal government started playing favorites in that industry. But there are obviously the same issues with the FDA, the military-industrial complex, the Fed, etc. etc. etc.

Seraphim said...

Anonymous wrote: "one thing the government can definitely do is act as a central agent for making sure something that needs doing gets done...."

When you're talking about poverty and mental illness and real life issues like that, it's not always clear what needs doing. Your statement seems to presume there is a clear universal answer. That's the problem with large-scale government solutions that can't bend to the nuanced needs of personal and local situations.

Does anyone really believe that Congress is capable of coming up with real, cost-effective, helpful solutions to the problems faced by "Earl of the Parkway" and people in his situation? Maybe local government could do something, but the U.S. Congress?

Stever Robbins said...

Seraphim: I truly don't know much about the performance metrics of the federal government, so I can't answer your question. I do believe that whether or not they're efficient, certain functions like regulating food and water quality can only be viably done at a federal level. In essence, I consider the role of government to be creating the playing field on which the free market can compete for solutions.

(For anyone who is knee-jerk against regulation, let me invite you to dinner, where we will prepare two meals. One of the dinners will be made entirely from food and water from countries with no quality regulations but vigorous capitalistic-style compensation systems [think China]. I'll eat the regulated meal and you get to eat the other one...)

For those who have taken game theory, I think the most important function of government is to shift incentives to deal with tragedy of the commons issues, which by definition are market failures. I seriously doubt that any politicians share my conception of their job.

Seraphim said...

Stever - Actually I think the EPA model for regulating water supply is pretty effective, but a big reason it is effective is that it delegates enforcement to the states. The EPA provides a minimum standard and basic guidelines, and the states can adapt to the local situation as needed.

But the FDA is another matter altogether, and is a perfect example of the abuses of corporatism to profiteer and to squash individual freedom. Executives move between FDA and corporate positions all the time, and there are clear examples of cronyism, such as FDA approval of GMO seeds and crops whose safety is in question; draconian regulations on local small producers of milk, eggs, meat, and vegetables, that are not applied to corporate farms (e.g., NAIS); and of course the FDA's role in fast-tracking the approval of drugs and vaccines for the sake of corporate profit rather than a genuine concern for public safety.

So: at that meal, let's both drink the same water, but you can have your government-approved "healthy" and "organic" foods, and I'll buy from the local farmer whose practices I have seen with my own eyes, eat the vegetables I've grown in my own garden, and buy other food products from sources I trust, rather than relying on a corporate profiteer wearing a government badge to tell me what I am allowed to eat. And while we're eating we can talk about ideas for educating the public on knowing where their food comes from. :-)

If any of that comes across as a "knee jerk reaction to regulation", then please read it again. :-)

By the way, I think all this is "on topic" -- hopefully the blog owner will agree -- since so many of these corporatist entities have been engaged in shamming the public for decades.

Stever Robbins said...

Seraphim: actually, I agree wholeheartedly with your assessment of the mixing of corporate and government influences vis-a-vis food production. I wasn't intending to hold up the FDA/food regulation as an example of efficiency or effectiveness, only as something that really has to happen at a global level and isn't amenable to market-based, for-profit solutions. (If it were amenable to for-profit solutions, the existence of Monsanto and the other agra-giants like would be sufficient to feed the world.)

I've thought for many years that so-called "business strategy" is nothing more than an attempt to subvert market mechanisms and win competitively without having to go to the trouble of producing the best product at the lowest price. I think most people's understanding of business and markets is pathetically SHAMmed by both corporate and government interests.

I have a dream, actually, of creating a fun, entertaining show that attempts to get behind some of the shenanigans and teach people to think critically about claims made by for-profit companies and the government.

weston said...


A lot of what you wrote didn't ring true for me but much of it revolves around opinion so I'll just address one that I consider a fact.

I have known many, many ambitious hard driving people who converted to laziness with little or no problem.

Right off the bat I think of one of the best litigators I ever saw who dropped everything after 15 years and now happily works as a retail clerk in a low stress dead end environment putting in as few hours as he can. He has no money but is extremely happy.

My own father grew up poor , eventually ran a multi million dollar company, retired at 50 and happily lived out his remaining 30 years with no hobbies and few friends, just hanging out in his condo watching t.v. and waiting for the early bird dinner at the local restaurant. Happy as a clam and lazy as hell after years of hard driving achievement.

