Category Archives: Economics

Another Thread in the Social Fabric Unravels

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My wife and I both come from (different) upstate New York factory towns.  My family moved to San Jose when I was nine.  Mary moved to California after high school, while her brothers stayed in Rochester and went to work for Kodak.  In the early ’70’s, that was a reasonable path to choose.  Kodak was a solid Dow Jones company and historically, one of the first to offer generous benefits to workers.

Over the last three decades, Mary and I have gone back for fun, for weddings, and funerals.  Rochester isn’t the same city.  Weeds grow in the parking lot of many silent factories.  Birds fly out of smokestacks once touted as the tallest in the country.

Kodak is a textbook example of a successful company blindsided by a “disruptive technology.”  But textbooks are the last thing on the minds of many of Kodak’s 38,000 retirees.  Late to the digital party, there is now talk of Kodak going bankrupt, and unfortunately, Kodak retiree health care is tied to the company’s fortunes.  http://www.npr.org/2011/10/12/141257737/the-picture-isnt-pretty-for-some-kodak-retirees

There are way too many stories like this in the news.  This one caught my attention because I know the town a little bit, and know people who are affected, people who played by the rules and now find themselves getting screwed.  A week from now, their story will be forgotten.

***

I found myself thinking again of the Occupy Wall Street protestors and some reactions from our “leaders” to their attempt to give people like the Kodak workers a voice.

According to Paul Krugman of the New York Times, Eric Cantor has called the protestors a “mob” and denounced them for “pitting Americans against Americans.”  Mitt Romney accused them of “waging class warfare.”  Herman Cain calls them “anti-American.”  Senator Rand Paul fears the protestors will start taking iPads from the rich, and according to the talking heads on CNBC, they are “aligned with Lenin.”  http://www.sacbee.com/2011/10/11/3973680/plutocrats-fearing-scrutiny-demonize.html

***

Hard times bring out the best in some people and the worst in others.  These days I find myself paraphrasing the Serenity Prayer – asking for “the wisdom to know the difference.”

Occupied

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I sat up and took notice the other night when a local news announcer complained that the “Occupy Sacramento” protestors “could not even say what they want.” In other words, they won’t play by the rules – you know, the unwritten rule that says when a TV station sends a van to cover your event, you need to have your sound-byte ready. How else can they work it into a one minute segment and move on? How else can you be neatly pigeonholed?

Actually, there is at least one articulate answer to the question of what the protestors want, supplied by Naomi Klein, a Canadian author and activist, at the “Occupy Wall Street” rally in New York. http://www.thenation.com/article/163844/occupy-wall-street-most-important-thing-world-now. This link comes courtesy of Genevieve’s blog, Look Who’s Blogging Now, which you can find on my blogroll. I suggest you check it out if you are interested in this latest eruption of frustration with the status quo, since Genevieve is off to check out the “Occupy Minnesota” protests, and will likely have more to say.

Occupy Wall Street protestors

Perhaps one reason I took special notice of the protests that night, was because I’d been reading of another famous entity that didn’t seem to be playing by the rules; I mean the universe we live in. If – and this is a big if – a large group of European physicists are right, and neutrinos really move faster than light, then some of our core assumptions about the nature of matter are wrong. Here’s a good article by Jason Palmer, science and Technology reporter for the BBC news: http://scienceblogs.com/startswithabang/2011/09/this_extraordinary_claim_requi.php

So this neutrino walks into a bar a moment after he’s ordered a beer…

Suddenly we’re faced with conclusions like these:

  • Twentieth century politics no longer works.
  • Twentieth century economics no longer works.
  • Twentieth century physics may need to be revised at its core.
  • As I have often discussed here, twentieth century publishing models are spluttering, and I’m sure you can think of other specialty areas where the past no longer functions as a reliable guide to the present.

Something similar happened a hundred years ago. In 1905, Freud published The Interpretation of Dreams, and Einstein published his special theory of relativity. Nineteenth century notions of human nature and the world no longer fit. The start of World War I nine years later marked the greatest failure of business-as-usual in the history of the world (up until then).

So what happens now?

