I do not believe that civilizations have to die because civilization is not an organism. It is a product of wills. Arnold J Toynbee
Yesterday, I explored a number of ideas around the proposition that the USA is in decline. The case is by no means clear but there does seem to be a preponderance of support for the notion that, as with all great empires, this could be an ‘end time’ for the USA.
One needs to go no further than A. J. Toynbee himself to reflect on that idea. Who was Arnold J Toynbee? Here’s his biography as presented on the Gifford Lectures website, ( Note: A fabulous series of lectures available on YouTube!)
Arnold J Toynbee
The British historian Arnold Joseph Toynbee was born in London on 14 April 1889 and died on 22 October 1975 in York, North Yorkshire, England. He was educated at Winchester College and Balliol College, Oxford. He was the nephew of economic historian Arnold Toynbee, with whom he is sometimes confused. His first marriage to Rosalind Murray, with whom he had three sons, ended in divorce in 1946. Professor Toynbee then married Veronica M. Boulter, his research assistant.
From 1919 to 1924 Arnold J. Toynbee was professor of modern Greek and Byzantine history at King’s College, London. From 1925 until 1955 Professor Toynbee served as research professor and Director of Studies at the Royal Institute of International Affairs. During both world wars he worked for the British Foreign Office. He was a delegate to the Paris Peace Conference in 1919.
While Professor Toynbee’s Gifford Lectures were published as An Historian’s Approach to Religion (1956) he is best known for his 12-volume A Study of History (1934-1961). This massive work examined the growth, development and decay of civilizations. He presented history as the rise and fall of civilizations rather than nation-states or ethnic groups. According to his analysis of civilizations the well-being of a civilization depends on its ability to deal successfully with challenges.
Professor Toynbee oversaw the publication of The Survey of International Affairs published by Oxford University Press under the auspices of the Royal Institute of International Affairs from 1925 to 1977.
A Study of History is the longest book in the English language, described in Wikipedia as, “the 12-volume magnum opus of British historian Arnold J. Toynbee, finished in 1961, in which the author traces the development and decay of all of the major world civilizations in the historical record. Toynbee applies his model to each of these civilizations, detailing the stages through which they all pass: genesis, growth, time of troubles, universal state, and disintegration.”
Back to the theme of the essay. One might propose, therefore, that a decline in the USA could be the ‘leading edge’ of a decline not only of the empire of the USA but of the whole of our present civilisation; the ‘universal rhythm of rise, flowering and decline‘.
It is axiomatic among most of our Washington elite that the United States cannot lose its preeminent global role, at least not in the foreseeable future. This assumption is implicit in all our economic policy discussions, including how politicians on both sides regard the leading international role of the United States dollar. In this view, the United States is likely to remain the world’s financial safe haven for international investors, irrespective of what we say and do.
Expressing concerns about the trajectory of our federal government debt has of course become fashionable during this election cycle; this is a signature item for both the Tea Party movement in general and vice presidential candidate Paul D. Ryan in particular.
Then later, in a reference to my own British history, writes,
Threatening to shut down the government or refusing to budge on taxes is seen by many Republicans as a legitimate maneuver in their campaign to shrink the state, rather than as something that could undermine the United States’ economic recovery and destabilize the world. This approach is more than unfortunate, because the perception of our indefinite preeminence – irrespective of how we act – is completely at odds with the historical record. In his widely acclaimed book, “Eclipse: Living in the Shadow of China’s Economic Dominance,” Arvind Subramanian places the rise of the dollar in its historical context and documents how economic policy mistakes, World War II and the collapse of empire undermined the British pound and created space for the United States dollar to take over as the world’s leading currency.
Then Simon endorses the key point made by Arvind Subramanian, namely,
But Dr. Subramanian also asserts that two other factors were important: the sheer size of the American economy, which overtook Britain’s, probably at some point in the late 19th century, and the United States current account surplus. In particular, American exports were far larger than imports during World War I and by the end of World War II the United States had amassed almost half the gold in the world (gold at that time was used to settle payments between countries.)
In effect, the United States dollar pushed aside the British pound in part because the United States became the world’s largest creditor.
Simon’s essay closes thus, (and you do need to read the full essay, by the way, many important ideas are expressed)
The dollar became strong because American politicians were responsible, careful and willing to compromise. Fiscal extremism, confrontation and a refusal to consider tax increases over any time horizon will undermine the international role of the dollar, destabilize the world and make it much harder for all of us to achieve any kind of widely shared prosperity.
Finally, in a call with my son, Alex, just 30 minutes ago (I’m writing this on the morning of the 4th October), he mentioned an item he had read in today’s Guardian newspaper No recovery until 2018, IMF warns.
