The ramblings of an Eternal Student of Life
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Friday, February 26, 2010
Current Affairs ... Personal Reflections ...

It’s a workday but I’m staying home because of the big snowstorm over the New York metro area. The birdfeeder outside my window is extremely popular this morning, attracting birds that usually don’t want to get close to human territory. These include juncos, which are also known as “snowbirds”. Over evolutionary history, birds evolved from reptiles; their feathers are really just modified lizard scales. So, those juncos, like all the other birds jumping around in the feeder box out there, are in effect ‘flying lizards’.

This storm is being called a “blizzard” by some of the more flamboyant local news reporters (I don’t think it really meets the technical qualifications for very low temperature and high wind). So if it takes a blizzard to bring juncos to my window birdfeeder, perhaps I should think of them as “blizzard lizards”.

Yea, I know, that’s kind of stupid. But that’s what cabin fever will do to you.

NEXT THOUGHT, FROM OUTER SPACE AND BACK AGAIN: I haven’t done any research on this, but sometimes I wonder if the American economy has been declining over the past decade or so because of the big cutbacks in spending over the past 40 years on space exploration. Up until 1975 or so, the American public was pretty excited about keeping America “first in space”, and beating the Russians to the moon. There were visions of space stations and lunar colonies and missions to Mars and Venus, and maybe even Jupiter or beyond (remember Kubrick’s 2001, A Space Odessy?). But for a wide variety of reasons, spending on space was cut back greatly after 1975. Despite some occasional stirrings about returning to the moon and getting to Mars, the recent Obama space plan confirmed that space exploration, manned and otherwise, will remain a relatively low national priority. NASA got over 5% of the federal budget back in the mid-1960s; by the end of the Bush Administration in 2008, it was down to 0.6%. For 2010, Obama proposes 0.52%.

That’s a shame, as there is a good argument (I think it’s good, anyway) that the many years of American prosperity and economic growth experienced from 1955 to 1975 were fueled by the technology advances that a vigorous space program generated. The space effort attracted a lot of bright young people into careers as scientists or engineers, and American businesses made good use of these “techie people” in generating new products and more efficient ways of doing things. That increased business profits, employment, tax revenues, standards of living, and general American optimism.

I don’t have the figures at hand, but I’ve heard that since 1975, a lot of bright young people who could have gone into science and technology decided to become lawyers or MBA’s, because that’s where the action seems to be in society (and the money). So what did we get from that? Lots of lawsuits, including all of the medical malpractice lawsuits that are helping to drive up health care costs. (Not that many malpractice suits aren’t justified; but with too many hungry lawyers out there, it becomes easier for someone whose operation didn’t go well to blame their doctor for what happened, and ignore the reality that sometimes the body just doesn’t respond to the best of treatments.) And spiraling health care costs (including Medicare and Medicaid entitlements, and the upcoming expansion of coverage under ObamaCare) threaten to drag down our economic growth and prosperity over the next generation.

Oh, and what else? Well, all of those lawyers and MBA’s (who used their mathematical and scientific skills to study the lucrative field of finance) started coming up with fancy new ways to make money by swapping around other people’s money. Instead of making money the old fashioned way, i.e. by designing a better product or service and then producing and selling it, America’s best minds set themselves to finding ways to redesign the means by which such “real economy” activities get the money they need to start up and expand. So the “real world economy” was ignored (at least in America; China and other foreign nations started taking it very seriously), and the “moneychanger economy” became the hot spot for rising young talent.

And you know how that worked out. Their collateralized debt obligations with their myriad “tranches”, along with their debt swaps and securities derivatives and credit cards and subprime mortgages, finally blew up; the law of unintended consequences finally reared its ugly head. And now our American economy is in the twilight zone, uncertain if it can re-gain its groove within the next 5 or even 10 years. There are signs of restored growth, but the huge overstock in real estate and unemployed workers may keep the US “economic engine” from turning over, despite the fact that our President is trying hard to “crank the ignition” and “step on the gas”. You know how it is when you’re trying to start a car with engine trouble; “come on baby, come on baby, catch, catch, get going!” Thus far, we haven’t heard that reassuring “VROOOOM” when the engine clears its throat and gets firing again. Or even worse, maybe there has been a short “VOOM” but the car shakes and stalls out again.

Meanwhile, China, with it’s “real economy” focus, seems to be cruising along, finding ways to keep growing despite reduced American consumer demand. Is it any coincidence that China seems to be putting a lot of its still-limited resources into space exploration? Statistics: In 2004, China had 351,537 students gain bachelors degrees in engineering and info technology. The U.S. for that year graduated 137,437. India wasn’t far behind at 112,000.

I’ve recently read a bit about investor Warren Buffett’s partner Charlie Munger. Munger and Buffett have gotten rich by focusing on “old school” investments. I.e. on putting money on the part of the economy that makes and does things, versus the “financial sector” that makes money (and economic crashes) moving around other people’s money. Munger has been warning lately that American capitalism has changed for good, and not for the better. He’s not really a space exploration fan, like I am; but otherwise, what he says fits quite closely with what I’ve said above. He’s worth a read, and some follow-up thought.

FINAL THOUGHT on MY GENERATION, BABY: I wonder how my generation, i.e the Baby Boomers, will be looked on in the second half of the 21st century. Today, we have some positive views of the generation or two before us, our parents’ generation. They experienced the Great Depression, and then continued to sacrifice so that America could fight World War 2 and keep the world from fascist domination. They also faced up to the threat from Soviet Russia and its so-called Communist doctrines. In doing all this, they laid the groundwork for a relatively peaceful and prosperous America, which we Boomers grew up in during the 1950s and 1960s. What will the following generations remember us for?

