Capitalism: A Love Story

Capitalism: A Love Story is typical Michael Moore – extremely one sided.  But as always, there are some pretty upsetting truths in it!

For instance, did you know that companies like Walmart, Hershey’s, AT&T, SBC, Winn-Dixie, Nestle… (the list goes on and on) may have reason to want you dead? They actually take out life insurance policies on their employees.  And no!  Not just on the executives where it might make some sense, but on the “peasant class” workers. They call it the “Dead Peasant Policy” or the “Dead Janitor Policy”.  These insurance policies account for 20% of all life insurance policies sold!!!

So say your wife, who works in the bakery at Walmart, suddenly dies.  How would you feel if you got no money after her death, but Walmart (who basically worked her to death) gets $80,000?  That was one story Michael Moore presented.  Another was a woman in Houston whose husband brought in over $6 million all told. Of course, the companies don’t want you to know they are taking these insurance policies out on you and it’s been a matter of contention.

If companies insure an executive, then it could be argued that they are protecting their investment.  But the insuring of “rank and file” employees is merely for profit. The insurance proceeds are tax free and they have an investment component which allows companies to earn tax-deferred returns while the employees are still alive and tax free loans can be taken out on the policies.

Does this make any sense? Why not work your employees to death if you have insurance policies on them and their families have no idea such policies exist!  This is super scary shit to me!!  How do I know that my husband and son don’t have insurance policies taken out on them? I don’t!!  Even companies my husband used to work for might still have insurance policies on him.  What right does a company have to do this??  It gives them more reason to want them dead, doesn’t it? Overwork your employees or stress them out by laying them off and the employees you’ve hired stand to be far more profitable dead than alive.  I am seriously bothered by this!

OK – so other stuff I took away from the film?  I don’t know.  Like all Michael Moore films, I have to weigh it out for a while.  There are plenty of people in the U.S. that live like those in third world nations.  We were made aware of one of those areas after Hurricane Katrina and take a trip to the Appalachian Mountains or some Native American reservations and you’ll hardly believe you are in the U.S.!!  I saw Moore’s Roger & Me about his hometown, Flint, Michigan, which seemed very much like a third world country – people killing and selling rabbits to survive! Moore claims that what was done to Flint is being done all across America, now.

So does that mean Capitalism is the great evil Moore makes it out to be? I don’t know.  Personally, I don’t have a lot of faith in it.  But that’s merely based on personal experience and not educated understanding.   I agree with all of the Catholic priests that were interviewed, however.  Capitalism, as we have it now, is based on greed.  Not compassion.

I loved the “WWJD” stint.  We’re supposed to be a Christian nation, but would Jesus tell someone who is dying that he can’t heal him because he has a pre-existing condition and that he’ll have to pay “out of pocket” for his medical expenses (which probably won’t heal him either, if Jesus can’t heal him!!)   Would Jesus belong to a hedge fund?  Would he sell short?  Would he agree that the richest 1% should have more money than the 95% of us who are under them combined? Wait!!  Did we miss something??  Did Jesus change his mind and decide that it was easier to get into heaven with money (blessed are the wealthy)?  Can you love both your money and your neighbor if you deny your neighbor the right to see a doctor or have a home to live in in order to better your bottom line?

OK – I know.  All of this is more tricky than Moore presents it.  I’m on the 17th lecture (out of 36) of America and the New Global Economy by Professor Timothy Tayor of Macalester College from The Great Courses Collection from The Teaching Company which offers a recent history of economies around the world in relation to America’s economy.  But I keep wondering why it is we assume that as long as all governments are on the path of economic growth, they are assured to offer the best possible benefit to the people of those nations.  It’s completely assumed.  But is it true?   We almost look at it as a religious, moral imperative. If we look to America as an example, and we can combine the income of 95% of us and that is less than the income of the top 1% of earners in the U.S., can we say with absolute faith that economic growth is THE “Way”?

Shakespeare Wallah (1965)

In December, I read Fareed Zakaria’s The Post American World because I heard that Pres. Barack Obama was reading it.

