Andrea S. James

Category: Politics

  • Stoicism > Hysteria: What do you wish to leak?

    I recommend oMeditations, by Marcus Aureliuswning a copy of “Meditations” by Marcus Aurelius. It’s the personal journal of the Roman emperor who was born in AD 121 and died in AD 180. Aurelius likely never intended for his personal meditations to be read by the rest of humanity but lucky for us, we get to read them.

    Here are a few verses that seem to resonate and provide wisdom on how those of us in business can navigate the present times:

    “If to your benefit as a rational being, adopt it: but if simply to your benefit as an animal, reject it, and stick to your judgement without fanfare. Only make sure that your scrutiny is sound.”

     

    “If you set yourself to your present task along the path of true reason, with all determination, vigour, and good will: if you admit no distraction, but keep your own divinity pure and standing strong, as if you had to surrender it right now; if you grapple this to you, expecting nothing, shirking nothing, but self-content with each present action taken in accordance with nature and a heroic truthfulness in all that you say and mean – then you will lead a good life. And nobody is able to stop you.”

     

    “Wherever it is in agreement with nature, the ruling power within us takes a flexible approach to circumstances, always adapting itself easily to both practicality and the given event. It has no favoured material for its work, but sets out on its objects in a conditional way, turning any obstacle into material for its own use. It is like a fire mastering whatever falls into it. A small flame would be extinguished, but a bright fire rapidly claims as its own all that is heaped on it, devours it all, and leaps up yet higher in consequence.”

     

    “Always make a definition or sketch of what presents itself to your mind, so you can see it stripped bare to its essential nature and identify it clearly, in whole and in all its parts, and can tell yourself its proper name and the names of those elements of which it is compounded and into which it will be dissolved. . . . Ask then, what is this which is now making its impression on me? What is it composed of? How long in the nature of things will it last? What virtue is needed to meet it — gentleness, for example, or courage, truthfulness, loyalty, simplicity, self-sufficiency, and so on? So in each case we must say: This has come from god; this is due to a juncture of fate, the mesh of destiny, or some similar coincidence of chance; and this is from my fellow man, my kinsman and colleague, though one who does not know what accords with his own nature. But I do know: and so I treat him kindly and fairly, following the natural law of our fellowship, but at the same time I am to give him his proper desert in matters which are morally neutral.”

    As you go about your life, you will leak out whatever is inside you: Calm, fear, courage, love, kind-heartedness, authenticity, fakery, hatred, or contempt. This is true of both leaders and followers. We all do better when we examine what’s inside and take note of what we are leaking. Go ahead and leak what you please, but do so knowingly.

    If you liked this post, you might like:
    Taking it down to the science
    You can afford it, you just choose not to
    The greatest selfie ever taken: Pale Blue Dot
    Adapt or die: Trump and the thematic lesson of 2016
    A bit about the fourth dimension: Time
    What does self rule mean to you?
    The mob asks the wrong questions

     

  • Adapt or die: Trump & the thematic lesson of 2016

    The clothes washing machine disrupted modern life. The automobile disrupted cities. In 2009, Apple disrupted the mobile phone market. In 2009, Blackberry stock traded near $140. It trades around $7 today. In that time, AAPL went from $12 to $100. Tesla is disrupting the auto industry — in North America, the Model S outsold Mercedes, BMW and Audi in that price category in 2015. Amazon.com disrupted big box retail stores — remember Circuit City?

    Regardless of how you voted this year, I think we can all agree that in 2016, Donald Trump disrupted politics and the Republican party.

    Some of us know market disruptors when we see them. But the majority of us fail to see what’s coming — and that especially goes for people entrenched in circles of group think.

    When disruption happens, the old rules no longer apply and the status quo is upended. This is why the so-called experts are so often wrong on predicting the future. In the case of technological disruption — of which I am usually biased in favor — the activities that sustain our society and human life become more efficient. Everyone has to adapt to a new reality — and that reality is defined by the market disruptor.

    I started talking with Wall Street clients about a Donald Trump presidency in summer 2015, when the GOP field was still full of contender nominees. It’s not that I was particularly more prescient or intelligent than my esteemed colleagues, it’s just that I grew up as a member of the white working class and have spent portions of my life on the Jersey shore, Alabama, and Minnesota, as well as having lived in Chicago, Washington, D.C., London and Seattle.

