Thursday, December 20, 2012

Persistence and Resilience

"You've got to be persistent."
My son is at the point in his development when he wants to run and play every waking moment. Keeping up with him takes a constant effort and a saint-like willingness to endlessly chase him and keep him from accidentally killing himself.
The only thing that will keep him calm for any decent block of time is The Best of Elmo 2. At this point, I have memorized every word on that video.

It consists mostly of famous musicians appearing to sing a song with Elmo, but stuck in there is a brief clip of David Beckham talking about the importance of persistence. It is a simple lesson, but one that I hope sinks in for my son. And it also made me think that maybe I've been a bit too pessimistic about our country recently, including in posts like this. But the best argument in favor of optimism for our future is that American society celebrates and rewards persistence.

Persistence, if you're not willing to watch David Beckham's explanation of it, is simply the willingness to keep trying to solve a problem that doesn't seem solvable after the previous attempt. It is a comfort with starting fresh, with reinvention. And America has been a magnet for persistent people, who are willing to dig as deep as they have to for an answer. And not just our Edisons, our Fords, our Wright Brothers: most everyone who got off a boat to make a new life here was jettisoning old assumptions and comforts to try something new, and was ready to keep trying until they found success. We still have an abundance of these folks, and I feel sure that if things got rough enough, we'd see more of a concerted effort by them to get involved and devise some new solutions.

I think a second element is required to solve big, complex problems: resilience. Some people, I think, might believe the two concepts are similar, but resilience is in many ways a precursor to persistence. The word actually comes from the Latin resili which means to spring back or rebound. Resilient things and people thus have the ability to return to their original state when they become deformed: exactly the opposite of getting bent out of shape. So you need resilience individually to return to your optimistic starting point and try again, but more importantly you need to live in a resilient society, one that doesn't get too distorted by bad laws or bad leaders. The US has, in the Constitution and the system of government built by it, an extraordinarily resilient political system. It has allowed a wildly diverse people over a huge expanse of territory to adapt to changing times and emergent challenges. Though we can't take for granted that it can solve every problem, it would be unwise to bet against it in any particular moment of crisis. As Glenn Reynolds wrote recently, if the federal government becomes overbearing or dysfunctional, we can evolve towards more localized decision-making that can ratchet down some of the national-level disagreements that today seem so resistant to resolution.

Nassim Taleb has been writing about something like this when he talks about antifragility. Basically, he's saying we need to design our institutions so that crisis and even failure makes them stronger, instead of destroying them. He also outlines five ways to build antifragile organizations that should be read by anyone high up in government or business. (I do think the transparent attempt to make 'antifragile' a business buzzword is a little sad, though I'll probably be using it in a presentation at some point next year.) Regardless, one point he made really stuck with me:
Some businesses and political systems respond to stress better than others. The airline industry is set up in such a way as to make travel safer after every plane crash. A tragedy leads to the thorough examination and elimination of the cause of the problem. The same thing happens in the restaurant industry, where the quality of your next meal depends on the failure rate in the business—what kills some makes others stronger. Without the high failure rate in the restaurant business, you would be eating Soviet-style cafeteria food for your next meal out.
 As a country we've been pretty good about learning from our mistakes: having 50 states means the folks in 49 of them can watch one try something new, and copy the ideas that make things better. A lot of the fear people have about recent trends is that we seem to be making the same mistakes over and over again. Consider how many fiscal crises we've had in the last five years, and how similarly all of them have played out. If we lose our resilience/antifragility, we're in deep trouble.

I grew up in Monroe, Connecticut, one town over from Newtown. A lot of my family lives in that tragedy-stained town, and I think it offers cause for both hope and alarm if we consider what it tells us about our persistence and resilience. On the one hand, we've had a steady stream of these tragedies in recent years, and we haven't been resilient enough to find a new approach to our laws or our culture that would help, and we haven't been persistent enough to stay focused on the issue after it fades from the newspaper headlines. Yet, when you see how the people of that town are handling the horror they've been through, you can't help but believe we still have a reserve of these qualities. They are helping each other, finding creative ways of getting the surviving children back to class, and raising money for the victims' families.

May we apply their example to the equally challenging, but far less awful, issues that face our government and our economy.

Sunday, December 9, 2012

The Empire of the Elite

The most recent election gave me the nagging feeling that I, and most everyone I know, was being played for a fool. The so-called fiscal cliff debate has finally confirmed it for me. I was foolish to believe, against the evidence of my own experience, that our leaders care about us or are even particularly concerned with being our leaders. What we are witnessing right now is the latest round of a great, global game of Empire. The people we think of as our leaders should more properly be viewed as our rulers.