The International Monetary Fund’s chief economist has warned that the global economy will take a decade to recover from the financial crisis as the latest snapshot of the UK economy suggested that growth in the third quarter will be at best anaemic.
Olivier Blanchard said he feared the eurozone crisis, debt problems in Japan and the US, and a slowdown in China meant that the world economy would not be in good shape until at least 2018. “It’s not yet a lost decade,” he said. “But it will surely take at least a decade from the beginning of the crisis for the world economy to get back to decent shape.
2018! That leaves plenty of time for any number of global ‘surprises’ geopolitical and environmental alike! But my final message is one of caution. I am as vulnerable as the next person in seeing ‘doom and gloom’ ahead. However, drop in to Learning from Dogs next Tuesday and watch something that may surprise you.
So on that note, the closing quote is going be one that I have loved for a long time:
“Prediction is very difficult, especially if it’s about the future. “ Niels Bohr
Civilizations die from suicide, not by murder. Arnold J Toynbee
I’m not sure where to start but as a result of finishing a particular book, plus a recent essay on Tom Dispatch, then another recent essay from Simon Johnson of Baseline Scenario fame, there were so many thoughts bumping around this aged brain that I had no alternative than to offer them to you, dear reader. You should also be warned that this is going to be two posts, covering today and tomorrow.
So let’s start with the book: The United States of Fear by Tom Engelhardt. To be brutally honest, I purchased the book more as a gesture of support to Tom who has been very supportive of Learning from Dogs, in particular allowing me permission to reproduce any essays that were published on TomDispatch, as a number have so been. What an error of judgment! Tom’s book provided another one of those rare but inspirational occasions where you know the world will never look quite the same again!
The back cover page of the book sets out the theme, thus,
Published 2011
In 2008, when the US National Intelligence Council issued its latest report meant for the administration of newly elected President Barack Obama, it predicted that the planet’s “sole superpower” would suffer a modest decline and a soft landing fifteen years hence. In his new book The United States of Fear, Tom Engelhardt makes clear that Americans should don their crash helmets and buckle their seat belts, because the United States is on the path to a major decline at a startling speed. Engelhardt offers a savage anatomy of how successive administrations in Washington took the “Soviet path”—pouring American treasure into the military, war, and national security—and so helped drive their country off the nearest cliff.This is the startling tale of how fear was profitably shot into the national bloodstream, how the country—gripped by terror fantasies—was locked down, and how a brain-dead Washington elite fiddled (and profited) while America quietly burned.
Think of it as the story of how the Cold War really ended, with the triumphalist “sole superpower” of 1991 heading slowly for the same exit through which the Soviet Union left the stage twenty years earlier.
One of the fascinating aspects of the book is that it was put together from 32 essays previously published online by Tom; the complete list with titles and dates is on pps. 205 & 206. So giving you a real feel for the book is easy! I’m going to do that by linking to one of those essays available in the archives of TomDispatch here. That essay was called Washington’s Echo Chamber and appears in the book starting on page 170 under the sub-heading of Five Ways to Be Tone Deaf in Washington. Let me quote you a little,
So much of what Washington did imagine in these last years proved laughable, even before this moment swept it away. Just take any old phrase from the Bush years. How about “You’re either with us or against us”? What’s striking is how little it means today. Looking back on Washington’s desperately mistaken assumptions about how our globe works, this might seem like the perfect moment to show some humility in the face of what nobody could have predicted.
It would seem like a good moment for Washington — which, since September 12, 2001, has been remarkably clueless about real developments on this planet and repeatedly miscalculated the nature of global power — to step back and recalibrate.
As it happens, there’s no evidence it’s doing so. In fact, that may be beyond Washington’s present capabilities, no matter how many billions of dollars it pours into “intelligence.” And by “Washington,” I mean not just the Obama administration, or the Pentagon, or our military commanders, or the vast intelligence bureaucracy, but all those pundits and think-tankers who swarm the capital, and the media that reports on them all. It’s as if the cast of characters that makes up “Washington” now lives in some kind of echo chamber in which it can only hear itself talking.
As a result, Washington still seems remarkably determined to play out the string on an era that is all too swiftly passing into the history books. While many have noticed the Obama administration’s hapless struggle to catch up to events in the Middle East, even as it clings to a familiar coterie of grim autocrats and oil sheiks, let me illustrate this point in another area entirely — the largely forgotten war in Afghanistan. After all, hardly noticed, buried beneath 24/7 news from Egypt, Bahrain, Libya, and elsewhere in the Middle East, that war continues on its destructive, costly course with nary a blink.