    Also, you can take this political truism to the bank: People vote for the candidate who makes them feel the best about themselves. We are all narcissists looking for the most favorable mirror. Once you get that fact down, it’s just a numbers game.

    A new thought occurred to me recently: When you’re in the midst of it, disruption and adaptation sometimes looks like death. This past summer, the media was convinced that the Republican party was toast — Democrats would surely sweep the presidency and the Senate and erode the Republican lead in the house. But the opposite happened. Republicans won the presidency, both houses of Congress, and expanded state governorships. But that Republican party will be a different one going forward than it was in the past, with a shifted set of priorities and policies.

    That a rebirth looks like death in the midst of it also throws off the experts, pointing and laughing from the outside. I can’t name a disruptive technology that wasn’t scoffed at initially.

    Adapt or die. That’s the thematic lesson of 2016, and maybe for all time.

  • Negative interest rates: When ‘good’ policy is bad psychology, it’s bad policy

    Something fascinating is going on with negative interest rate policy: It’s having the opposite of its intended effect.

    A negative interest rate is a simple concept — it means that money in a bank account shrinks over time, rather than grows. It takes the time value of money and heightens it by penalizing saving.

    The concept started in 2014 in Europe and since, Japan has also followed suit. Negative interest rates are applied to reserves held by commercial banks, meaning that no small time individual is going to lose the nominal value of the money in his bank account. The policy trickles out to create negative yields on government bonds — meaning that if you put 100 units of currency into a bond, you won’t get all 100 back at maturity — and onto large institutional savers — meaning that entities with large sums of money sometimes have to pay the bank to store their money.

    The US does not have negative interest rates, but because other countries do, the US has to hold interest rates low to keep the dollar competitive. (A strong local currency is not always a good thing because it makes your exports more expensive.) See the chart below? If you know what you’re looking at, that interest rate chart tells you nearly everything you need to know about access to wealth, success, income inequality, and the post-Great Recession economic recovery.

    How does this affect you? Well, it means that you aren’t going to get a lot of return on your savings account any time soon. It means that home values are going to continue to rise quickly in economic hot beds, as access to capital remains cheap. And, in theory, it should make you want to invest your money in stocks, in new business ventures, or in consumption of goods.

    But, does it?

    Low interest rates seem to have worked. But negative interest rates are still untested.

    The purpose of negative interest rates is to encourage financial activity, lending, and inflation. A negative interest rate is a “use it or lose it” policy — it encourages commercial banks to lend money rather than to save it. It is supposed to create a mentality similar to your “use it or lose it” vacation leave or flex account — when you know that your asset is going to be lost over time, you’re encouraged to use it now. And this mentality is meant to trickle out to consumers.

    But here’s the problem: Negative interest rates are bad psychology. It communicates uncertainty and thus, encourages individuals to act cautiously and to save more money. Instead of creating a free-for-all of money flow, people are hunkering down, spending less, and saving more.

    The Wall Street Journal today quotes several people who are hunkering down and cites statistics on reduced consumption after negative interest rate policies were implemented. People are feeling that they need to save more today to build up wealth. (Not mentioned: I guess these folks don’t want to take their chances with the stock market.)

    The interest rate on three-month US treasuries. (Source: barchart.com)
    The interest rate on three-month US treasuries. (Source: barchart.com)

    And this makes perfect psychological sense. We know that when people feel richer, they are more likely to spend on consumption, more likely to take risks. Negative interest rates are meant to communicate that it is riskier to leave your money in savings than to spend or invest it now — that’s the rational outcome.  

    But that’s not how people think. People are not perfectly rational with their money. Individuals are certainly not trained to consider inflation risk.

    I wonder if the problem is not so much with negative interest rate policy as it is with how it’s communicated. Because here’s what it means to the financially enlightened: It is still probably a good time to take risks or to start a business. The US is not likely to grow interest rates while trading partners are stuck at negative.

    Here is also what it says to me: The ‘experts’ are acting on theory, trying their best, but never really fully sure of what they’re doing and not good at measuring unintended consequences. Economic policy is experimental.

    What do you think?