I can’t help but wonder if they will say this: our parents and grandparents from the mid 20th Century (i.e., the Boomers) were spoiled; they consumed and borrowed too much while obsessing over their own spiritual needs and emotional fulfillment. They didn’t re-invest in America’s physical and moral infrastructure. They were against war when it threatened their own young skins; but when they later needed it, they farmed it out to the country’s lower classes. They didn’t make the relatively small sacrifices that could have avoided a lot of future problems, even though they were so well educated and clearly knew what they were doing. Despite all their songs about brotherhood and one-world, they encouraged their politicians to become gladiators for local interests, and to totally ignore the common good.

Their politics, fueled by a “24 hour news cycle”, became a vicious free-for-all; they selected top leaders with wonderful speaking talents, beautiful people who looked great promising everything to everyone. They were then dismayed when those unfulfillable promises were not fulfilled. They wouldn’t do anything about the big problems that they clearly were aware of, as they lived in fear of real sacrifice. Despite all of their political correctness and sensitivity to groups with claims of oppression, they let the rich become richer while allowing the middle class and the poor to slide off the map. They felt good about protecting rights for gays, Latinos, high-functioning autistics, and other groups (to their credit), while allowing things to get worse economically for 90% of the population.

They worried greatly about the environment and what the effects of pollution and carbon would be; but as to making sacrifices in their own living standards to deal with it, they weren’t very enthusiastic (but they were so proud of their little gestures like more-efficient autos, light bulbs and grocery bags). They knew there was a growing problem with health care, a cancer-like problem eating away at the economy; but instead of taking more personal responsibility for health care and its costs, they passed legislation just making it more of a no-cost entitlement.

And now they’ve left us with a weakened, nearly bankrupt nation with high unemployment and living costs. The Chinese (or Brazil or Iran or Russia or India) are increasingly calling the shots on the international scene. It will take many decades of re-building and common sense before our kids have the same level of comfort and opportunity that they had (and squandered!). They were really smart people, but they just didn’t use common sense to see the big picture, the picture of our nation as a whole. I.e., the big picture that previous generations once possessed, the picture that once made America such a great nation. It all goes to show that good times make people think small (and in incredible detail), and bad times make them think big. Too bad that the Boomers had it so good, and thus couldn’t see the big things right before their eyes. The big things that we, their grandchildren, now have to try to fix.

◊   posted by Jim G @ 12:59 pm      

  1. Jim,
    First, regarding your “stupid tho’t of the day”: I’ve often read that if one wants to see the dinosaurs, one need only look at the birds (some say “chickens”) of today. I think very often of what is often said of those millions of years ago when the dinosaurs were predominant—that mammals were just a tiny niche of the ecology of the time; mammals hardly counted. Today it seems the opposite is the case: It’s the mammals that predominate and the “dinosaurs of today”—well, one can hardly say they don’t count as they bring such beauty into our lives.

    As to your comments on the economy and the baby boomers: Let me say that, unfortunately, it seems to me that you are so right about them. What amazes me about the whole “baby boomer generation thing” (and here let me say that I am way too old to be included in the baby boomer generation) is that as well meaning as it was at the time, as right as it seemed at the time, it does somehow come out to be not all that good. However, when one thinks back to the “good old days”, they were not all that “good” (take it from one who was born in the “good old days”).

    Which leads us to the conclusion that when one deals with humans, the best one can hope for is a mixed bag of good and bad. The best of intentions has within it something that is not 100% perfect; yet that which is not 100% perfect has a lot of good in it. I do tend to think that 50 or 100 years from now the baby boomers will be remembered for what it was that they tried to do well and good—and there was a lot of good—at least “intentions” in the boomer generation.

    Now as to the economy: Rather than lay the blame for our current economic crisis on not investing in the space program (if I read you correctly), I would say that the major blame must be laid at the feet of the “Greed Is Good” concept that perhaps still pervades much of our society. (E.g., the major bonuses of some of the executives of the “banks that were too large to let fail”)

    So much of a couple of generations has left me often with my mouth hanging open in amazement: the constant have-to-have-the-latest-and-newest-electronic-thingy that comes on the market, the use of credit as if it were money in hand and not money of the future, and the cavalier attitude that if one can’t pay, one simply goes bankrupt and defaults on one’s debts. (Regarding this last I know personally of several individuals who, without a second thought, did just that.)

    Then too there is the constant idea that the “economy MUST grow”—which leads us back to the “consume, consume, consume idea” of the above comments. Somewhere along the line people were bound to come upon the fact that they were going to have to actually pay their bills or major problems would arise. Well, the time has come. And it also seems that the major institutions had the same attitude: That there would not be a reckoning to come for all the debt swaps, securities derivatives, etc. Well, the time for reckoning has come.

    If one thinks back to the depression of the 1930s , the country recovered from that depression when WWII started. I remember those times—the rationing, the putting everything into the “war effort”, and the citizens at home being very limited in what they could buy. (In fact, I still have some ration stamps somewhere that I have saved.) Short of some major catastrophe getting us out of this current depression, I would say that the best way to get out of it is for the nation of consumers to change their spending habits and for the concept of “growth of the economy” to be taken in a somewhat altered way—do not look for fast growth; look for slow, sustained growth. And above all, do not consider that “Greed is good.”

    Comment by MCS — February 27, 2010 @ 12:33 pm

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