Gongol.com Archives: October 2021
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October 4, 2021
Following their recent parliamentary elections, the Germans are trying to come up with a coalition with enough seats to form a government. For Americans who find waiting for results past the end of evening hours of Election Night to be excruciating, it's almost impossible to fathom the notion that it could take weeks to decide who's taking over as Chancellor after Angela Merkel. The concession-then-withdrawal-then-36-day-uncertainty of the Presidential election in 2000 was just about more than we could take. ■ As a multi-party parliamentary democracy, Germany is more accustomed to the required horse-trading and negotiation. What's interesting about this election, though, is not the center-left party that came in first, or the center-right party that came in a close second, but rather the third- and fourth-place finishers: The Green Party and the FDP (a "business-friendly", classical liberal party). ■ The two parties have already entered talks with one another, since they together would have the heft to swing a coalition to either of the first- or second-place parties. (It seems unlikely that #1 and #2 will join forces in a "grand coalition".) The Greens and the FDP have important things in common, though they have obvious differences as well. ■ It seems strange that, so often, the Greens of the world are so eager to distance themselves from the classical liberals. There's actually a great deal of space within classical liberalism to justify a "market green" philosophy -- one where the costs of cleaning up after ourselves are used to help rectify shortcomings in otherwise purely market-based transactions. It's no surprise that a lot of center-right economists, for example, endorse the use of carbon taxes to "internalize the externalities" of greenhouse gas emissions: If your behavior creates pollution, then it makes sense to make you pay to clean it up at the same time. As Ben Franklin put it, "He that resolves to mend hereafter, resolves not to mend now." ■ Of course, the conclusion that there ought to be much in common between classical liberals and Greens assumes that the fundamental drive of any Green Party (and it is an unusually international political movement) is to leave behind better environmental conditions for subsequent generations. That, alas, isn't always the case; Greens regularly make the case for much more public ownership and much higher taxes. If the only goal is to socialize everything, then "Green" is really "red" under a coat of paint. ■ It's too bad that the loneliest quadrant in American politics is the classical-liberal space -- the one that favors both economic rights and social freedoms -- particularly given how it's really derived from a lineage of the philosophy of 1776 and 1787, relying on modesty about what government can and should try to do in place of free people making decisions under ordered liberty. As the German election shows, that group is never a majority all on its own. Parties of that nature never seem to crack more than 10% to 15% of any vote. But they're found everywhere people are free to vote, whether as parties on their own or as interest groups, and their influence ought to be for good. Cleaning up after ourselves is a much larger task than just the natural environment.
October 5, 2021
The last Sears in Illinois will soon close
While there was an entire documentary filmed about "The Last Blockbuster", other retail sunsets have been less photogenic. In particular, the waning of the once-mighty Sears empire is at once too enormous to believe and too unreasonable to make sense. And now, the last Sears department store in Illinois is set to close in November. ■ It's generally unwise for a consumer to become emotionally attached to a retail outlet, but Sears earned a special place in American lore. Not only was it once so vast in its reach that it was the "World's Largest Store", its name was attached to what was the world's tallest building from 1973 until 1998. The Sears Catalog -- which overtook the mail-order empire of rival Chicago firm Montgomery Ward's -- was an enormous commercial success for decades. Sears even sold some 70,000 American kit homes by mail. For a good portion of the 20th Century, Sears was practically synonymous with retail. ■ Now, what's left is barely a shadow of its former self, down to just dozens of stores (at most). It's truly crazy that Sears managed to fail just as hard as it has. Having dominated catalog commerce for generations, e-commerce should have been an obvious pivot -- a next step not unlike an actor moving between television and film. We're talking about two slightly different modes of almost exactly the same thing, and unlike Amazon, Sears started with a nationwide distribution system already in place, not to mention an enviable empire of bricks-and-mortar showrooms, many of which were owned outright by the company. ■ It's not as though the company was either risk-avoidant or reluctant to embrace new markets by nature: Sears launched the Discover Card and backed the Prodigy proto-internet service. The transition to becoming a hybrid digital-and-physical retail colossus seems, in retrospect, to have been the obvious path. ■ For all the attention paid now to the massive reach of Amazon, antitrust lawsuits and regulations tend to be less effective than good old-fashioned competition. Amazon has Amazon Basics; Sears had well-regarded house brands ranging from Kenmore to Craftsman to DieHard. In practically everything that Amazon does at great scale today, Sears once had a head start. ■ Where in the Sears corporate DNA was the memory of how it was once the upstart? How many second chances could one firm drop? Having triumphed over Montgomery Ward's in one era, it slipped in another and showed no signs of durable recovery. Once the beneficiary of creative destruction, now it is the victim. And it is not only the vast number of Sears employees and investors who lost out; so did the consumer public. Healthy competition among sellers is good for the buyer. ■ The decline of a once-great firm like Sears suggests that for all the praise we lavish on "disruptors", our business schools ought to focus harder on training management in practices like preserving institutional memory and making an active discipline out of making both consistent incremental improvement and capturing the advantage in moments of punctuated equilibrium. Maintaining and sustaining what is already good ought to be just as lucrative and status-enhancing as starting something from scratch.
October 6, 2021
Between friends, that's not how we operate
One of the legal protections sheltering Facebook whistleblower Frances Haugen as she testifies to Congress is the regulation that permits a person to come forward to the SEC with proprietary company information if that information covers "conduct that is likely to cause substantial injury to the financial interest or property of the entity or investors". In this case, Facebook's behavior appears to meet that test. ■ But disclosure is a really strange thing in Facebook's world. Most of the time, it's assumed that shareholders in a company also have a vote in how the company is run. But that's not how it works at Facebook. Mark Zuckerberg's voting control over the company is absolute. He is, in effect, an absolute monarch. (This is a long-known bug in Facebook's corporate programming.) ■ Consequently, while information may be of material interest to shareholders in terms of their ability to determine the fair price at which to buy and sell the shares, anyone holding Facebook shares has surrendered the right to have an interest in how the company is being run. To do so is a foolish choice, and the current circumstances illustrate why. ■ The mythology of the founder is strong in American corporate management, especially in high technology. Bill Gates, Steve Jobs, Jeff Bezos, Elon Musk, Mark Zuckerberg -- all founders, and all household names. Few people know the founders of insurance companies, truck-stop empires, and ceramics importers. Certainly, some founders have established great companies and grown them through exceptional vision and understanding of the marketplace. In exchange for their visions, they sometimes insist that everyone else (investors, customers, and employees alike) must go along for the ride. ■ But rare is the person who can adequately anticipate every risk or understand the third- and fourth-order consequences of their own actions. Good decisions generally require robust debate. And Mark Zuckerberg has established boundaries around Facebook to shelter him entirely from that debate (and go sailing instead). ■ It's not far-fetched to imagine Facebook's lawyers arguing that disclosure of the type of information revealed by the whistleblower doesn't doesn't have any material impact on any choice that an individual shareholder could make. As long as Mark Zuckerberg knows everything he deems necessary to know about what's happening inside the company, including unflattering internal research, then shareholders who have effectively surrendered their right to vote must assume that he knows enough to make company decisions for them by proxy. ■ That assessment, of course, is utterly bonkers: No shareholder should surrender that kind of authority to some kind of god-king at the helm of a company. Yet, Facebook shareholders have done effectively that. ■ The consequences have been manifest. Mark Zuckerberg runs Facebook the way he wants, in a way no titan has run any media organization before. The ghosts of Paley, Sarnoff, Hearst, and Pulitzer must be green with envy. Perhaps the financial returns from a Facebook investment have been just too mouth-watering for investors to overlook. But it also means that there is no ethos or soul to the company beyond that of the general partner running the investment. Whether Zuckerberg has ever seen the company as a partnership, though, is an entirely different matter. ■ Warren Buffett has always represented his conglomerate, Berkshire Hathaway, as a conscious partnership between himself and his investors. While, like Facebook, Berkshire has also been largely under the voting control of one individual and his immediate orbit, Buffett has for decades recited as his number-one principle that "Although our form is corporate, our attitude is partnership." While his execution may have been imperfect, that philosophy -- one of maximum transparency with the founder's co-owners, including family and close friends -- treats even the "limited" partners as intelligent, curious beings. Paradoxical, indeed, that Facebook, which says it is all about friendships, is run as though no one else in the partnership is truly a friend.
