A Contractual Solution to the Credit Crunch

The credit crunch is a simple tragedy of the commons.  It is in each bank’s individual self interest to wait and see if the other institutions begin lending again.  Why stick your neck out?  Collectively the result is that no one lends.  You need a big dog to come in and change the incentives for the major players to begin lending again.

The Fed and should write up a contract and send it to fifty of the world’s largest banks and financial institutions.  The contract will specify a simple lending schedule; a ramp-up of lending over time by the institutions proportional to their size and holdings.

The contract’s obligations will kick in only if a certain threshold of the institutions sign, say 45 of the 50.  It is a conditional contract.  In the contract it states that the lending plan becomes obligatory only if 44 other institutions also sign.  So, each institution can sign and know they are bound to begin lending only if most of the others are.  Nobody is caught exposed.  Nobody sticks their neck out. 

Institutions that do not sign will lose access to the world central banks for say, ten years.  Institutions that sign on but are later found to have violated the terms will have the same penalty applied.  This solution is simple, effective and doesn’t involve bailouts or public ownership of banks.

Freedom as Forward Looking

Persons are nodes in causal webs.  Ultimately, if we trace all the springs of our actions we will arrive at processes and systems that are outside of ourselves, or not ourselves.  If our brains are hypercomplex parralel processors, then tracing back our decisions, our values leads back to events, whether atoms bouncing around or our parents saying something in our youth, of which we are not the authors.  It’s all physics one might say.

The issues here are complex and labyrinthian.  But I would like to point out that if we view freedom as forward looking or as an educative and communicative tool, we can build a freedom on solid foundations of our best supported picture of human nature.  For example, if we ground our praise and punishment (including our justice system, on future interactions, on teaching, then our praise and punishment becomes about teaching and corrective actions, rather than an eye for an eye, or that someone’s good deed is to be praised not for itself but because praise encourages repeat behavior.  

We don’t have to worry about obtaining the impossible goal of being totally self determining, full agents.  No human is such a being.  We should instead seek to improve ourselves and our communities to do better in the future.  And this sort of freedom is all we need.

Is Advertising Detrimental to the Health of Humans?

Yes and no, let me explain.  I agree that businesses and governments have for a long time been very attentive students of human nature, eliciting the hidden springs and levers that drive us to action.  Much of adverting uses glitches in the mechanisms that relate our desires to behavior, causing us to buy things that don’t fulfill the desires they were expected to fulfill.  The beer commercial with attractive actors is the most salient example.  Although certainly drinking beer is somewhat related to having sex.

At the level of the individual, the best thing we can do is educate ourselves about what advertisers are doing and how to blunt their force.  As the philosopher John Dewey continually said, either we must discover and disseminate knowledge about ourselves, or non-personal forces and groups with narrow interests will run the show undetected behind the scenes.  Part of being free means knowing how you are prone to error.

I

But advertisers as such, like science, or religion, is not good or evil in and of itself.  It its best form it is communication about how to effectively satisfy our needs and aspirations.  At worst, it preys on our weaknesses for the benefit of others and the harm of ourselves.  Witness the gambling industry.

So, should we try to eliminate advertising?  If we do, how will I know about the great new Italian place a couple miles away?  Or the newest hybrid?  Or a great new novel?  Probably, forms of advertising are the only way to communicate this information.  We must take the beneficial with the harmful and educate people in mental judo so advertising doesn’t jump them.  The alternative of a society without advertising is worse.  A society where there are no known options, whether TV’s, religions, or lifestyles, might as have no options.

Any free society needs communication, a criss-cross of information sharing.  But more than that, we need quality communication that enhances our lives, activates our abilities, and makes us more aware of the connections in and amongst our community.  We need ways that companies and individuals that are productive can make their products and services known.  There is no essential difference between advertising cars and disseminating ideas about the good, the true, and the beautiful.

My purpose is not to say that everything goes; that there are no ethical distinctions regarding advertising and the products and services sold.  My point is that some forms of communication that fall under the heading of advertising are necessary.  Advertising is too hooked into our existence to banish completely.  For if we did somehow get rid of advertising we are left with the same problem: how do we communicate our own productive efforts and activities and find others whose productive efforts we in turn value?  Abolishing advertising leaves us with the unfulfilled task of creating forms of communication that are open, free and beneficial.  Instead of getting rid of advertising, I suggest we look for new ways of communicating, while enacting smart realistic public policy i.e. limits on advertising when necessary.  Rules and freedom require each other. 