     

    More light reading:

    Are Negative Rates Backfiring? Here’s Some Early Evidence (WSJ)
    Everything you need to know about negative rates (WSJ)
    Bloomberg quick take: Negative interest rates (BBG)
    Julius Baer Charges Institutional Clients for SNB Negative Rate (BBG)
    Even Warren Buffett is confused by negative interest rates (MarketWatch)
    Bill Gates: Low rates pose leverage, bubble risks (CNBC)

  • What does self rule mean to you?

    The greatest human experiment in self rule lives another year!

    Government of the people, for the people, and by the people. But do we TRULY mean it?

    What does it mean to you to be sovereign, not a subject? To stand before your god with no man standing between you?

    Happy Independence Day, friends!

    Here’s a fantastic 2004 interview with Michael Novak.

    My fave bit: “Our Founders always wondered about how long it would last. The price of liberty is everlasting vigilance. You’ve got to be on your guard every minute or you will lose it. In most of history, societies have not been free. It’s a very rare society that is free. The default condition of human societies is tyranny. Every society’s inclination is toward tyranny, unless you resist it constantly.”

  • Lucky seven billion — now what?

    In case you haven’t heard, the United Nations is saying that the world population will reach 7 billion today.

    Happy Halloween?

    Of course, the number and date are symbolic rough estimates, since there’s no way to count everyone on the planet down to the person. The UN is using the figure to create a news event, or call to action, for fighting global injustices. (More.)

    I’m wondering, what the heck are the rest of us supposed to do with this information? Worry? Duly note it?

    Tuck it away for sarcasm purposes later?

    “Seven billion people on the planet and I’m the one who (insert unique problem and eye roll here.)”

    (Whatever you do, from this day forward, do not get caught saying “six billion people” — you will look woefully behind the times.)

    Does population matter? Is the Earth over populated? How would you even talk about such a thing from a religious world view?

    Population is the unspeakable missing factor in a lot of dinner party discussion topics — the consumption society, rising global living standards, immigration, the state of U.S. education, anthropomorphic climate change, agricultural progress and food shortages, liberal versus conservative world views. (What’s that? You stick to sports and movies? Need to try that!)

    Maybe polite company could discuss population growth, but who wants to be the first to go all Ebenezer Scrooge on the party, talking about decreasing the surplus population? The closest thing I ever hear to the “too many people” assertion is usually regarding California highway traffic.

    Population discussions are uncomfortable. They go straight to the heart of the debate over individual versus collective freedom.

    If “7 billion” as a news topic makes you uncomfortable, you’re not alone.

    Bill Gates intellectually struggled with the idea of overpopulation in relation to the work of The Bill and Melinda Gates Foundation, which promotes programs that improve health care and lengthen life. He knew that improving health was good on an individual level, but what about on a collective, global level? Gates has said that he was relieved to learn that better health leads to economic improvement, which eventually leads to lower natural birth rates.

    “I believe it is in the rich world’s enlightened self-interest to continue investing in foreign aid. If societies can’t provide for people’s basic health, if they can’t feed and educate people, then their populations and problems will grow and the world will be a less stable place,” Gates said in his 2011 annual letter. “. . . The second great benefit of vaccination is that as the childhood death rate is reduced, within 10 to 20 years this reduction is strongly associated with families choosing to have fewer children. While it might seem logical that saving children’s lives will cause overpopulation, the opposite is true. I mention this amazing connection often, since I remember how I had to hear it multiple times before the full implications of it became clear. It is the reason why childhood health issues are key to so many other issues, including having resources for education, providing enough jobs, and not destroying the environment. Only when Melinda and I understood this connection did we make the full commitment to health issues, especially vaccination.”

    He’s definitely treading on some controversial territory there, but I believe he presents his arguments in a scientifically compassionate way.

    American author Jonathan Franzen addresses the topic of population control in his hit novel, “Freedom.” Two of the main characters — portrayed as liberals harboring excessive guilt over their own existence — adopt human population control as one of their secret pet causes, and find themselves slipping down a rabbit hole of ever-more absurd theories and slogans. Those bits make up some of the most awkward and infuriating sections of the book — if it was the author’s intent to make the reader gnash one’s teeth, he achieved it.

    I’ll conclude this blog post the way many debates end in Paris: With the existential question about why we’re even debating it in the first place.