October 7, 2021
Processes before personalities
Every year, enormous sums of money are spent to persuade Americans about what to do and how to spend. Advertising and marketing are estimated to be worth $390 billion annually, or almost $1,200 per person. That's an enormous volume of expenditure -- and it doesn't include the investments required to try to persuade people through other means. Yet surely we devote considerable resources to everything from stemwinding speech-makers at political rallies to religious ministers exhorting people from the pulpit, not to mention bloggers, meme-creators, and podcast hosts -- all generally trying to persuade others to align with a point of view. ■ For all of the time and money devoted to persuasion, it's a shame that there hasn't been more devoted to cracking one of the toughest problems in psychology: Our predisposition to believing and remembering stories far easier than facts and abstract ideas. We have at least some understanding of the neurological and biochemical factors involved -- stories activate emotional stimulation, which in turn motivates us to remember and to act. ■ The problem is that people know this power, sometimes intuitively. Others study the effect and treat it as a way to "hack" the learning process. Done by people with good motives, it can be a useful tool. But it's done as well by people with ill motives who know that a story does not need to be the whole truth in order to work. Thus we are awash in "narratives", some entirely false, some misrepresenting the facts, and some fully true, all of which tend to influence the audience's thinking more than an objective report on reality. This is why "controlling the narrative" is such a powerful tool -- either for good or for evil. ■ Unfortunately, stories tend to be reductionist, especially in their ability to cast individual participants as either heroes or villains. This, in turn, makes it hard to keep fact and fiction in common play, especially when matters are in dispute or take place within gray areas (as most issues are). A more complex, more human James Bond is more interesting to some, but many people prefer simpler hero/villain dichotomies not only in their fiction but in their realities as well. ■ It would be a great public service to find not a new hack that makes storytelling even more powerful, but to find the tools necessary to make facts and abstractions and gray spaces easier to understand and internalize. Our tendency to favor stories makes us susceptible to casting our lots -- politically, socially, even religiously -- with personalities rather than with processes and principles. And that can be dangerous, not only because it leaves us exposed to the malice of charismatic evildoers, but also to mass movements that tend towards cults of personality. Somewhere, deep within our vast economic engine, can we find just a sliver of the $390 billion devoted today to persuasion and point it towards cracking the code on facts and abstract thought instead?
October 8, 2021
Charlie Munger has spent a lot of time thinking about thinking, and he deserves credit for popularizing (at least within financial circles) the notion attributed to the mathematician Carl Jacobi: "Invert, always invert". In other words: When faced with a meaningful problem, rather than facing it directly, ask how to achieve the opposite outcome. Jacobi applied this thinking to math, while Munger applies it more broadly to life. ■ Taking that approach to the widest possible angle raises some fascinating questions. For instance: Instead of asking, "Will America win in a great-power competition with China?", the inversion might look something like, "What would you do if you wanted to undermine America?" ■ If you wanted to undermine America, you might encourage eating the seed corn. That might take the form of spending exorbitantly for the purpose of short-term gratification or for things that will be here today and gone tomorrow, rather than paying as you go for things that are easily consumed. (The United States has a $28 trillion Federal debt, or about $85,000 per person.) ■ If you wanted to undermine America, you might amplify the narcissism of small differences. The more people find themselves squabbling over what are ultimately relatively minor differences, the easier it is to make them skeptical of anything that looks like cooperation. (There are Americans profiting from unhinged calls for "national divorce" and differences like urban vs. rural or red state vs. blue state are often treated as insurmountable divides rather than the relatively small distinctions they really are when compared with much of the rest of the world.) ■ If you wanted to undermine America, you might suggest that the country's problems are too big to overcome. Hopelessness is a powerful poison, and a country sapped of its sense of endurance may be tricked into apathy or fatalism about its decline. (Serious people write opinions in major publications with titles like "Is the United States too big to govern?" and government institutions have made large and visible unforced errors on critical issues.) ■ If you wanted to undermine America, you might try to make it appear flaky about its commitments. If allies and potential allies don't believe that a country has the institutional will to follow through on its commitments, it can be left weakened by isolation instead of empowered by cooperation. (One poll found that majorities of the British, Germans, and French consider American politics "broken", and the US withdrawal from Afghanistan left allies disappointed.) ■ If you wanted to undermine America, you might point its divisions within rather than without. The classic maxim of "divide and conquer" applies as easily to the modern day as it did in the past. (Russian disinformation operations in particular have sought to stoke divisions among Americans, not so much for specific political gain as for their broader capacity to weaken.) ■ People don't have to deliberately intend to undermine America to take actions that have that effect. It isn't just the obvious adversaries and the useful idiots who cause harm. We have to be conscious that even when we think we're on the right side of matters, we might still be contributing to the wrong half of the ledger in the balance of power. ■ As uncomfortable as some of these inversions may be, the good news is that we have no reason to dwell on the mistakes made up until the present. There is no compulsion to continue making the choices that undermine -- and all of the reason in the world to devote our energies to doing the opposite. Calvin Coolidge advised, "So far as each individual is concerned all he can do is to take the abilities he has and make the most of them. His power over the past is gone. His power over the future depends on what he does with himself in the present. If he wishes to live and progress he must work." So it is true as well for a great country that wishes to endure for centuries to come.
