Author: ken

Can We Talk About It?

Talking about capitalism has not been easy. The word is freighted with ideological connotations of conflict. Merely using it raises the specter of Marxism, along with such concepts as “alienation” and “exploitation,” terms that reflect historic struggle.

The preferred term today, seemingly more neutral, has become “market economies” or “free enterprise.” But as the stranglehold of the finance industry on our economy has started to loosen, and we begin talking about the .01%, there has been a decided shift in the conversation.

The term “capital” itself seems indispensible, while “capital accumulation” and “capital investment” seem to be things that actually happen, not just on Wall Street. No judgment implied.

On the other hand, “capitalist” retains its derogatory flavor. It implies someone who simply makes money from money. The alternative “entrepreneur” carries the implication of hard work and risk – but that’s not always warranted by the behavior of the super-wealthy. The preferred substitute has become “investor,” no doubt because, today, though our retirement accounts, college funds and savings efforts most of us have actually become investors. Putting money in the cookie jar or hiding it under a mattress no longer seem viable.

But “capitalist” implies a different scale, beyond the tidy consumption of investment vehicles. The large number of billionaires who live in a rarefied world apart from the rest of us calls out for terms adequate to express our awe and anxiety – and disapproval. A capitalist is not just someone who believes in capitalism. It’s not a creed. A capitalist owns capital — and uses it to make more capital.

More and more books and articles are coming out about “saving” or “reforming” capitalism, even in the mainstream press. Partly this reflects our growing awareness of the financial industry’s destructive focus on short-term gains. Partly it is about the extraordinary and increasing disparity between the rich and the poor. Partly it is that our economy is simply not creating jobs as expected, frequently touted in the past as a major benefit of our “free market” system. Nor does capitalism today seem capable of “investing” in education or the health of the workforce. “Capital” and “labor” do seem to be increasingly at odds.

In this climate, “capitalism” is not the only charged term being revived. Recently, Matthew Yglesias, the business and economics correspondent for Slate, proclaimed: “The Class War Has Begun.” He links this to recent political developments: “Democrats want to pare back tax breaks for high-income individuals in order to preserve social services, while expanding a handful of tax credits aimed at the working poor. The GOP concept, by contrast, is to shelter tax incentives for savings and investment from any closure—a move that primarily benefits more prosperous households.”

He adds: “The Republican budget savages programs for the poor . . . . The Medicaid expansion and health insurance exchange subsidies included in the Affordable Care Act will be the largest shift of economic resources to the lower half of the income distribution in generations.”

These points are not new, of course, but he also calls attention to how difficult it is to talk about them: “since neither party seems to really want to discuss its redistributionist agenda, we can’t even debate it properly.”

The old language is somewhat dated and awkward, to be sure – but maybe it will have to do until we find more up-to-date concepts. The greater danger is that we might never get to talk about what is really going on, and the choices we face.

How Technology Makes Decisions for Us

We don’t really need to know how things work in order to use them, do we? More and more, technology is hidden behind “user friendly” controls. But there is a growing case to be made for the dangers of our increasing technological ignorance – or incompetence.

I have no idea how to repair my car’s engine. I can’t even change the oil. With today’s high level of manufacturing precision, less and less is that a problem. My car’s dashboard lights up to signal a needed repair or beeps to tell me its time for a checkup. I rely on that.

This faith in buried technology was summed up fifteen years ago by the design guru Donald Norman: “The ideal system so buries the technology that the user is not even aware of its presence.” But that means that we are more and more dependent on designers to decide what is important — or not. And they tend to emphasize the value of convenience.

Evgeny Morozov cited Norman’s dictum recently in The New York Times, noting: “The hidden truth about many attempts to ‘bury’ technology is that they embody an amoral and unsustainable vision.” We don’t know how much electricity our appliances consume. We don’t worry about how “cookies” buried in our internet services transmit information about us. And we don’t think about the cumulative impact of the billions of daily transactions we take for granted. (See, “Machines of Laughter and Forgetting.”)

Author of To Save Everything, Click Here, Morosov urges us to embrace an “aesthetic of friction” to slow us down, to increase awareness of the costs and implications of our seamless convenience.

Two years ago, Jared Lanier, the digital Media pioneer, similarly warned us about this in his book, You Are Not A Gadget. He urged us to learn how to program our computers, warning: “program or be programmed.”