II

From our armchairs we cannot always see the effects of forms and contents of communication.  We allow lots of stuff to take place that most people probably think is harmful.  We do this for a variety of reasons; some think there is a set of naturally occurring rights that governments cannot violate, some think the truth and social progress is better served overall if there are lots of opinions and lifestyles out there, even if some are harmful.  Some see free exchange of information, including advertising, as a check on the power of governments and other agents on our freedom.  So, despite our reluctance to repress certain forms and content of communication, I believe it is legitimate to discourage certain forms of communication both in our private lives, and through smart public policy.  One cannot yell “fire” in a crowded movie theatre; you cannot incite people to violence.  These are legitimate restrictions on free communication. 

I think it is fruitful to think of these sorts of restrictions as protecting ourselves from the limitations and finiteness of humans.  It is too risky not to head for the exits when someone yells fire, reasonable debate and scrutiny are out of the question, the cost is simply too high and information limited.  As an extension of this idea we may wish to require by law the simplification of language on credit cards so that people have a better idea what they are getting into.  Of course, we do not want to hide people from reality with a paternalistic state, the line we draw must be a close examination of the question at hand, not a sweeping generalization. 

For instance, the availability of music on the internet allows music fans to sample and play music many would never have heard of with out it.  For the perspective of the music fan, the internet, with MySpace, file sharing, etc. has been a boon.  Our musical culture is no longer dictated by a small number of large corporations pushing a handful of artists.  This will be true no matter what happens with file sharing, the internet is too big and open.  Also, notice during this sea change in the West there have been no laws abolishing much of anything (although smart policies on the backend of the internet are certainly necessary).  The internet is a tool built without a dictate or law from the government.  Also, its potential to affect communication has not been tapped.  Whether, over all, the internet will be better or worse for humans has yet to be determined I think.

III

We should encourage and seek out ways, both in our private lives, and though public policy where we can encourage and discourage certain practices and behaviors.  This could take the form of reasonable rules for advertisers, no beer and cigarette ads on kids TV shows, and educating citizens, especially young citizens, about defending themselves against advertising.  As individuals, we should not patronize businesses that utilize these tactics. 

On an individual level, I think we can participate in forms of communication in our daily lives that are not associated with advertising.  This may be as simple as reading a book or participating in a support group, or getting together with friends and giving more thought to our communication.  Switching our modes of communication from the TV to real people will, I argue, transform the way we communicate and the contents of our thoughts.  The stunted, black and white communication style of the 30 second sound byte or TV commercial we be replaced by contextual understanding, careful listening and wise purposeful action.  This is our best defense against tyranny, whether by the government or corporations.  Let them listen in.  They will find no easy mark and maybe those marketeers and spies will join us.  All solutions to problems of propaganda and advertising must, at the end of the day, rely on average people getting off the couch and rearranging their lives to some extent.  One good thing is that getting off the couch improves the lives of the individuals who do so, even if no wider change occurs.  The trouble is that this sort of positive change is nebulous, difficult and often competes poorly with video games, explosions and beer.

Greenspan’s Shock, Our Mental Block

Alan Greenspan’s shocked reaction to the current economic turmoil shocked me.  The same factors that turn the engine of our economy, i.e. allowing and enforcing risks and rewards on individuals and companies based on their behaviors in the market place, can also stop it cold.  

Actions in the marketplace of individuals and organizations are to a great extend predicated on the expectations of what will happen in the marketplace in the future.  It is rational to have realistic expectations of course.  Over optimism and over pessimism are sins.  But in a sense when we act in the marketplace we are collectively not looking down.  We predicate much of our optimism on the trust that most people, most of the time, will not look down at the same time and greatly contract their spending and act as if the end is nigh.  Because if everybody contracts their spending, there will soon be nothing to spend.  When we collectively feel good about our collective prospects, this fuels real growth as we spend and investment more and higher paying jobs are created.  But when an event or events take place that breaks the spell and people anticipate that everyone else will contract spending, then if everyone thinks this way, everyone will actually contract spending.  In terms of the housing bubble, the price of housing became so high and flippers became so prevalent, that people looked down and broke the spell.  Another pressure is the high debt levels folks carry.  An everlasting bubble is theoretically possible, but it is overwhelmingly likely that in our complex world an event will occur that will pop it.  

