Monday, March 31, 2008

How Do We Learn from Our Mistakes?

Out there in the world of people buying, selling--and losing--homes, where "foreclosure" is a word we're hearing as often as people in high school hear "acne," a different, odder phrase is re-entering the language: "moral hazard."

The idea behind this phrase is that people should learn from their mistakes, the hard way. If people take out mortgages, they can't afford, let them lose their houses. They'll know better the next time. If banks make bad loans, let them lose money, even (in the extreme) go out of business. That will teach the remaining companies a lesson. It's called "the discipline of the market," and people who talk about that discipline sound like stern parents, while people using the phrase "moral hazard" sound like the book of Proverbs: spare the rod and spoil the child.

Of course, it's hard to take a strap to a child when he grows to be bigger than you are. The bigger the bank, the harder it is for the Federal Reserve, the Treasury Department, Sen. McCain, and other stern parents to whip it into shape. So we, the taxpayers, bail out Bear Stearns, with many more billions of dollars to come out of our pockets soon. And no one seems to worry that we're teaching bankers the wrong lessons, or that their moral fiber will wear thin as they become dependent on government handouts. As F. Scott Fitzgerald said, the rich are different.

Let's let this blatant hypocrisy pass, for now. Here's what I'm wondering. Is losing your shirt (or your house) the only way a person can learn from experience?

Turn your gaze away from the financial landscape and train your sights on a smaller scene: the world of nonprofit organizations. I work in such an agency, and I read the literature about nonprofits. The buzzword in our field isn't "moral hazard." It's "the learning organization." Managers of nonprofit organizations are supposed to give their employees lots of room to come up with new ideas and try them out. Only with experiment, goes the theory, will we learn how to do anything new. Instead of disciplining staff who try something that fails, we are to support them, think with them about the lessons learned, and try to do better next time. We all learn from a plausible mistake. The whole agency will be better off for the knowledge gained in the experiment--knowledge we would lose out on if we discouraged people from trying something new...OR punished them for failure.

Isn't this peculiar? In one sphere of human endeavor, we assume people only learn from being punished. In another, we believe people only learn when they are free to fail without penalty.

Of course, this is too general. People who come up with lots of ideas in an innovative company get promoted even if a few of them don't work out, as long as the company makes money overall. And you certainly can't try just anything at a nonprofit. Our funding sources see to that, by tying down the use of the money in restrictive ways that a corporate manager would never accept.

Still and all, I am left wondering if "moral hazard" is really the right way to look at financial matters either. Perhaps people who commit fraud are immoral and have to pay for what they've done. Even people who are unethical--not revealing their real personal finances, or not disclosing the real terms, and risks, involved in an investment--might need a spanking. But people who tried to realize the American dream of homeownership and trusted their lenders too much? That sounds like a self-help book, not a crime. They should be on Oprah, not in the poor house. There's no chance that most people who lose their home, or even come close to it, are going to run out and make the same mistake. They don't need the discipline of the market. They need the chance to learn from their mistakes, which means they need a second chance.

Sunday, March 30, 2008

Predictably Irrational America

I haven't yet read the new book Predictably Irrational, although I heard the author interviewed on NPR. The book talks about how, as individuals, we make certain kinds of mistakes over and over again. We buy things we don't need because they're on sale. Our headaches get better when we take placebos. "Paying for dinner in cash feels very different than paying the same amount with a credit card, giving your hosts a gift when you arrive at their place for a dinner party is not the same as giving them cash, and giving employees a monthly increase in their salary has different effects on their spending compared to an equivalent yearly bonus."