In the chapter entitled,”The Mixed-up Future”, Zakaria writes:

When thinking about what the world will look like as the rest rise and the West wanes, I am always reminded of a brilliant Indian movie, Shakespeare Wallah, made in 1965.  It features a troupe of traveling Shakespearean actors in post-colonial India who are coming to grips with a strange, sad fact. The many schools, clubs, and theaters that had clamored for their services are quickly losing interest. The English sahibs are gone, and there is no one left to impress with an interest in the Bard. The passion for Shakespeare, it turned out, was directly related to British rule in India. Culture follows power.

I put Shakespeare Wallah on my Netflix queue and just got around to watching it tonight. It is a kind of scary thought that the U.S. will likely experience what this troupe of British actors experienced in India. At one point, they were the height of culture because Britain was in power.  But as soon as Britain was no longer in power, guess what took the place of the Shakespearean troupes? Bollywood!

Zakaria writes:

     In other words, part of the story in Shakespeare Wallah is the rise of mass culture.  Bollywood – India’s indigenous mass culture – is a cultural mongrel. Because it is part of mass culture, it borrows from the world’s leader in (and perhaps originator of) mass culture – the United States. Many Bollywood films are thinly disguised remakes of American classics, with six to ten songs thrown in. But they also retain core Indian elements. The stories are often full of sacrificing mothers, family squabbles, fateful separation, and superstition. The West and East are all mixed up.

     The world we’re entering will look like Bollywood. It will be thoroughly modern – and thus powerfully shaped by the West – but it will also retain important elements of local culture. Chinese rock music sounds vaguely like its Western counterpart, with similar instruments and beats, but its themes, lyrics, and vocals are very Chinese.  Brazilian dances combine African, Latin, and generically modern (that is, Western) moves.”

Shakespeare Wallah is about the Buckingham family which is loosely based on the true experiences of the Kendal family.   Felicity Kendal actually plays Lindsay Buckingham, the British Shakespearean actress who falls in love with Sanju.  Sanju (Shashi Kapoor) is involved with a famous Bollywood star, Manjula, played by Madhur Jaffrey.  (I have one of Jaffrey’s excellent cookbooks. I didn’t realize she was also an actress!) The Buckingham’s used to command attention, but when Manjula comes to see their play, all eyes are on her.  It is she who now commands attention.  (In real life, Feliciity’s older sister, Jennifer, married Shashi Kapoor!)

Zakaria writes:

Modernity belongs to everyone now, not just the West. Chinese rock vastly outsells Western rock. Domestic movies everywhere are thriving.  The real effect of globalization has been an efflorescence of the local and modern. Modernity has a western face, but it no longer belongs to the west. The great shift in the world is going to be more about power than culture.

Probably the most difficult thing for the Buckingham’s was the gradual realization of their increasing lack of importance.  I think that is going to be equally hard for Americans.  I remember attending a “Green” Conference (I don’t remember what it was actually called) 5 or so years ago. One of the speakers was from Dallas and he was encouraging everyone to support local business because he anticipated that America would no longer be as important to the world as it was then because other countries were becoming so powerful, especially China. Jobs would not be as plentiful for U.S. citizens because they could just as easily be filled by people from other countries as from the U.S. Countries would no longer be clamoring for U.S. goods and services because they could just as easily get them from other countries. The only real way to protect our lifestyles, this speaker said, was to begin to intentionally support our neighbors. Eat at the restaurant that is owned by the people who live by you. Buy goods from your local farmer. Support local retailers.  Keep the money flowing locally.  We have the whole Keep Austin Weird campaign which is an encouragement to buy local. But most local businesses don’t make it anymore. What happens now that so many large U.S. Corporations aren’t making it either?

The world may continue to have a western face because it has been so heavily influenced by the west. But it most definitely no longer belongs to the west!  It’s going to be an interesting shift.   After watching Revolutionary Road, I wonder if it might be somewhat cathartic, difficult though it may be?