Frankly, though, I doubt consumers will welcome the slowing down provided by additional friction to increase their awareness of the unwanted effects of technology. Nor do I think most of us will want to learn how to program our computers. (I certainly will not want to change the oil in my car.) Laudable as those goals are, we will continue to prefer the easy help offered by buried technology.

But Morozov and Lanier are right to see the dangers. Our friendly user interfaces seduce us to be manipulated or allow us to be just plain careless. The design gurus are responding to the market, and they will continue to nudge us in the direction of convenience.

An analogy is the calories contained in our food. If we want to lose weight, we need to check out the information about calories now posted on most of the bottles and jars at the supermarket. That’s the first step. Then we have to plan around all the options we have for our meals. Finally, we have to decide to eat less of what we usually want.

This is more than merely managing the information. Our minds jump to conclusions, and our bodies demand what our appetites dictate. Much as we like to think we are in control of our actions, we welcome the decisions we have already made.

The Dangers of Digital

A prominent researcher in Positive Psychology now suggests that our “heart’s capacity for friendship . . . obeys the biological law of ‘use it or lose it.’ If you don’t regularly exercise your ability to connect face to face, you’ll eventually find yourself lacking some of the basic biological capacity to do so.”

This has implications not just for our states of mind, whether positive or negative, but for how we communicate in today’s world of constant digital hook-ups. In other words, as Barbara Fredrickson put it in The New York Times: “When you share a smile or laugh with someone face to face, a discernible synchrony emerges between you, as your gestures and biochemistries, even your respective neural firings, come to mirror each other. It’s micro-moments like these, in which a wave of good feeling rolls through two brains and bodies at once, that build your capacity to empathize as well as to improve your health.”

“If you don’t regularly exercise this capacity, it withers.” She adds, “Lucky for us, connecting with others does good and feels good, and opportunities to do so abound.” (See, “Your Phone vs. Your Heart.”)

So actually seeing each other in person makes a big difference over texting or email. It’s a richer connection that affects our biological bodies, our hearts, our muscles and nerves. But does this extend to virtual seeing, such as Skype or Facetime?

We have no research on this, so far as I know. Still, I suspect it’s not the same. It’s not just that the images we respond to on the screen are generally small and degraded, but also they are abstracted from their context. We may well see the facial expressions of those we speak with, but what about their postures? Or their subtle hand gestures or darting glances? Or what about smells or subtle kinetic clues to, say, breathing? To be sure, we may pick up some of that, but we will miss a lot as well. And it’s not just the movements we consciously detect. Two bodies sitting across from each other constantly attune and reflect each other in ways they seldom notice. They are picking up and processing signals only a tiny percentage of which reaches consciousness.

No doubt technology will improve, the bandwidth of communication will increase. But, still, if we are not in the same room, we can’t help but “multi-task,” listen to what’s happening next door, anticipate our next meeting or drift into thinking about dinner. And we won’t usually even notice that we are only half present, because we will have narrowed our focus as we try to screen out distractions and concentrate of grasping the message coming from afar through our device of the moment.

This is not to argue against cell phones or email or texting. It is merely to remind ourselves that these virtual connections are not the same as real interactions. The information we exchange digitally may be vital, but the experience we have of each other and of ourselves being with another is a big part of living. And, as Frederickson reminds it, we will lose it if we don’t use it.

History As Farce

“Gibberish,” concluded Floyd Norris, the financial reporter for The New York Times, summing up the “London Whale’s” description of his disastrous strategy to the JPMorgan group charged with overseeing investments.

According to the report of the Senate committee investigating the bank’s huge losses, this is how he described his plan: “sell the forward spread and buy protection on the tightening move,” “use indices and add to existing position,” “go long risk on some belly tranches especially where defaults may realize” and “buy protection on HY and Xover in rallies and turn the position over to monetize volatility.” It seems that no one understood him, but they approved his strategy, nonetheless, probably because they were afraid of seeming stupid. As a result, the bank ended up $6.2 billion in the hole — at least that’s the figure they eventually owned up to. (See, “Masked by Gibberish, the Risks Run Amok.”)

Nick Leeson, the rogue trader whose outsized trades brought about the collapse of Barings Bank in 1995, described a similar situation in his memoir. According to Norris: “When auditors and bosses asked how he was making all that money . . . he responded with meaningless but impressive-sounding jargon.”

