Thursday, April 24, 2014

How We Think

I've been thinking again about how we think. About the reasoning processes that produce such paradoxes. About how two of us, with good minds and good educations, can look at a situation, especially one involving our dearest principles, and come to such different conclusions.

Corrupt Legislation (1896) by Elihu Vedder.
Library of Congress
, Washington, D.C.
What got me started this time was Chief Justice John Roberts. Specifically his majority opinion in McCutcheon v. FEC, which opens the door for individual donors to contribute to as many politicians as they wish. The other big campaign finance case during Roberts' tenure, Citizens United, permitted corporations and PACs to spend as much as they wanted on political campaigns. Taken together, McCutcheon and Citizens United all but eliminate limits on political contributions and spending.

I doubt anyone thinks private financing of politicians doesn't influence legislation. There's even a century-old mural depicting legislative corruption in the main reading room of the Thomas Jefferson Building of the Library of Congress. So why, when Congress finally worked up the courage to try to wean itself from its money addiction, did the Supreme Court decide to weigh in on the side of deep-pocketed donors? What kind of thinking got them there?

Before Roberts' tenure, the Court thought it so obvious that money corrupts politicians that it welcomed most campaign finance reform. It routinely acknowledged the risks to democracy from "politicians too compliant with the wishes of large contributors." Money--in the form of PACs, businessmen with political agendas, rich ideologues, anyone who wanted his representative to be especially grateful for his financial help--kept up the pressure, though: We're just exercising our First Amendment freedoms. You can't take those away from us. That would be un-American. Un-democratic.

And money found a sympathetic audience in the Roberts Court. The legal reasoning goes like this:

Free speech is essential to democracy and must not be limited except under the most compelling circumstances of potential harm to the public (think, shouting fire in a crowded theatre);

Money is speech;

Therefore, political contributions and spending must not be limited except in the most compelling circumstances, which the Roberts Court found to exist only in cases of outright bribery ("quid quo pro corruption," as the Court calls it).

Chains of logic like this are called syllogisms. Syllogisms are beguilingly persuasive, which is why lawyers like them. One logical step leads painlessly to the next. If you're not careful, though, they can take you to strange places. You're out for a walk on a sunny afternoon, following the path of logic, daydreaming absently, and you look up and find yourself lost. When logic leads you somewhere that is at odds with common sense, it's called "reductio ad absurdum." I used to be so good at it that my favorite professor in law school regularly noted my talent to my classmates. I don't think he meant it as a compliment.

No matter the intellectual seductiveness of the Roberts Court's logic, I think we all sense--indeed, feel pretty confident--that we'd be better off if no one could buy political influence. If a politician has to listen to you because of the way you spend your money for or against him or his positions, you are buying influence. It would be better if currency of political influence was ideas, not lucre.

The irony of the McCutcheon and Citizen United decisions--the reductio ad absurdum--is that the Roberts Court has used an essential theoretical building block of our democracy, the First Amendment, to erect a practical barrier to the operation of that same democracy. On paper the votes of individual citizens will still matter, but the real power to influence those votes, and to anoint the politicians from whom voters must choose, will flow to those with money.
I'm not the first to be dismayed by the decisions. Linda Greenhouse, who writes about the Supreme Court for The New York Times, wrote recently, "Maybe somewhere in the country there is someone sufficiently out of touch with political reality to be open to the chief justice’s persuasion." David Brooks, the Times' thoughtful conservative columnist, gamely tried to make the best of it by saying McCutcheon would strengthen the influence of the political parties, which would serve as a salutary counterweight to ideological big spenders like the the Koch brothers.

The McCutcheon and Citizens United decisions seem so at odds with the ideals of our democracy that what fascinates me is this: Why did Roberts, who is not stupid, decide this way? Maybe, like David Brooks, he's a fan of Edmund Burke, the eighteenth-century political and social philosopher considered by many to be the father of modern conservatism. Maybe, like Burke, Roberts is fundamentally uncomfortable with democracy. Burke didn't trust the masses. He thought the natural order of things was for men with land to govern. Men with money.

Not since the Warren Court of the 1950s has the Supreme Court as actively re-written our social compact. The difference, of course, is that the Warren Court was protecting the little guy, whereas the Roberts Court has made it its mission is to protect the big guy. It's frankly hard to understand why. Except in a revolution, money doesn't need protecting.