Anonymous said...


As someone in the Nanny State of Britain, I have to agree with Roger and Seraphim because what we have here is exactly whta they have described - people who know how to work the system winning while those that really need help get left behind. We now have households where three generations have lived on benefits and the sad thing is that their fertility rates are higher then those that are higher up the economic ladder which means that in years to come we will be a nation incapable of looking after ourselves.

It beggars belief that in the US people are dying from hunger and curable diseases but we have the other extreme here too.

I just wonder what the healthy middle path is?


word verification - persiste!

Anonymous said...

This might sound bigoted but as someone who has worked in the system for a long time, there are certain groups of people who are probably lazier by nature so you can't give them added excuses to sit back and take the public tit. If you do that it will never stop, it will go on from generation to generation. That doesn't mean they're worse people, just lazier and need more of a push, the way I see it. You're not doing them or society any favors by holding their hand and doling out money. It calls for tough love, not the weepy overly sympathetic kind.

RevRon's Rants said...

Mechanics of providing assistance aside, I'm surprised that so many people who claim that the US is a Christian nation are so quick to revise his teachings in order to satisfy their own agendas. He didn't say "whatsoever you do unto the least of these - after verifying that they are deserving of your help - so you do unto me."

Abandoning those who genuinely need help because there are some who are capable but choose to game the system is literally throwing out the baby with the bath water. I'll have to agree with anon 5:49 on this one. Working toward fixing the system, eliminating the abusers, and helping those who truly need it is the only truly sensible - not to mention moral - thing to do.

Anonymous said...

I demand health care coverage that is just as good as any rich guy out there. I have never respected authority - it's just who I am. Stop signs and red lights don't apply to me. Laws, rules and oppressive regulations don't apply to me either. Don't even think about fining or jailing me - that would not be fair. I don't feel like paying my mortgage. I can't. But I demand to stay in this house. There should be no pain for my bad habits, decisions and lifestyle. I refuse to help myself. I can't help myself. What's the difference, anyway.

I am all about the here an now. I don't want to sacrifice for the future. I refuse to prepare for a future I might not experience. So take over my responsibilities: pay my bills; provide for my wants. All of them. Subsidize my refusal to provide for myself. I have always been this way - it is my natural state. I am not a parasite, I am a human and I demand to be treated with dignity.

I am the New American and I vote.

Steve Salerno said...

Anon 11:18: I like the way you did that. Very well put. Not saying I agree, but it's a compelling statement of the alternative position and I admire the execution.

roger o'keefe said...

Anon 11:18: Amen!

Stever Robbins said...

Anon 11:18. How do you feel about people who live off inherited wealth?

Anonymous said...

I was just about to post my comment when I read Stever's comment. I couldn't agree more, and I'm not just going to leave it at a rhetorical as he does. These people who sing the praises of rugged individualism, then let them turn in their trust funds and legacies and see what they can do from square one. LEt's let the clock start anew with each generation, since they didn't work any harder for it than the so-called welfare queen works for her handouts. And what about how the money is made? Please tell me I'm not supposed to admire scumbags like the guys at AIG or Goldmach Sachs or Countrywide Mortgage or all those other outfits that sent the economy into a tailspin while the executives were off on vacation eating beluga. Also on the subject of handouts, let's not forget the bailouts, tax breaks and all the other perks that accrue to corporate types.

This is such an asburd and elitist double standard that I wonder how people like Anon 11:18 can sleep at night.

Anonymous said...

Anon 11:18 here:

How do I sleep at night? On a mattress full of money (to borrow from TV's Don Draper). My money is made honestly; politicians and regulators don't help me. I don't game the system; I just do better than my competitors.

Stever - People who live off of inherited wealth - the Kennedy clan for instance - don't bother me. Generational wealthy types are the backbone of the charities and philanthropic foundations in this country, and they do a world of good.

For the record: as a solid capitalist, I am against corporate welfare queens; tax cheats; and bailouts. Nobody is "too big to fail" in my book. The fear of failure keeps many of us going, just as it did the pioneers 150 years ago. And I'm all for fining the crap out of BP for the mess in the Gulf of Mexico. Responsibility is paramount - personal and corporate. There is no reset button in life.