Leeson noted: “Luckily for my fraud, there were too many chiefs who would chat about it at arm’s length but never go further. . . . And they never dared ask me any basic questions, since they were afraid of looking stupid about not understanding futures and options.”

Karl Marx wrote that history repeats itself, first as tragedy, then as farce. And nothing illustrates his point better that the behavior of these bankers. In the past, traders could offer real explanations to their supervisors, not gibberish. But financial markets had gotten too complex for many bankers to grasp. As Gillian Tett pointed out in her book, Fool’s Gold, many traders did not understand the complex derivatives based on mortgages that they were selling and buying in the credit bubble that led to the crash of 2008. They trusted their colleague to know what they were doing.

But now, the lesson has been learned. Traders now only have to counterfeit the appearance of arcane financial knowhow. Just talk fast enough, use a lot of jargon, act confident and it seems that you can get away with almost anything.

Norris makes the point that, as a result, banks can no longer be trusted to act sensibly. He actually put it more forcibly, and referred to “the sheer incompetence and stupidity documented in the report.” So, he argues, if they can’t be managed properly, it’s best to get rid of them – or, at least, reduce them to a size where their failures will not bring down the whole system.

It is such an obvious point one has to wonder why it has to be made over and over again. Are the bankers still too embarrassed to admit their own ignorance and incompetence? Has banking gotten too complex for bankers themselves to handle?

Real News – or Media Event?

The parallels between the papal conclave and the Oscars, Tonys, and Grammys are just too striking to miss, and not just because the Vatican ceremony came in the middle of our awards season. Indeed, Slate framed its breathless announcement as if the envelop had just been opened: “And the new Pope is: 76-year-old Jorge Mario Bergoglio from Argentina.” (See, “Holy Smoke! Meet Pope Francis. He Has One Lung, Loves the Bus, and Hates Gay Marriage.”)

Other parallels: the lavish spectacle of the arriving cardinals provided its own version of the red carpet; the balloting was secret; the announcement was preceded by weeks of speculation and discrete politicking behind the scenes; occasional leaks; the coverage of the fashions, with tailors working over-time to prepare the costumes; the giant TV screens; the drama of the white and black smoke; the gushing of the crowds in St Peter’s Square; the expert commentators and insider details; the bookmakers’ odds. It all provoked reactions in the media that ranged from tongue-in-cheek amusement to derision. Habemus Papem. “Habemus Who?” or, as The Daily Beast put it, “There’s a New Pope in Town.” (See, also, “The Vatican’s Big Fashion Problem: How Fat Is the New Pope?”)

Any source of news these days can hardly avoid becoming exaggerated and ironic, given the media’s insatiable appetite. In an age when TV cameras hover over a poor groundhog in February 2nd to catch it watching its shadow, what can’t become news?

But there is much more to the tone of the media coverage than the contempt of familiarity. The Catholic Church can still impress with its wealth and power, but it is no longer set apart from other institutions. Its venerable moral authority is gone, leaving it wide open to suspicion and attack. The endless sexual scandals, the extensive cover-ups and resistance to acknowledging complicity and guilt, not to mention the mismanagement of the Vatican Bank, have reduced it the status of little more than a dysfunctional and corrupt multinational corporation.

So the impressive settings, the rituals and the spectacles still capture attention, but it is essentially no different from the other events that routinely entertain and distract. We are left wondering what difference does the papal election actually make anymore.

Pope Francis we now learn was the runner-up last time. Reporters suggest that intrigue prevented any real reformer from getting elected this time. The process is ostensibly democratic and presumably any catholic is eligible to be chosen. But the College of Cardinals had been carefully stacked over the years to exclude any members who might offer significant change to the key issues facing the Church in the 21st century.

To be sure, the new Pope has modeled himself on Saint Francis of Assisi, cooked his own meals and took the bus to work in Argentina. That may make it easier for the poor to identify with him, and it suggests a different attitude towards worldliness and pomp. The BBC reports that the Pope wants “a poor church for the poor.” But what does that actually mean, and will it lead to anything but cosmetic changes?

Was there the possibility of any change that might actually justify the news coverage as anything but a media event? It looks like the media themselves didn’t think so. (See, (“Why Pope Francis May Be a Catholic Nightmare.”)