Einstein said, “The mind that creates a problem is not the mind that can solve it.” In other words, we have people who are sick of the status quo, but for the moment, avoid easy answers. Analogies to the Tea Party are obvious enough that even this week’s Saturday Night Live picked up the thread. As I recall, the media was frustrated with the Tea Party in the beginning for the same reasons – no central spokesperson, no succinct Powerpoint agenda. Once they sent people to Washington, the Tea Party got buttonholed pretty fast as a one-issue-movement. “Balance the budget without raising taxes and life will be good again.” Does anyone, even a member of congress, really believe that?

Here’s an observation by a local man:

“The enemy of my enemy is my friend? Despite reasonable differences, tea partyers and “occupiers” have far more in common with each other than with the politicos they elected to represent them. Conversely, Republicans and Democrats have more in common with each other than they do with the people who voted for them.” Bruce Maiman, “Wall Street Protestors, meet the tea partners,” editorial in The Sacramento Bee, Oct. 7, 2011, p. 13

The news media, even NPR, refused to acknowledge the occupiers for more than a week, but they didn’t go away. I hope they stay out in the open long enough for people and especially politicians to really get a glimpse of the underlying disappointment, fear, and outrage that animates so many who can no longer be soothed by simplistic answers.

What do they want? For now, “None of the above,” is a valid answer!

A View From Outside Our Borders

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I had not planned to comment further on politics or the economy, but recently, in my geek mode, I was cruising for iPhone apps and downloaded the one for The Economist. I was so impressed with the first editorial I read that I decided to pass it along, as a pertinent view from an expert outside our fray.

If you favor the view that austerity is the way to prosperity in the short term, you’re likely to be disappointed because this editorial echoes others I have read suggesting that we have recently been asking the wrong questions.

The article is from the August 6, issue, “America’s Economy:  Time for a Double Dip?”   http://www.economist.com/node/21525405.  You may have to register to see it:

If America does manage to avoid recession and slowly begins to pull out of this mire, it will be testimony to its underlying strengths. It still has huge advantages over other rich countries: a younger, less-taxed population, a more innovative economy and, for now at least, the dollar as the global reserve currency. If only it had the political leaders to match, its chance of avoiding recession would be far better than one in two.

***

And now I return to my usual tricks, in particular, reading a gripping adult fantasy that I plan to review later this week.

Stories of the Fall

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I started this blog to write about stories, imagination, and spirituality.  Initially, when I spoke of stories, I meant fiction.  I now use the word in the wider sense suggested by James Hillman when he defined psychology as, “the study of the stories of the soul.”  I also use “stories” as Professor of Religion, David Loy, did in his book The World is Made of Stories, a meditation on the worldwide intuition that what we normally see is not “reality” but our stories about reality.

Right now, stories of money and its lack weigh on everyone’s mind. I have my own stories of recent events that I hesitated to share until yesterday, when I saw that Rush Limbaugh accused the president of, “engineering the decline of the American Republic.”  http://awareamerican.wordpress.com/2011/08/09/limbaugh-on-market-collapse-obama-engineering-the-decline-of-america/.  I decided that since it’s Amateur Hour, I might as well weigh in.  Here’s my story of why the United States and Europe find themselves in such a colossal mess:

***

We are still in the early stages of globalization, but no one seems to remember that.  Limbaugh should blame Al Gore for inventing the internet, the steam engine of our current post-industrial revolution.  The changes are going to take as long, be at least as sweeping, and at least as traumatic as those of the first Industrial Revolution.  Here are a few key events:

1)  NAFTA:  The North American Free Trade Agreement, which went into effect on Jan. 1, 1994, marked the beginning of the end of blue collar work as a viable means of livelihood for large numbers of people in this country.

NAFTA protest

2) Offshoring White Collar Jobs:  This picked up in earnest in the late 90’s, as the internet made it feasible to hire large numbers of skilled foreign professionals for a fraction of the cost of their US counterparts.  I remember lots of phone conferences at the end of the day with engineers in Asia who would sometimes have solutions in our inbox in the morning.

The Y2K scare delayed the effects of sending thousands of tech jobs overseas, but once it was clear that the world was not going to end, the “dot com bust” ended the party for good.  Springsteen’s blue collar lyrics came true for professionals as well:  “Foreman says these jobs are going boys, and they ain’t coming back.”