    From Adam Gopnik’s, ever-quotable, “Paris to the Moon”:

    In Paris explanations come in a predictable sequence, no matter what is being explained. First comes the explantion in terms of the unique romantic individual, then the explation in terms of ideological absolutes, and then the explanation in terms of the futulity of all explanation.

    Population talk falls within all three paradigms.

    Don’t just be one of the crowd, please feel free to share your thoughts. 🙂

    (more…)

  • Economics should be taught in schools. Period.

    My initial reaction to the #OccupyWallStreet protests is this: Our public schools are failing many of our kids.

    This is not new and I’m not the first to say it. People know that to compete in a global, information-based and technological economy, education is more important than ever. Our nation has a huge mismatch of available labor skills and needed labor skills.

    When I hear some of the protesters speak, I feel they don’t have the full set of tools — the language, even — to express themselves. They don’t know how the system works. And it’s ridiculous that they don’t, because the capital markets are ruled by some basic concepts that are not that difficult to teach.

    (Here’s  a start: The economic collapse of 2008 and 2009, from which we’re still reeling, was caused by too much debt. Did Wall Street play a major role in buying and selling that debt? Sure thing. Did consumer banks and mortgage lenders make loans to people who shouldn’t have gotten them? Yes. Could they have done it without borrowers? Nope. Would they have done it without government tax incentives and policies that promoted home-ownership, which guided capital to flow into mortgage debt, versus other types? Probably not. Read Michael Lewis’s The Big Short to learn more.)

    It’s ridiculous that kids memorize the dates that Confucius lived but don’t learn a thing about consumer credit or compound interest.

    One colleague recently told me that his grade school taught him weaving and knots. He didn’t learn the concept of supply and demand until after college. (What economy was he being prepared for?)

    When I was in grade school, I learned the difference between a mitochondria and a ribosome. I couldn’t have told you one thing about debt or equity, a bond or a stock.

    Don’t get me wrong — I love science, I love art, I love that my public school exposed me to Toni Morrison and Chaucer — I think these things are important, but there’s got to be a way to fit economics in.

    Economics is the study of incentives, of money supply and flow, of consumption, of economies.

    This economics stuff matters. Even if the Wall Street protesters don’t fully understand the system, they know it affects them. Because it does.

    Business makes the world go around.  And it can be richly taught. I took my first macro-economics as an honors colloquium, 15 students in an intimate group with a real economist. But the fun came in micro-economics. I had a high-energy professor — we did exercises on buying and selling, we were all to be “goods” in the market selling our labor, we played games that illustrated incentives. I never looked at a consumer product price tag in the same way again.

    Earlier this year, I guest-lectured on business journalism 101 at a local university. The college kids, who are self described non-math types, got a lot out of it. For many, it was their first exposure to anything financial.

    One student approached me after my talk and said, “When my boss cut back my hours at the coffee shop, he said that coffee bean costs were rising. I was like, ‘What does that have to do with me?’ I feel like I understand that now.”

    Bingo! I’m sorry her hours were cut, I’m thrilled that she better understands how a drought in South America affects her personally. She figured it out after just 20 minutes of learning the principles of an income statement.

    This isn’t a post that’s meant to blame or shame. I just think we should arm kids with the tools they need.

    Financial literacy is an important tool.

    For some great commentary on public education, check out this interview with the late Steve Jobs.

    (more…)

  • A tribute to biology, which bugs me

    This post is an ode to the health care workers — doctors, nurses, lab researchers and scientists.

    I salute you.

    Because biology has got to be the most infuriating of the basic sciences. And I don’t know how you work each day with the maddening messiness of organisms. It has got to be like dealing with derivative instruments each and every day, only with blood and needles involved.

    After spending some time with a friend on chemotherapy, and reading “The Emperor of All Maladies: A Biography of Cancer,” I’ve been thinking a lot about matters of the body.

    My adult world has been one of computer code, words, numbers, math, physics, money, finance, accounting, business, technology, satellites. It’s all about efficiency and accuracy.

    And biology is all so . . . nebulous. Organic. Messy.

    As a reporter, I remember once touring a bio-tech lab in Bothell, Wa., where a company was working on a new treatment for a particular blood-circulation malady. The chief executive of the company told me that the treatment may work on more than half of patients — and that would represent fantastic odds.

    What? Why wouldn’t it work with everyone? There were math and chemistry formulas all over the place, on every available surface. How come sometimes A = B and other times, A = C, but B does not always equal C, but sometimes it does. How does that make logical sense?

