Sunday, October 27, 2013

Self-Reliance and Politics

This might have been set up.

I've long been fascinated with the differences in ideologies held by the thousands of political organizations that are or were in power around the world. I marvel at the logic and reasoning behind the set of principles that distinguish one party from the other and the philosophy/set of beliefs that uphold the movement and forces that distinguish each party.

Every party has their raison d'ĂȘtre. There is no right or wrong. Historical context helps to determine each party's validity. And wars and other markable global events have either served as catalysts for some parties (ex: Capitalist-oriented) or as immediate elimination for others (ex: National Socialism).

I have become familiar with the United States two-party system and have since followed the back and forth on a variety of issues between the Republican and Democratic parties. I've generally followed the evolution (or lack thereof) of both parties' economic policies.

In a general sense, the Republican party's economic policy supports (i) free markets (laissez-faire economics) and have, in factions, advocated supply side economics (most notably during the Reagan years) and have characterized themselves as being "pro-business", holding individuals accountable for the country's wealth creation and economic growth. The Democratic party's economic policy supports (i) increased government spending/intervention and progressive taxation to produce the benefits required by the general population and those determined to be "in need".

The Republican party has been derided for benefiting the rich, most notably through tax cuts, and through the wealth inequality stemming from the ensuing distribution of wealth as a result of leaving the economy to its own devices. The Democratic party has also come under fire for its supposedly irresponsible push towards looking to create a welfare state, in which entrepreneurship is partially affected as a result of progressive taxation and citizens abusing the system (spending other people's money, assuming it will never run out).

The differences between each party and their distinctive economic policies are much more complicated than described, but the central idea and essence that distinguishes each party is present.

As of late, Republican obstructionism has been gaining strength, as evidenced by the recent stand-off between parties that led to the 2013 US federal government shutdown. Democratic insistence and support for Obamacare has also become a divisive issue. Poll results have found that the general US population believes that the Republican party favors the wealthy. This and other events have all become political hallmarks that demonstrate the ongoing partisanship that has plagued the US political system during the years following the 2007-2008 financial crisis.

Who is wrong and who is right often comes down to a matter of opinion. When this happens, politicians like to resort to facts. Facts, most of the time, become useful tools that help support ideologies.

Fact-checking aside, it becomes an awesome thing to witness politicians slinging mud at each side's arguments, all the while having the evidence to support it all. Some argue that democratic frameworks have favored historic economic growth - Krugman does a great job of rubbing it in. Others choose to focus on the ills produced by government intervention and make a point of the unwanted effects it produces.

The literature on this subject is endless; the effect Keynes, Friedman and other Economists have had on the economic policies favored by the Democratic and Republican parties has been remarkable. The back-and-forth between what's right and what isn't has also been schizophrenic at times. What was thought to have worked (New Deal, anyone?) before was found to not have been as successful than originally believed. Believing that something works only to find out later it has been a failure has been the crying call between party leaders for decades; warning the public of the dangers and ultimate demise of the different acts, programs and legislation presented by the opponent is the norm - some predictions have been proven right, and some haven't. Serious soul-seraching usually ensues.

The political process and the slow path to evolution is occasionally draining. The genius behind great politicians lies in their ability in absorbing (and transforming) the harsh realities that come with public service.

What becomes apparent, and ultimately undeniable, is that the different forces behind each party's ideologies were a product of supreme intelligence and motivated self-reliance.

It was this last set of words (self-reliance) that bought me to Ralph Waldo Emerson's famous essay.

I read that essay in college and I remember I was taken aback. The language was dense, the phrasing was poetic (so much, that at times it was grating), and the message was profoundly spot-on: trust yourself, believe in yourself, understand yourself and become one outside of what society determines you to be. In a nutshell: become an iconoclast in your own right, so much so, that you can readily survive anywhere.

The great political, economic and social revolutionaries (think Marx, think Keynes, think Schumpeter, think Franklin) were superhuman when it came to idea creation. Some did not live long enough to realize the effect they had on the world. But one thing connects them all: their self-reliance.

Self-reliance combined with eventual collective support and world-wide implementation bred the political systems we know today.

The text below explains the concept well. Few grasp it well enough to apply it.

But once the occasional confident visionary steps in, it becomes possible to turn the world on its head.

For the moment, the Republicans and Democrats have been mired in a political stalemate where their differences have dissipated any chance of reaching a general sense of agreement.

Let's see what self-reliant element comes in to shape things up and change what we think is certain today, which might be uncertain tomorrow.

From Emerson's essay Self-Reliance:

"And so the reliance on Property, including the reliance on governments which protect it, is the want of self-reliance. Men have looked away from themselves and at things so long that they have come to esteem the religious, learned and civil institutions as guards of property, and they deprecate assaults on these, because they feel them to be assaults on property. They measure their esteem of each other by what each has, and not by what each is. 
But a cultivated man becomes ashamed of his property, out of new respect for his nature. Especially he hates what he has if he sees that it is accidental, - came to him by inheritance, or gift, or crime; then he feels that it is not having; it does not belong to him, has no root in him and merely lies there because no revolution or no robber takes it away. But that which a man is, does always by necessity acquire; and what the man acquires, is living property, which does not wait the beck of rulers, or mobs, or revolutions, or fire, or storm, or bankruptcies, but perpetually renews itself, wherever that man breathes. 
'Thy lot or portion of life,' said the Caliph Ali, 'is seeking after thee; therefore be at rest from seeking after it.' 
Out dependence on these foreign goods leads us to our slavish respect for numbers. The political parties meet in numerous conventions; the greater the concourse and with each new uproar of announcement, The delegation from Essex! The Democrats from New Hampshire! The Whigs of Main! the young patriot feels himself stronger than before by a new thousand of eyes and arms. In like manner the reformers summon conventions and vote and resolve in multitude. Not so, O friends! will the God deign to enter and inhabit you, but by a method precisely the reverse. It is only as a man puts off all foreign support and stands alone that I see him to be strong and to prevail. He is weaker by every recruit to his banner. Is not the man better than a town? Ask nothing of men, and, in the endless mutation, thou only firm column must presently appear the upholder of all that surrounds thee. 
He who knows that power is inborn, that he is weak because he has looked for good out of him and elsewhere, and, so perceiving, throws himself unhesitatingly on his thought, instantly rights himself, stands in the erect position, commands his limbs, works miracles; just as a man who stands on his feet is stronger than a man who stands on his head. 
So use all that is called Fortune. Most men gamble with her, and gain all, and lose all, as her wheel rolls. But do thou leave as unlawful these winnings, and deal with Cause and Effect, the chancellors of God. In the Will work and acquire, and thou hast chained the wheel of Chance, and shall sit hereafter out of fear from her rotations. A political victory, a rise of rents, the recovery of your sick or the return of your absent friend, or some other favorable event raises your spirits, and you think good days are preparing for you. Do not believe it. Nothing can bring you peace but yourself. Nothing can bring you peace but the triumph of principles."

Sunday, October 20, 2013

Econ/Finance and Neuroscience Articles worth reading

From Barry Ritholtz's weekend reads collection:

Until we can all do this, I'll keep sharing knowledge on my blog.

1. What We’ve Learned from the Financial Crisis - one of the best HBR articles I've ever read. Period. Also - one of the best if not the best all-encompassing financial/economic 2008 - 2013 crisis summary out there.

2. You can increase your intelligence: 5 ways to maximize your cognitive potential - Increase your intelligence by following the 5 primary principles: 

(i) Seek Novelty, (ii) Challenge Yourself, (iii) Think Creatively, (iv) Do Things The Hard Way and (v) Network.

Sunday, October 13, 2013

I say jump, you say how high

Paul Krugman recently made a reference to a Tom Wolfe essay titled "The Ultimate Power: Seeing 'Em Jump" in his article about the GOP and the true motivation behind the US's top money makers: the 0.1%.

The essay, first published in New York Magazine in 1968, focuses on power - Wolfe goes on to describe in detail how power-hungry New York politicians and businessmen lead their lives, indulge in very specific possessions and treat their underlings.

An obvious question that lacks an obvious answer quickly surfaces: What lies behind their drive for power?

To answer, Wolfe references Abraham Ribicoff, a former Connecticut Senator and Governor, who offers an interesting take on what drives these people:
On what really drives people like congressmen and senators - fame? money? the exercise of power? 
Ribicoff says: 
"It's not fame, at least not in the sense of publicity. They see their names and faces in the paper so often they take it for granted. It's not money. There may be some congressmen with deals going, but most lose money while in office because of the cost of campaigning and entertaining. It's not even the exercise of power, at least not in the sense of putting a bill through or having a part in policy decisions. For most of them it is something else. It's more...seeing people jump. It's a feeling...knowing that anywhere they go, people will move for them, give way, run errands, gather around...and jump..." 
Wolfe adds: 
Jump! Power is, after all, control over people's lives. So perhaps it is natural that the symbols of power - as opposed to mere fame or wealth - should involve people jumping, i.e., acting like servants or loyal vassals.

"Now, raise your hand if you like it when they jump."

I'd be hard-pressed to think of a better way to describe most politicians.

Cristina Fernandez from Argentina, according to an article in The Economist, has built an administration and cabinet full of jumpers (or as Argentines call them, "sock-lickers"), that cannot exist without her.

Fidel & Raul Castro, Evo Morales and Nicolas Maduro are all examples of leaders that not only have jumpers, but also have historically gotten rid of those that do not jump, threaten to stop jumping or just simply, for valid reasons or not, cannot jump anymore.

Africa's longest-serving leaders (Ethiopia's Meles Zenawi - 20 years, Chad's Idriss Deby - 21 years, Sudan's Omar al-Bashir - 22 years, Burkina Faso's Blaise Compaore - 24 years, Uganda's Yoweri Museveni - 26 years, Cameroon's Paul Biya - 29 years, Zimbabwe's Robert Mugabe - 31 years, Angola's Jose Eduardo dos Santos - 32 years, Equatorial Guinea's Nguema Baso - 32 years, until recently, Libya's Muammar al-Gaddafi - 41 years - reference) certainly have their fair share of jumpers, and it'd be idiotic to assume that they're not turned on by others jumping for them. If anything, after so many years in power, it would have to become even reasonable to assume that these men can't help it - their own search for power has made them addicted to it.

They thrive; their people languish.

The world economy suffers.

Mind-numbing subservience squashes entrepreneurship.  Citizens that aren't free end up either working for the detrimental system that limits them (which becomes more powerful through their conscious promotion) or are paralyzed by it.

Global trade advances at a snail's pace. Necessity provokes reform and advances, but mires the newly erected economic structure with corruption and conflicts of interest.

Education is perverted. Creativity and innovation is cornered and made to forcibly trudge through pre-approved channels - thus dampening, stagnating and deviating the creative process.

Those are some general effects.

To describe what lies behind this, one might think of pride, the most serious of the 7 deadly sins; a vice to watch out for, mainly because of the dangers and moral pitfalls related to superiority complexes.

In a religious context, pride has been a point of discussion since Lucifer was cast out of heaven for challenging his Creator. God said "Jump" and Lucifer said "You jump." That was it.

On earth, people are free to make others jump - which is fine, if the jumping serves a purpose. After all, someone has to jump.

The problem, in a nutshell, comes when the jumper is made to jump for its own sake.