The Economic Times

I suppose we’ve all been taking a course in economics of sorts. Economists have been coming out of the wood works all over the place to explain what is happening to the U.S. Everyone has their opinion but it’s hard to imagine anyone really knows what should be done to set things aright. It’s like sailing uncharted waters – who knows where we are going to end up?

I feel nervous about where we’re headed even though sometimes I think I’d love to give up my suburban lifestyle to live off the grid somewhere. I sometimes have visions of Grapes of Wrath and the horror stories of poverty and eating nothing but pinto beans for months on end. (My grandmother told about life during the Great Depression.) Sometimes, the visions are more like something out of Mad Max. Truth be known, I’ve been scared of an economic crash my entire adult existence.

I have noticed, over the years (and years), that it is extremely difficult for me to accept that I might actually deserve “the good life”. I have always imagined the sunset of my life will be toil and drudgery so I’m forever waiting for the economic bottom to fall out from under me. I know it’s irrational and that my feelings are not a prediction of current events. But I have to wonder – how many of us have been living with this irrational fear? I tend to be very practical because of it, but it would make sense that people would take crazy advantage of the good times if they think the bottom will eventually fall out from under them. Especially if they deny the fear.

I know exactly where this idea came from, too, because once upon a time I was absolutely convinced that money was the root of all evil. I spent a lot of time working through my thoughts on that. Money has no inherent value. It’s what people do with it and their relationship to it that creates the meaning it has for each of us. Anyway, I am quite certain this distrust of money has maternal roots. One day in high school, I had the gall to propose that people were driven by what makes them happy. This made my mother almost violently angry because she hadn’t raised me to believe the purpose of life is happiness. She had raised me to know that the purpose of life is hard work! That good old Puritan work ethic.

Remember Calvin, one the Puritan’s most beloved theologians? He said that salvation was pre-ordained and that there was nothing you could do to be saved. You were either chosen by God, or you weren’t. And although I find it unlikely that he taught it, the result of his teaching was the idea that the best you could do was look like you were one of the chosen through piety and hard work which would bring prosperity. Financial prosperity, of course, was equated with being blessed by God (unless, of course, you used that financial security as an excuse to sit on our ass and act pompous). Voila, hard work becomes the very meaning of life. The Puritan work ethic and capitalism were a match made in heaven. Capitalism probably wouldn’t have flourished in the U.S. like it did without Puritanism.

I have a deep admiration for much of the Puritan ethic and fully realize we have every reason to be grateful for the hard work ethic of our ancestors. But this ethic becomes problematic when material abundance (and especially material excess) becomes equated with proof that we are blessed by God (or the universe or whatever).

Hard work doesn’t always bequeath financial prosperity. You can be struck down by a heart attack because of all that work. Does the hard work remain meaningful? Or maybe you are a Mexican immigrant who works 90 hour plus weeks just to barely make ends meet, but can never get ahead. It’s definitely hard work, but is it meaningful? And is it absolutely true that financial prosperity provides meaning?

I tend to agree, life is more meaningful to me when I am engaged in meaningful work. But hard work itself doesn’t provide meaning. Sometimes, it just makes life extremely difficult and ages you before your time. Plus, it’s become a national distraction. We are all so incredibly busy that we barely have time to stop and think about the consequences of all our frantic production and consumption.

Even though I don’t have a lot of it and live a fairly modest life, I have an obsession with money. I do not have a healthy relationship with it. I have had abundance most of my life, and I have not been grateful for it because I’ve been preoccupied with losing it. And because I am so obsessed with losing it, I’m afraid to seek out meaningful work. I’m content to take the meaningless 8 to 5 job that will pay the bills rather than preparing for an engaging career. I have a difficult time convincing myself that I’m worth it – that I deserve to have a career that makes me happy. 

The Post-American World by Fareed Zakaria

Wow!  What a book.  I learned a ton!  Here are my sketchy notes:

We are moving into a post-American world not because America is in decline, but because there is a rise of the rest of the world. The central challenge of this rise will be to keep the forces of global growth from turning into the forces of global disorder and disintegration. Economics, information and culture has become globalized, but political power is till tied to the nation-state which increasingly becomes less able to solve problems unilaterally and is less willing to come together to solve common problems. As the number of players increases, the challenge will become even greater.  We need to learn to view things from various perspectives rather than just our own.