October 11, 2021
Creative people should just feed the beast
Certain creative entertainers -- writers, comedians, musicians, directors, actors -- are such marquee names that every time they generate a new piece of work, it is guaranteed to receive much critical attention. Dave Chappelle is one such performer -- a comedian who has been honored with the Mark Twain Prize, who walked out on a $50 million deal with Comedy Central, and who has just seen the release of the final performance of a six-special agreement with Netflix (for which he is said to have been paid $20 million per installment). Singer/songwriter Adele has a giant contract with Columbia Records and Sony. Director Ridley Scott has a lucrative contract with Apple TV. Writer JK Rowling has considerable liberty to write her own ticket for manuscripts anywhere. ■ Multi-project deals in particular raise an interesting question. Which combination of quality and frequency would an audience rather get from a creative performer: A stunning blockbuster once every five years, or a steadier stream of good-but-perhaps-not-great projects delivered every year? ■ People say they want infrequent blockbusters. But do we really? ■ Jon Stewart, for instance, was paid perhaps $25 million a year to host "The Daily Show". And any daily show is bound to include some clunkers. But he has since then been much harder to find -- now returning with a streaming deal that will be much less frequent than daily -- with new episodes every other week. Will it earn him the same audience reach (and pay) as his "Daily Show" once did? It would be a surprise. ■ It's hard to tell with performers who remain alive, but practically the moment they pass away, their value of their deep catalogs grows enormously. Prince, we are told, left 8,000 unreleased songs in a vault at Paisley Park. Hundreds and hundreds of potential albums, never released, and undoubtedly endlessly desired by his fans. Fans endlessly desire copies of Beatles recording sessions and lost Bob Marley tapes and the previously unpublished works of Douglas Adams. ■ Every great creative performer needs, of course, at least one signature work, if not more. (Harper Lee is notable, of course, for the semi-singularity of "To Kill a Mockingbird".) But once a great, career-defining work has been produced, it seems that what audiences really want is a high volume of output. That isn't what they usually say they want. But if given the chance, the creative individual ought to take every opportunity to put out as much material as possible. As audiences, we're liars: We're too critical of imperfect releases in the moment, but rare is the devoted fan who would turn down the chance to have more of a great creator's work after the artist has died. It only makes sense for the creator to do as much work (and gain as much profit from it) as they can while still living. ■ No work is going to be perfect, and there's no sense in waiting for perfection before release. On this comes the advice of a most unlikely source, James Madison: "[T]he purest of human blessings must have a portion of alloy in them; that the choice must always be made, if not of the lesser evil, at least of the greater, not the perfect, good". Besides, you can always remaster your album, publish a revised edition, or edit a director's cut of your movie. Audiences are lying: They say they want creators to hold out for perfection, but they really just want a steady stream to feed the beast.
October 12, 2021
Keep our differences in perspective
The outrage-entertainment industry, a complex that gets far more than its proper share of attention, is thoroughly entranced with the idea of dividing Americans along the most preposterous cleavages possible. A member of Congress casually tweets about "national divorce". An extremist commentator uses his platform to say that an entire political party wants "to see America completely obliterated". Even ice-cream makers now become instruments of political outrage. ■ In reality, though, the differences among Americans -- and the other 95.7% of the world's population, really -- are not all that great. Division sells, but it's neither healthy nor honorable to participate in the transaction. This isn't to say that a veneer of harmony does away with the real differences that do exist, but it is to say that profiting from disharmony is intellectually dishonest grifting. ■ Most people are good at heart -- or, at the very least, neutral. Even the highest estimates of antisocial personality disorder find it occurring to a maximum of 4% of people. That leaves at least 24 out of every 25 people inside the boundaries of normal pro-social behavior, including having a regard for the well-being of others, a sense of responsibility, and normal feelings of remorse when things go wrong. ■ Most people sample from a buffet platter of beliefs and impressions rather than a comprehensive worldview. Not only do social scientists find it hard to reliably sort Americans into political typologies, attitudes on individual issues are subject to complete reversals in public opinion over very short time horizons. Most people are malleable in their civic and political beliefs. ■ Most people want to belong to things bigger than themselves. This manifests in a wide range of ways, from the personal transcendence model of positive psychology to the forms of political activism that emerge when people feel a low sense of belonging, but the evidence points toward a strong intrinsic need to feel needed by something other than oneself. The sense of needing to matter to others can only be fulfilled by belonging to social groups and institutions. ■ Most people are eager to find meaning in the world. The Pew Research Center says 71% of American adults are at least somewhat religious, and religion isn't the only vector for existential meaning. The best-seller lists almost always contain books that explore questions of philosophy either directly or indirectly. ■ Most people just want to be left alone to pursue happiness, live freely, and remain untroubled by others, particularly the authorities. These are neither controversial nor groundbreaking assertions; they are bedrock ideals of the very union itself. ■ There should be no profit -- politically, socially, or financially -- from seeking to convince one's fellow Americans that we are not only more different than alike, but that we need to seek greater distance between us rather than expanding the common ground. The addiction to cantankerous and even violent division is toxic, both personally and culturally. It is not historically unique, but it is contemporary and potent. People of goodwill ought to see how much we have in common with most others and redouble efforts to reinforce a healthy sense of commonality.
October 13, 2021
It says something unflattering about speakers of English that we don't have a better taxonomy for uncertainty. We have a language so rich that we can name 120 different colors of crayons. We have words that are abused senselessly, like "literally" and "absolutely" and "fundamentally", which speakers rarely mean...well, literally. ■ And yet, we don't have efficient ways of conveying uncertainty using our language. We don't have economical means of of saying, "I will know more when more information is available", or "I have low confidence in my reasoning because certain aspects are outside my expertise". Donald Rumsfeld's famous rant about "unknown unknowns" illustrates the problem well: It was superficially confusing because he had so few useful words at his disposal. In Rumsfeld's own words, "It sounds like a riddle. It isn't a riddle. It is a very serious, important matter." ■ English doesn't really offer gradations of uncertainty, either. Sure, we can be "pretty sure" or "fairly certain" or "almost positive" about things, but even those are unclear definitions. Given the survey results that say that people have widely ranging mathematical interpretations of words like "likely" and "unlikely", we need something much better than highly-disputed probabilistic words. ■ Vast portions of life are subject to uncertainty -- basically, anything other than "The Sun will rise in the east and set in the west". (And, even then, it's only exactly east or west twice a year. The rest of the time, it's a little north or south of due east or west.) In fact, it is a deep-seated problem if people find it easier to express unwarranted or exaggerated confidence than to explain the degree or source of their uncertainty. ■ People can barely wrap their brains around the basic vocabulary of mostly sunny or partly cloudy or "a mix of clouds and sun", much less use the language to express the same degrees of uncertainty or incomplete certitude about other aspects of life, both ordinary and extraordinary. ■ If it is desirable to achieve compromises or overcome differences of opinion (and it most certainly is), then it would be far more suitable if we could explain which areas are gray zones in our thinking -- and why -- so that we can express to others where we are subject to persuasion, seeking additional information, or withholding our certainly only to buy time to "sleep on it". ■ The depth of our vocabulary for a matter tends to indicate how seriously we take it. A sound, for instance, can be a whine, a whinny, a screech, a scream, a whistle, or a shriek -- all similar, but all clearly different. Yet there is no comparable depth of vocabulary for describing uncertainty. That's a real shame, because it leaves the ground wide open for people to express ever-increasing levels of certitude where none is warranted, when instead good faith would demand better explanations about those areas where we are uncertain. ■ This tendency causes us to surrender ever more of the discourse to those who are increasingly sure of themselves -- even though they often have diminishing reason for so being. This invites a dishonest form of intellectual warfare between opposing sides, which line up more out of tribal loyalty than out of reason, and it squeezes out those who hold unorthodox or heterodox views. ■ People can scarcely be expected to know the difference between instinct (which animals possess from birth), and intuition (which is speedy reasoning developed and honed from experience). Failing to know the difference even between these things, we can hardly expect people to appreciate the nuances of confidence. The closest we come is to offer people percentage odds of certainty, as in being "90% sure" of a thing. That we don't have simple words for expressing any of this better is a true shame. ■ We ought to have a linguistic construction comparable to "mostly cloudy" that expresses, "I don't know enough about this to be certain for the time being, but as soon as I have more detail I will have a reasonable opinion". We need a shorthand way similar to "a chance of showers" for expressing, "My past experience runs contrary but I don't know enough in this particular case to say what I think." Filling those gaps won't make everything perfect, but it might salvage our thinking and our debates from the corruption that comes from misappropriated confidence.