Personally, I give a ton of money (and a fair amount of time and talent) to charity even though I get no tax deduction in my income bracket. I have never had a trust fund - I started out lower-middle class - and neither will my children.

roger o'keefe said...

I can see the emotions underlying the other side but it irks me that so many bleeding heart types act as if I'm supposed to apologize for doing well in life. I played by the rules, did what was supposed to do, made sacrifices early so I could maybe relax a bit now, didn't spend money foolishly or borrow out the kazoo, and tried to take a wise, prudent path in all I did. I was responsible and hard-working and that made me a success. I'm supposed to feel bad about that now? Guilty?

IN a word, TOUGH.

Stever Robbins said...

Roger--who's trying to make you feel guilty? I don't see it. The only point I'm making is that if personal responsibility is the metric we're going to use for wealth distribution, then we need to be equally clear about people who happen to have money through no fault of their own. I'm a graduate of Harvard Business School. I know a lot of extraordinarily successful people, when measured by their net worth. Many of them worked very hard for that money. And many of them put in less work and effort than the laziest of the lazy, they just happened to be born to the right parents.

You may well be one of the people whose accomplishments are largely due to your own actions. That doesn't mean that you didn't have help or that you didn't rely on a multitrillion dollar infrastructure that enabled you to earn that money. Claiming that your successes are somehow divorced from the context in which you were born and live seems unrealistic.

Even Warren Buffet is very clear that the biggest factor in his success was being lucky enough to be born into a capitalistic, free market economy that was stable enough for him to go up the learning curve he did. He's very clear on how much of it was due to him and how much has been due to luck.

I'm also in reasonably good financial shape, and enjoying the fruits thereof. What I find rather fascinating, however, is that the bulk of my net worth can be traced back to lucky investments. The seven corporate products I've shipped and the value I've added to people's lives in the form of products and services have paid my bills, but it's been the stock market that has actually given me enough cushion to relax a bit about money. (And I'm still far from retirement, sadly.)

Steve Salerno said...

I think that what annoys a lot of people--and I know I fall into this category--is the hubris, the sense of entitlement, among so many of those who live charmed lives. As I write this, I'm listening to Donovon McNabb's heir at QB, Kevin Kolb, describe his brand-new $12.25 million contract extension. (This is for one year of work, mind you.) "I'm glad to be able to give my family security and get that out of the way so I can concentrate on the game," says Kolb, projecting absolutely no sense that what has happened to him in life is extraordinary and totally beyond the frame of reference of the average human being.

Give your family security? As if you finally got management to agree to provide health benefits? That's how some of us describe a $12 million paycheck?

No, Kevin, you did not give your family "security." You gave them a magical, wonderful windfall that neither you nor they deserve. You gave them something for which you (and they) should be falling to your knees and kissing the ground in thanks, or raising your arms to the sky in joyful hosannas, each and every time it comes up. But instead you just sit there at a press conference and, in a bland, totally businesslike tone of voice, talk about it as if your union boss just negotiated your crew an extra $6.20 an hour?

NormDPlume said...


You have come up with a most un-typical portrait of a rich person - a professional athlete. Athletes have very short careers on average, and a lifetime full of debilitating injuries.

Worse, they have income but very little wealth. The money is quickly blown on taxes, agent fees, bling, and the high-roller, gaudy ("player"?) lifestyle they cannot sustain. High-profile professional athletes are often poor people with money - temporarily. Because poor people have poor ways.

Anon 11:18 got it right with her/his sarcastic missive (at least I hope it was sarcastic and not genuine): the poor live in the here-and-now. They blow their income pretending and showing off that "they have made it"; yet they accumulate no wealth. I'll bet you that a decade from now, the Long Snapper will have a higher net worth than the high-profile QB.

Steve Salerno said...

Norm: 1. I thought you were Anon 11:18. You mean you're not?

2. I go back to something I tweeted not long ago. The well-to-do (or "high-powered industrialists") always talk about how they're the engine of capitalism and spew all this stuff about creating jobs and prosperity, while they bemoan government interference and leftist obstructivism and the "socialist mindset" and all that. So I say: Fine. Let's revert to a purer form of capitalism. No real labor laws. No progressive taxes on corporations. No capital-gains taxes. No government interference of any kind. No limits on, or suspicion of, how much any executive or entrepreneur pockets. We'll let it all get sorted out in the free marketplace...