U.S. Secretary of State James Baker said, in 1991, that the world was moving toward a hub and spoke system, where every country went through the U.S. to get to its destination, to a point to point route. The rest of the world doesn’t have to go through us to get to where they want to go anymore and so are becoming increasingly interested in themselves and less interested in the U.S. The rise of the rest is a direct consequence of American ideas and actions – the U.S. globalized the world.   The question is, can the U.S. globalize itself?

Many countries decry the loss of their culture to that of the American culture because the rise of a mass public empowered by capitalism and democracy looks American.  But what is really happening is that the old, hierarchical order of these countries is in decline. The new mass culture is important because in a democratic age, quantity trumps quality. I find this interesting because it was Nietzsche’s fear that because democracy places the focus on equality, quality would no longer be valued. (Nietzsche calls it the “lie of equality” because equal “rights” is necessarily dependent upon an abstraction of values which he doesn’t think exists.)

Kurosawa had a lot of similar complaints about democracy. But what he liked about democracy was the empowerment of the individual and that is what is starting to happen with the rise of the rest of the world. Zakaria says that when he was growing up in India, global affairs were defined through a Western lens. But today, the news represents a great diversity of perspective on the world. This is the growth of new narratives – the rise of individual identities.

China has had incredible growth, more than any country in history. It remains a communist state, but history has shown repeatedly that a market based economy that achieves middle-income status tends toward liberal democracy. China has yet to reach that middle income status so we have yet to see if it will become democratic, but it will be interesting to watch play out.

Zakaria asks: What does God have to do with foreign policy?  Islam and Christianity create a missionary spirit within foreign policy. The Protestant sense of purpose has made a deep mark on global affairs. China, on the other hand, has no such sense of missionary spirit or sense of destiny. It doesn’t need to spread anything to anyone to vindicate itself.   So things like the lack of concern for human rights in other countries may look bloodless to those of us who are used to spreading our ideals, but that’s not necessarily true. It’s just that the veneration of an abstract idea is alien to China’s practical mindset.

According to Robert Weller, “The Chinese base their sense of cause and effect around the idea of qi energy.  Qi is the stuff of feng shui, and the element in the body that is manipulated by acupuncture or Chinese herbs. It is part of a broad way of understanding the structure of the world as a set of interacting forces, complexly interrelated rather than working through a simple and linear cause and effect”.  Concepts like qi are as central to their ways of thinking as our ideas of a moral Creator to the western mindset. But this can cause some problems because Beijing has been shown to be well aware of its power, but slow to recognize its broader responsibility by arguing that it is simply minding its own business.

Zakaria asks: If China continues to act calmly and slowly enlarges its sphere of influence, seeking only greater weight, friendship and influence in the world and pushes Washington to the sidelines in Asia, making itself the alternative to a hectoring and arrogant America, how will America cope with such a scenario? The U.S. is completely unprepared for this sort of challenge. Perhaps the answer is with India, which is the second fastest growing country behind China.

India is one of the most pro-American countries in the world. In 2007, 71 percent of Indians said they had a favorable impression of America. Only America has a more favorable impression of America (83%). There is a sense in which India understands America and America understands India. We are both quarrelsome democracies. But Hindus, like the Chinese, don’t believe in God. They believe in hundreds of thousands of them which makes it extremely tolerant. All ideas are readily absorbed into Hinduism. So like China, India isn’t missionary. The only guiding principal is one of ambiguity.