That was published by Tom a little over 18 months ago! Seems as relevant today as then! Let me stay with perspectives from 2011.
Chomsky, visiting Vancouver, Canada in March 2004
On the 24th August 2011 Noam Chomsky wrote an essay entitled American Decline: Causes and Consequences. Chomsky, as Wikipedia relates, is Professor (Emeritus) in the Department of Linguistics & Philosophy at MIT, where he has worked for over 50 years. Here is how that essay opens,
In the 2011 summer issue of the journal of the American Academy of Political Science, we read that it is “a common theme” that the United States, which “only a few years ago was hailed to stride the world as a colossus with unparalleled power and unmatched appeal — is in decline, ominously facing the prospect of its final decay.” It is indeed a common theme, widely believed, and with some reason. But an appraisal of US foreign policy and influence abroad and the strength of its domestic economy and political institutions at home suggests that a number of qualifications are in order. To begin with, the decline has in fact been proceeding since the high point of US power shortly after World War II, and the remarkable rhetoric of the several years of triumphalism in the 1990s was mostly self-delusion. Furthermore, the commonly drawn corollary — that power will shift to China and India — is highly dubious. They are poor countries with severe internal problems. The world is surely becoming more diverse, but despite America’s decline, in the foreseeable future there is no competitor for global hegemonic power.
So, according to Chomsky, it’s not as ‘black and white’ as Engelhardt sets out. But do read the full essay.
Nevertheless, the idea that the USA is ‘fiddling while Rome burns’ is supported in an essay published by Mattea Kramer on TomDispatch on the last day of September. I’m going to end Part One by republishing the essay in full. (Note that this is being published here after the first ‘debate’ had taken place.)
oooOOOooo
Tough Talk for America
A Guide to the Presidential Debates You Won’t Hear
By Mattea Kramer
Five big things will decide what this country looks like next year and in the 20 years to follow, but here’s a guarantee for you: you’re not going to hear about them in the upcoming presidential debates. Yes, there will be questions and answers focused on deficits, taxes, Medicare, the Pentagon, and education, to which you already more or less know the responses each candidate will offer. What you won’t get from either Mitt Romney or Barack Obama is a little genuine tough talk about the actual state of reality in these United States of ours. And yet, on those five subjects, a little reality would go a long way, while too little reality (as in the debates to come) is a surefire recipe for American decline.
So here’s a brief guide to what you won’t hear this Wednesday or in the other presidential and vice-presidential debates later in the month. Think of these as five hard truths that will determine the future of this country.
1. Immediate deficit reduction will wipe out any hope of economic recovery: These days, it’s fashionable for any candidate to talk about how quickly he’ll reduce the federal budget deficit, which will total around $1.2 trillion in fiscal 2012. And you’re going to hear talk about the Simpson-Bowles deficit reduction plan and more like it on Wednesday. But the hard truth of the matter is that deep deficit reduction anytime soon will be a genuine disaster. Think of it this way: If you woke up tomorrow and learned that Washington had solved the deficit crisis and you’d lost your job, would you celebrate? Of course not. And yet, any move to immediately reduce the deficit does increase the likelihood that you will lose your job.
When the government cuts spending, it lays off workers and cancels orders for all sorts of goods and services that would generate income for companies in the private sector. Those companies, in turn, lay off workers, and the negative effects ripple through the economy. This isn’t atomic science. It’s pretty basic stuff, even if it’s evidently not suitable material for a presidential debate. The nonpartisan Congressional Research Service predicted in a September report, for example, that any significant spending cuts in the near-term would contribute to an economic contraction. In other words, slashing deficits right now will send us ever deeper into the Great Recession from which, at best, we’ve scarcely emerged.
Champions of immediate deficit reduction are likely to point out that unsustainable deficits aren’t good for the economy. And that’s true — in the long run. Washington must indeed plan for smaller deficits in the future. That will, however, be a lot easier to accomplish when the economy is healthier, since government spending declines when fewer people qualify for assistance, and tax revenues expand when the jobless go back to work. So it makes sense to fix the economy first. The necessity for near-term recovery spending paired with long-term deficit reduction gets drowned out when candidates pack punchy slogans into flashes of primetime TV.
2. Taxes are at their lowest point in more than half a century, preventing investment in and the maintenance of America’s most basic resources: Hard to believe? It’s nonetheless a fact. By now, it’s a tradition for candidates to compete on just how much further they’d lower taxes and whether they’ll lower them for everyone or just everyone but the richest of the rich. That’s a super debate to listen to, if you’re into fairy tales. It’s not as thrilling if you consider that Americans now enjoy the lightest tax burden in more than five decades, and it happens to come with a hefty price tag on an item labeled “the future.” There is no way the U.S. can maintain a world-class infrastructure — we’re talking levees, highways, bridges, you name it — and a public education system that used to be the envy of the world, plus many other key domestic priorities, on the taxes we’re now paying.