October 14, 2021
Risen from the ashes 150 years later
Chicago is marking the 150th anniversary of the great fire that leveled the young city. The fire is, of course, one of the most significant parts of Chicago lore, even earning its spot as one of the four stars on the municipal flag. ■ The story of Chicago's recovery from the devastating fire is one of triumph over a series of great adversities. A city that was once ruined is the third largest in the United States, a massive commercial and cultural center. ■ Had you looked at Chicago in 1871, perhaps you would have seen the city's rosy future beyond the rubble. But, for as much as the people of Chicago deserve credit for their resilience, the city's overall success is due more to its fortuitous geography than anything else. The labor force of Chicago at the time of the Great Fire was really nothing all that special. With about 300,000 inhabitants, Chicago was the fifth-largest city in the country (behind New York, Philadelphia, Brooklyn [then its own city], and St. Louis). 48% of the city's people were immigrants. The school system was struggling to keep up with growth. Meatpacking and railroading were central to the economy, and they didn't require sophisticated workers. ■ It was a city teeming with immigrants, many of whom arrived with very little financial capital or skill (after all, the wealthy and well-established would have had little reaason to leave their homelands). As much credit as the residents of the burgeoning city at the time should get for persisting through the difficulties of the fire and its aftermath, there's not anything in particular about about what they did or who they were that would have made the place special. They happened to be in a great place at the right time for expansion. Certainly there were instances and specific cases of high-quality foresight, vision, and ability that made the rebuilt Chicago better than before. ■ But, in reality, it would have been hard for Chicago to fail. Its virtually ideal location at the base of Lake Michigan and its resulting position as the obvious intersection of much of the nation's surface transit (by both road and rail) put Chicago in an ideal position -- no matter who was there. At the margins, some differences will matter and add up -- otherwise Evanston, Hammond, or Gary might ultimately have turned out to be the dominant city in the region. ■ Being in the right place at the right time -- whether by choice or by accident -- can make a great deal of difference. People carry their knowledge and their skills with them, but being in the right place to put them to work can have a huge impact on an individual's ultimate productivity. What you do can matter much less than where you are. Even today, it's been noted that simply moving from a different country of origin to the United States raises the productivity of virtually any immigrant by a substantial margin: In the words of the World Bank, Migration is, therefore, the most effective way to reduce poverty and share prosperity". ■ Chicago's revival ought to be taken seriously by anyone who today considers the plight of refugees and asylum-seekers. Great Britain has welcomed around 65,000 people from Hong Kong on relatively short notice, as those people have tried to escape the ever-increasing oppression of China's authoritarian government. The British government expects 300,000 people to ultimately make the move. ■ In moving from Hong Kong to the United Kingdom, those people ought to maintain not only the skills and productivity they had before, but in many cases may become even more productive by being surrounded by a like-minded government and culture. And, just as they produce, they will also consume. The act of simply being in the right place can make all the difference. And those who arrived first ought to note well that their fortunes are often improved by the presence of newcomers.
October 15, 2021
A handshake deal slows inflation
Nobody with any sense would accuse Warren Buffett of being a novice deal-maker. Having transacted scores of buyouts placing existing firms under the Berkshire Hathaway umbrella, Buffett knows what goes into a contract to buy or sell. And even having conducted dozens and dozens of transactions in the years since, Buffett still openly regards his 1983 purchase of the Nebraska Furniture Mart as one of his favorites. It was a $55 million deal conducted in just a page and a quarter of type. ■ Buffett praised the deal when it was new, writing: "I always ask myself in appraising a business is how I would like, assuming I had ample capital and skilled personnel, to compete with it. I'd rather wrestle grizzlies than compete with Mrs. B [Rose Blumkin, the company founder] and her progeny." The year following, he praised the deal again: "Our evaluation of the integrity of Mrs. B and her family was demonstrated when we purchased 90% of the business: NFM had never had an audit and we did not request one; we did not take an inventory nor verify the receivables; we did not check property titles. We gave Mrs. B a check for $55 million and she gave us her word." In his 2013 letter, he returned to the sale, saying "Mrs. B simply told me what was what, and her word was good enough for me". And in his 2020 letter, he returned to extol the simplicity of the deal once again. ■ Not everyone is going to make deals with savvy immigrants who overcome great odds (like arriving in America unable to speak English) with square dealing. But it is wise not to overlook the centrality of mutual trust in the Buffett/Blumkin deal. Hundreds of pages of contract language would have enriched the attorneys writing them, but they would not have altered the basic squareness of the deal. ■ No contract can account for every contingency, nor should it. Unfortunately, disproportionate bargaining power rears its ugly head as "standard" contracts grow longer, larger companies impose payment terms that favor them at the expense of smaller suppliers, and loser-pays arbitration raises the stakes in any dispute (usually to the benefit of the party with the deeper pockets). ■ When people grow anxious about inflation (which is, after all, simply paying a higher nominal price for the same outputs), what almost always goes overlooked is the hidden "inflation" of deadweight in contracts. For a while, parties can grin and bear it through a few new adverse contract terms here and there. But before long, contract inflation -- that is, deals that take more and more pages to document before any real business takes place -- starts to impose real costs. Either someone must spend time, energy, and expertise to review contracts in-house, or they must pay someone on the outside to perform a review. And with each new adverse term, someone within the agreement chain needs to account for new risks by pricing them in somewhere. ■ These problems point to the absolute centrality of having two things. One is a clear, equitable, and understandable legal system for conducting business. If it takes too long to work out disputes in the courts, then people will seek to work out the disputes in contract language instead -- effectively front-loading all of the hassles of a court case into the initial contract negotiation. (This is wildly inefficient.) ■ The other is a widespread agreement to earn, keep, and abide by good reputations. Warren Buffett liked Rose Blumkin's reputation, so he was able to make a $55 million deal in fewer than 1,000 words -- that's $55,000 per word of contract language, anchored almost entirely on a mutual trust resulting from earned reputations on both sides of the deal. ■ So, while people are worrying about headline inflation -- and whether it's structural or transitory -- we really ought not to miss the consequences of contractual inflation, too. Those consequences take a while to trickle down through the economy, but they are quite surely real.
October 18, 2021
One of the most satisfying exercises of American life is to cross a state line. It's an act we take for granted, almost to an excruciating degree, but we really ought to pause once in a while to consider what a subversive act it really is. ■ It took the European Union ten years to implement the Schengen Agreement to dismantle border controls among most of the EU countries, and even after 35 years, the Schengen Area is neither comprehensive within the EU, nor entirely free. Several member countries have reinstated border controls to deal with Covid-19, just for example. ■ Freedom of movement isn't to be taken for granted elsewhere, either. China's approach to internal travel remains far from free, which is widely (and correctly) regarded from the outside as a restriction on personal freedom. And a significant movement is underway to relax the existing restrictions on travel among the member countries of the African Union, because that freedom is seen (again correctly) as both a meaningful form of freedom and a great tool for economic development. ■ The basic appeal of maximizing the free movement across borders of goods, money, ideas, and people is that freedom of movement reinforces the basic sovereignty of the individual while simultaneously enhancing the efficient distribution of labor, capital, and the intangible resources that make economic activity possible. It is a case where the principles of classical-liberal personal rights and those of market economics are elegantly aligned. ■ Americans tend not to notice these very much as we ride the highways and cross the land and river borders that separate states from one another. Regions belonging to multiple states are usually much more closely identified by their shared identities -- the Quad Cities of Iowa and Illinois, Kansas City of both Kansas and Missouri, Cincinnati and Northern Kentucky, and Metropolitan New York -- than by the state-level distinctions that divide them. A sign generally welcomes the traveler to a new state at a high-traffic crossing, while lower-tier crossings may be noticeable only because a street is named "State Line Road". We are free to be peacefully different and seamlessly integrated. ■ But perhaps we should notice these borders more, even if only to nod in cheerful respect for the ease of our crossings. States are bundled together in a patchwork of interstate zones: Federal Reserve Bank districts, National Weather Service regions, FAA regions, EPA regions, districts of the US Army Corps of Engineers, and Federal court circuits, among many others. ■ The idea that we can sustainably divide and categorize ourselves across 330 million people and 50 states without troubling one another to "show your papers" merely to cross a state line is no small factor in the strength of our union as a country. We aren't compelled to think about that freedom all that often, but it would be a wise exercise to bring it to the forefront more often. The benefits of union are vast and enhance our well-being.
