Sunday, October 23, 2011

The Road to Understanding

This is a story about how I learn from my children. I have many opinions, some firmly held, that, when I think about them, I’m not sure why I have them. This is particularly so with economics, everything from fiscal and monetary policy to the responsibility of the state to its citizens. My sons Chris and Nick and Grant and I talk about economics all the time, and now that Chris is a senior at the University of Chicago, studying math and economics in the halls of Milton Friedman, he has been giving me books to read, most recently Friedrich Hayek’s The Road to Serfdom.

This is also a story of how I learned from my father. In his thrall, I grew up a social Darwinist. This is not to say he was not compassionate. He helped the poor face to face, and I learned from him that that was our responsibility. He wasn’t so big on paying taxes so the government could help those he could not, however. I never made any money to speak of in those years, so I didn’t really have an opinion about taxes. I thought we ought to help the poor, or at least give them a fair chance to help themselves, but I didn’t have a very good notion of how to do either. Truthfully, growing up in a white-bread southern suburb, I had no idea what it meant to be poor.
Hayek would have appealed to Dad. Hayek was a fierce libertarian, who feared collectivism because he believed it inevitably led to totalitarianism, an understandable concern in the middle of the fight against Hitler and Mussolini, when The Road to Serfdom was written. John Maynard Keynes is widely regarded as Hayek’s rival in economic theory, and certainly Keynes was more favorably disposed to government intervention in recessions, but even though Hayek vigorously opposed state control of the economy, he did not think the state should abandon its citizens in bad times.

He wrote: “There is no reason why in a society which has reached the general wealth which ours has attained the first kind of security should not be guaranteed to all without endangering general freedom.” (The Road to Serfdom, chapter 9.) The “first kind of security” to which he refers is “the certainty of a given minimum of sustenance for all.” This is a long way from survival of the fittest.

In today’s New York Times, Nancy Koehn reviews a new book titled Keynes Hayek: The Clash That Defined Modern Economics. She points out that Keynes’s support of government spending was developed in desperate response to Britain’s chronic unemployment in the 1920s and 30s. For his part, Hayek learned to fear government spending because of his dread of inflation, which he had watched devastate his native Vienna in the 1920s. Where you stand depends on where you sit, as they say. But Keynes also feared socialism, and Hayek did not think the state should abandon its citizens to the depredations that flow from fluctuations in economic cycles: “[T]he very necessary efforts to secure  protection against these fluctuations do not lead to the kind of planning which constitutes such a threat to our freedom.”

Christopher Sims and Thomas Sargent were just awarded the Nobel Prize in economics for their work in trying to understand how the economy responds to various kinds of government action. This was work done in the 1970s. They still don’t know the answers. The reason: it’s complicated; individuals and markets don’t always perform predictably. There are just too many variables. “If I had a simple answer, I would have been spreading it around the world,” Sims said.

So, what have I learned? I guess the answer is that I have a better understanding of what the questions are, but not much better idea of the answers. I am confused and ambivalent. I know what I would like--greater economic opportunity for the poor and the middle class (the rich seem to be doing fine, thank you) and a social safety net that catches us if we fall too far--but I’m not sure how best to get there. Long term, the answers seem obvious: educate our children better so they can compete in the global economy; repair our infrastructure; and innovate. Short term, all I can hear is the shouting at Tea Party rallies and Occupy Wall Street.

I doubt that many in the Tea Party have waded through Hayek. They might find him too moderate. From that side of the political spectrum today, there is a lot of magical thinking going on: if we just got government out of the way, we’d all be fine. Yes, if you have your own private police force and don’t need to use the roads much. Otherwise, good luck.

And from the school of thought I now feel closer to--the Nancy Pelosi fringe, as some call it--there are also problems. A good heart does not pay off the national debt. A good heart does not eliminate government bloat and corruption. It is almost as big a fallacy to think we can just raise taxes and everything will be fine as it is to want to drown government in the bathtub.

So, when will we listen to one another; when will we sit down and reason together? If you believe John Kenneth Galbraith or Daniel Kahneman, not soon. In The Affluent Society (another book Chris gave me), Galbraith coined the term “Conventional Wisdom.” He said we all have too much invested in what we think at any given time to let pesky facts get in the way. Only when events overcome us (think boarding the rocket ship to leave an over-warmed planet), do we let go of our cherished preconceptions.