In a culture where you can earn a lot of money without thinking in the long term, the long term will become irrelevant to daily practice.  An arms race of risk taking pushes the individual, company or sector into new behaviors once considered foolish.  If you see a fellow employee, CEO or competitor reap the rewards of large risks in the short term, there is pressure to conform to this behavior.  As this behavior becomes more prevalent, it becomes more likely that you will be pushed out of the marketplace if you do not conform to the new behavior.  What was once an innovation in behavior becomes merely what is necessary to keep up.  The synergy of activity during optimistic times has its destructive analogy in pessimistic times.  As the financial and housing sectors took more and more risks as a sector and the outlook became more short-term, Greenspan should have known that both sectors also became more fragile.  

One reason why markets cannot be trusted without smart regulation is because humans and organizations are not the perfectly rational information machines a view implicitly held by many.  We are protean adopters, who mimic successful behaviors and employ an error prone, limited rationality.  More over there is no guarantee that cooler heads will prevail if they have been pressured off the scene by more successful (in the short term) hotheads.

Democracy’s Creed

 

Democracy’s Creed

 

Pathways for Successful Democratic Interactions

·      Treating each other as free, equal and capable is a diachronic trust that treating, people as free, equal and capable will make it so.  It is a goal that regulates our present behavior.  It will sometimes fail and we will face challenges that test and strain this rule.  We may, in some instances be forced to abandon it, but it is the default stance and general rule we ought to apply.

·      Respect cashed out as careful listening, offering responses within the other’s reach, and trying on other’s beliefs, no matter how strange or hateful. 

·      Using language and interpretation of others’ language that searches out pathways for agreement and a furtherance of trust useful for future discussion.

·      Discussion and interaction that seeks polite rational argument not based on insults or deception.

·      All persons are capable of learning and change, treating them as such will elicit learning and change in others and ourselves.

Rules and Democracy

Democracy is a practice.  At every turn, at every interaction with another person of any age or position, you attempt to implement the democratic actions of listening, offering, and creative problem solving.  This does not imply a free-for-all. Rules and expectations such as fairness, respect and encouraging feedback are values needed to fulfill the democratic procedure and democratic outcomes.  The procedures and outcomes are intertwined, democratic procedures promote democratic outcomes, and vice versa.  We must promote both at once and always.  The democratic procedures and outcomes are not conundrums to be reconciled, but valued productive instruments.

Why Democracy?

Democracy, both as a political system and as a private mode of life, is the best tool to give us the good life.  It is close to a necessity.  Democracy is the practice that I can follow, and if others follow to, will most likely give us the good lives we want, while giving everyone else the best chance at the good life as well.  This is not an a priori deductive argument such as a problem of math or logic.  Such arguments fail.  It is an inductive argument; based on the full knowledge of the world, the bountiful possibilities of human nature, present human actualities and causal pathways between these three. 

If you want the good life, then you must be willing to aim for the conditions that allow the good life for all, if you expect to justify yourself to everyone.  Only if you are not forced to justify yourself in a exchange of reasons, or cut off from knowledge of the situations of such others, can you hobble along attempting to achieve your circumscribed goals while imposing, or supporting practices, that deny the good life to others.  And moreover, that good life will be in a measure impoverished, because it is not aware of what it is doing to others, and it loses out on the expanding interactions and growth that democratic practice brings.  Hence democracy means justifying yourself to the rest of society, whether literally or producing that conversation in the individual.

Democracy and Education

Education and human development and hence Democracy is, at its core, an invitation as equals to further exploration, with the teacher, parent, scientist, and citizen showing the varying strengths of successful paths and exploring new ones, rather than giving instructions to follow without further interaction or questioning.

And these provisional paths of varying certainties, whether yelling at the child not to run into the street, advising a teenager not to try meth, suggesting a book to a college student or encouraging a grandmother to participate in a town meeting, must be used because they are the pathways that create capable and learning adults who will in turn become healthy and wise parents and teachers.  People, whether stunted or wise, are formed by interactions, mainly with other people, and since we cannot develop healthy humans, let alone any humans, without such interactions, we should be planful about which ones to use and we should not be afraid to judiciously experiment with such pathways that will create better teachers parents, scientists and citizens.