October 19, 2021
Is to the great astonishment of persons of sound mind that, in 2021, buildings like hotels and condominium complexes are still being constructed with elevators that do not list a floor numbered 13. How it is possible that we continue to accommodate the preposterous superstition against that beleaguered number in this day and age? ■ Can it really be true that after all of the technological and educational progress of the last century, people still believe that there are numbers that are unlucky or bad? It boggles the mind. There is no reason whatsoever to consider any number any less (in intrinsic worth) than any other. They are merely numbers -- quantifications, neither good nor bad. And the continued accommodation of the anti-13 superstition makes fools of us all. ■ To wit: Anyone of right mind can plainly see that a building that contains 14 floors must have a 13th floor, whether or not it is numbered as such. To try to represent otherwise by renumbering the 13th floor as the 14th (or, indeed, even as "Floor 12.5" only demands of us to imagine that things are not as they plainly are and can be seen to be. This willing suspension of disbelief is a ridiculous accommodation for people who have chosen to believe in things that are not real. ■ Magical thinking can have its place amid the fairies, unicorns, and talking mice of childhood. Children need their imaginations to picture what isn't real so they can someday absorb the difference between fact and fiction. But to accommodate adults who choose not to believe the facts as they plainly are is only to agree that we are going to allow some people to be not only irrational but outright contemptuous of reality. And that's just nonsense. ■ If people want to adhere to a ridiculous secular superstition like "unlucky 13", then let them be the ones to come forth and specifically confess their own nonsense. Let them be the ones to tell reservation call centers or front-desk clerks that they refuse to sleep on a floor with a particular number. Let them face their own absurdity plainly and clearly. Don't make the rest of us pretend as though a number of floor does not exist when plainly it does. ■ If truly one believes that the 13th floor is an unlucky place to put one's head for the night, then one should willingly pay more to sleep on a different floor by making such a request at the time of their reservation or check in. But in the meantime, the rest of us shouldn't be asked to pretend as though facts as basic as counting aren't meaningful in a polite society.
October 20, 2021
The passing of former Secretary of State Colin Powell has set off the usual round of obituaries from mainstream sources that speak with almost equal weight of Powell's stature as a ground-breaking military officer and Cabinet secretary, and of Powell's role in the fray of politics. CNN wrote that "the damage was already done" to Powell's reputation by his UN address, and the New York Times noted "He left at the end of Mr. Bush's first term under the cloud of the ever-worsening war in Iraq". These efforts to report both the good and the bad are predictable from news outlets striving to be seen as objective. Somewhat less predictable was the scurrilous and ungracious response of one former President. ■ The philosopher Epictetus is credited with saying that a person should react to the death of an enemy "By setting himself to live the noblest life himself." Setting aside whether Secretary Powell was actually anyone's enemy (at least domestically), the advice is sound. ■ Not everyone is naturally gracious, and not every life is filled with an equal measure of good to be emulated. But when a person passes, unless one is doctrinally obligated to talk about "both sides" of the individual's life, it should be quite enough to make a choice between two things: Describing the lessons learned from the deceased, or saying nothing at all. ■ Are there exceptions? Perhaps. A handful of lives are so monstrous as to escape redemption, but too noteworthy to go without comment. But those lives are vanishingly few. ■ For the remainder, it ought to be enough either to acknowledge for the record what good others can take from the story of a life, or to remain quiet. All lives are complicated. Every personality evolves over time. Everyone battles demons, foibles, and shortcomings. A life cannot be lived without mistakes or regrets. But it cannot be worth anyone's time to dance on the grave of another, even if only in something as ephemeral as a tweet. ■ The urge to get in a word about "both sides" about a person's passing ought to yield to noting the lessons of a life -- not merely for social decorum, but because that's the only productive way to live what remains of anyone else's time on Earth. As Maimonides put it, "a man needs to associate with the just and be with the wise continually in order to learn [from] their actions, and to keep away from the wicked, who walk in darkness, so that he avoids learning from their actions." If a person passes and leaves behind some of that wisdom, the living ought to amplify and make use of it. If they pass and leave behind nothing of value, then what good comes of airing grudges or grievances? Letting a person die unremarked would seem to be the harsher verdict of history.
October 21, 2021
Not an invaluable prescription, but a non-valuable one
An opportunistic member of the Senate is looking to score points against the current widely-known difficulties in the economic supply chain by pushing a bill to require the Departments of Commerce and Defense to come up with lists of products to subject to a 50% "local content requirement" for goods deemed "critical for the protection of the industrial base in the United States". ■ There isn't much subtlety to the proposal: On page 2, the draft bill declares that "Excessive globalization has been a disaster for United States workers in the manufacturing sector." That analysis is a stretch: Many American manufacturing jobs are doing just fine. ■ Work that exists to satisfy a capricious mandate or an arbitrary quota is likely to attract more rent-seekers than innovators. Innovators are attracted to markets where their products and services can efficiently fill needs and cultivate new customers. Rent-seekers tend to inhabit those markets where their energies are deployed to higher returns by finding new ways of locking in government protections. The effect of rewarding rent-seekers will not be to advance the economic progress or stability of the country, no matter what claims someone makes about the "industrial base". ■ The problem of product shortages early in the pandemic was less about the supply chains themselves than of a failure to have made adequate preparations for "rainy day" events. Stockpiles of necessary equipment like personal protective gear were insufficient for the demand shock of a viral pandemic. Our attentions need to be focused on making sufficient preparations for low-frequency, high-impact events like the Covid-19 outbreak, not on ham-handed "solutions". ■ The consequences of broad government interventions can be significant. Look at the case of Puerto Rico: Tax breaks (phased out in 2006) turned the island into an important site for pharmaceutical manufacturing -- the source of 25% of total pharmaceutical exports from the US. But that concentration (again, one specifically enhanced by government tax policies) turned severely consequential when Hurricane Maria did massive damage there in 2017, with consequences like shutting down all three of the factories belonging to one of America's largest suppliers of IV fluid bags. That hurricane was a domestic event, and the United States had to urgently turn to Australia and Ireland to make up the resulting shortfalls in products like antibiotics. ■ The efficiency gains from specialization and trade are vast -- even domestically, concentration tends to result from specialization. Just for example, a company like 3M (a major supplier of N95 respirators) has plants in 29 different states, but those facilities are highly specialized, and the risk to the company overall from disruptions at any one of them is specifically noted in their reports to the government. The company may have 64 domestic manufacturing sites in all, but they don't all make the same things. Regional advantages -- like access to raw materials, energy supplies, or graduates of research universities -- all matter. ■ A great deal of American manufacturing involves high-tech design and complex final assembly. It's very good business to be on the far end of a supply chain, where lots of value can be added by well-trained, sophisticated workers. Plenty of "foreign" manufacturers are hiring American workers because those choices are profitable, not because they're being forced to do it. But those supply chains, even for a lot of high-value, American-made products, require importation that isn't subject to bureaucratic definitions of value-added. ■ Sweeping mandates like a 50% value quota -- enforceable on whatever the government arbitrarily deems "critical to the manufacturing base" -- aren't real answers to the root causes of the shortages encountered over the last two years, nor to the long-term health of the economy. Real accountability for the problems we have experienced depends on looking carefully at worst-case scenarios for high-impact events, and developing (and executing) real plans for those, so that we're never stuck scrambling for N95 masks or IV bags ever again. Acting on specific needs is like taking out an insurance policy, and it's prudent for voters to demand that elected officials take those sorts of steps. Smacking the economy more generally with more red tape and greater government intervention in private affairs is a bad prescription.
