Author: ken

Can It Be Done?

Two weeks ago, the Army announced plans “to require that all 1.1 million of its soldiers take intensive training in emotional resiliency. . . . The training, the first of its kind in the military, is meant to improve performance in combat and head off the mental health problems, including depression, post-traumatic stress disorder and suicide, that plague about one-fifth of troops returning from Afghanistan and Iraq.” (See “Mental Stress Training is Planned for U.S. Soldiers.”)

It is an inevitable development, given increased awareness of the long-term psychic consequences of combat, but also our society’s increasing recognition of the benefits of counseling and the value of emotional intelligence. And, clearly, it is a good step – if a challenging one. Research suggests such a program could make a difference. The big question is: can the army really accept it?

Gen. George W. Casey Jr., the Army’s chief of staff, noted that the program was an effort “to transform a military culture that has generally considered talk of emotions to be so much hand-holding, a sign of weakness. . . . I’m still not sure that our culture is ready to accept this,” General Casey said. “That’s what I worry about most.”

Our corporations have struggled for many years with similar efforts. “Culture change” has become an accepted concept for trying to shift organizations from “command and control” structures, where initiatives originate at the top, to more flat, participatory structures, delegating more responsibility to those out at the periphery. The idea is that a culture change is required to get employees to take more active responsibility for their work, enabling organizations to be more nimble and creative in adapting to change. They have to give up, among other things, the security of knowing what they are expected to do.

The concept of culture is useful here because it suggests deeply engrained habits, assumptions, identities, values, and rewards – an interlocking, mutually reinforcing set of beliefs and standards that have developed over many years. Much has been learned about the difficulty in implementing such agendas. Does the army know what is involved in trying to make such a shift work?

For one thing, a culture change has to be implemented on all levels, or else it is just talk. The rank and file will become cynical about what they are asked to do if the higher-ups just watch them try to do it without undertaking to do it themselves.

For another, it is easy to get superficial compliance, alongside deep-seated resistance and sabotage. The process of implementation can become a thinly disguised joke.

Finally, it will inevitably clash with other customs and procedures. For example, how will these new cultural norms fit in with traditional concepts of basic training? And will those responsible for basic training be willing to reconsider the changes required to support the new initiative?

Gen. Casey is right to be worried. What he proposes is a needed and well-intentioned step, but it is also sure to run up against extraordinary and largely hidden obstacles. And it is all too easy to imagine that no one will understand why it did not work.

“The Best Medical Care in the World”

A New York Times editorial points out today,  (See “World’s Best Health Care.”)   “researchers from the Urban Institute released a report analyzing studies that have compared the clinical effectiveness and quality of care in the United States with the care dispensed in other advanced nations….  The bottom line was unmistakable. The analysts found no support for the claim routinely made by politicians that American health care is the best in the world and no hard evidence of any particular area in which American health care is truly exceptional.”

So why do we claim we are the best? It is a kind of reversed prejudice. No matter how good a job other countries do to reduce infant mortality, provide for public health, offer preventative care, low cost hospitals, and so forth – they can’t possibly be as good as us.

Other countries, of course, have experienced similar national pride, and maybe all are subject to some form of it. Athenians in classical Greece called all those who lived elsewhere“barbarians”. The English in the nineteenth century smugly assumed “the white man’s burden.” Our misplaced pride in our medical system is clearly part of a larger, more embracing chauvinism that includes pride in our government, our freedoms, our wealth, our technology, “the best in the world,” we like to say — but which conveniently overlooks our penal system, our racism, our dismal record in public education, our homeless, etc. I am trying not to take sides here, but once you point out the profound irrationality of our national self-congratulation, it is difficult not to fall into the opposite extreme.

So what is the reason for our particular brand of this condition? Surely there is more than one. “Patriotism is the last refuge of scoundrels,” thundered Dr. Johnson, and there is a point to that: it disguises other, less attractive motives, and serves to project our contempt for others into socially acceptable directions. It also binds people together who might other wise have little in common.

But I think there is an aspect unique to us: as a nation of immigrants, we inevitably ambivalent about the land of opportunity that took us in and helped us become successful. Our loyalties are divided. But one way we can all come together is through such forms of crass “boosterism” and half truths – especially if they come out of the mouths of our politicians. It justifies the painful choices so many have made.

AND WHAT THE STRESS TEST CONTINUES TO REVEAL

“It took many years to inflate the enormous debt bubble that popped in 2007. The deleveraging process, which is nobody’s idea of fun, will take a long time, too.” Gretchen Morgenstern wrote this in the Busness Section of Sunday’s New York Times (See “What the Stress Tests Didn’t Predict.”)

She wrote this as a warning to investors who have been recently inflating the value of banking stocks. Based on a new report by Christopher Whalen, analyzing data from the “stress test” that banks are now required to submit, she noted that “the number of financially sound banks is declining and that the ranks of troubled institutions are growing. Indeed, Mr. Whalen said his figures show more stress in the banking industry in the second quarter of 2009 than in the immediately previous periods.”

This is “under the radar,” to put it mildly, something most investor don’t seem to want to know they know. As Morgenstern makes clear, the information is out there, but investor “confidence” is outstripping reality. Perhaps even more important, just plain common sense is being ignored in the assumption that there can be a quick fix to the credit bubble.

Mark Gongloff made a similar point in today’s Wall Street Journal. (See “Bulls of March Look Set to Trade In Their Horns.”) He quotes one of the few traders who correctly called the bottom of the market in March: Jeremy Grantham “sees ‘seven lean years’ of a sluggish market ahead, to atone for what the firm believes was a long era of overpriced stocks.”