The men on the Court who are with Roberts on this (and it's all men) are not rich. They can't be bribed, so supporting monied interests cannot benefit them personally. And despite my idle musings that Roberts might be a closet Burkean, it seems unlikely that he or his colleagues truly mean to subvert our democracy. This leaves me thinking they must have fallen for their own sophistry. Seduced by the arrogant beauty of their pinched logic, they’ve strolled heedlessly along its path into the political theme park where they, and thanks to them, the rest of us, now find ourselves. A place where the rides are glitzy and slick barkers grin and say come on in, but where there are no other attractions to choose from, only the ones money built.

It's enough to make me wish my old law professor had encouraged me to take a judicial clerkship. If I had held onto my youthful skill at laying out a logical path to an absurd result, I would have been an outstanding candidate for Chief Justice of the United States.

Monday, April 21, 2014

No Family, No Chance

Whenever I hear someone say that the solution to our social problems is a return to strong families, I cringe. Don’t get me wrong, I think families are important. I'd have nothing to write about in this blog if it weren't for my family. And there is no question that a good family, one with the emotional and financial resources, and the time, to support one another, gives a child an important head start. Such a family doesn't guarantee success for its offspring, but it certainly doesn't guarantee failure.

That's the problem with a bad family: it almost seems to guarantee failure. If you're abused or neglected and malnourished, if there is no one to help you when you need it, to show you the way when you stray, the odds are you aren't going to have such a good life. You're more likely to end up in prison than college, more likely to pursue drugs than dreams, more likely to engage in risky behaviors that lead to teen crime and pregnancy and effectively end your adult life before it begins.

We have a notion of family as a kind of Platonic ideal: we bear our children and look after them; with every generation the cycle repeats and humans flourish. Maybe that ideal was reflected in reality in some long-ago time, but no one can read Hugo or Dickens and not realize that, especially among the poor, it hasn't been that way for a long while.

There seems to be something in our nature that wants failure to be a choice. If someone is fat, he just doesn't have the willpower to push away from the table; if someone is out of work, she isn't looking hard enough; if a child goes hungry, his parents are lazy or negligent, or both. I suspect the psychological underpinning of this is in part our understandable desire to preserve the illusion that we are in control of our own fates--that bad stuff won't happen to me. But I fear that another part of the reason may be to absolve us from responsibility for doing anything about the adversity that befalls others--that's their problem, it's up to them to solve it. This enables us to feel sympathy, to reassure ourselves that our hearts are in the right place, without having to open our checkbooks.

Let's start with children. Surely no one thinks it's a newborn's fault that he was born with drugs in his system. Surely no one thinks a toddler should be responsible for finding her own food, or that a six-year old should teach herself to read, that a twelve year old should be forced to learn math by intuition. Kids need nurture and education. Can we all agree on that? And if they don't get it, not only are their lives the worse for the lack, society as a whole bears the inevitable cost. We not only lose their productivity, we pay for their prisons, for their medical care later in life, even their burial. And what do we or they get for those societal expenditures? Nothing.

Judith Warner had a good column in today's NYT in which she urged more employer support for families, more generous paid family leave, more flexible work schedules to accommodate family emergencies and needs. Higher level employees already have many of these benefits, but those down the salary scale have few. And it’s those lower-paid employees, the ones without the flexibility of greater financial resources, who most need the benefits. If we want the family to take responsibility for itself, we may have to give it a little help.

As hard as it is in today's political environment to get food stamps and day care for kids, it's even more difficult to get help for their parents. The relentless drumbeat to reduce unemployment benefits is just one example. The feeling seems to be that grownups are not children, and they can damn well look after themselves.

The problem is that many of them can't. Many are young men and women raised in poverty without the education to make much of their lives. Many others are older and have lived in poverty all their lives; as far as they can see, there is no way out. And yet we--not all of us, but too many--we who have ourselves benefited from good families look upon these unfortunates in the same way some look down upon people who are obese: those folks need to get a grip, try harder, pull themselves up by their bootstraps. While that may be a Puritanically satisfying plan of action, it's not going to happen.

Let's talk about obesity. Why has it increased so much in the last fifty years? Did we all just get lazy and fat? Did we all loose our willpower? I don't think so. I think we all started eating refined and processed foods that gave us more sugar, salt and fat, and in bigger doses, than our bodies were evolved to handle. Too many calories equals too much body-fat. Is that our own fault? Yes and no. It's sort of like smoking and cancer: we just didn't realize what these new foods and eating habits were doing to us until it was too late. Now we know, but were hooked. Nothing is harder than quitting smoking, except maybe quitting eating stuff that's bad for you.

The point is that we're not always fully responsible for what happens to us. Humans are good at many things, but changing established patters of behavior isn't one of them. And when those mass behaviors create widespread damage, it has to be the job of all of us to clean up the mess. No one person, no one unit of social organization--like the family--can do that. It's too hard. We have to work together. We have to fill in the gaps. We have to take care of those who aren't being taken care of.