October 22, 2021
Straying from the straight and narrow
An idea from psychology that has ascended in the first decades of this century is the "paradox of choice", which suggests that people may find themselves overwhelmed by having too many options and would often be more satisfied with fewer. Some economists have a hard time with this argument, since consumer optimization often requires many alternatives (and because greater customization often leaves people obviously happier). ■ Yet there does seem to be some kind of "paradox of choice" at play when it comes to our belief systems. Despite having greater access via the Internet and a spectacular array of media choices to a more diverse array of opinions than at any time in human history, surveys appear to document a more bimodal political landscape in America than almost anywhere else people live under democratic rule. Do people simply find themselves having too many available options? ■ It's perfectly fine if free people choose not to have strong opinions regarding their self-government. In fact, a calm, generally-satisfied public is probably a signal that things are mostly going well. But if people are attracted to escalatory cycles of increasingly rigid orthodoxies of political economy, then something is going wrong. ■ The problem isn't even (necessarily) with the exact orthodoxies in play. The problem is with adherence to political or ideological orthodoxy itself. Orthodoxies are hazardous because facts change, technologies change, and resources change. And when they change, the responses need to be appropriate to the circumstances. As anyone visiting the Jefferson Memorial can read, the primary author of the Declaration of Independence also wrote that "[L]aws and institutions must go hand in hand with the progress of the human mind. As that becomes more developed, more enlightened, as new discoveries are made, new truths discovered and manners and opinions change, with the change of circumstances, institutions must advance also to keep pace with the times." ■ The effort never to stray from the "right" opinion (that is, from orthodoxy) too often leads people to reject incremental growth and intermediate measures that go in the right direction. And directions matter, particularly because no human civilization can possibly reach a final destination. There is no Utopia to be had, whether it's a workers' paradise, Galt's Gulch, or a Integralist commonwealth. A destination assumes that human history plods along a singular, linear timeline that will eventually stop. ■ Even on discrete issues, people choose orthodoxies over incremental improvements at their own peril. Orthodox "Greens" reject nuclear power even though it is the only plausible intermediate-term alternative to fossil fuels. Focusing on environmental orthodoxy, California legislators voted to ban gas-powered yard equipment even though the state's electrical grid remains notoriously fragile. Gold bugs adhere to orthodox views of the money supply, even though gold production rises and falls and monetary-supply flexibility repeatedly demonstrates itself to be a vital tool for avoiding economic depressions. ■ Principles are essential, but principles that calcify into unbreakable orthodoxies are hazardous. A principle is a matter of right and wrong, and imposes upon the principled party to do the right thing, even if the consequences are bad. Orthodoxies are built upon assertions of what is right for the orthodox, all other consequences notwithstanding. And while principles may be adjusted or weighed comparatively ("tell the truth" is a great principle, but it should yield to "save a life"), orthodoxies are not so flexible. ■ Orthodoxies usually break down into disputes over purity and adherence -- usually to the words of a long-dead prophet. That's because a fixed orthodoxy usually has to attach itself to something that will not change, and living people can't help but change. (That's why invoking the name of Ronald Reagan held such power in the Republican Party after his death.) An orthodoxy with a living prophet tends to become a cult of personality, which is just as morally hazardous. ■ But community requires consensus -- or at least, a process for building consensus. As Reagan himself is quoted by Haley Barbour as saying, someone "who agrees with you 80 percent of the time is a friend and ally; he's not a 20 percent traitor". Strict orthodoxy, though easy to adopt, leaves no room for adaptation and growth over time. A decent respect for the complexity of our times demands that we bring our decent principles to bear on most public matters, but steer clear of becoming so wedded to orthodoxy that we reject the necessary compromises of life's incremental steps forward.
October 23, 2021
With the news that China has conducted at least one hypersonic missile test and the peculiar response from the White House spokesperson that "We welcome stiff competition, but [...] we do not want that competition to veer into conflict", the punditry game of the hour is to ask "Are we entering a new cold war?". ■ A fixation on framing the problem in the convenient frameworks of the past is no way to seek the answers to the challenges of the present. This is not to say that history is of no use -- it most certainly is. But as Winston Churchill put it, "Past experience carries with its advantages the drawback that things never happen the same way again. Otherwise I suppose life would be too easy." ■ Just as it was a misnomer to classify World War II as a sequel to World War I, it would be a mistake to classify the power conflict between the United States and China as a mere repeat of the Cold War that defined half of the 21st Century. We need a different language altogether for what is already quite evidently underway: A low-grade, long-term, multi-dimensional class of friction between two powerful countries. ■ Dwight Eisenhower once recited what he called an "old truism" (attributed to Carl von Clausewitz) that "war is a mere continuation of political policy in the field of force." The Cold War indeed involved the "field of force" -- almost to the exclusion of any other effects that linger in memory today. The conflicts of the Cold War involved U-2 spyplanes and naval blockades, proxy wars and an Iron Curtain. The Soviet Union was thought to have spent 15% of its GDP on the military in the 1980s. ■ That conflict was big, and it was existential. It's why the mythical "red phone" offered a hotline from capital to capital. But this time, some things are different. ■ There are certainly hard-power, field-of-force aspects to the relationship between the United States and China. That's why freedom of navigation exercises near Taiwan matter, and why calls made by the Chairman of the Joint Chiefs of Staff to China captured so much attention. It would be stupid to discount the potential for any number of discrete conflicts (like the disposition of Taiwan) to lead to a "hot war". ■ But unlike the Cold War, the present conflict involves ordinary users of apps like TikTok, NBA players with opinions on Tibet, and cable TV channels beaming propaganda into 30 million American homes. It extends from hacking millions of US government worker identities to debt financing for infrastructure around the world. ■ Economic supply chains are deeply interdependent, the Internet is global (despite the Great Firewall), biological contagions can achieve pandemic status in days, space junk can rain down anywhere, and climate change is a universally shared risk that no country can solve alone. For all of these reasons, and many others, the tactics of conflict between powerful countries are substantially different than those of the past. ■ That doesn't mean we should abandon a well-informed, historically-literate approach to a grand strategy about how to see it through. Human nature is, after all, pretty much the same as it always was. But it does mean that labeling this as some kind of "Cold War II" is bound to give the public a vastly wrong impression about how it will affect them, what commitments they will be asked to make, and what their expectations ought to be for a tidy outcome. ■ There is no convenient metaphor, and thus it requires a new name altogether. Just as Churchill -- he of "things never happen the same way again" -- was the first to label the Iron Curtain, someone is overdue to name what this is today. A monster with no name is doubly frightening.