American Higher Education continues to be its greatest asset. It is lax when it comes to rigor and memorization, but it is much better at developing critical faculties of the mind which are needed to succeed in life. While most educational systems teach you to take the test, the American system teaches you to think. This is why America produces so many entrepreneurs, inventors and risk takers. In America, people are allowed to be bold, challenge authority, fail and pick themselves up. America’s culture of learning challenges conventional wisdom, even if it means challenging authority.   While America marvels at Asia’s test-taking skills, Asian countries come to America to figure out how to get their kids to think. American culture celebrates and reinforces problem solving, questioning authority, and thinking heretically.  It allows people to fail then gives them a second and third chance. It rewards self-starters and oddballs. Education expenditures are considered “consumption”, but in a knowledged based economy, education functions more like savings – it is spending forgone today in order to increase human capital and raise future income and spending power.

America has an advantage over Europe because Europe is moving toward taking in fewer immigrants at a time when its economic future rides on its ability to take in many more. America, on the other hand, is creating the first universal nation, made up of all colors, races, and creeds, living and working together in considerable harmony. Muslims are much more easily assimilated here than they are in other countries. America’s edge in innovation is overwhelmingly a product of immigration.

But, for all its strengths, the American economy now faces its strongest challenge in history. We are borrowing 80 percent of the world’s surplus savings and using it for consumption.  Also, today we have the second highest tax rates of the major industrialized countries – not because American rates have gone up but because everyone elses have gone down. There are also major health care issues. Most of the cars manufactured in North America were made in Michigan for a century after 1894. But since 2004, Ontario Canada has produced the most cars. This is because car manufacturers have to pay $6,500 in medical and insurance costs for every worker in the U.S. and only $800 per worker in Ontario. The costs of the American health care system are creating a significant disadvantage to hiring American workers. Also, no where else in the industrialized world do people lose their health care if they lose their job but in America. This makes us far more anxious than other countries about foreign competition, trade, and globalization.

The U.S. is entering the 21st century with a highly dysfunctional politics. (Zakaria wrote this before the economic crash and says we are not entering it with a fundamentally weak economy – wonder if he still thinks that is true?) Our political system is antiquated and overly rigid. It is likely that our economic system will adjust to whatever challenges it faces. The question, Zakaria says, is can Washington adapt to a world in which others have moved up? Can it respond to shifts in economic and political power? Can Washington truly embrace a world with a diversity of voices and viewpoints? Can it thrive in a world it cannot dominate?

2002 was America’s Roman moment. Today we are an enfeebled global superpower with economic troubles. Anti-American sentiment is at an all-time high everywhere.  But the biggest shift is that so many countries are no longer dependent upon us. In 2007, China contributed more to global growth than did the U.S. This was the first time any nation had done this since the 1930s.

Americans believe in the virtues of competition, but we seem to have forgotten this belief when it comes to the international arena.  The U.S. has been unrivaled and unchecked and this has had its advantages but it has also made Washington arrogant, careless, and lazy. It has been driven by internal matters with very little sense of the broader environment. American officials seem clueless about the world they are supposed to be running to the rest of the world.  The costs that come with being a superpower can be easily lowered through attentive diplomacy, which went out the window with the Bush Administration.  But if we are going to gain this diplomacy, we have to let go of our fears.

Hot, Flat, and Crowded by Thomas Friedman

I got so much out of Hot, Flat and Crowded.  Friedman’s ideas make a lot of sense!

We are living in an increasingly hot, flat, and crowded world. Meaning, we are undergoing climate change that only the few stubborn few continue to deny. The world has become flat with emerging societies emulating American capitalism and industry, which adds to issues of climate change – especially as more and more people’s lifestyles improve and they demand cars and increasing amounts of energy.  China, alone, will add untold amounts of CO2 emissions into the atmosphere over the next few years.  And, the world is becoming increasingly crowded. Lots of people are being born into the world and all of those people will add increasing amounts of CO2 emissions into the atmosphere, too.