This is all fascinating, but individual decisions have limited effects. If I personally act as if food eaten standing up has no calories, that only destroys my diet. Think about some of the decisions this country has made that have had horrific effects that could have been predicted--but we made the decisions anyway.
  1. When we deregulated the mortgage industry, get-rich-quick schemes put borrowers, lenders, investors, and taxpayers all at risk. Borrowers are losing homes they can't pay for. Lenders are losing big money on defaulting loans. Investors are seeing the securities they bought, which were based on those same risky mortgages, become worthless paper. And we all will end up paying. This happened in the 1980's, when we deregulated the Savings & Loan industry. It was predictable.
  2. When we declared a "war on terror," we unleashed the intelligence agencies to spy on you and me. It's not just the people with Arabic-sounding names who are getting stopped, often erroneously, in airports. It's snooping on our phone and email conversations and infiltrating our meetings with our fellow citizens. This happened in 1919, with the Palmer Raids; in the 1950's, with anti-communist witch hunts associated with McCarthyism; in the 1960's and 1970'S, with the COINTELPRO operation against the antiwar and civil rights movements (including against the person of Dr. Martin Luther King, Jr.) ; and in the 1980's, when the targets were the radical feminist, Central America solidarity, and nuclear freeze movements. It was predictable.
  3. When we invaded Iraq, as I have documented earlier on this blog:
    1. Young Americans came home with grave mental health problems.
    2. The military tried its best to deny them medical coverage.
    3. Many had problems adjusting to nonviolent civilian life.
    4. Vets withe Post-Traumatic Stress Disorder will be at greater risk for heart attack than the rest of us as they grow older.
    5. The military also tried to cheat returning veterans out of their costly GI benefits, or "bait and switch," giving vets much less than they were promised when they joined.
    6. Women in the military were sexually harassed and, too often, raped by their fellow soldiers.
    7. Military contractors are suffering the same mental and physical wounds as soldiers.
All these insults to our young service men and women occurred to some degree in Vietnam. It was predictable that they'd happen again. And yet we sent them off to war.

It's a good thing to read a book about how to avoid getting snookered out of your personal cash. How can we learn to keep our country from being defrauded out of hundred of billions of dollars, and thousands of lives? Before we make the decisions that people in Washington and at Halliburton want us to make, let's look at that past to avoid predictable mistakes. As the philosopher George Santayana wrote, "Those who cannot learn from history are doomed to repeat it."

Thursday, March 20, 2008

The Around-the-Clock Follies

During the Vietnam War, the Joint United States Public Affairs Office in Saigon gave a daily press briefing. Government spokespersons, who had not been in the field, would give the official line on what had happened that day. Reporters, some of whom had been with the troops before, knew that the official story often bore very little relation to reality. Yet they reported it anyway, and it got carried on the evening news. The reporters' resentment at being used this way led to them call the whole charade "the five o'clock follies."

Today, the deadline to make the evening news means little. We are used to a twenty-four hour news cycle, where both the crucial and the sensational events of the day can go out through the worldwide web instantaneously. But some things haven't changed.

The U.S. government still measures wartime success by the "body count," even though it has nothing to do with whether or not we are achieving anything in Iraq. As Vietnamese leader Ho Chi Minh said, in reference to the French, "You can kill ten of our men for every one we kill of yours. But even at those odds, you will lose and we will win."

The difference is that now, the U.S. counts civilian casualties--when it suits. Back when the number of civilian deaths was climbing (far too many of them killed by U.S. troops), the Bush administration said, in effect, so sorry, but that's not our fault.

In recent months, the number of civilian deaths is still much, much higher than it was during the first three years of the war. Fewer people are dying than last year, so the administration is claiming the "surge" (a more comforting term than "escalation") worked.

What's wrong with this picture? Two things, at least.
  1. U.S. troop levels were not the only thing affecting the number of civilian casualties during this period. Shi'ite militia leader Muqtada al-Sadr told his Mahdi Army to observe a ceasefire. Some Sunni militias decided they could fight the local al-Qaeda forces better if they didn't have to fight the U.S. at the same time. Neither of these is a permanent situation. Sooner or later, they will fight each other-if U.S. troops are still there, they will fight the U.S. too. Civilian casualties will rise again, maybe dramatically.
  2. Casualties are just the wrong yardstick to use. On today's On Point, reporters and generals agreed that Iraq, and especially Baghdad, have been ethnically cleansed. There are Shi'ite neighborhoods that are "no go" for Sunnis, and vice versa. People are not going across ethnic lines, so fewer are getting killed. Is this progress? Should we say "Mission Accomplished" again?
We have broken Iraq. It may take a generation for it to reassemble itself. Civil war, at this point, may be inevitable. All the U.S. is doing now is arming and training the sides in the coming war. To believe that this is worth doing because the number of people getting killed is down for a little while is folly.