Any industrialist who does not succeed at creating jobs or lifting the quality-of-life of his workers, by certain agreed-upon benchmarks, is subject to the death penalty. No trial, no excuses. His failure to create the broader prosperity he preaches is taken as prime facie evidence of guilt.

You like that deal?

NormDPlume said...


What an awful "deal" of yours. Under your plan, Harry Truman would have been executed upon bankruptcy, and Abe Lincoln, too.

What's with the demand for success? You can't outlaw failure; it's part of the learning process. And you seem to be putting the owner under penalty of death while guaranteeing a rising standard of living for the "workers". Not even Karl Marx came up with that one. Chico, maybe; but not Karl. Are not the employees responsible for their own destiny? Can't they obtain new skills over time leading to a better paying jobs? Has night school been outlawed in Steve World?

You scheme puts a death penalty upon anybody running a company which loses a competitive edge due to a competitors innovation, or their own failed innovations.

Let me know if anybody thinks this is a reasonable, rational or logical plan.

I want a capitalism where participants spend most of their strategic planning time concentrating on their customers and not their regulators, taxing authorities and bureaucrats.

Government regulations always have unintended consequences, and that is not a good thing.

Anon 11:18 wants fines for BP for the oil slick? I want thumbscrews followed by a long swim through the slick by the corporate Loss Prevention staff who were asleep at the switch.

Steve Salerno said...

Norm et al: Obviously (or so I thought) I am not proposing that we actually implement such a system.

I'm just saying that to hear the super-capitalists tell it, they want it both ways: no limits on their own success (or methods used in courting success) and yet no penalties, either, for their failure to deliver the wider societal benefits they always tout in upholding the free market as the be-all-and-end-all of social progress.

That strikes me as a little bit like some crazy parent saying, "I want to be able to use any extreme method at my disposal to ensure that my kid is obedient and well-disciplined; I want to be able to beat him, torture him, break knees and fingers, etc. And if he turns out eventually to be a psycho serial killer, hey, I wash my hands of it. I did my part..."

NormDPlume said...


I respectfully disagree.

No, supercapitalists don't want it both ways.

Wall Street is composes of two segments: one heavily regulated,"the regulated capitalists" (Fannie Mae, Merrill Lynch, Goldman Sachs...) and the "unregulated capitalists" (private hedge funds).

Only the heavily regulate half begged for bailouts because their regulators forced them to re-package the subprime debts and to make a market for loans to subprime people backed by dubious real estate. They had to compete with the Federal Government-run institutions of Fannie Mae and Freddie Mac. When your competition is backed by the limitless resources of the US Treasury, you make stupid deals to keep up. so when the market tanked, this half of Wall Street screamed "No Fair! Bail us out!"
But the private hedge funds were hammered pretty hard, too. Dozens of them quietly liquidated and left their investors holding the bag. They didn't ask for bailouts because they we not forced to participate they way the regulated capitalists were.

If you look at history, 30 years ago Wall Street had nothing to do with home mortgages at all. Local savings and loans handled home loans - they wrote and held onto the loans. And standards were rather high. Big Commercial real estate transactions were handled by Wall Street. But the savings and loans went bust, so Congress mandated that Wall Street get in the game. Over time, Congress mandated lower lending standards which rapidly became no standards at all. The toxic debt soon swamped the system (if the subprimates paid their sub-prime loans, there would have been no collapse.) So regulated capitalists demanded bailouts. Unregulated capitalists licked their wounds, re-grouped and are back in the game.

Steve Salerno said...

Norm: OK, so if it turns out that the handful of emails unearthed regarding Goldman Sachs' policy of betting against the market (and against its own clients' interests) weren't just flukes, as some apologists have characterized them, but rather were representative of a general policy of venal behavior...then is that just "stupid deal making," as you put it? Or is that part of an overall climate of corrupt practices that characterizes people in high places when they think no one is watching?

I don't think that anyone, anymore, can make simple-minded, Gorden Gekkoesque arguments about how "greed is good," as if the natural, leveling mechanics of the free market will somehow keep the outlanders from screwing the rest of us. Bullshit. If nothing else, the past few years have shown us that when the people at the helm turn into a rogue economy all their own, there is virtually nothing to keep them in check (especially when their interests are translated into financial policy by the activities of their lobbying arm in D.C.) The rest of us end up fiddling while they burn us.