3)  The Economy on Speed:  Thanks to Alan Greenspan, who held interest rates artificially low, and George Bush, who started two wars, the bust was delayed, but delayed only.  Quite a few people saw it coming:

  •  In 2004, a poster on a Motley Fool bulletin board said, “Soon our biggest industry will be selling each other beanie babies on eBay.”
  • Ca 2004, Warren Buffett called derivatives, “financial weapons of mass destruction.”
  • By 2006, people on all the financial websites were warning that a housing bust was no longer a matter of “if” but only of “when.”  The only thing no one fully realized then was how bad it would be.

Our problem now is not just that housing prices crashed in 2008, but that since the turn of the millennium, housing and consumer spending have been our major industries.

So what comes next?  Here are a few random suggestions and observations, not necessarily in order of importance.

1)  The President should demand to see Rush Limbaugh’s birth certificate.  Evidence suggests he is an alien – and I don’t mean the kind that comes from another part of planet earth:

2) On the Sunday before the debt ceiling resolution, I saw an interview with General Motors CEO, Dan Akerson, that made me hopeful.  Not only has GM paid back the government bailout, but they’ve done so with the introduction of fuel efficient cars.  Akerson articulated our need for independence from foreign oil that politicians since Jimmy Carter have talked about without effect.  Other American auto makers have echoed Akerson’s sentiment.  Now that greener energy is becoming profitable, there there is hope for eventual movement, growth and jobs in that sector.

3)  I’d like to see every Democrat in Washington read this article Julian Zelizer posted on CNN.com, “Where are the Democrat’s Ideas?”  http://www.cnn.com/2011/OPINION/08/08/zelizer.democrats.ideas/index.html?hpt=hp_t1

4)  We all need to look at the situation in Britain as an example of what could happen here if politicians try to balance the budget with only draconian cuts.  It’s time for people who care about the country to name the Flat Earth Party for what it is – an assortment of morons who don’t understand that they live in the 21st century and not in 1776.

5) Vote against any candidate who claims to have “a plan to create jobs” – they are either deluded or lying.  In discussions I’ve heard, usually referencing Japan, the only government action that seems to work is stimulus money applied for the long term, they way you have to use a lot of matches to start a fire with wet wood.   Unfortunately, we’ve exhausted the means and will to do that.

***

If you’ve actually read to the end of my rant, thank you.  It’s no more outlandish than claiming a single man could bring down our Republic all by himself.  To paraphrase Hillary Clinton’s book, it would take a village to do that – a large village, like Washington, DC.

How Much is Too Much?

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I have to thank Ceinwenn for this topic.  He or she (I can’t be sure, since the link takes me to a password protected forum) commented on my previous post, Three Requirements of a Book Review (?).  Ceinwenn felt I had given away too much plot info in my review of  David Baldacci’s First Family.  It’s entirely possible.  Several comments mentioned avoiding spoilers, something I have not considered as much as I will now.

In my own defense, I would cite the similarities of a synopsis, which you use as a design and advertising tool with your own fiction, and the plot exposition section of a book review.  In a synopsis, you must reveal what happens; you can’t leave an agent or editor guessing.  In a book review you must not.  Got it.  Thanks.

But that wasn’t what I really wanted to talk about here.  Ceinwenn’s comment spun me off thinking of several recent things I’ve said about blogging, and specifically my discovery that the public act of blogging is far more stimulating than the private act of writing in a journal.  The public nature of blogging makes it challenging in terms of deciding how much self-revelation is right.

My wife has commented on my tendency to get too academic and boring, which is an easy path for me to take.  On the other hand, I remember a psych teacher who was Mr. Sensitive-Self-Revelation, and it wasn’t a pretty sight!  A remember a very calm and poised young woman walking out of the class, shaking her head and making barfing noises.

You get what I’m saying.  As a blogger I want to be real and I enjoy the same quality in others, but I’ve used the delete key on posts that went to far.  I might write about an embarrassing moment, especially if there is humor involved, but I’m probably not going to post my most mortifying-ever experience.  You know the one – you’re driving along and it comes to mind and you slink down in your seat in case the nearby drivers can read your mind.

Some topics rouse caution immediately, notably politics and religion.  Mary and I have a couple of long-term friends that are long-term because we learned early on to stay off these topics.  Here on this blog I circle both politics and religion, but I keep more of a distance than I would personally like to.  Still, because I really dislike door to door religion or candidate salespeople, I don’t want to risk using this space to invade anyone’s right to decide for themselves.  Fortunately, tonight I get to quote someone brilliant on a political topic.