Or, as Kahneman put it in “The Surety of Fools,” in this morning’s New York Times Magazine: “The confidence we experience as we make a judgment is not a reasoned evaluation of the probability that it is right. Confidence is a feeling, one determined mostly by the coherence of the story and the ease with which it comes to mind, even when the evidence for the story is sparse and unreliable…Overconfidence arises because people are often blind to their own blindness.”

That’s my story, and I’m sticking with it.

Wednesday, October 19, 2011

At the Corner of Self-Reliant and Selfish

They are bums, and that is why they are homeless.

These are people who have figured out that it's easier to beg than it is to work.

I think the homeless advocates are more interested in keeping the homeless problem going (rather than solving it) because to eliminate homelessness would eliminate their jobs. Governments and nonprofits want to increase the number of people who are dependent on handouts.

Like most people, I worked hard for and earned everything I have in life. I resent having to publicly support those who chose to hinder their existence by making bad life choices. Providing more assistance just gives people an easy way out and takes away their drive, pride, and work ethic.

Everybody has a story. So what? Why should Palo Alto have to take care of all the sad sacks?

Here in Palo Alto we have a place called the Opportunity Center. It was built five years ago to provide shelter and counseling for the homeless. Some feared it would be a magnet for homeless people from all over, but in the time since it opened the number of homeless in Palo Alto has fallen from 341 to 151. The center has given many a chance for a new life. One man has gone from the streets to studying biochemistry at a community college. He wants to be a doctor.

A recent story about the center by Sue Dremann in Palo Alto Online was followed by readers’ comments. Most were supportive. The ones quoted above were not. They are not unusual. You hear them anywhere homelessness or welfare is discussed. They call for hard work and self-reliance. You can almost hear John Philip Sousa playing or see John Wayne squinting into the brightness of the big sky.
Self-reliance is a myth, of course. Elizabeth Warren put it well recently when she said no one in this country does anything without help. We all rely on roads and public safety and free public education, provided by the government and paid for by taxes. When we pay our own taxes, we are just returning the gift given to us by those who came before.

We’d all like to think we can take care of ourselves. Dependence on anyone, family or social services, is no fun. Ultimately it is humiliating. We lose confidence that we are worth anything to anyone, even ourselves. We get depressed. We drink. We do drugs. We do stupid, self-destructive things. Is that a choice we make, or do we just walk out of the unemployment line and keep putting one foot in front of the other until at last we are completely lost?

I don’t think even the least charitable among us cares if someone else privately helps a person in need. Many don’t want to be told they have to help, though. They don’t want their tax money spent on people they suspect are just milking the system. They might be paragons of personal charity. They might volunteer in soup lines. They might be the first to stop and help a stranger change a flat tire. But they want to see the need with their own eyes, and they want to choose for themselves whom to help.

None of us wants to be told what to do by a government we’re pretty sure is bloated and inefficient, maybe even corrupt. This is the vein, black as coal, the Tea Party mines. This feeling that our government has lost touch with us, that it is working for someone else, and using our money to do it.

But the solution can’t be found on some Western movie set where everybody is ruggedly independent and fends for himself. In today’s complex and crowded world, we are all bound together by not only our common aspirations, but by our common needs for security, education and livelihood. The answer is not to tear down the creaky old house that shelters us, but to remodel it.

The Opportunity Center is a good example of just such a remodeling project. It was funded by a combination of government and private grants. It has both paid and volunteer staff. Law students from Stanford volunteer their time to help people navigate government and private programs for housing and employment. The Palo Alto Medical Foundation provides free medical and psychiatric care. A year or so after the Opportunity Center opened, my son Christopher wrote an article for his high-school newspaper about a new city police department plan to focus more on helping the homeless than arresting then.

So, if the Opportunity Center is a model of compassionate and effective joint governmental and private action, how does one explain the negative comments above? Hard to say. Perhaps those people are bigoted toward the poor. Perhaps they are afraid they could end up like that themselves. Perhaps they are just selfish.

I don’t think they speak for most of us, though. Almost everyone now is frustrated with government. That frustration and the related sense of powerlessness can lend appeal to simplistic fixes like Grover Norquist’s stated objective of shrinking the federal government down to the size that can be drowned in the bathtub. That makes a clever sound-bite, but it is ridiculously impractical.