Tuesday, March 18, 2008

What We Need to Understand about Racism

There's so much that people misunderstand when they talk about racism.
  1. Just mentioning a person's race is not racism. Referring to prejudice, discrimination, and oppression on the basis of race is not racism. In fact, how could you fight against racism if you couldn't name it, or identify the people who are affected by it?
  2. Some people are saying the fact that Barack Obama can run for President is proof that racism no longer exists in this country. They are mostly people like Ward Connerly, who have tried to deny the effects of racism (and the need for affirmative action to cure it) long before they ever heard of Barack Obama. One swallow does not make a spring. One serious Black presidential candidate doesn't prove or disprove anything about race and politics. And no number of African American politicians can make up for the poverty and ill health that affect a disproportionate percentage of the African American community.
  3. Connerly was quoted in the Boston Globe as saying Obama is proof of the end of institutional racism. Huh? "Institutional racism" doesn't mean "lots of white people hate black people and can't get over it." That's almost the opposite of what the term was invented to describe. "Institutional racism" means the kinds of burdens we put on people on a racial basis whether or not we personally think they're good or bad, equal or unequal. When a high percentage of African American families live in low-income school districts, and therefore go to underfunded schools, and therefore get a substandard education, and therefore have fewer opportunities to get a good job, and therefore end up living and raising their children in low-income neighborhoods--that's instituionalized and even structural racism. It doesn't take haters to make it go on. It takes a movement to make it stop.

Saturday, March 15, 2008

You Can't Handle the Truth!

Geraldine Ferraro was only telling the truth. The first woman to run for Vice President on a major party tickets said this about Barack Obama:
If Obama was a white man, he would not be in this position. And if he was a woman (of any color) he would not be in this position. He happens to be very lucky to be who he is. And the country is caught up in the concept."
It is not insulting to Obama to recognize that a large part of his appeal lies in the fact that he's a credible black candidate. He recognizes that himself when he says, ""The day I'm inaugurated, America will look at itself differently, and the world will look at America differently." He knows that it's not his policies that will make the world look at America differently, because 95% of the time, they are the same as Clinton's policies. It his his face. It's part of what he is offering to voters: the chance to look at African Americans as leaders, and to have the world see us as a society moving away from its racist past. Clinton should not have had to fire Ferraro from her campaign, and Ferraro does not have to apologize for pointing out the obvious. If she meant it to be insulting, that's her problem. It's no insult. It's the truth.

Dr. Jeremiah A. Wright, Jr. was telling the truth too. I am not talking about the appreciation that the former pastor of the church that the Obamas attend has shown for Louis Farrakhan. That is something Obama does well to regret. I am referring to the remarks Dr. Wright made about Obama's rival for the presidency, Hillary Clinton:
"Barack knows what it means to be a black man living in a country and a culture that is controlled by rich white people," Wright said in a video recording of a December sermon posted on YouTube. "Hillary can never know that." Clinton has never been subjected to racial epithets, he said. (Boston Globe)
Strategically, it makes sense for Obama to disassociate himself from these remarks. He is running for President, not leading a movement against racism. His whole candidacy depends on black people viewing him as "one of us" while whites, Asians, etc. view him as an exciting, idealist progressive--who also happens to be black.

But Wright is right. This country is still controlled by rich white men, and that will not change even if Barack Obama is the next President of the U.S. Obama does know what it's like to be the object of racial epithets. When Jordan Williams, a Kansas student, asked Mr Obama whether he was "authentically black enough," Mr Obama said he had suffered the same difficulties as other African-Americans in hailing a taxi in New York: "You know, when I'm catching a cab in Manhattan in the past, I think I've given my credentials."

And Hillary cannot know what that's like, any more than I can--any more than Barack can know what it's been like for Hillary to live in Bill Clinton's shadow all these years and then be subjected to double-bind questions about being tough enough and feminine enough at the same time. None of us can know exactly what it's like to be in another person's shoes. That's precisely the reason that we cannot afford to silence people who speak up from their own perspective and simply tell--dare I say it?--an inconvenient truth.

Thursday, March 13, 2008

Iraq: Five Years Later

Run, don't walk, to the Boston Phoenix web site. Read the interview with economist Joseph Stiglitz about "the three trillion dollar war." Do it now, before next week, when you'll have to blow out five candles on this ghastly invasion's birthday. Then, make notes about how to stop the next war.

Tuesday, March 11, 2008

The Texas Concentration Camp

The single most important thing the next President can do is ...to restore the Constitution of the United States. If you doubt that we live in a lawless country now, click on the title of this blog and read what Margaret Talbot wrote in The New Yorker about the black hole in Texas that we throw immigrants in, separating husband from wife, parents from children, and security from humanity.

Monday, March 10, 2008

War, What is It Good For? Profits

Iraq is a profit center. That's the message that corporate boardrooms are sending us with three stories that came out this weekend.