I’m traveling.  As a matter of fact, I’m attending a two day intensive teaching session let by a Tibetan Buddhist teacher of international renown (forbidden topic #1).  I got back to my room and flipped on the news just in time to see the President’s message that a compromise is in the works. (forbidden topic #2).  Whew!  No one with their head screwed on right could wish to see our country in default, and yet, the whole situation is icky!  Have you ever gone for a swim in a lake or river that was too full of alge?  You come out feeling slimy.

It’s far to easy to blame someone else, but none of us are innocent in this mess.  We elected these clowns, most of whom are doing what they think we want them to do in order to get re-elected.  It cuts a lot deeper than that, and once I get home, I may quote from an article I found that has a lot to say about this dance of the public and the politicians.

Meanwhile, here is the brilliant comment I promised, from Walt Kelly, creator of the wonderful comic strip, “Pogo.”  This particular panel was printed in 1971, on the occasion of the first Earth Day, but its message took on a life of its own that goes beyond any single issue.  If we could learn one thing from this latest crisis, this would be my vote.  We, as a nation, will not be destroyed from without, goes the common wisdom, often repeated over the last decade – but clearly we can do it to ourselves.

Remember Real Money?

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US Silver Certificate

In 1965, my father, who worked for IBM, was assigned to the south of France for two years, so the family packed up for Europe.  Back then, except for a few parodies in Pink Panther and James Bond movies, Americans in Europe got some respect.  Our money got a whole lot of respect – everyone wanted dollars.

My mother, who was an artist and appreciated fine drawing and engraving, drew the line at most European currencies.  “It looks like play money,” she said.  No wonder!  It was colorful and had big heads!  Real money, like good old yankee greenbacks, was sober and serious – it was monochrome and the heads were decently small.  I laughed the other day at a fast food restaurant.  I handed the clerk a twenty and he held it up to the light.  No one trusts a big-head!

Our coins contained silver through 1965

My father was involved in the early development of magnetic card readers.  I remember his mood of euphoria the day engineers succeeded in programming a “1” and a “0” on a magnetic strip.  He announced that someday none of us would carry money at all.

“That sucks,” I said – my usual answer to my father when I was a teenager.  I thought of him today as I used my iPhone to buy a frappacino and then glanced at the budget headlines as I carried it out the door.

Money has always been abstract:  the great Lakota medicine man, Black Elk, called gold, “the yellow metal that drives men crazy.”  To his people, gold was just a pretty stone in the river – nothing to get excited about.

Now money is virtual as well – I used a pattern of pixels to buy my drink.  That doesn’t mean it doesn’t have as much power as it ever did – you can’t see or touch the wind, but this year especially, we have seen what it can do.  Still, in some ways, the increasingly non-material nature of money makes it seem all the more open to abuse.  As I understand it, the Fed doesn’t even have to print big-heads to increase the money supply – a few keystrokes will do it.

Standing liberty quarter

In truth, I love the convenience of electronic money.  A decade ago, when I was managing our affairs and my fathers, I had to write out 30-40 checks a month, a task that took a lot of time and was always subject to error, for my mind wanders when it is bored.  One Friday evening I wrote a payee the entire amount of my paycheck.  Luckily, that honest woman called me a few days later and said, “Uh, sir, I think you made a mistake.”

Abstract or not, we use our money for concrete things – a meal, a car, a house, a movie ticket, a new pair of shoes.  One immediately thinks of bartering, but these days, that seem rather strange.  In the last elections, a conservative senate candidate from Nevada suggested people might think of barter if their medical costs were too high.  Her opponents jumped on that statement, and their slogan, “Chickens for checkups” was a factor in her loss.

There is one aspect of money we do not think of often – in some of its forms, it is beautiful.  When I was a kid, I collected coins – just pennies for the most part.  I tended to spend anything bigger on baseball cards.  Now I have come to appreciate the sheer beauty of the two types of coins pictured here:  walking liberty halves, and standing liberty quarters.  These pictures show the amazing quality of the engraving.  Coins in this condition are premium, but fortunately, more heavily circulated specimens can be purchased for just a few dollars.  It’s quite an exercise in imagination to hold a coin that is 80 or 100 years old and wonder about its story.