October 25, 2021
Straying from the straight and narrow
An idea from psychology that has ascended in the first decades of this century is the "paradox of choice", which suggests that people may find themselves overwhelmed by having too many options and would often be more satisfied with fewer. Some economists have a hard time with this argument, since consumer optimization often requires many alternatives (and because greater customization often leaves people obviously happier). ■ Yet there does seem to be some kind of "paradox of choice" at play when it comes to our belief systems. Despite having greater access via the Internet and a spectacular array of media choices to a more diverse array of opinions than at any time in human history, surveys appear to document a more bimodal political landscape in America than almost anywhere else people live under democratic rule. Do people simply find themselves having too many available options? ■ It's perfectly fine if free people choose not to have strong opinions regarding their self-government. In fact, a calm, generally-satisfied public is probably a signal that things are mostly going well. But if people are attracted to escalatory cycles of increasingly rigid orthodoxies of political economy, then something is going wrong. ■ The problem isn't even (necessarily) with the exact orthodoxies in play. The problem is with adherence to political or ideological orthodoxy itself. Orthodoxies are hazardous because facts change, technologies change, and resources change. And when they change, the responses need to be appropriate to the circumstances. As anyone visiting the Jefferson Memorial can read, the primary author of the Declaration of Independence also wrote that "[L]aws and institutions must go hand in hand with the progress of the human mind. As that becomes more developed, more enlightened, as new discoveries are made, new truths discovered and manners and opinions change, with the change of circumstances, institutions must advance also to keep pace with the times." ■ The effort never to stray from the "right" opinion (that is, from orthodoxy) too often leads people to reject incremental growth and intermediate measures that go in the right direction. And directions matter, particularly because no human civilization can possibly reach a final destination. There is no Utopia to be had, whether it's a workers' paradise, Galt's Gulch, or a Integralist commonwealth. A destination assumes that human history plods along a singular, linear timeline that will eventually stop. ■ Even on discrete issues, people choose orthodoxies over incremental improvements at their own peril. Orthodox "Greens" reject nuclear power even though it is the only plausible intermediate-term alternative to fossil fuels. Focusing on environmental orthodoxy, California legislators voted to ban gas-powered yard equipment even though the state's electrical grid remains notoriously fragile. Gold bugs adhere to orthodox views of the money supply, even though gold production rises and falls and monetary-supply flexibility repeatedly demonstrates itself to be a vital tool for avoiding economic depressions. ■ Principles are essential, but principles that calcify into unbreakable orthodoxies are hazardous. A principle is a matter of right and wrong, and imposes upon the principled party to do the right thing, even if the consequences are bad. Orthodoxies are built upon assertions of what is right for the orthodox, all other consequences notwithstanding. And while principles may be adjusted or weighed comparatively ("tell the truth" is a great principle, but it should yield to "save a life"), orthodoxies are not so flexible. ■ Orthodoxies usually break down into disputes over purity and adherence -- usually to the words of a long-dead prophet. That's because a fixed orthodoxy usually has to attach itself to something that will not change, and living people can't help but change. (That's why invoking the name of Ronald Reagan held such power in the Republican Party after his death.) An orthodoxy with a living prophet tends to become a cult of personality, which is just as morally hazardous. ■ But community requires consensus -- or at least, a process for building consensus. As Reagan himself is quoted by Haley Barbour as saying, someone "who agrees with you 80 percent of the time is a friend and ally; he's not a 20 percent traitor". Strict orthodoxy, though easy to adopt, leaves no room for adaptation and growth over time. A decent respect for the complexity of our times demands that we bring our decent principles to bear on most public matters, but steer clear of becoming so wedded to orthodoxy that we reject the necessary compromises of life's incremental steps forward.
October 26, 2021
At the close of a transaction in a store or a restaurant, Americans are accustomed to a courtesy farewell -- something along the lines of "have a nice day". Sometimes it's a trademark phrase, like Chick-fil-A's "My pleasure". While it may be perfunctory, it's still usually nice to hear -- in the way that, for the most part, commerce makes us courteous to other people. ■ From time to time, the alert consumer hears a variation, like "Have a wonderful day." We often use "wonderful" to express a particularly sunny sentiment, but perhaps we ought to take it more often to its roots. ■ "Wonderful" has an obvious etymology: It literally means to be full of wonder. The word has softened a great deal in ordinary use, and "wonderful" now is generally used merely as a synonym for "really good". Still a nice way to greet someone, but the word is underachieving. ■ That underachievement ("semantic bleaching", in the words of Merriam-Webster) is a shame, because life in the 21st Century is filled to the brim with subjects of wonder. Commercial airline flights virtually never crash anymore. Cars can drive themselves. Phones can translate speech into foreign languages in real time. ■ High technology isn't the only source of wonder. The world has leapt from 75% electrification to 90% in just 20 years. Extreme poverty is close to being eradicated, as is polio. The cost to produce renewable energy is collapsing and more of it is being produced than ever. ■ Social wonders continue, too: Women have achieved educational parity with men in the American workforce. Even in a year of extreme social and personal stresses, the notable murder spike in 2020 not only looks like an aberration, even the spike produced a rate almost half of what it was a quarter-century ago. Meaningful majorities in the United States and several other countries approve of increasing diversity and gender equality. ■ And nature would still be full of wonder, even without human help. Marine biodiversity has shown itself remarkably resilient when humans ease the pressure we place on habitats. There have been four dwarf planets discovered just within our own Solar System (in addition to Pluto). And scientists are still struggling to measure the unfathomable size of the Universe. ■ To consider these facts with appropriate wonder is not to excuse or ignore the many ways in which further progress is desirable on all of these fronts and more. But just as practicing gratitude is a psychological technique that yields lots of good results, practicing wonder is a worthwhile way to maintain perspective in a world where things often go wrong from day to day. It may be hard to have a wonder-filled day every day, but reserving time and mental space for small deposits of wonder is good for us.