Anti-tax advocates insist that we should cut taxes even more to boost a flagging economy — an argument that hits the news cycle nearly every hour and that will shape the coming TV “debate.” As the New York Times recently noted, however, tax cuts might have been effective in giving the economy a lift decades ago when tax rates were above 70%. (And no, that’s not a typo, that’s what your parents and grandparents paid without much grumbling.) With effective tax rates around 14% for Mitt Romney and many others, further cuts won’t hasten job creation, just the hollowing out of public investment in everything from infrastructure to education. Right now, the negative effects of tax increases on the most well-off would be small — read: not a disaster for “job creators” — and those higher rates would bring in desperately-needed revenue. Tax increases for middle-class Americans should arrive when the economy is stronger.
Right now, the situation is clear: we’re simply not paying enough to fund the basic ingredients of prosperity from highways and higher education to medical research and food safety. Without those funds, this country’s future won’t be pretty.
3. Neither the status quo nor a voucher system will protect Medicare (or any other kind of health care) in the long run: When it comes to Medicare, Mitt Romney has proposed a premium-support program that would allow seniors the option of buying private insurance. President Obama wants to keep Medicare more or less as it is for retirees. Meanwhile, the ceaseless rise in health-care costs is eating up the wages of regular Americans and the federal budget. Health care now accounts for a staggering 24% of all federal spending, up from 7% less than 40 years ago. Governor Romney’s plan would shift more of those costs onto retirees, according to David Cutler, a health economist at Harvard, while President Obama says the federal government will continue to pick up the tab. Neither of them addresses the underlying problem.
Here’s reality: Medicare could be significantly protected by cutting out waste. Our health system is riddled with unnecessary tests and procedures, as well as poorly coordinated care for complex health problems. This country spent $2.6 trillion on health care in 2010, and some estimates suggest that a staggering 30% of that is wasted. Right now, our health system rewards quantity, not quality, but it doesn’t have to be that way. Instead of paying for each test and procedure, Medicare could pay for performance and give medical professionals a strong incentive to provide more efficient and coordinated care. President Obama’s health law actually pilot tests such an initiative. But that’s another taboo topic this election season, so he scarcely mentions it. Introducing such change into Medicare and the rest of our health system would save the federal government tens of billions of dollars annually. It would truly preserve Medicare for future generations, and it would improve the affordability of health coverage for everyone under 65 as well. Too bad it’s not even up for discussion.
4. The U.S. military is outrageously expensive and yet poorly tailored to the actual threats to U.S. national security: Candidates from both parties pledge to protect the Pentagon from cuts, or even, in the case of the Romney team, to increase the already staggering military budget. But in a country desperate for infrastructure, education, and other funding, funneling endless resources to the Pentagon actually weakens “national security.” Defense spending is already mind-numbingly large: if all U.S. military and security spending were its own country, it would have the 19th largest economy in the world, ahead of Saudi Arabia, Taiwan, and Switzerland. Whether you’re counting aircraft carriers, weapons systems, or total destructive power, it’s absurdly overmatched against the armed forces of the rest of the world, individually or in combination. A couple of years ago, then-Secretary of Defense Robert M. Gates gave a speech in which he detailed that overmatch. A highlight: “The U.S. operates 11 large carriers, all nuclear powered. In terms of size and striking power, no other country has even one comparable ship.” China recently acquired one carrier that won’t be fully functional for some time, if ever — while many elected officials in this country would gladly build a twelfth.
But you’ll hear none of this in the presidential debates. Perhaps the candidates will mention that obsolete, ineffective, and wildly expensive weapons systems could be cut, but that’s a no-brainer. The problem is: it wouldn’t put a real dent in national defense spending. Currently almost one-fifth of every dollar spent by the federal government goes to the military. On average, Americans, when polled, say that they would like to see military funding cut by 18%.
Instead, most elected officials vow to pour limitless resources into more weapons systems of questionable efficacy, and of which the U.S. already owns more than the rest of the world combined. Count on one thing: military spending will not go down as long as the U.S. is building up a massive force in the Persian Gulf, sending Marines to Darwin, Australia, and special ops units to Africa and the Middle East, running drones out of the Seychelles Islands, and “pivoting” to Asia. If the U.S. global mission doesn’t downsize, neither will the Pentagon budget — and that’s a hit on America’s future that no debate will take up this month.