    And scientists in this world just accept this without going mad. Amazing.

    Even the stock market, with all of its dizzying weariness, opens every day at 9:30 a.m. ET and closes at 4 p.m. Chaos with time parameters!

    Try telling the human body that you have a deadline. That you have someplace to be. That your Outlook Calendar has sent a 15-minute reminder and you’ve got to get going.

    I studied computers and physics in college and the practical application of those disciplines is normally always a predictable outcome. (Physics does become a discourse on probabilities at the quantum level, but for the sake of argument, when applied practically, Earthbound Newtonian physics adheres to unbreakable laws.)

    A basic element of computer coding is the If / Then statement.

    It looks like this:

    IF A=B

    THEN:

    DO this;

    ELSE:

    DO that;

    END.

    It’s so simple. It’s boolean. It’s either-or. True or false. One or zero. On or off.

    Biology? What a mess. Is it any wonder that health care is difficult to figure out on a societal level? That care standards vary and that a dollar here doesn’t go as far as a dollar there?

    Sometimes, I wonder if the desire for government to just take over health care – pay for all of it, handle all of it – has less to do with economics and more to do with people’s frustration and fear over the messiness of the process, the bills, the lab tests, the lack of instant gratification and the unpredictability of it all.

    Hat’s off to you, biology workers. You are way more comfortable with random outcomes than I could ever be.

    Life is messy and you’re not afraid to get your hands dirty.

    (more…)

  • Politics is just politics, not citizenship nor community

    In American society, there is profound tension and disagreement over the role of rich versus poor, government versus corporations, individual versus collective, scarcity versus abundance.

    None of these debates are new under the sun, but there’s been extra intensity in argument of late.

    What’s the problem?

    The problem arises when people pick a side, make it stand in for a community and an identity, declare that the other is “evil,” and do not budge. All logic is pushed aside. Rational debate flies out the window.

    Checks and balances are a good thing. Our three branches of federal government, combined with a state system, were set up to promote them.

    Corporations that seek to maximize profit and efficiency are a natural check and balance on government, which doesn’t operate with the efficiency that naturally comes from a bottom line.

    At the same time, government representing the collective people are a check and balance on corporations, thus ensuring the health and safety of food, air and water.

    I see this tension play out daily in my own brain — where the liberal guilt I picked up in college, sometimes partnered with compassion, butts up against the conservative practicality and understanding of the role of incentives that I’ve come to appreciate from corporate America.

    This back-and-forth is not a bad thing. Individuals should be demanding of government, voting with their votes and opinion pieces, and demanding of corporations, voting with their dollars.

    But to the sensational attention seekers: I wholly reject your unconsidered arguments.

    Dig in your heels, refuse to debate, refuse to engage, and you’ve lost me. Call the other side stupid, and you’ve lost me. Use the word “evil” to describe a politician or CEO or corporation, and you’ve lost me. (In fact, just stop using the word “evil” outside of a religious context.)

    Most of us are moderately liberal or moderately conservative, with a smattering of so-called “radical” beliefs on random issues.

    We’re a nation of minds smart enough to invent airplanes, telephones, the Internet and hamburgers. Our political debate should be more intelligent.

    — ### —-

    Update: 10:30 a.m.

    Funny, in my inbox I just received a “special letter from Starbucks CEO Howard Schultz.” (All those lattes I buy gets me special treatment.)

    He puts it more eloquently than I did:

    We must celebrate all that America stands for around the world. And while our Founding Fathers recognized the constructive value of political debate, we must send the message to today’s elected officials in a civil, respectful voice they hear and understand, that the time to put citizenship ahead of
    partisanship is now.

    (More.)

    (more…)

  • Applying Wall Street logic to your life

    Do you ever wonder why a stock goes up with a company announces layoffs? Or why a stock goes down after a company wins a huge contract?

    It’s because we don’t judge events purely by what happened. Rather, we look at what happened relative to our expectations.

    If a company makes a million dollars in a year, but Wall Street was expecting two million, nobody says, “Congratulations.” The company just came in at half of what was expected. Similarly, if a company only loses a million and Wall Street was expecting it to lose more than that, it’s pats on the back all around.

    This is true of life, too.