I don't think many disagree with those broad principles. Maybe a few hardcore libertarians, but not many. The problem is that we haven't yet developed remediation systems that we all agree make sense. People worry that the government wastes taxpayers' money with inefficient programs that are riddled with fraud. Private charity hardly makes a dent. Workplace reforms come slowly, because capitalism is a jealous mistress who punishes the unprofitable. In the absence of solutions in which we all have confidence, we’re having a hard time mustering support--within companies, communities and governments--for specific programs.

Okay, so we're just going to go slowly, as we always do. We're going to grope our way. We're going to get better and better over time, but maybe over a long time. While we're on that long journey, though, I think we should be singing "We Shall Overcome" and not "Get a Job."

Thursday, April 17, 2014

The Map of Our Lives

At my father's funeral, the local pharmacist, who had a soda counter where Dad went to eat strawberry sundaes to try to keep up his weight, to try to stay alive to see his fiftieth birthday, told me that the year I got my first bonus as an associate in an LA law firm was the year my dad knew he'd lost me. Until then, I guess he'd hoped I might come back to Nashville. He'd offered to buy me a house there before I left, offered me a junior membership in the country club where I grew up playing golf. But I couldn't wait to get out of there. Nashville was a small town. Everybody knew me and my family, or at least that's how it seemed to me. I wanted a little anonymity, a chance to figure out for myself who I was.

The cities where my children are. Or, "Why is this map smiling?"
Three years later, who I was was a son grieving for his father. His death didn't make me wish I'd not left--not then or even now, with the perspective of time--but it taught me something. Several things, really. For instance, I didn't realize until I heard it in the tone of my father's friend the pharmacist how much my father had wanted me to stay. He offered the inducements I mentioned, but he never really said it. Or maybe I just wasn't ready to hear it. We could have come back together in a few years (maybe I could have enticed him to come to LA), but I needed space first, and then he was gone.

Flash forward a few decades. Here I am again, but this time the shoe is on the other foot. I'm the father hoping his sons will come back home. One is. Not because I want him to (although I’m sure he’s glad I do), but because this is where he means to seek his fortune. He'll graduate in a couple of weeks with a degree in computer science and electrical engineering. Silicon Valley is to him what LA was to me when I was his age: a honeyed land of opportunity. Everything he wants to do is here. Meg's and my good luck is that so are we.

But our other son wants to be an economist, and he's just been accepted into the PhD program at Harvard. I couldn't be happier for him (nothing could have kept me out of Harvard law school if I'd gotten in), but I confess to a bit of melancholy. Before he got his Harvard acceptance, when I'd thought he might come to Berkeley, I'd launched into a not too subtle marketing campaign for California: sunshine, family nearby (but not too close), a lifetime supply of the shorts he loves to wear, that he wore even as an undergrad in Chicago, until the snow was over the tops of his tennis shoes. Who knows, a new car might not be out of the question, I hinted.

I should have known better, right? Wasn't it my own father's solicitations that drove me away? Well, not really. True, I sensed that his bribes were merely a more sophisticated means of controlling me as, with expansive bursts of drama, he had always tried to do, but I was used to that and knew how to deal with it. No, the real problem was that Nashville was a small town in those days, too small for me. Say what you want, but the San Francisco Bay Area is not provincial. And although I do probably make too many helpful suggestions to my children, I am not my father.

Except in this way: I can see myself sitting down with a friend and saying, "Damn, I've lost him now."

I know this because I've already lost three. I married the first time when I was very young and had three children by the time I got out of law school (hence my father's offer of a house, which would have been a weird thing to offer a single young man). By the time Meg and I married, two of my first three kids were in college and the third was a senior in high school. My oldest son went off to the University of Pennsylvania and never came back. He's a lawyer in Philly now, with a lawyer wife and two children. My second son is in Atlanta with his wife and three kids, via college at Vanderbilt (a bit of irony) and business school in Cambridge. My daughter got her MFA in drama in New York and stayed for a while to perform off Broadway. By the time she returned to LA to pursue a career in film, I was gone. And now her mother has left too. Hers is less a case, I suppose, of her leaving her family than of her family slipping out of town while she was working on her dream.

There are, in my experience, three forces that pull and push us as we make our way in the world apart from our parents. There is a positive force, a kind of gravitational attraction to family and place, that pulls us back home. There is a negative force, the dark matter born out of the Big Bang of family stress, that pushes us away. And there is a kind of free-floating youthful energy that has nothing to do with family and that crackles like a Van de Graaff generator with the restless urge to learn and feel and grow, to be vibrantly alive. Whatever the force that propels us, however, if we go far enough away, for long enough, although we might not think much about it at the time, gradually a new way and place of living becomes the status quo. Suddenly, somewhere else is home.