5. The U.S. education system is what made this country prosperous in the twentieth century — but no longer: Perhaps no issue is more urgent than this, yet for all the talk of teacher’s unions and testing, real education programs, ideas that will matter, are nonexistent this election season. During the last century, the best education system in the world allowed this country to grow briskly and lift standards of living. Now, from kindergarten to college, public education is chronically underfunded. Scarcely 2% of the federal budget goes to education, and dwindling public investment means students pay higher tuitions and fall ever deeper into debt. Total student debt surpassed $1 trillion this year and it’s growing by the month, with the average debt burden for a college graduate over $24,000. That will leave many of those graduates on a treadmill of loan repayment for most or all of their adult lives.
Renewed public investment in education — from pre-kindergarten to university — would pay handsome dividends for generations. But you aren’t going to hear either candidate or their vice-presidential running mates proposing the equivalent of a GI Bill for the rest of us or even significant new investment in education. And yet that’s a recipe for and a guarantee of American decline.
Ironically, those in Washington arguing for urgent deficit reduction claim that we’ve got to do it “for the kids,” that we must stop saddling our grandchildren with mountains of federal debt. But if your child turns 18 and finds her government running a balanced budget in an America that’s hollowed out, an America where she has no chance of paying for a college education, will she celebrate? You don’t need an economist to answer that one.
My rather slow response to my Versatile Blogger award!
Last Friday morning, the 16th, I turned on my PC to discover that lovely Kathryn Johnston of 4amWriter had nominated Learning from Dogs for the Versatile Blogger Award. I was blown away especially as since then the connections I have made with other writers have been wonderful.
However, a more prompt acknowledgement on LfD seems to have escaped me until today. I quickly learnt that there is a proper protocol associated with the response to the award.
Thank the award-giver and link back to them in your post.
Share 7 things about yourself.
Pass this award along to 15 blogs you enjoy reading.
Contact your chosen bloggers to let them know about the award.
So here goes!
Award logo
So first, a very big thank you to Kathryn of 4amWriter for including me in her list. As she said on her post, “This title says it all! If you love dogs, this is a must-visit!” That’s generous of Kathryn. Dogs are a very powerful reminder of an uncomplicated way to live, as described on the Home Page. The Vision behind the Blog is:
Our children require a world that understands the importance of faith, integrity and honesty
Learning from Dogs will serve as a reminder of the values of life and the power of unconditional love – as so many, many dogs prove each and every day
Constantly trying to get to the truth …
The power of greater self-awareness and faith …
Seven things about me!
H’mm, what to say.
Born in London 6 months before the end of WWII,
Been a business-to-business salesman most of my life,
Started my own business in 1978 and remained in ‘self-employment’ until quite recently,
Lived on my own boat, based in Larnaca, Cyprus, for 5 years,
A keen glider pilot for many years at Rattlesden Gliding Club in Suffolk, later a private pilot,
Always wanted to write,
And, finally, happier than I have ever been being married to Jean, having met in Mexico in 2007, moving out there with Pharaoh, my GSD, in 2008 and subsequently arriving in Payson, Arizona in 2010 with 11 dogs and 6 cats!
So here are the 16 Blogs (I use that description loosely) that I wish to pass this award to:
Yves Smith of Naked Capitalism. How Yves finds the time to produce the huge volume of articles and website links every day is beyond me.
James Kwak and Simon Johnson of Baseline Scenario. James and Simon were, for me, an early source of openness about the key issues affecting the global economy that slammed into our collective faces in 2008.
Patrice Ayme of the Blog of his own name. Patrice’s sub-heading on his Blog reads, “Intelligence at the core of humanism.” Again, a prolific writer with a huge intellect that he puts to wonderful use. Just pick anything that he has written to see that proved in spades.
Bill McKibben of 350.org. The headline on the website says, “We’re building a global movement to solve the climate crisis.” Say no more!
Michelle of Dog Kisses’s blog. Wonderful blog – just go there and enjoy it.
Sue of Sue Dreamwalker. Again, just a wonderful Blog – do please visit.
Vlatko, the owner of Top Documentary Films. We do not subscribe to any television channels at home so Vlatko’s resource is so valuable for us. Huge selection of free documentary films to watch.
Deanna Raeke and Andrea Rosebrock of the Blog For The Love of a Dog. Very active in fighting all corners on behalf of man’s oldest companion.
Rob Hopkins and his team at Transition Network. Rob is one of the leading voices for changing to a sustainable relationship with this planet. He is based in Totnes, Devon, my local town for many years when I lived in the village of Harberton. His books on Transition are masterpieces.