A few interesting points:

  • There is very little difference between the religious tenets of our allies in Saudi Arabia as that of al-Qaeda’s. Our energy purchases are indirectly fueling malevolence and suicide. This is thanks to the First law of Petropolitics which says that, in a petropolis, the price of oil and the price of freedom move in opposite directions. The higher the average global crude oil price rises, the more that free speech, free press, free and fair elections, freedom of assembly, government transparency, judicial independence, rule of law, and the formation of independent political parties and nongovernmental organizations are eroded. The higher the price goes, the less petrolist leaders care about what the world thinks or says about them. They have more disposable income to build up domestic security forces, bribe opponents, buy votes or public support and resist international norms. Conversely, the lower the price of oil goes, the swifter the pace of freedom. The more leaders are sensitive to what the outside world thinks of them. (A petrolist state is one that is dependent upon oil production for the bulk of their exports and government income: Angola, Gabon, Nigeria, Iran, Russia, Egypt, Kazakhstan, Kuwait, Uzbekistan, Azerbaijan, Indonesia, Venezuela, Qatar, United Arab Emirates, Syria, Equatorial Guinea, Sudan, Burma, and Saudi Arabia.  Countries with diversified economies – Norway, U.S., Denmark, Great Britain – are not subject to the First Law of Petropolitics.)
  • When a nation’s oil income goes up, the number of women in the workforce and the number of women who gain political office both go down. Oil production reduces female political influence by reducing the number of women who work outside the home.
  • It wasn’t Ronald Regan that brought down the Soviet Regime. It was the price of oil. It was $70-a-barrel oil followed by a $10-a-barrel oil that killed the Soviet Union. The best post-Iraq strategy for driving reform in the Persian Gulf is to bring down the global price of oil. We can do this by developing clean power alternatives.
  • Climate Change Deniers come in three types:
    • those paid by fossil fule companies to deny that global warming is a serious human-caused problem;
    • those scientists, a small minority, who have looked at the data and concluded for different reasons that the rapid and extensive increas in greenhouse gas emissions since the Industrial Revolution is not a threat to the planet’s livability;
    • conservatives who simply refuse to accept the reality of climate change because they hate the solution – more government regulation and intervention.
  • Climate change deniers are like the person who goes to the doctor for a diagnosis, and when the doctor tells him, “If you don’t stop smoking, there is a 90 percent chance you will die of lung cancer,” the patient replies: “Oh, doctor, you mean you are not 100 percent sure? Then I will keep on smoking.”
  • Three stages of skepticism:  One, They tell you that you are wrong and that they can prove it. Two: they tell you you’re right but it doesn’t matter.  Three: they tell you it matters but it’s too late to do anything about it. Almost all skeptics have jumped from 1 to 2 and them from 2 to 3, but jumps from 1 straight to 3 are becoming more frequent. All three positions are deeply wrong. Cool quote by Rob Watson: “Mother Nature is just chemistry, biology, and physics. Everything she does is just the sum of those three things. She’s completely amoral. She doesn’t care about poetry or art or whether you go to church. You can’t negotiate with her, and you can’t spin her and you can’t evade her rules. All you can do is fit in as a species.  And when a species doesn’t learn to fit in with Mother Nature, it gets kicked out. Every day you look in the mirror now, you’re seeing an endangered species.”
  • Cool quote by Heidi Cullen, Weather Channel climatologist: (actually Friedman paraphrasing Cullen): We humans are playing lead electric guitar in Mother Nature’s symphony orchestra. In doing so, we forget a fundamental truth: We are the only species in this vast web of life that no animal or plant in nature depends on for its survival – yet we depend on this whole web of life for our survival. We evolved within it. As we adapted to it, it shaped us into what we are. We humans need that web to survive – it doesn’t need us.  But we sure need it – and it thrives only if the whole system works in harmony.
  • The people who are going to suffer the most in a world that is hot are those who caused it the least – the poorest people in the world who have no electricity, no power plants, and no factories.
  • Everything America or any country can do to go green today will make it stronger, healthier, more secure, more innovative, more competitive and more respected. That’s why Friedman says that Green is the new red white and blue. We solve our own problems by helping the world solve its problems. We help the world solve its problems by solving our own problems.
  • A lot of Americans claim global warming is a hoax. But here’s the deal. If those who are concerned about climate change turn out to be wrong, we’ve refocused America to be energy efficient and gain in the process. The worst that can happen is that we’ll have cleaner air and water, more efficient products, more workers educated in the next great global industry, higher energy prices but lower bills, greater productivity, healthier people, and an export industry in clean power products that people across the world will want to buy – not to mention the respect and gratitude of more people around the world than ever. We won’t have to fight as many wars over natural resources. But if the climate skeptics and deniers who say climate change is a hoax are wrong, we’ll have a future full of droughts, floods, melting glaciers, rising sea levels, resource conflicts, massive disruptions along coastal areas all over the world and the human race will be nothing more than a bad biological experiment on the planet.