Steve Salerno said...

(I should probably point out, however, that in my article on "crime and punishment" for Skeptic, I did indeed argue that the transgressions of, say, a Bernie Madoff or Ken Lay are far worse than those of, say, a Charles Manson or Ted Bundy, given the overall impact on society; and that if anyone deserves the death penalty, then high-impact white-collar criminals should get strapped to the table long before serial killers.)

NormDPlume said...

Why is Goldman being crucified for betting against the toxic sub-prime debts the were forced to repackage and sell? They didn't create these financial turds (the banks and mortgage brokers created them), they just repackaged them, threw some insurance around them and unloaded them to customers. And then they bet that these financial turd would fail.

I see no crime in this. In the finance world, you can go "long" - bet that the value of something will go up - or you can go "short" - bet that the value will decline. In essence, the politicians ordered Fannie Mae and Freddie Mac to go long - with your tax dollars - on "The Poor" and their sub-prime loans. Goldman went "short" on "The Poor" - correctly predicting that "the Poor" would welch on their sub-prime loans.

Goldman was right, and they made a bundle of money by being right. But if The Poor had actually paid their mortgages the way you and I do, Goldman would have lost their asses.

So now Goldman is being crucified for being right. They wisely bet that The Poor would turn out to be deadbeats. And the Compassionate Conservatism and The Community Reinvestment Act and all this social engineering was complete bullshit.

The government forced Goldman to be a "market maker" for sub-prime securities Goldman did not create. Goldman bet that these securities would be worthless, so they insulated themselves from the downside risk; and then they further bet against what they were forced to sell. And for this they are being crucified.

If you ran Goldman, you would have not acted differently.

Steve Salerno said...

Norm: Now wait a minute. You "see no crime" in touting to your customers the very same instruments that you are (privately/covertly) shorting on your own account? Is that a joke?

And your assumption about what I "would do" if I were running Goldman bespeaks that same generalized cynicism about life and human nature that has people saying "I'll just bury that last 1099 and I'll pad my expenses a little bit and hey, if they catch me, they catch me. Everybody does it." Or "I'll just pick up that wallet that someone left on that bench over there, take out the money and put it back on the bench so maybe its owner can find it later. Hey, anybody else would do the same thing."

No, Norm, everybody does not do such things. And if you're the kind of person who smirks at honor when you see it in others--"how terribly naive"--then that's a damn shame, is all I can say.

RevRon's Rants said...

It is ironic that so many of the "supercapitalists" strive to implement a system of Social Darwinism, given the fact that throughout history, the implementation of such systems has resulted in the system's demise. One would think that a "conservative" would direct their behavior in such a manner as to create a socioeconomic structure that would be sustainable over the long term. Unfortunately, their preference seems to be for short-term gains at the expense of such sustainability.

What is even more ironic (to me, at least) is their attempts to cuch their efforts as being for the greater good of society (ie: elimination of governmental regulation will result in an increase in jobs creation and thus, benefit to the "common man"). As I've pointed out before, all one has to do is look at the overall quality of life in Hong Kong to see how well that works out. I'd like to think that even the most cynical isolationist who claims to appreciate the American way of life would want to avoid following that model. And if I'm "naive" for holding to that ideal, I hope to never become a "realist."

NormDPlume said...

The real question with Goldman should be "Why were they forced to repackage sub-prime loans they did not create?" What were they doing in this business? Why were they selling this crap to their customers?

When you get to the root of the problem, you find statists with a social engineering agenda creating an environment full of debt which will never be repaid. And that's because owning a home is the sign of being responsible, and giving someone a home does not thrust responsibility upon them.

Lower lending standards in the name of affordable housing for The Poor flooded the system with bad loans. Goldman was forced to make a market for these bad loans and they refused to hold any of them for any length of time. And then they bet that the loans would go bad.

What is the criminal act here? Betting against The Poor and the governmental do-gooders? Or being right?

Jack Marshall said...