Victoria Brown, Daniel Honan and team at Big Think. As their headline says, “A forum where top experts explore the big ideas and core skills defining the 21st century.” Fabulous resource.
All the Directors and team at Sustainable Arizona. As is described on their site, Sustainable Arizona is about, “Our nonprofit organization is made up of volunteers and professionals committed to making sustainable development possible. We accomplish this by encouraging businesses that add true value to our communities while preserving the environment.“
Anthony Watts of Watt’s Up With That. With over 9,000 followers and over 98 million viewers this very reasonably can be regarded as the world’s most viewed climate website. Anthony’s 3 million monthly visitors puts my 40,000 into perspective!
The whole team at the US-based National Wildlife Federation. Their Mission: As America’s largest conservation organization, National Wildlife Federation works with more than 4 million members, partners and supporters in communities across the country to inspire Americans to protect wildlife for our children’s future!
Peter Russell of Spirit of Now. Peter writes on his Blogsite, “There are many observations I make in daily life—some profound, some mundane—mostly concerning the natural world around, or the nature of the inner world of mind. Some incline us to wonder and awe. Others make us think, and question our assumptions.” Never before have we needed so much to think about the way we think!
Nakibul Hoq, blogging from Bangladesh in the city of Dhaka under the Blog name of Freedom to Survive.
I shall be passing on the ‘award’ to all bloggers today.
Let me close again by saying such a big thank you to Kathryn of 4amWriter and, from that, how quickly I came across Limebird Writers who, I know, will be a great source of support as I face 2012 and ‘the novel’!
This documentary may, probably WILL, enlighten you.
On the 30th March I wrote about the film Inside Job. Then a few days ago James Kwak of Baseline Scenario, a blog that I have been reading for some time now, also wrote a piece about the film, opening his Post thus,
I finally saw Inside Job at a friend’s house tonight. I don’t have anything original to say about it. I thought it was a very, very good movie. There were lots of little things that weren’t quite right (many of which were probably conscious decisions to simplify details for the sake of comprehension), but I don’t think any of them were substantively misleading.
As always with Baseline Scenario, the comments are as interesting and educational as the article, and that was just as valid in this case. One of the comments was from Carla who wrote,
I think Inside Job is no longer available to view for free now that the DVD is for sale at Amazon (well worth the purchase, BTW).
Anyway, we watched the film on Tuesday evening and, boy oh boy, was it an eye-opener.
I promise you, the full film is so well worth watching. (And do read to the end of this Post!)
The film also makes reference to the website The Money Fix which has a great number of resources for those that wish to explore further this fascinating subject. Thanks Carla.
I am indebted to James Kwak, the author of this article on Baseline Scenario, for giving me permission to reproduce in full what was published on the 12th March, 2011.
By James Kwak
A friend passed on this article in The Motley Fool by Morgan Housel. It begins this way:
“Enough.
“That’s the title of Vanguard founder John Bogle’s fantastic book about measuring what counts in life.
“The title, as Bogle explains, comes from a conversation between Kurt Vonnegut and novelist Joseph Heller, who are enjoying a party hosted by a billionaire hedge fund manager. Vonnegut points out that their wealthy host had made more money in one day than Heller ever made from his novelCatch-22. Heller responds: ‘Yes, but I have something he will never have: enough.’”
The rest of the article discusses the cases of Rajat Gupta and Bernie Madoff, the former accused (but not criminally) and the latter convicted of illegal activity done after they had already been enormously successful, professionally and financially.
Housel asks, why do people push on — legally or illegally — when they have more of everything than anyone could possibly need? He summarizes the happiness research as follows:
“Money isn’t the key to happiness. What really gives people meaning and happiness is a combination of four things: Control over what they’re doing, progress in what they’re pursuing, being connected with others, and being part of something they enjoy that’s bigger than themselves.”
Of course, even if that’s true (and I think it is, except for the first sentence, on which more below), that doesn’t mean that people realize it. And if people don’t understand the relationship between their actions and their personal outcomes, we have no reason to believe that they will behave in a utility-maximizing way.
That said, renowned economist Justin Wolfers was recently on Planet Money saying that money does, indeed, buy happiness. He was discussing a paper he did with Betsey Stevenson looking at datasets covering many countries over many years. They find a positive relationship between income and subjective well-being, whether in the form of life satisfaction or happiness (although the relationship appears somewhat weaker for happiness).* In particular, they find that there is no satiation point, at least when making cross-country comparison (that is, the positive relationship persists even when you look only at countries that are at least moderately wealth).