Twenty-five years after I left Nashville, I returned. Meg and I were married and had Chris and Nick. I took a job there that I shouldn't have, that wasn't right for me. I was licking my wounds after a business failure. Maybe subconsciously I was slinking back home. I quit that job after a month, but we stayed in Nashville. Meg was writing, and soon so was I. Nashville was affordable, the boys were in a nurturing elementary school and, most importantly as it turned out, my mother and grandfather were there. In the years we stayed, I reconnected with them and Meg and the boys got to know them. By the time Mom died, I had a completely different appreciation for her than when I'd first bolted from town all those years before. I wouldn't give anything now for those last years with her, even though I admit that if I had found a better job somewhere else, I never would have gone back home. So what is that? Life giving me a second chance?

Sentimentality is not a young-person's game. No one is going to die. There is always time to go back home and catch up. Chances to grab the brass ring, on the other hand, feel urgent and fleeting. If we didn't take them, not only would we feel bitter about opportunities missed, civilization itself might stagnate. Still, if you believe that literature shows us who we are, think about what it tells us. I'm pretty sure there are far fewer angsty, heartbreaking and triumphant novels about jobs and friends than about family. For better and worse, our deepest passions are reserved for our families. Living too far away from them is a little like having a long-distance romance: It can be exciting, but in the end it leaves you missing a lot of love every day.

When I was a boy, I had a cat named Pepper. She disappeared one day. We looked for her, but we had no idea what had happened to her. Big dogs roamed loose in the neighborhood in those days. I imagined an owl had swooped down on her in the night. Years later, an eternity in the lifetime of a boy, she reappeared. She had been gone so long that not only did I not recognize her at first, I almost didn't even remember her. Her reappearance was like a magic trick. I wish I still had that cat. Maybe she could teach me how she did that.

Friday, April 4, 2014

The Invisible Hand Reaches Out to Help

Imagine you work for a company that pays you not for the profit you produce but for the good you do. The more poor children you feed, the more money you make. The more old people you get to their doctors' appointments, the more money you make. The more graffiti and trash cleaned up in a bad neighborhood, the more money you make.

Nice, you say. But fugetaboutit. Who's going to pay for that?

The answer is: The same people who are now covering the costs of not doing those good deeds. Hospital emergency rooms. Health care insurers. Prison systems. Fire and theft insurers. Governments at all levels.

As a society, we're gradually coming around to the view that an ounce of prevention is worth a pound of cure. Annual physical exams, vaccinations and cancer screenings are now free under the Affordable Care Act. Auto insurers give lower rates to drivers with no accidents. Home insurers give premium discounts for homes with alarm systems.

Still, so much that we could do to prevent predictable (and expensive) future problems remains undone. I believe this is because we lack a coherent and well-adapted infrastructure to incubate new approaches to solving persistent social problems. Government now shoulders much of the load, but government is notoriously inefficient and, even when well-intentioned, frequently not very expert.

There is an alternative to government, though. A tried-and-true model we can pull right off the shelf. One we have used with tremendous success throughout our nation's history. One that many argue is the only model that has ever been or can ever be successful. What is this holy grail, this ideal approach to problem solving? It is greed. Or, as it's known by its polite name, capitalism.

Here's what we might do. First, we set up companies--let's call them FutureFunds--to address specific societal needs that are underserved. Then we identify the institutions that bear the long-term costs of not meeting those needs, and we offer them this deal: Pay us now to save you more (maybe much more) later.

Each new FutureFund would establish its own plan to attack the problem it is addressing: health emergencies, home fires, gang violence, teen pregnancy, crime, incarceration. The FutureFund pays its workers to get the results it has promised--reducing the costs of poverty, bad health, poor education, etc., etc.--and, Voila! Everybody's a winner.

There is a company in Nashville, Tennessee that is doing this in the healthcare area. It takes payments from health insurers of a set amount for each patient insured and promises to reduce health claims by at least the amount of the total payments. If it does not, it refunds the money it didn't save. If it does better, it and the health insurer split the savings. The way it reduces claims is by getting close to patients and helping them keep their doctors' appointments, take their medications, go to their exercise therapy. The work is labor intensive, but the company has a well-trained patient-outreach staff supported by good data systems. It's too early to tell how successful it will be, but it's in its third round of funding. And it's no charity case. It's doing this all on its own, within the incentive structure of free enterprise.

