Saturday, February 23, 2008

Recession: Expect More Flakiness

When everyone has money and is busy, they don't have time to sweat the small stuff. That cuts both ways. On one hand, they are more likely to overlook details that may matter to someone else. It's not important to them, therefore it just doesn't seem very important, period. On the other hand, if someone does catch them on something they overlooked, they are more inclined to just pay the money or do whatever seems necessary to take care of it in the easiest possible way. It's different when people have less money and more time. They are more likely to notice the details that weren't handled quite right, because now those little amounts of money seem more important. They have the time to fool with the details, and the time to hassle those who aren't paying attention. In this sense, it can be more difficult to get away with small crimes and offenses in hard times. A countervailing factor is that small offenses are likely to be more common in hard times. When everyone has money, it's pretty much assumed that everyone will pay their bills on time, that broken stuff will be fixed properly, and that generally things will work as they should. But when people don't have money, or are afraid of losing what they've got, they are likely to be more flaky. They will want to be adjusting or backing out of deals and looking for squirrely ways to save a buck. Poor countries are not known for their crisp, efficient handling of problems. As more people find it necessary or helpful to scrounge for the occasional extra little bit, it seems likely that corruption and complication will be increasingly likely, in situations where one would not previously have expected such behaviors. It is ironic, because this theory implies that the countries that most desperately need efficiency are least able to achieve it. If this prediction of one aspect of future life in America should prove accurate, it will reflect an unfortunate and ironic fact. There was a long period of time, a half-century or more, in which the U.S. had a unique opportunity to shape the terms of trade around the world. There was sufficient power to make a tremendous impact upon the processing of routine transactions in developing nations -- transactions that sometimes meant everything to the powerless. Rather than stand for corporate power and the accumulation of wealth by a few, the international image of the U.S. could now be that of a power that believed in its touted principles -- of equality, for example, and of the rule of law over all citizens. The current business climate in places like China could have been influenced favorably. Now, instead, the U.S. economy is increasingly at risk of coming to resemble that of a developing nation. Having failed to make the world a better place in this regard, we may find ourselves forced to live in the world we have helped to create.

Friday, February 22, 2008

Fools and Their Money

In the late 1980s, we had a savings & loan (S&L) crisis. It seems to have been caused by President Reagan's decision to reduce regulations on S&Ls. Hundreds of banks wound up more or less bankrupt. I worked in the Resolution Trust Corporation, a government agency created to clean up the mess. Sometime in the late 1990s, I saw an estimate that the S&L crisis cost the nation at least $160 billion. I did a calculation. That appeared to be about the same amount as the total of all federally insured student loans through 1995. In other words, the S&L crisis cost this nation as much as if we had just given out grants, instead of loans, to every student who got a federally insured loan in the 30-year (or so) period ending in 1995. When I made that calculation, I thought it was just a convenient way of conceptualizing what it meant to waste $160 billion. But now I'm thinking about how much we're spending on Iraq and tax cuts and all kinds of things we can't afford, and it occurs to me: this is the classic situation. This is a fool and his money. When your money burns a hole in your pocket, it then falls out onto the ground and troubles you no more. But if you aren't carrying around that money in your pocket, then this scenario does not apply. If you have already invested the money someplace where it was badly needed, then you don't really have the option of throwing it away. What I mean is that I am beginning to think the government really should have spent that $160 billion on giving grants to college students. Or if not on that, then on something else comparably productive. And if the government had kept on doing that -- had kept on giving grants to students, say -- then, when it came time to march off to war, President Bush would have had to explain to parents why they would now be paying the vast sums needed to prop up the universities. And then middle-class Americans would have had a strikingly more informed concept of what overthrowing Saddam Hussein might entail.