At one point in the Planet Money interview, I believe Wolfers did say that when it comes to happiness, someone (Kahneman, I think) had estimated that there is a satiation point at around $75,000 per year. But, he went on, the issue is that we may want subjective states other than simple happiness. So, for example, we may want the subjective feeling of power, whether or not it actually makes us happy in the moment. And those other subjective states may not have satiation points, or they may have little to do with income.
But ultimately I agree with Heller. It is a great thing to have “enough,” and to know you have enough. And that is a feeling that for some people, apparently, no amount of money can buy.
* The difference, put simply, is between whether you feel happy at this moment and whether you feel satisfied with your life as a whole. For more, see this fantastic TED Talk by Daniel Kahneman (which I have recommended before).
“More than any other time in history, mankind faces a crossroads. One path leads to despair and utter hopelessness. The other, to total extinction. Let us pray we have the wisdom to choose correctly.”
Read a few days ago on Baseline Scenario and I couldn’t resist using it. Not the first time, I’m sure, you have read this dear readers but still well worth another airing.
Plus it gives me a chance to remind people that Baseline really is a Blog worth following.
While I follow a number of Blogs, there are few that I read avidly. One of them in that latter category is Baseline Scenario. I wish I understood more of the technical issues presented by the Blog authors and the dozens of brilliant commentors. But the essence of what is being discussed is clear. I thoroughly recommend subscribing.
Here’s a recent Post from James Kwak (see end of Post for bio details). It was called Free Books and Board Seats. James very kindly has given Learning from Dogs written permission to reproduce the article in full.
Here in the blogging world, some of us are very sensitive to the potential appearance of impropriety. A year ago, the FTC published new rules requiring bloggers to disclose cash and in-kind payments they receive for reviewing products. The upshot, for most of us, is simply that now, when we discuss a book, we say if we got a free copy of the book from the publisher. (Although it’s not clear that that disclosure is required, since getting a free copy is something that readers should expect; I don’t think the New York Times Book Review bothers pointing out that, for every book they review, they got a free copy, although they almost certainly did.)
All the more relevant, then, is Gerald Epstein’s post about conflicts of interest in the economics profession.
“Jessica Carrick-Hagenbarth and I did a study of 19 prominent academic financial economists who were members of two influential groups that have played a key role in the financial reform and regulation debate in the U.S. Of the 19 academic economists in these groups, 70% advised, owned significant stock in or were on the board of private financial institutions. But you wouldn’t know by looking at their self-identification in media appearances, policy work or academic papers.”
There are certainly economists who were talking up the housing market in the summer of 2008 without disclosing their financial ties to banks–who were desperately hoping that housing prices would not collapse.
C’mon, guys. I don’t even get very many free books (maybe one per month on average–I decline most of them), and I always disclose that. I know it’s not feasible to list every company that ever paid you to give a speech. But really, if you’re a paid director of a bank and you write about the banking industry, can’t you at least point that out?
Well put James.
—————————— James Kwak is a former McKinsey consultant, a co-founder of a successful software company, and currently a student at the Yale Law School. He is not, never has been, and never will be a member of the Yale Law Journal. He is a co-founder of The Baseline Scenario.
I had been in a bit of a rant mood and contributed a comment to that Post. I wrote:
I don’t have the knowledge to respond to Simon’s excellent Post in detail but his comments reinforce what feels like a constant throbbing in my mind – how can the citizens of so many countries have abdicated so much interest and concern in how they/we are governed. Wish I had even a clue as to the answer to that question.
Significant social unrest would be very scary – the ‘law’ of unintended consequences and all that – but there are times when I wonder if this, in the end, might be the only form of real progress for the hard-working, tax-paying majority.
End of rant! 😉
Interestingly, that stimulated some replies which were, in my opinion, worth sharing with you; kind reader of Learning from Dogs that you are!
Sir, you raise a sad but true point when you ask how a majority of us citizens, on a worldwide basis, could have lost true “by the people” control of our own governments.
For most of us the loss of healthy economic functioning has been the main consequence of this, something that has been very painful. But I also find myself reflecting on the unspeakable genocides in our collective human history. One gets an awful sense of how such things were permitted to arise…ZeroInMyOnes
And
Well spoken Paul Handover. The system cannot and will not be changed politically or judicially because the malevolent forces who conjured the system own and control both the political and judicial operations and operators. Those operators work to advance the interests of the predatorclass whose operations, operators, and structures are malevolent.
The people are the abused victims of predatorclass criminal enterprises bent on total control of the earths wealth and resources, and the enslavement or eradication of the rest of the population.