Provocative, reflective, but really, Steve: NUTS. And un-American. Laziness is not a disability, it is a character trait, one that is encouraged and nourished when a lazy individual is "taken care of" by those who are not lazy. Cowardice, fecklessness, being irresponsible... the same. Your call to universal paternalism simply guarantees the eventual shortage of anyone willing to make the effort to be a helper rather than a "helpee." I find it hard to believe you can even be serious...unless you have plans to become homeless.

In the end, this isn't kind; it is cruel, just like giving an alcoholic a drink is cruel. And it is also unfair to those who are not lazy or irresolute.

By the way---the statement that health care is not a basic right isn't "tea stained," it is factual, according to the Declaration of Independence. Our natural rights are what we are born with and that must be taken away. The question of whether we want to extend societal rights to health care is a legitimate one, but it is an issue to be debated. Summarily and inaccurately declaring it a "natural right" just sidesteps the argument dishonestly.

Steve Salerno said...

Jack: Question: Your feelings about laziness are a "character trait," aren't they? Then change them. Go ahead. Presto! Decide to change them. Bet you can't. You know why? Because you're married to them. They're who you are. Until you're something else.

And your rebuttal would be, "But I don't want to change my feelings about laziness, because I'm right." See how easy it is to justify the way we are?

As for "basic rights," I don't know that we can simply list them based on what it says in certain documents. Mein Kampf was a document. The Jefferson Davis constitution was a document. The Unabomber wrote a document. The Catholic Church has its documents, which disagree materially with provisions of the Qur'an and the Talmud. Who's to say whose document supersedes whose?

"But I'm talking about the U.S. Constitution, dammit, which is the basis of U.S. rights!"

Is that so? So the Constitution is inherently, objectively "correct"? The Constitution that contains, at last count, 27 Amendments that were considered necessary to clarify or even revise the Founders' original thinking? The Constitution that contains language that, to this day, the most learned scholars can't seem to interpret (a la the 2nd Amendment)?

Sorry, I'm not buyin' it.

Steve Salerno said...

I feel the need to get something on the record. I am not one of those who delight in savaging American industry at every opportunity. There are some who seem to organize their lives around such activity--a woman I follow on Twitter, The Nation's Katrina vanden Heuvel, is one such person (which sorta makes sense, given that The Nation is, well, The Nation). There is such ostensible glee in her "voice" every time she chronicles some new corporate embarrassment.

No such glee here. I grew up in a home in which the great industrial powers--GM, Exxon, later IBM--were considered secular gods. A lot of that feeling "took." I remember when my travels used to take me routinely to Detroit, and I'd sojourn in the RenCen, which at the time was home to major wings of two of Detroit's Big 3, as well as their ad agencies, and the whole building buzzed with American Pride. I felt it, too. Simply being in that building, seeing what capitalism had wrought, made me feel all warm and gooey. (I have always been a hopeless sentimentalist.)

But symbols only take you so far, and in recent years in particular it has become apparent that The Great American Core is surrounded by a lot of putrefying rot. I think the core itself is still sound--maybe I'm naive?--but I don't think we can too long act as if the rot isn't there, or let it go untreated. That's why I respond as I have in the course of a thread like this. There are too many people out to pervert what my America was supposed to be, to twist the whole thing to their selfish aims, and we have to call them on it before it's too late.

Jenny said...

Steve, you wrote: "I think that what annoys a lot of people--and I know I fall into this category--is the hubris, the sense of entitlement, among so many of those who live charmed lives."

Now there's a phrase: charmed lives. What exactly is a charmed life? My brother actually used that phrase with me last week to describe our childhood, which was far from charmed.

Seriously, what do you mean by charmed life?

Thanks, Steve! Love your writing.

Stever Robbins said...

"Charmed life" is a fascinating concept. I always thought my background was quite a struggle. We were lower-middle class, lived in a trailer for a while, and never had much disposable income. Yet ... I happened to become interested in computers, happened to be in a school district where I could pursue that, stumbled upon ARPANET access (forerunner of the Internet) which led me to meet people at MIT. Despite my poor background, I ended up in a series of school districts with gifted children's programs and magnet schools ... ended up getting into MIT and then Harvard Business School, etc.

I never thought of my life as particularly easy. I would imagine that few do. We're aware of what are struggles for us, and much less aware of how our struggles measure up to the struggles of others.