  1. "Dozens of US troops in Iraq fell sick at bases using 'unmonitored and potentially unsafe' water supplied by the military and [KBR, formerly Kellogg, Brown & Root, a part of Halliburton], a contractor once owned by Vice President Dick Cheney's former company, the Pentagon's internal watchdog says."
  2. "Democrats in Congress criticized the Department of Defense and the Bush administration for allowing Houston-based KBR, a top Iraq war contractor, to avoid paying hundreds of millions of dollars in payroll taxes by hiring American workers through a Cayman Islands-based shell company." The Boston Globe called the scheme "War profiteering by tax dodge."
  3. "For decades, contractors have been asked to report internal fraud or overpayment on government-funded projects. Compliance has been voluntary, and over the past 15 years, the number of company-reported fraud cases has declined steadily. Facing the increased violations, prosecutors sought to force companies to notify the government if they find evidence of contract abuse of more than $5 million. Failure to comply could make a company ineligible for future government work. But a later version of the rule, reviewed by the OMB and published in the Federal Register in November, specifically exempts "contracts to be performed outside the United States."

Sunday, March 9, 2008

The Real Problem with Nader

You might get the impression from my last few posts that I think people who object to Ralph Nader's candidacy should just stop whining. Actually. I do think we have a bone to pick with Nader. It's this: like Jesse Jackson before him, Nader is doing nothing to build a movement.

What's that you say? They're politicians, not community organizers? But you see, a progressive candidate should be both. If possible, the candidate should win, but we progressives know it's not always possible. What the candidate can do--can always do--is help people who are hungry for justice find one another, and call their friends, and get organized, and put their best arguments forward. In years to come, what was a voice crying in the wilderness can become the voice of the people.

Before he was a politician, Obama was a community organizer. I voted for Obama instead of Clinton in the Democratic primary because there's a just slight chance he might remember that. Now, how do we remind Ralph Nader?

Saturday, March 8, 2008

Vote Strategically

Back at the Fischman home page, where this blog began, I have made three points about the Nader candidacy:

  1. By running, Nader is in a position to raise issues that none of the major party candidates will touch.
  2. If we had instant runoff voting, nobody would have to fear Nader. People could vote Nader #1, the eventual Democratic candidate #2, expressing their real preference and electing their most acceptable candidate who's really competitive at the same time.
  3. The Democrats have their fate in their own hands. If they run a good enough campaign, they can convince most progressive voters to swing their way.
Let me add a fourth practical point. If you were tempted to vote for Nader in 2000 or 2004, most of the time, it was a safe thing to do. Massachusetts voters could vote Nader knowing that Massachusetts would go for Gore, then Kerry, come hell or high water. Proud progressive Texans could vote for Nader knowing that the candidate the late lamented Molly Ivins famously called "Shrub" was going to carry that state. There were only a handful of swing states where progressives really had to worry about "wasting their vote" or Nader becoming a "spoiler." If you didn't live in Florida or Ohio, for the most part, you could vote Nader with a clear conscience.

This year, if Clinton is the nominee, the same logic will probably hold. She will aim to win all the blue states and a couple of the swing states to gain a majority in the electoral college. So, if you're not in a contested state, you can vote for Nader, Mickey Mouse, or Che Guevara if you want to. It won't matter a whit.

If Obama is the nominee, all bets are off. He is the first Democrat who stands a chance of putting Howard Dean's "fifty-state strategy" to the test. I can still do whatever I want. Massachusetts is not going for a Republican, no matter what I do. But if you're in the Rocky Mountain West, or the Carolinas, or any of the other places that went for Bush last time but might go for Obama this time, watch the polls and decide on Election Day how to use your ballot.

Friday, March 7, 2008

About this blog

Welcome to my world. Please help change it.

There's an old joke in which a man takes a length of cloth to a tailor and asks him to make him a pair of pants. The tailor fits the cloth to the customer. He pins it here and there to fit the man's shape. When the fitting is done, the customer asks the tailor how long it will be until his pants are ready. "A week," the tailor says.

"A week?" the customer says in astonishment. "In a week, the Lord made the heavens and the earth!"

The tailor shrugs. "Go take a look out that window."

The customer looks out the window. "So?"

"So," says the tailor, "look what a world He made in a week--and I'm going to make you a beautiful pair of pants!"

There's a lot in this world that needs changing, but most of it is not what God made. This blog will be a place to talk about changing the social arrangements that make life so ugly for so many people. I will bring to the task what my parents, my Jewish tradition, my political science training, and my life as a man who loves women--and tries to make the world a place where women and men are equal and free to love each other--have taught me. Sometimes, that will be analysis. Sometimes, reflections. Sometimes, maybe the best times, jokes.

What will you bring to the discussion? I can't wait to hear from you.