Morgenstern calls this false optimism a “relief rally.” That is, investors value stocks on the belief that things are not as bad as they could have been, not on what they are likely to be actually worth.

Anxiety and Paranoia over Health Care

It is clearly a cynical attempt to manipulate public opinion, the idea that Obama is proposing “Death Panels” to determine whether or not grandma should be forced to die. But why has it caught on and fueled such angry protests?

Much of these enthusiastic lies and distortions comes from the far right, who are desperate to hand Obama a defeat. For them, the public’s interest in having improved medical care – much less a rational debate on the subject – is far outweighed by their partisan fear that their own political survival is at risk if the plan is not defeated. Over a week ago, The Times pointed out that the extreme, unfounded rumors “had a mainstream provenance, openly emanating months ago from many of the same pundits and conservative media outlets that were central in defeating President Bill Clinton’s health care proposals 16 years ago.” (See “False ‘Death Panel’ Rumor Has Some Familiar Roots.”)

And it seems to be working among Republicans, as Charles Blow notes in today’s Times: “According to an NBC News poll released this week, 76 percent of Republicans believe that the health care plan will lead to a government takeover of the health care system; 70 percent believe it will allow the government to make decisions about when to stop providing medical care to the elderly; and 61 percent believe it will allow the use of taxpayer dollars for abortions.” (See “Masters and Slaves of Deception.”)

The Republicans are more prone to such fearful fantasies because of their hatred of big government. But it may not just be Republican paranoia that is barging into this debate. We are all anxious about the fact that health care is what holds the line between life and death – and it is that ever-present anxiety that makes us all somewhat vulnerable to these scare tactics.

There is not enough money to provide all the health care everyone wants. Cost are already spiraling out of control, and as many sober voices have pointed out, even the best plans will require some form of rationing. But the fact is that we actually have “rationing” now in the form of a crazy quilt of unequally distributed services: there are those who have no coverage at all, or have lost their coverage, or are denied it because of a pre-existing condition or because the paperwork keeps getting turned back, and then there are those who can’t afford their medications, who are covered under one policy but then not under another, or can’t get to a doctor because they are infirm, who wait too long because they are scared or mistrustful. The question is whether we will have a more rational system or the lottery we have now.

But, then, lots of people like lotteries. At least you can think you have a chance to win. Uncertainty keeps hope alive, and the rare winners fuel the fantasies of the many losers. Maybe you’ll be lucky and won’t get sick, or find a hospital that won’t turn you away. Maybe you’ll get what you need.

What’s the Rush?

A month ago Newsweek proclaimed that “The Recession is Over,” and that’s just one of the more visible signs of our eagerness to put it all behind us. The Federal Reserve announced Wednesday that the recession appeared to be bottoming, while policy makers, financial analysts and investors are joining in the chorus.

But in case we hadn’t noticed it ourselves, a New York Times editorial on Monday summarized grimmer news: Thursday the Commerce Department reported retail sales down, Friday the University of Michigan reported consumer confidence is down, over the weekend another big regional bank failed, while unemployment is still growing. (See “The View From the Bottom.”) The Times editorial makes the point that yet more government action is required for the economy not to be mired at the bottom. But my question is where is the optimism coming from? What is motivating the rush?

We all want it to be over, of course, that’s just common sense. Moreover, optimism is good for the economy at this point. But I think something more insidious is fueling this premature excitement. Too many of us want to get back to business as usual before we are forced to learn the lessons of our mistakes. We don’t want to think too much about what needs to change.

It is now so clear that the big banks were drastically over-leveraged, wildly underestimating their risks, that the “shadow banking system” had grown out of proportion and out of the view of regulators, that the market did not work as most assumed it would (including Alan Greenspan), and that banks and mortgage companies had free reign to sell debt to those who did not understand what they were getting into. The big investment banks want to get back to parleying risk into outsized profit. Wall Street wants to go back to big bonuses. We all want to see our portfolios increase – and we want the financial industry to work its magic again.

On the bottom of the first page of Saturday’s financial section in The Times, was a revealing story about changes over 200 companies made to their pay plans: “The biggest shock? . . . . despite the calamities that short-term profiteering has visited on our economy [virtually all the companies surveyed] made short-term incentives a bigger component of compensation.” The author of the study commented: “This is counter to the direction suggested by the United States Treasury, academics and other expert advisers regarding ways to mitigate risk.” Another troubling finding was an increased use of restricted stock awards that are not performance-based. That is, compensation was still tied to promise and risk, not delivery. The old game had started up again. Nothing had changed. (See “The Quick Buck Just Got Quicker.”)

The financial playing field has been drastically altered by the Great Panic. But, by and large, the same players remain, and they are eager to get back into the game they know. The drive to believe the recession is over masks the fact they we do not want to face what needs to be changed.

Postscript: An editorial in today’s Times, calls attention to the same study that caught my attention yesterday, noting that Geithner, the Treasury Secretary, was quoted in the Wall Street Journal last week as saying that he did not think the financial system was reverting to past practice, adding: “and we won’t let that happen.” (See “More Business as Usual.”) But Congress appears reluctant to act, and it’s not clear that the Administration itself grasps the extent of the resistance it will face.

Even when people know they need to change, they do not want to give up what they know, the familiar habits that worked for them in the past. That is true for bankers, investors, and a public that is impatient for a return to prosperity.