Obama, Wright, Ayers

I think the connections between Obama, Wright and Ayers are tenuous at best. Moreover, I’m not convinced at all that this changes Obama’s status as a good candidate.  But let’s do a little thought experiment to see if there’s parity.  So, let’s say that McCain’s long time pastor advocated some similar, but opposite rhetoric on race from the right that would make you uncomfortable.  In addition, let’s also say that early in his career McCain attended a political dinner at the house of a person who attempted to kill anti-war activists.  How would you view this?

I wouldn’t care too much. The reason I wouldn’t care, just as I don’t care in the case of Obama’s connections to such people, is that politicians, in order to get to the place in politics that they do, must be ruthlessly goal-directed. You don’t get to be a politician at that level by acting on a moral code, or at the very least you must compromise your goals often for the sake of the big picture You are constantly saying things you don’t believe, or have no opinion, and looking for political connections to help you further your political career. It is the reality of our democracy and of how actual democracies work.

Moreover, sophisticated politicians and observers have access to the following rational. They may view themselves as representing the people and doing whatever it takes to win, for winning, is indicative that the right view has prevailed.  Or, for the more realistic, that the right view has a better chance of prevailing, maybe not all the time, but more often than not.  An analogy might be a lawyer making an argument that they find wrong, but advancing it anyway because it will convince a judge or jury. They trust the system to make the decision about the argument trusting the system as a tool for getting it right more often than not.  Ben Franklin said something similar, that the right view will prevail in open debate.  It is understandable, although perhaps ultimately incorrect to rationalize that it is okay to advocate arguments that one believes are deceptive, malicious or just plain false and still trust that the system will more often than not choose correctly.  One could in fact argue that lawyers are bound by oath to advocate for their client in the most convincing way possible regardless of their personal beliefs.  I imagine many politicians see themselves in this light.  Again, perhaps there are problems with this view, all I’m claiming.

I view politicians as lawyers.  I don’t care what sort of person my lawyer is, as long as he can represent me well, and the same goes with my political representatives. Just as self-interest usually prevails in keeping lawyers representing their clients well, so to the array of pressures and constraints in western democracies keep ambitious, ruthless politicians in line.  We do need to worry about bad politicians making life worse for us, but I would like to submit the idea that this is due more to changes in the external pressures than the actions of any given politician.  Stalins and Hitlers happen because the political landscape allows and supports their actions.

Let’s treat politicians for what they are, professionals who have teams of other professionals behind them working for the goal of survival as a political team.  Politicians are like the CEO of a small corporation.  We can and should hold them to account for their policy decisions, and expect them to behave in certain ways in the public sphere.  But focusing on their personalities and one-up-manship in patriotism draws attention away from the platforms they are advocating.  Whether a certain politician is nice, patriotic, or hates America is lost in the message massaging and spin doctoring that must take place in order to be successful.  That is the reality.  There are things we can and should do to change this reality.  But when we are making a choice in the here and now about which candidate to pick, we need to understand that who would make a good president given our current options, like who makes a good lawyer, has little to do whether they are nice or likeable or associate with bad folks.  Politicians who speak and act through their moral code do not survive as politicians in our environment.  Because their statements will not be vague enough to garner support, and their specificity will be criticized with convincing rhetoric.  What honest person can reason with the unreasonable in an exchange of sound bytes?  Either you play the game or fail and some one more willing to play will take your place.  Now, I suggest we leave aside how we judge the individual politicians, and realize that, for better or worse, our political system selects for these behaviors.  We cannot expect anything otherwise.

I accept the current reality of sleazy politicians who are ambitious, empty vessels filled with focus-grouped sound bytes. They can be controlled by external pressures such as their team of advisors, the press, congress, public opinion and their desire for lucrative post-presidential careers as speakers. Personality, core beliefs, charisma, are not unimportant, but they are swamped by daily pressures from the party, interest groups, lobbyists, the press, etc.

The pathologies of how we communicate with and select our representatives are to blame for why we get professional, ambitious, soulless, representatives, and government that could be better.  Until this basic problem is alleviated to a great extent, we’ll have to settle for sleazy lawyers representing us rather than Honest Abes.  The question as to whether, deep down, any candidate is of the latter sort is generally irrelevant to their potential effectiveness as representatives.