October 27, 2021
The headlines blare that New York City, under the charge of outgoing Mayor Bill de Blasio, is going to shut down the gifted and talented program in its public schools. Critics of the program, which starts with a screening test in kindergarten, argue that it results in a de facto form of racial segregation. ■ Setting aside the inevitable obstacles to effectively managing a district of 1,094,138 students, the plan appears -- at least from the reporting -- to conflate the need for reform with the need for shutdown. The school district says it plans to "launch 'Brilliant NYC,' a blueprint for accelerated learning for all elementary students in New York City". The way New York is handling talented and gifted education appears to need meaningful change (after all, kindergarten is too early to expect sound selections to be made), but it doesn't have to flatten its approach altogether just to make things better. ■ Why do we have TAG (talented and gifted) programs in the first place? The obvious answer would appear to be that it's for the kids themselves. But it's also true that, if we're doing it right, those programs also ultimately benefit society as a whole. It's easy to make the mistake of thinking of TAG programs as a reward for high-performing students. The world knows how to deal with the person who conscientiously does their work day in and day out and is highly capable of earning straight-A's. TAG programs should be intended for students who fall substantially above the mean -- as in, a standard deviation or two -- in at least some observable way. ■ Having that much cognitive talent is indeed a gift. But it can also complicate a person's ability to adjust along a normal timescale. The familiar awkwardness of coming-of-age stories can be even more complicated for those who are already noticeably different from their own peers as they are growing up. A child whose cognitive development is out of step with their chronological peers needs at least some different attention in order to achieve healthy and well-balanced development. If we define everything on the basis of chronological age, then a gifted child is "advanced" in their cognitive development. But turn that on its head: If we standardize based on the child's apparent cognitive age, then the typical gifted child stands a good chance of pacing behind their cognitive peers in terms of emotional development. A 10-year-old who thinks like a 16-year-old still has 10-year-old hormones and impulses. Targeting certain specific resources to the attention of these children is in their best interest. ■ But there is a social calculus in effect as well. As Lee Kuan Yew put it, "To be successful, society must maintain a balance between nurturing excellence and encouraging the average to improve. There must be both cooperation and competition between people in the same society." The leaders of a conscientious society will look at their most talented individuals and try to optimize the investments it makes in them as students. ■ That doesn't necessarily mean railroading every gifted child through an accelerated curriculum, either. Stimulation is important, and academic acceleration can pay off in some cases, but other factors matter, too: History is full of examples of gifted individuals who needed time to think and dream in order to produce their greatest output. Differentiated educational opportunities that make the most of individuals' existing gifts and talents is a great way to help produce the most from the raw mental materials that individuals are given at birth. ■ But people who are born with tremendous raw talents usually need help and guidance in learning how to refine and put them to good use. The mind of a genius doesn't come with an owner's manual. And, to put it bluntly, society has a significant self-interest in producing well-adjusted geniuses. So it not only makes sense for the individual student, but also for society more broadly, to approach those differences wisely. ■ As the slogan of the UNCF says, a mind truly is a terrible thing to waste. If New York City (or anyplace else) wants to serve its entire student population well, then it shouldn't take TAG education any more lightly than it would its programming for students at the opposite end of the curve. If the TAG program currently in place is yielding obviously faulty results, then the answer isn't to jettison the program entirely, but to figure out where and why the inequities are entering the picture and to reform the process accordingly.
October 28, 2021
Move carefully and leave things better than you found them
Facebook long operated according to the motto "Move fast and break things". When Facebook was 10 years younger and still on the scrappy side of things, that motto conveyed a certain attitude about not being afraid to try complicated technical challenges -- a programmer-friendly ethos, rather than a corporate philosophy. But Facebook isn't so small anymore, and the emerging consensus is that it has been very, very naughty. ■ Thus the announcement that Facebook is rebranding its corporate umbrella is not a surprise. "Meta" will be the parent, and the individual products (including Facebook) will keep their names. The name may be a new coat of paint on the existing order, but what Meta/Facebook really needs is an affirmative philosophy: Rules to follow above all else. "Leave things better than you found them" is available for the taking. ■ Imagine the things an affirmative Facebook could offer: Based on what it already knows (algorithmically), what if it served up individualized recommendations for ways to do good? A "Facebook Goodwill" project could give people pre-screened suggestions for charitable organizations, volunteer opportunities, or simple good deeds that would be suitable to the individual's interests. ■ What if Facebook took its vast database of information on users' interests and produced "Meta Enlightenment"? Daily, bite-sized lessons -- again, thoughtfully curated rather than generated by some mysterious backend artificial intelligence -- in subjects that would not only make the user a little smarter, but perhaps also a little happier. People already look for micro-learning opportunities (think Duolingo and its 5-minute language lessons), but Facebook could again use its powerful News Feed platform to put that learning right in front of users. ■ Or, imagine perhaps a Facebook Philosophy entry, not hidden somewhere elusive, but right there in the News Feed, serving up curated thoughts designed to help people think about their place in the world. Facebook's potentate said in 2018 that he was going to concentrate on "making sure that time spent on Facebook is time well spent". Might not that start with exposing people not to echo chambers but to ideas that might lead to "well-spent" time? ■ Any one of these ideas may sound heavy-handed -- until one realizes that Facebook is already making these choices, with the content it serves up algorithmically. One might even say "unthinkingly". Making the choices behind Facebook Goodwill, Meta Enlightenment, or Facebook Philosophy would expose the company to scrutiny and criticism, as people would (rightly) ask whether virtuous choices were being made. ■ But in deciding not to consciously leave things better than they find them, but merely to serve up ever-increasing "engagement", Meta/Facebook is already making those choices, but shoving the responsibility over to computers, rather than to people. To deflect a choice is still to make a choice. Better to have transparency and accountability for those choices than to let them happen on autopilot. Because that hands-off approach is how you break things.
October 29, 2021
Fast talking gets a bad rap. Look up the synonyms for "fast talker", and you'll encounter words like "phony", "scammer", and "swindler". That's because we associate the phrase with someone achieving their malicious ends through deception, and saying things too quickly for another to comprehend is an obvious means of deceit. ■ And yet, in the literal sense, there's nothing wrong with a high rate of speech. The average pace of American speech is about 150 words per minute. Yet the average reading pace for non-fiction is estimated to be 238 words per minute. The gap between those two values is substantial: Assuming both methods were used to deliver the same content, reading would be 58% faster. ■ Despite this, we often choose to consume new information not by reading, but by attending lectures, seminars, and workshops -- hypothetically subjecting ourselves to a much slower pace of information transfer. Why? Besides the obvious social rewards that come from being together with others, it's often plainly easier to sit and digest information delivered by a live person than to spend the equivalent amount of time reading. ■ At least some of this difference is due to the relative cognitive loads of the two methods of delivery. Processing the written word to store it in memory takes some effort; that's why active reading techniques are recommended for people who are reading to learn. ■ An oral presentation (especially when delivered by a dynamic speaker with the help of visual aids) can substitute for some of the processing required of a lone reader. A speaker can communicate things nonverbally -- through gestures, emphasis, volume, speed, and pitch -- that reader have to infer on their own. ■ But live speakers should still consider consciously picking up the pace. The relative gap between the paces of speech and reading suggests that something is left on the table if a presenter speaks too slowly. An audience giving its undivided attention to a speaker can handle accelerated speech: at least a quarter of podcast listeners voluntarily make use of increased playback speeds. Research has shown that audiences can handle audio content delivered at 1.5x speed without excessive mental strain. ■ If the content has been thoughtfully laid out, there seems to be no good reason for a presenter not to choose a quick pace of delivery -- that is, to be a literal fast-talker. In particular, if attention has been paid to delivering the information in a logical way that scaffolds the new information upon the old, then talking at a lively rate should send the audience a nonverbal signal to pay attention and wall out distractions. ■ In addition to creating a more immersive experience for the audience, a quicker pace can help overcome a seeming paradox. For some complex matters, breaking the idea into smaller pieces and assembling them carefully can add words but decrease the total cognitive load for the learner. Getting rid of jargon and appealing to tools like metaphors can require more words but make the content easier to digest. An energetic presenter taking more words to say things in an audience-friendly way can afford to speak faster than someone droning on through a morass of jargon and excessively complicated language. ■ Some people speak quickly as a symptom of nervousness, and that is clearly counterproductive. But as long as the information is conveyed in a confident, fluid way, a faster-than-normal rate of speech may help the audience to enter a state of flow by engaging their focus. And a well-prepared instructor ought to be able to omit the filler sounds (like "um") that fill time unproductively. In a world where learning more material faster is a matter of some real consequence, perhaps fast talking has been getting less credit than it is due.