The Tennessee healthcare entrepreneur is betting that if people follow their doctors’ advice, they will have better health outcomes. This seems intuitively correct. But sometimes cause-and-effect connections that seem obvious turn out not to exist. Two things can happen at the same time—that is, be positively correlated—without one necessarily causing the other. They may both be caused by a third thing, for example. Breakfast eaters may be less likely to be obese, but is that because they eat breakfast, or is it because they are physically active, which both makes them hungry in the morning and less likely to be overweight? (Thanks for the example, Kahn Academy.)

Perhaps the foremost challenge to creating a workable model for making money by doing good is establishing cause and effect. To attract support, a FutureFund will have to make a sound, empirical case that what it plans to do will produce the desired cost-saving benefit. The good news is that we have never been better equipped to tackle this challenge. All fields of study--medicine, social sciences, economics--are getting better at sniffing out the root causes of our most persistent problems. In the past, sometimes we just haven't had enough information to know what to do. Big data, crowd-sourcing, learning software, and an overall higher level of connectedness are allowing us to peel back the layers of causality. Relatively new disciplines like behavioral economics are intersecting with psychology and sociology to help us better understand what makes us act the way we do. As we come to better understand the causes of our persistent problems, we will be able to design better solutions.

The second big challenge is patience. Even assuming we are correct in our belief that better childhood education provides long-term benefits—in health, achievement and productivity—the economic effect of those benefits for a particular child will not be realized for decades. Indeed, they will not be fully realized except over the person's lifetime. Who can we expect to make an investment with a payoff that is so deferred? The obvious answer has been government (local, state or federal). Government is the primary beneficiary of many social investments—through lower poverty rates and higher future tax revenues, for example—and it has the capital and, election-year politics aside, the necessary long-term strategic horizon. Up until now, when these kinds of strategic social investments have been made, they have, for the most part, been made by government.

I hate to say it, but the problem with government spearheading any investment is that often it’s not very good at it. We all know about the $150 hammers and the $300 toilet seats the Department of Defense buys. Private enterprise is generally better (that is to say, more disciplined) at successfully structuring and monitoring the deployment of capital and labor. The role government can usefully play is facilitator. This is an accustomed role. The tax code, for example, has long been used to encourage various kinds of investments. (Okay, I’ll admit that, given the Swiss cheese of loopholes and ill-advised tax expenditures that make up the current tax code, that may seem like a bad idea; but it’s something we can do while we’re waiting for tax reform, which seems to be hiding out with the Abominable Snowman and Santa Claus).

Government could help our private FutureFunds by funding research into cause and effect and by providing incentives like lower taxes on returns on investments in FutureFunds. FutureFunds could be non-profits, thereby making them attractive for donors wishing to support their research and operations.

But while government could give FutureFunds a leg up, the burden of financing them can and should fall to private capital. Managing risk is not new, but managing risk for profit on a contract basis is more novel. The rewards would be long term, so the capital best-suited to a FutureFund enterprise would be from investors seeking moderate but steady returns, as opposed to, say, the sky-high returns required to attract capital to new commercial technologies. There would have to be a break-in period where FutureFunds proved they could produce results, but once they had done that, the underwriters of societal risks, both private and public, would likely line up as customers. And private investors, once they are convinced of the long-term stability of the business model, would open their wallets.

Think of the fun we could have working for a FutureFund. The satisfaction. I dare say such a company would have no trouble attracting an enthusiastic workforce to the positive energy of doing something that was doing good. Half of us might line up to be on the front lines of operations and the other half might hunker down over the statistics and regressions needed to find out which solution worked and which didn't.

Would it be only do-gooders who wanted to work at a FutureFund? Most of us like doing good, but we've got families to feed and kids to support, so we need to get more out of these jobs than feeling good about ourselves. I don't see why compensation at a FutureFund couldn't rival that of any traditional business. Executives could make big bucks--perhaps not Wall-Street big bucks, but solid compensation--and workers could be paid well. The idea is not that the business would be run on the cheap, like a volunteer soup kitchen, but that it would not be making profits for shareholders. It would pay its salaries and other operating costs, it would repay it's lenders and investors, whose investment returns would be fixed to levels more like bonds and preferred stocks, rather than having the unlimited upside of common stock. There would still be plenty of other commercial enterprises for investors who wanted risky returns. But for those seeking stable, patient yields, FutureFunds would be attractive.

Think of it. No more frustrating waiting for Congress to decide whether to fund a project. No more political battles over whether a project was worthwhile. If you had solid research supporting your plan, you could attract investors and customers. If not, back to the drawing board. But you would be the master of your destiny. Not some politician. Not some shareholder who only wanted a bigger corporate jet. You. And me.