  • A truly green America would be more valuable than fifty Kyoto Protocols. Emulation is always more effective than compulsion.
  • If you hear a politician call for “renewable energy”, walk away. If you hear a politician calling for a “renewable energy system”, listen up.
  • Friedman says we need an ethic of conservation.  But be clear, ethics are not laws. They are not imposed by the state. They are norms, values, beliefs, habits and attitudes that are embraced voluntarily – that we as a society impose on ourselves. Laws regulate behavior from the outside in. Ethics regulate behavior from the inside out.   Ethics of conservation embrace a sense of responsibility, of stewardship, for the natural world. And, it includes trusteeship – respect for future generations who will inhabit the world we leave them.
  • The idea that going green is easy is false. We are not currently undergoing a green revolution, we are having a green party and we need to get serious. There is no easy way to do this. If we can pull it off, it will be the biggest single peacetime project humankind will have ever undertaken. Very few politicians are willing to to talk straight about the size of the challenge. We are failing right now. Between 2000 & 2006, we tripled the rate of global CO2 emissions – 3%/year.  Prior to our so-called green revolution, we were increasing at a rate of 1.1%/year.
  • Oystein Dahle, former vice President of Exxon for Norway and the North Sea:  “Socialism collapsed because it did not allow the market to tell the economic truth.  Capitalism may collapse because it does not allow the market to tell the ecological truth.”
  • We fool ourselves about the cost of things because we leave out the externalities.  For instance, a factory makes toys. The two major players are the manufacturer and consumer. But there is an externality being paid by some third parties – the short and long term health consequences of polluting the air, poisoning the river, and intensifying global warming by making those toys with coal-fired power and toxic chemicals.  We hide the costs and the products are underpriced because these costs have been hidden.  This failure to price externalities has highly negative economic, health, and national security implications.  It’s the job of government to get the market to correct this failure.
  • Politicians very often underestimate public willingness.  The public is very often willing to do the right thing when it’s clear what the right thing is and what the true costs and benefits of the alternatives really are.
  • Conservatives worry about gasoline taxes being raised or an imposition of a tax on carbon dioxide. But the truth is that the American people are being highly taxed by Russia, Venezuela, Iran, and may soon be taxed by Mother Nature.  So those who are against taxes are still for a tax.  It’s just that one goes to the U.S. Treasury rather than the Saudi treasury.
  • 9/11/01 – gas was between $1.60 and $1.80 in Amer.  Had Bush imposed a $1-a-gallon “Patriot Tax” the next day, gasoline prices would be close to $3.00 a gallon.  The U.S. government would have gotten the revenue, demand for gasoline would have fallen, and demand for more fuel efficient vehicles would have soared.  We’d already be through the transition and would not need to pay the outrageous amounts for gas we recently paid at the pump.  Sept. 12, 2008 – gas was more than $4.00 a gallon and fuel economy in the U.S. was still lousy.  All that money has gone to the oil producers.
  • China can’t afford to do what the west has done. It’s unfair, especially considering how much CO2 the west dumped into the atmosphere. But Mother Nature isn’t fair. China thinks climate change is a conspiracy concocted by the West to slow China’s growth. China is 1/5th of the world’s population and is now the world’s biggest carbon emiter. As China goes, so goes planet earth. If China can’t make a stable transition to clean power and energy, it will nullify everything everyone else does to save the earth. America has to lead a green revolution if we expect China to go green. The question is, can we do it and can China follow?
  • China has adopted several world-class policies in just the past two years, and they are working on more. In a couple of areas they are now actually leading the U.S. One benefit they have over the U.S. is that when they want to implement change, they just implement it. It doesn’t take eleven years to pass through the myriad of systems it has to pass through here.
  • The greatest thing that the U.S. could do for itself, for China, and the world is to publicly state its intention to “outgreen China”.  A little competition can go a long way.
  • Currently, we are not rising to the opportunity. The R&D norm in most industries is 8 to 10 percent. It’s less than 1 percent in the energy industry.
  • It is much more important to change your leaders than your lightbulbs.
  • Green is still more an option than necessity. That is going to have to change because as John Kerry said, “Real change comes only when people form a movement so large that Washington has no choice but to listen. It’s the only way to change the nation.”
  • The big challenge in energizing a real green revolution is that the people most affected by any climate change are not likely to be “us”. They haven’t been born yet.
  • We need a real “Department of Energy”. The main task of the current Department of Energy is to wach over our nuclear weapons stockpile.
  • We can’t keep looking at it as a matter of cost.  “If you view green as cost, it is a failure.  If you view it as an ordinary investment, it is a failure.  If you view it as an extraordinary investment that will bring transformational rewards and dramatic benefits, and therefore a huge opportunity, you will find success.”  Ramalinga Raju from Satyam, the Indian outsourcing giant.