This is not, by the way, an Illuminati-like argument that there is a cabal secretly controlling the world. It is rather to say that the natural state of man is not participatory democracy, but leadership by an elite, and that natural state is reasserting itself. And the elite we have is, all things considered, considerably kinder and gentler than previous versions. But the fact remains that they are ruling us, and their goals are not our goals.

Now, this is a huge topic, and I am at risk of getting lost in it, so I'm going to quickly lay out my thesis and give you a couple of arguments in support of it. My basic theory is this: in the 1800's, the Europeans, and especially the British, created the first global system. People from those countries were the only ones who had a chance to be rulers, but the colonies created opportunity for many people who otherwise would have been trapped by their class to rise. This was one strand of the meritocratic model.

At the same time, the United States was neither ruled or ruler, but a democracy (although a far from perfect one) where people were free to pursue their own goals. This was a second strand of meritocracy. But after World War II, the European empires were destroyed and the US was ascendant, although facing an existential foe in the USSR. The US, then, adopted a modified form of empire: it didn't rule directly, but provided economic goodies and military protection for those who played along. It also allowed the most talented people from other nations to come here and join an elite that would either build wealth here or take their knowledge back home. The meritocracy was thus globalized, but at the same time our exposure to the first strand of meritocracy (which essentially held that the most powerful or talented should administer the world for the greater good) began to modify our own more individualistic conception of success.

The result is ably described in this quote from a 2011 article in The Atlantic Monthly:
[T]he rich of today are also different from the rich of yesterday. Our light-speed, globally connected economy has led to the rise of a new super-elite that consists, to a notable degree, of first- and second-generation wealth. Its members are hardworking, highly educated, jet-setting meritocrats who feel they are the deserving winners of a tough, worldwide economic competition—and many of them, as a result, have an ambivalent attitude toward those of us who didn’t succeed so spectacularly. Perhaps most noteworthy, they are becoming a transglobal community of peers who have more in common with one another than with their countrymen back home.
The key word in that paragraph, by the way, is competition. Our elite are consumed with getting into a position of global prominence and then beating their fellows in the great game of wealth and power accumulation. They are not, with few exceptions, primarily concerned with building national or local prosperity. They are building a global empire of the elite, and we are its subjects.

The conversation around the fiscal cliff is a clear indicator that our national politicians, and the media and business leaders that surround them, are more concerned with power than outcomes. The entire conversation, from the President on down to David Gregory on Meet the Press this morning, is driven by who gains political advantage from a deal, or lack thereof. Only rarely do you hear anyone even mention the underlying issues of debt and spending that have gotten us to this point, and the conversation almost instantly breaks down over whose numbers are more important, and moments later we are back to looking at who is winning the polls.

The politicians on both sides work for, and want to be part of, the elite. That's why they're willing to raise taxes on income before they'll go after taxes on investment. Because the bankers and hedge fund managers who pay those low taxes on their earnings all went to the same elite schools as the politicians, attend Davos with those politicians, and go to costly fundraisers with (and often for) those politicians. The politicians know these people and care about them in ways they could never know or care about most of their constituents. Now, this isn't to say every politician is this way, but certainly enough are that it distorts our civic life profoundly.

Since this global elite is so focused on money (as a numeric indicator of power, if nothing else) it is not surprising that financiers would be at the heart of the matter. Many made the argument that a global financial system that is so complex and intertwined that the collapse of any large institution could destroy the worldwide economy should be dismantled. I have never heard a coherent argument against this position, I am sure it polls incredibly well around the world, and the banks go on more or less untouched, and they even manage to do things like help Iran launder money in the search for profits.

Again, I'm not saying we're being oppressed or horribly mistreated by these rulers, merely that they are making the decisions they think are best for "the people" without really caring about what the people want, and that they are increasingly adept at extracting wealth from us without giving much of value in return. This elite has managed to avoid a shooting war in and amongst the developed nations for over 70 years, and has, I think, done some good in reducing the impact of extreme poverty. Their record isn't all that bad compared with some other ruling classes we could look at.

It is just good to keep in mind that this global ruling class is ultimately running the show, that it neither feels connected to or much worries about the middle class in the countries it happens to inhabit, and that it feels no compunction about being very well-compensated for its efforts. If nothing else, it will help you make more sense of seemingly manufactured events like the fiscal cliff.