Yet objectively, I had a ton of opportunities others didn't, and most of those opportunities were no fault of my own, nor were they due to any effort on my parents' part. I was also gifted with the predisposition to work hard and the ability to focus intensely on problems.

The part that was under my control was the ability to recognize opportunity and pursue it. I'm perfectly happy to own that. But the "charmed" part of my own life is that I was presented truly superb, edge-of-bell-curve opportunities from an early age onward. Further charmedness is that several things well outside my control happened to make certain projects pay off, etc., in ways that helped pay off my student loans, etc.

I would define a charmed life as a life in which you are exposed to opportunities that, by their nature, will lead to further good opportunities if you take them. I'd also consider a life charmed if things beyond your control happen to work out enough to kick you into the self-reinforcing cycle of good opportunities.

(A friend of mine is a very famous venture capitalist in Silicon Valley. He has confided that he had no idea what he was doing, but one lucky, purely random hit early in his career led people to believe he was hot stuff. Then, people with the best deals started coming to him first because of his reputation, which generated more success, and so on. This is an example of a virtuous cycle of good opportunities.)

If you haven't read "The Fifth Discipline" by Peter Senge, I highly recommend it. He discusses archetypes of systemic behavior that drive a lot of the results we see around us. One such archetype is "success to the successful," which basically encapsulates the notion that small successes early on can amplify to create tremendous successes later in life. (Again, more due to the system structure than due to anything you, personally, did.)

Seraphim said...

RE: "Charmed life" -- What do you think of this article on making your own luck?

Seraphim said...

Actually, reading more closely, that last article I posted has too much "power of positive thinking" for my taste, but I still think the underlying principle of being open to opportunity is valid. There are plenty of other examples: see google.

Stever Robbins said...

Seraphim: I agree with the article. I don't think he's claiming anything about "power of positive thinking." He's saying if you think in certain specific positive ways (e.g. the counterfactual thinking), you'll be more resilient and able to keep going after failure. That seems quite reasonable.

I've been involved in integrating some rather striking new research into serial entrepreneurs into a college curriculum, and the research shows that successful serial entrepreneurs constantly scan for opportunities, and actually seek out areas of unpredictability, precisely because they are adept at finding ways to turn the unpredictable/"negative" into an asset (the lemonade principle).

In my earlier comment, I was referring to which opportunities show up in a given person's life, which isn't in their control, in addition to how they react to those things, which is within their control.

Jenny said...

Stever and Seraphim, regarding the charmed life. Very insightful! But I cannot help wondering what it means, still.

I took a "charmed walk" recently, through a neighborhood in my community that is populated by obviously wealthy people. The thought occurred to me that without the contrast provided by the Haves and the Have Nots, we'd not know how to discern Charmed or Charmless, would we? :)

I've been reading an interesting book lately, and I wonder how Steve (our blog host) would characterize it. The Resilient Self: How Survivors of Troubled Families Rise Above Adversity is written by a couple of doctors who are married to each other. They are critical of a self-help approach that focuses on pathology, instead offering what they call a Challenge Model, "which affirms the survivor's capacity for self-repair."

How would you (anyone reading) characterize Steve's blog? I'm inclined to call it a mutual aid society.

Steve Salerno said... aid society? Now there's one I hadn't thought of. ;)

nightman1 said...

Amusing. The USA, allegedly the most Christian nation, is the champion nation of the developed world at creating rationalizations for avoiding being kind to the poor.

And this is particularly galling to me because I can see that the nation has immense excess productive capacity--which it uses to buy vast numbers of new and shiny weapons every year. This is its way of avoiding giving that money to poor people instead.

In countries like Japan and most of "old Europe" they have similar excess productive capacity (which is the gift to all of us of the Industrial Revolution), and they spend lots of it on helping their fellow citizens (or at least on building wonderful infrastructure projects).

The "USA way", by contrast, boils down to this: to hold on with a death grip to the set of views that rises naturally out of scarcity, long after modern productivity has removed that scarcity which was always before man's lot.

This is not sensible or humane policy. It's a quasi-religious act: perpetuating an unnecessary zero-sum struggle for survival because in your belief system that struggle gives your life meaning.

Too bad that all the rest of us have to help you give your life meaning by portraying the "bad" antithesis to your "good", and by endlessly demonstrating through our painful poverty the very bad consequences of being "bad."