Rational Utility Maximizers?

I don’t know why I’ve been so obsessed with understanding economics of late because honestly, I don’t think my understanding is going to help the current situation. But I persist…

I took two basic economics classes in college – macro & micro economics. I remember next to nothing about those classes except that they were my least favorite classes…. EVER!!  I detested my instructor who was an arrogant young, T.A. (not a Prof.). Thinking it might help to have the basic information presented by an actual professor with decent credentials, I recently ordered a Great Courses class on Economics led by Professor Whaples at Wake Forest University to see if that might help my dismal view. I finally started watching the first few lessons last night and realize that one of the problems with Economics I had in college is still problematic for me.

Here is my specific issue: Whaples says that he and the vast majority of economists assume we are all rational utility maximizers:

People act in a consistent manner, with a reasonably well-defined notion of what they like and what their objectives are and with a reasonable understanding of how to attain those objectives.

But is this true?? Are we rational utility maximizers?

This was the assumed sociological model in the nineteenth century. But sociology has long since moved beyond it and psychology has provided all sorts of studies that show we are not, in fact, rational utility maximizers.

Cognitive psychology has shown that we consistently deviate from the rational choice thanks to cognitive bias. We think our personal experience captures the “truth”, but that’s not necessarily so!  It has been repeatedly shown that human beings are overly confident about their judgments, especially when individuals hold strong convictions.  Also, our conscious desires are very often at odds with our unconscious desires. We tend to distort our perceptions to see what it is we want to see and then make our choices based on our distorted  perception. Perhaps our choices are reasonable based on culturally skewed perspectives, and maybe this is why the rational utility maximizer model seems to work so well. But this still seems problematic to me, although I can’t quite put my finger on why.

Whaples says Economists recognize that there are factors that inhibit rational choice and that these are called  “market imperfections”. Whaples hasn’t gone into this yet but I seem to remember being taught that the way to minimize market imperfection is to teach people how to be rational utility maximizers. (Thus, the primary function of public education is to produce effective consumers and producers.)  So couldn’t we say that our current economic system is based on an inherent economic bias that people should be rational utility maximizers rther than upon a “truth” that people are rational utility maximizers?

My husband has an MBA so I’m always asking him economic questions and presented him with this one. He jokingly replied, “You are being un-American!” But I’m not trying to say we shouldn’t try to be rational utility maximizers.    Perhaps that is an important American duty.

It’s just a musing…  if classic economics understood the rational utility maximizer model as descriptive knowledge, what does it mean to Economics that the model is now primarily viewed as prescriptive knowledge from a social sciences point of view?

As I said, I’ve only just started the lessons.  Hopefully Whaples will go into some of this and help me understand how Economics has adapted to current models of human behavior because I can’t believe it would simply ignore them.