Monday, February 18, 2008

Getting Old

It's odd to see these occasional photos, online, of famous people from the 1970s and 1980s, and how they look now. Not that they all look bad. I saw one, today, featuring Goldie Hawn. She still looks like Goldie Hawn. But she's the exception. We are getting older, and we look it. That's OK, for the most part. We are human, we should expect this to happen. If anything, we should be proud of it. We have learned some things; we have been around the block a time or two. My generation, the Baby Boomers, distrusted older people in our youth, back in our 1964-1974 heyday. That was appropriate at the time. But it was also too bad for us. Now we are older people, and we don't have the confidence befitting the office. We are lame-duck old people, occupying the position by virtue of seniority; but eventually we will be shuffled offstage by new, younger old people, who hopefully will have spent their lives learning and believing that experience and wisdom are priceless. None of this helps the fact that everybody is starting to look so damned old. But, as I say, it's really OK. Being with all these old folks helps me to see differently. When I was a kid, I would dismiss or avoid people with wrinkles or grey hair. It just didn't seem that they understood my world. Now that I'm one of them, I think my world is opening up. Imagine feeling that you are not so terribly removed, after all, from your 87-year-old mother. It is a bit of an epiphany. This year, I will turn 53. It sounds like a lot. I don't feel very old, but in a kid's eyes I know I look it. I'm grizzled; my cheeks sag a bit; I'm grey. Christ, I probably even smell funny. Those kids, they have noses like a bloodhound, when they get around someone my age. Alice Cooper thought he had problems when he sang, back in 1972, "I'm in the middle / The middle of life / I'm a boy and I'm a man / I'm eighteen." What should I sing? "I've got an / Old man's face and a / Baby's heart / I'm 52 and I / May be an old fart ..." Ah, but see, I still have my sense of humor. I think it may have been the comedian Rodney Dangerfield who described a conversation with some guy: "So, Rodney," the guy said, "you lived your whole life in New York?" "Not yet!" Rodney replied with mock fright. That's how I feel. I'm in the middle of my adult life, if you start from 17 or so and run, like my folks, up into the high 80s. Who knew I'd be spending so many years as an old guy? It seems like a strange plan. But I don't write the music; I just dance to it.

Thursday, February 7, 2008

A Bet: It's McCain in the End

So John McCain will be the Republican candidate for president. He will face either Hillary Clinton or Barack Obama. My early bet is that he will beat Hillary, if she is the candidate, but that he will be beaten by Barack, if he is the candidate. I say that because people are increasingly sick of the Clintons. Not everybody, not by a long shot. But the Clinton campaigns in South Carolina and Florida provided vivid reminders of dirty old politics. Both McCain and Obama show at least the potential to be better than that. In that sense (given my previous speculation that Obama will be the candidate), I am betting that the better person will win, in both the primary and general elections. If the Democratic candidate is chosen by superdelegates, as appears increasingly likely, then I am betting that some who have committed to Clinton will find a way out. There is not a "best" candidate. Obama seems to be best at re-enfranchising the younger generation. McCain seems likely to be the best candidate for restoring confidence in the economy -- the sense, that is, that a strong hand is at the tiller. Clinton will embody issues that resonate with women. These are examples, of course; each candidate has other strengths as well. Among those various strengths, I suspect the crucial one will be the economy -- the sense of uncertainty, that is, and dread of hard times ahead. Winter will be coming in November. My early bet is that his strength will be most appreciated on Voting Day.

Monday, February 4, 2008

2008 Beijing Olympics: The Chinese Government Is Screwed

It appears increasingly likely that China will not be able to deliver air suitable for athletes, in time for the 2008 Olympics (or, indeed, for years to come). There could not be a better way to advertise China's pollution problem -- to tell the world what a terrible price China is paying for its rapid economic advance -- than to convene the planet's best athletes there, force them to breathe that air, and give them and the sports commentators something to talk about, for years to come. It also appears increasingly likely that China will present, to the world, the picture of a political mess. The Chinese government needed to be responsive to its people's dreams and concerns before 1989. If it had done so, there might not have been a protest or consequent massacre in Tiananmen Square that year. Failing that, there was an opportunity to become more responsive thereafter. That, too, has substantially failed to happen. At present, the government is ramping up its suppression of dissent. But the dissenters are not quitting. With the eyes of the world on that nation, the ugly truth will be highly visible. In short, within the Olympic context, the Chinese government is doing its level best to persuade the world that the government is illegitimate and that the Chinese route to prosperity is not the right one. This is not Abu Dhabi, with its shimmering wealth. This is a land of a billion people who cannot get clean air or drinking water. And the whole world is going to see that. Having the Olympics in Beijing was a proud idea, but it does not seem likely to serve the Chinese government well.