It’s a lot more fun to think in these terms – of the beauty of money – than it is to think of our headlines or watch politicians on TV.  One thing “those European countries” did when we lived abroad, was periodically throw their governments out.  Even now, some nations hold votes of no confidence, which amount to a mass recall.  I remember feeling superior to that  – our system worked after all.  Now as I look at the big-heads in my wallet  – my mother’s old criterion for funny money – I doubt that I am alone in the fantasy of charging our leaders with high crimes of cluelessness and voting the rascals out.

Disruptive Technologies and the End of Borders.

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In the electronics industry, one of our truisms was that change is the only constant.  We also talked and thought a lot about “disruptive technologies.”  The term was coined by Clayton Christensen in a 1995 article and elaborated in his 1997 book, The Innovator’s Dilemma.  Even well managed firms (and Borders does not seem to have been one of these), can be blindsided by failing to recognize “the next big thing.”  This is because its first manifestations tend to be clunky and crude.

The makers of fine coaches were probably not too worried when the first loud, dirty, and expensive horseless carriages appeared.  The empty factories and smokestacks in Rochester, NY are mute witnesses to Kodak’s failure to recognize the threat that digital photography posed to their chemical business.  Tower Books, which I loved, failed to develop an online presence, and Borders, among other things, was late to the eReader party.

There is no good news in this for anyone, least of all the 11,000 employees who are out of a job.  Or everyone who found wonderful things while browsing the stacks.  Even the idea that disappearing big-box bookstores will give indies a second chance seems unlikely.  One writer interviewed on NPR, whose books are carried by Borders, suggested that future bookstores may resemble what you find in airports:  “cookbooks, vampire novels, and celebrity tell-alls.”  http://www.npr.org/2011/07/19/138499967/mich-book-chain-borders-closing-after-40-years

I remember a college town where a wonderful independent bookstore closed soon after a Borders opened. Now it has come full circle and both are gone.  All I can think of are these words of the late George Harrison: All things must pass.

So Long to the Space Shuttle

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Yesterday afternoon, I stopped at a Starbucks and used an app on my smartphone to pay for a drink.  Then I glanced at my email while waiting for the barista to finish my frappacino.  I would not be doing any of that without the the US space program, which has reached the end of an era with the last space shuttle flight.

For it was during the ten year “space race” to put a man on the moon, that miniturization of electronices found the means, motive, and opportunity to thrive.  Intel opened its doors in July, 1968, a year before the moon landing, with 100 employees and a plan to make SRAM’s.  Three years later, when they introduced the first microprocessor, the game was afoot.

In hindsight, we can see that during the tech boom, the law of unintended consequences was operating full tilt, carrying many seeds of our current bust:  the sophistication of the internet which enables the “offshoring” of hundreds of thousands of jobs even as ever increasing “efficiencies” allow employers to do more with fewer people.

Where will the “next new thing” come from?  From dreamers like  Jobs and Wozniak, who built the first Apple computer in their garage.  Or from childhood friends, like Bill Gates and Paul Allen, who were inspired by the January 1975 issue of Popular Electronics to build and sell an early BASIC Interpreter and form a company that Allen named, “Micro-Soft.”

***

In 1972, when Adam Frank was ten years old, a collection of books on space exploration  in the local library changed his life.  He decided to become a scientist.  Now an astrophysicist, teaching at the University of Rochester, he asked a number of scientists across disciplines what set them on their path.  He found that fully three generations of dreamers claim they were inspired by NASA.  What is going to ispire the next generation of scientists, he asks, for:

The loss of that dream would feel terrible for the 10-year-old I was all those years ago. More importantly, it would be a terrible loss for all the 10-year-olds dreaming now of exploration and science. And for a nation that needs science and scientists to survive, it would the most terrible loss of all.  http://www.npr.org/blogs/13.7/2011/07/08/137678718/the-inspiration-gap-and-the-shuttles-last-launch

***

Beyond all practical considerations, the space program gave moments that those who lived through them will never forget.  If you’re old enough, you probably remember exactly where you were and what you were doing when Neil Armstrong stepped onto the moon.

You probably also remember that beautiful day in January day when Challenger exploded.  Who had any idea that the loss of that crew could cut so deep?

We all know there are rhythms of expansion and contraction, of dreaming and the end of dreams.  The stars aren’t going anywhere.  Let’s hope we are able to stretch ourselves toward them again soon.