14 June 2011

Investors Are a Superstitious, Cowardly Lot

It always surprises people who know of my fondness for history (I did earn my degree in the field) when I tell them that we place entirely too much value on the past.  It's one thing to study what has gone before, to learn from it and to find inspiration.  It's quite another to try to recreate the past, and this mistake is even more egregious when we try to cling to the past rather than embrace the present and look to the future.

We wax nostalgic about the past, cherry picking what to remember and celebrate--and it becomes even more compounded when our understanding of an era is inherited from someone else.  Sure the 1980s were fun; Saturday morning cartoons rocked, we had much cooler toys than previous generations and the things DC Comics published in 1986 (The Dark Knight Returns, Watchmen and Crisis on Infinite Earths) still stand tall. But wait a minute.  The 80s were also an era where we all expected the Soviets to launch a nuclear holocaust and AIDS emerged and was allowed to spread unchecked because ignorant bigots characterized it as a reckoning from God against deviants.  We're already seeing revisions to the narrative of the 1980s.  Right-wingers hold up the Reagan 80s as a golden age and for their wealthy masters I'm sure it was.  What about the millions of Americans unceremoniously discharged from health care clinics and hospitals, thrown to the streets because "it's not government's job" to care for people?  Funny, but no one talks about that.

We've heard since 2008 that investors are too uncertain to put their money into the economy.  They're timid and scared, we're told, and they're burdened by regulation.  They've got billions in off-shore accounts and if we would just agree to not tax that money at all, they'll consider spending some of it here.  Oh, and they're doing the best they can to keep down the price of oil, but they can only do this as long as we continue to throw $4 billion in federal subsidies their way.  Otherwise, who knows?  Things might get 'spensive.

It's a nice little thing you got goin' here, America...
During last night's GOP debate, Newt Gingrich insisted that NASA was in the way of space exploration and should give way to the private sector.  Now, let's take a moment to remember how we even got NASA.  It was originally a program of the United States Air Force conceived by a government that viewed supremacy in space as vital to our national security.  We had to have a presence beyond the clouds, lest we forfeit it to our rivals.  We can debate today whether that was a small-minded view of space, whether it was hubris or paranoia, but what we cannot debate is that NASA was created to protect our national interests.  Gingrich would seem to be implying that NASA was some kind of tyrannical agency imposed on us by a meddling government at the expense of entrepreneurial enterprises.  It is only now that we're at relative peace with other nations and do not fear terrorists launching space shuttles that we can afford to view space exploration as an avenue for commercial exploitation.

Yet, when Republicans listen to Gingrich discuss NASA, all they hear is, "Government agency preventing economic growth...bureaucrats...meddling...regulations..." and that's all they need to hear to know to applaud.  Really?  Government regulations are a bad thing when it comes to space exploration?  Just what part of building a vehicle capable of going into orbit or beyond seems like it shouldn't be under scrutiny?  The acquisition and storage of a ton of rocket fuel alone seems like something we should want heavily regulated.  I don't want some guy to hit a big Powerball payout and decide he's going to try to build a rocket in his backyard.  You know why?  Because it can go very, very bad.  So, yes, Mr. Speaker, I do believe that regulations about space exploration should be stringent.
Do you really feel better if Joe Sixpack can build his own rocket?

Let's consider the argument that regulation is an oppressive burden for the moment. This, I think, is an even worse argument for capitalists to make but no one ever calls them out on it. There is no reason that a private sector organization should not be able to adhere to regulation, at least no organization led by the almighty entrepreneurial vision that we're told is being stifled. Remember, if you will, that DuPont testified before Congress in 1987 after a decade's worth of scientific study that there was no reason for any kind of regulation against chlorofluorocarbons. A true entrepreneur would innovate an alternative, and that's what has happened. The Montreal Protocol is recognized as one of the most successful international environmental efforts of all time by everyone who doesn't have an irrational obsession with rejecting anything involving the words "international" and/or "environmental." Regulations are only stifling if you're lazy and resistant to adaptation.
There was a time when American entrepreneurs and investors pushed one another to get ahead of the curve, to take chances.  Today, the message has been on of unified resistance to any kind of check against their own self-destructive ways.  In a recent TV interview, former General Electric Chairman and CEO Jack Welch told Piers Morgan that despite his prodigious experience running a successful business, he couldn't make any sense of Wall Street when he tried to get involved there.  There is a culture among investors that no longer considers a bonus an actual bonus; for them it's an expected lump of cash they take for granted, and nothing else matters to them except guaranteeing that it's large.  Welch recounted a conversation in which an investor's sole reaction to news about a company was, "This won't affect my bonus, though, right?" [paraphrased]  What kind of vision or leadership is that?
The guy who revived G.E. couldn't make sense of Wall Street.
That tells you all you need to know about how crazy it is.
I am the first person in my family to go through college (my dad took some courses through the G.I. Bill, but never completed a degree).  No one will ever openly admit it, but education isn't particularly valued in my family.  My grandfather rose to a well-paying position with Louisville Gas & Electric with nothing more than a high school degree.  He's a no-nonsense guy, but one with a quick wit who can think on his feet.  In his generation, those traits were respected and given the chance to flourish.  His kids grew up believing that if they put in the time and effort, someone would recognize them in the same way and give them the same kind of opportunity for promotion and success.

Unfortunately, times change.  I'm comparable in innate talents to my grandfather (though, between you and me, I have a better sense of humor).  Without my college degree, I'm nothing more to an employer than just another menial laborer with a penchant for $5 words.  With my degree, all I am is a potential replacement for someone on the verge of another promotion.  I would be cheaper because I'm less experienced, so if I was to get a job today it would be at the expense of someone else whose only offense may be that he or she has put in years with the company.  Unlike my grandfather, they're not being recognized and rewarded for their loyalty and hard work.  They're being replaced by someone cheaper, because that's what protects the bonus of the guys at the top.

I'm reminded of a scene in Tombstone, near the final act where Jason Priestley sees another victim of the cowboys and it pushes him to a breaking point.  While the rest of the outlaws make ready to ride into their final battle, he declares, "I'm sorry, but we got to have some law!" and rides away.  The narrative of our economic collapse really comes down to one thing: a lack of responsibility.  The purpose of regulation is to compensate for the bad judgment of individuals.  It is clear to anyone paying attention that Wall Street exercised poor judgment because irresponsibility meant a big payday at the time.  Few, if any, appear to have bothered to consider anything beyond, "I'm richer today than yesterday!" on their way to the Rainbow Room.  Regulation exists to be the grown-up in the room to say, "This is not a good choice you want to make."

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