Private enterprise will not meet all our basic needs. There just isn’t enough profit in fire, police, roads, education, the electric grid, clean water or social safety nets. If we want to take care of ourselves, we’re going to have to do that most American of all things: roll up our sleeves and get about the business of repairing government at all levels, so that it not only meets our needs but can be trusted with our money.

Monday, October 17, 2011

Hold Mail

I like the mail. I have the same sentimental affection for it that I have for the pocket watch my grandfather carried. I remember waiting for the mail carrier to deliver my self-addressed stamped envelopes, the ones writers used to send to agents so they could mail us rejection forms without having to pay postage. I used to call the mail truck “the shadow,” because the fear of rejection is almost as great as the fear of death. We all use email now. It’s quick and painless enough to pass muster as not constituting cruel and unusual punishment.

Still, the mail comes every day. Even though there is not much important in it nowadays, you can’t let it pile up in your mailbox when you’re out of town, so every time we go away I log onto and submit a hold mail request. I have a user name and password, just like on every other website. The post office website never remembers me, though. I have to fill in my full name and address every time. The site is slow and cumbersome, and several times I have come home to a box stuffed with random mail, like Tuesday’s and Saturday’s. I’ve taken to printing the confirmation of my mail hold and taping it inside the mailbox door so it pops up to scare away mail.

On a recent trip, Meg and I decided to play hooky a little longer, so I went online to extend my mail hold. Oops. No can do without the confirmation number, the one taped to the mailbox like a string of garlic.

Desperate to avoid post office Muzak and endless transfers deeper into the bowels of bureaucracy, I emailed the customer service department and begged for help. After a few days (standard time for mail delivery, apparently, even the electronic kind) a nice woman named Linda responded. She addressed me as “Page,” the name of my mother, whose bills I used to pay from my home; Mom has been dead for three years now, so having the post office call out to her was a little weird.

My half-dozen emails with Linda went like this: Linda: Here’s how you do it. Me: Tried that, didn’t work. Linda: The confirmation number should be right there, upper left corner. Me: Nope. Linda: If you placed the hold by calling the post office, you can’t extend online. Me: No, I placed the hold online (thinking, I just told you that). Linda: If your request has expired, you can’t extend online. Me: The request has not expired; can’t you just send me the number? Linda: Sorry, you can only get the number by logging on with your username and password. Back to square one. Frankly, given that her responses were so determinedly unhinged from the reality of my facts, I was kind of disappointed that Linda didn’t ask how Mom was.

The exchange was not fruitless, though. I learned two lessons. Number one: write down your hold mail confirmation number; otherwise, you’ll never see it again. Number two: don’t stockpile “forever stamps.” Mailmen and women are an intrepid lot. They deserve our gratitude, and a gold watch. Neither snow nor rain nor heat has stayed completion of their appointed rounds. But the Internet is a storm of a whole other magnitude.

(Epilogue: As Linda directed, I called the post office and asked them to hold the mail for four more days. When we got home, on our porch was a basket of all the mail that had been held for three weeks. It had been there for four days.)

Monday, October 3, 2011

Frodo and the Lost Boys

Chris and Nick used to bodysurf in Santa Barbara, and Frodo, our golden retriever, would swim out with them. I think he was trying to rescue them. He swam back and forth from one to the other and they came in with big scratches on their chests from his paddling front paws. I would go out with them to distract him, but he was never interested in me. Finally I would have to take him in bodily and walk down the beach with him so they could surf unmolested. Even then, when we were hundreds of yards away, he would look back over his shoulder and take off back to them.
Meg and I are in Santa Barbara now with Frodo. No boys. They’re off at college. We walk on the beach with him and throw sticks in the water and he has a big time. Today she took him down without me and he spotted two boys out in the surf, one with a blue suit like Chris’s and one with a red suit like Nick’s. He was sure it was them. He swam out to one of them and when he saw it wasn’t Chris or Nick he swam to the other and then back again to the first one. One of the boys came out with him and he walked with Meg a moment and then, as though certain he just must not have checked carefully enough, he swam out to them again.

He’s back home now, stretched out on the patio in the sun. I wonder what he is thinking, whether he is wondering where Chris and Nick are. I wonder if he thinks about them when he can’t see them. I wonder if he is just like Meg and me.