The peoples only hope for implementing the changes necessary to form a more perfect union is best described here:
(“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness. That to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed. That whenever any form of government becomes destructive to these ends, it is the right of the people to alter or to abolish it, and to institute new government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their safety and happiness.”) TonyForesta
And
Paul Handover, that was not a rant. You are simply talking common sense.
Scary is right. And it’s scarier by the day.
We have to try to work constructively for change. I keep urging people to check out the potential for an economy based not on constant growth, which is impossible on a finite planet, but on some sane principles of equity and sustainability.
If you go to http://www.steadystate.org and look at their position statement, you can see that people from all over the world are signing on–yes, just three or four people a day–but they are from every continent and just about every country.
Now, can you help this “go viral”? Carla
These are strong, powerful views. I have joined Casse, the organisation referred to in Carla’s comment – see second Post from me today – and Tony’s comment motivated me to look up the history of the United States Declaration of Independence, the subject of a separate article on this Blog.
“You’ve got to do your own growing, no matter how tall your grandfather was.” Irish quotation.
In England, inexplicable happenings are commonly ascribed to being ‘Irish’! It’s meant in a loving way; there is a great deal of warmth towards the different ways that Irish people appear to see the world. But what is facing Ireland (and other countries) as a result of some distinctly unfunny goings-on in the USA is potentially hugely damaging.
To many the way that the world has descended into a dark, economic abyss, which is likely to affect us all in so many ways, and in which we are going to remain for a long time (a la Japan?), is also inexplicable.
Thus a chance comment from Norm Cimon to a recent post on Baseline Scenario set off a chain of discovery that for me has been very interesting. Here’s how it ran.
I have subscribed to Baseline Scenario for some time. It describes itself thus:
The Baseline Scenario is dedicated to explaining some of the key issues in the global economy and developing concrete policy proposals. Since it was launched in September 2008, this blog has been cited by virtually every major newspaper, Internet site, and blog covering economic and financial issues.
It’s a great resource.
A recent Post on Baseline Scenario, Irish Worries For The Global Economy, had already attracted 135 comments at the time of writing this post. A recent one was from a Norm Cimon, who is described in Linked In as the owner of Info Synchronicity LLC. This is what he said:
That is the other side of the coin. William Black has been lucid on this topic, and clear on the morality of the current age and how to fix it. Put people in jail and let everyone know why they were sent there. If you want to change perceptions then change the reality. The anger of the general public and the disdain of Wall Street are tied to that one issue. No one has paid for the crime of the millenium and everybody knows it.
And included was this recording of Bill Moyers interviewing Bill Black, the author of The Best Way to Own a Bank is to Rob One.
Here’s the interview:
However, there’s more to this discovery than the YouTube video. If one clicks on the link behind Norm Cimon’s name on that Baseline post, then one is taken here. It’s a pdf of a paper written by Norm Cimon entitled, “Computing Power and Human Greed.” It seems to me to explain the tools, for want of a better word, that enabled the American banking system to behave in the way that Bill Black so roundly condemns in the Bill Moyer interview. Here’s how Cimon ends his paper:
With networked computers now cast by all organizations, including the financial sector, into the role of wizard-behind-the-curtain, we all live in Oz. It’s long past time we pull back the veil and call a halt to the mindless application of this supreme and supremely dangerous creation before the damage gets any greater.
Unfortunately, there isn’t a date to the paper but my guess was that it was written late in 2009. Whatever the date, it is a very apt observation.
Brits will be well aware that the Irish have been the source of many funny stories and ‘Irish’ humour is still a favourite with the English.
But this piece from Baseline Scenario is very troubling, and that’s putting it mildly.
The excellent article, as they all are from Baseline, is here.
I stole a small extract to underline the import of what BS are writing about.
However, let’s be clear: Europe’s headache remains large, and this should concern all of us – just look at Ireland to see how misunderstood and immediate the remaining dangers are. Ireland’s difficulties arose because of a massive property boom financed by cheap credit from Irish banks. Ireland’s three main banks built up loans and investments by 2008 that were three times the size of the national economy; these big banks (relative to the economy) pushed the frontier in terms of reckless lending. The banks got the upside, and then came the global crash in fall 2008: property prices fell more than 50 percent, construction and development stopped, and people stopped repaying loans. Today roughly one-third of the loans on the balance sheets of major banks are nonperforming or “under surveillance”; that’s an astonishing 100 percent of gross national product, in terms of potentially bad debts.
(That’s my italics, by the way.)
Anyway, do read it in full – it’s got important implications.
And then give yourself a proper laugh at the wonderful sense of humour that comes across from the Irish Sea ….
Learning from Dogs 