    Not knowing expectations is operating blindly.

    It’s why a teenager who gets a new cheapo car acts disappointed. Well sure: A new car is great if you expected no car at all. But, if the car is lesser than what was expected, it’s a disappointment.

    The great thing is: You can manage your own expectations and manage other people’s expectations of yourself.

    If you find yourself grossly disappointed with some aspect of your life, take a moment to examine what your expectations were. And were they realistic to begin with?

    Marriage is one big practice in managing expectations. If you expect it to make your life whole and complete and rainbows and peace signs, you’ll be wholly disappointed. On the flip side, you should expect basic things such as teamwork, respect and emotional support.

    Most of politics seems to be a debate over expectations of the role of government.

    I’m fascinated by parenting and happiness studies. Namely, I’ve learned that parenting does not equal day-to-day happiness. But it can produce a sense of accomplishment on a longer timeline.

    I think that families should set their expectations this way: Family life will be 90% draining and 10% rewarding joy. (For example, how could changing a diaper or driving all over creation to run errands possibly ever be awesome? No, it’s something you lovingly do because you want your child to be clean and healthy.)

    If during some three-month period Mr. Smith (fictitious guy) is happy 15% of the time and stressed out and frazzled 85% of the time, he can say that his home life exceeded his expectations.

    And then he can declare to family and friends in his quarterly update: Our car broke down, the dishwasher stopped working, and lil Suzie’s got the flu. But that met expectations. On the upside, no one threw up on the floor, our dog didn’t destroy any shoes and we all got to go on one nice walk in the sunshine. Net/net: It was a positive quarter in the Smith household.

    As for work life: It’s best not to ponder whether your job is meeting your expectations. Rather, think about how you can exceed others’ expectations. And then see if the reward is mutual.

    If anyone finds that this works, please let me know. I’m either a genius or hopelessly naive. =P

  • Considering the new security measures, with a shrug

    Taken moments ago: A reflection of the plane in the engine.

    I used to marvel at how the DMV was the great equalizer — no matter your status, income or personal hygiene, you had to pick a number, buddy, and wait your turn.

    Commercial air travel, exceedingly affordable, is quickly taking its place.  The realities of the jet age combine the brightest and most-mundane of humanity.

    Consider that one of humankind’s greatest achievements — flight, en masse — is met with the guy digging up his nose for gold, two rows back. Great minds have mastered the physics, engineering, manufacturing, economics and piloting on behalf of those of us who have not mastered the use of tissue, ahem.

    (I am composing this blog post at cruising altitude, via Delta’s free wi-fi, sponsored by Google Chrome! Sweet!)

    Given how easy it is to book a ticket, is it any wonder that the U.S. Transportation Security Administration has enacted its new and intense screening rules? The agency exists to keep travelers safe — and that is what it is trying to do.

    I’ve had a lot of time to contemplate these things of late. In the past four weeks, I’ve flown nine times, been naked-scanned twice, received a chest pat once and even received a “special pat down,” for wearing a skirt.

    Some of it was slightly embarrassing, but, the TSA folks were courteous and even apologetic.

    After the screenings, I tried to muster some outrage of the sort that I’m reading about around the nation: Open declarations that the screenings are unconstitutional. Hilarious mockery from the Canadians. Concern about the feelings of sex-assault victims. The guy who told a TSA worker, “If you touch my junk, I’ll have you arrested.” (The Daily Mail, in the UK, has a photographic summary of the U.S. reaction, including photos of the woman who wore a bikini through the security checkpoint.)

    As for me? I’m having trouble getting worked up about it. Every argument I come up with is shot down with two-word rebuttals. Plastic explosives. Underwear bomber. Who knows.

    As Jeff Foxworthy would croon, redneck-style, “Well thanks fer spoilin’ it fer evrybody else!”

    TSA should be challenged, on a national scale, through the courts. America is stronger for its checks and balances. However, I’m not a fan of the micro-protests, hammering on the people who are just following orders. It’s not “us” travelers against “them” TSA agents. It’s “us” who desire to land after takeoff versus “them” who’d like to kill us.

    Up here at cruising altitude, I am secretly glad that everyone went through the same intense security screenings that I did. Even nose picker guy.

    Thus, I’ve packed my dignity in my checked luggage. It should meet me upon arrival at the gate.