Rational Philosophy

Congress And The Bailout

I just deleted several hundred “spam” comments from my comment moderation queue. The mysterious originators of these comments, which are then automatically generated in huge numbers around the Internet, aim to attract or influence commercial traffic in their direction. I don’t really care whether the operation works. I presume it does, since otherwise why would they keep doing it? But I care about having to delete all of those messages when I have better things to do with my time.

A couple of weeks ago I was on the phone with my friend in Australia just after the AIG bailout and he mentioned that had AIG gone under he would have been left in the hole for several hundred thousand dollars. Many clients of his medical business have insurance with AIG. The fingers of this particular invisible hand spread far.

But why did AIG, with its trillion dollar balance sheet and stalwart history of conservative risk management need to be bailed out?

Joseph P. Cassano AIG Financial Products

Well, if the NY Times has its story straight, AIG’s problems were catalyzed by the overreaching overconfident overpowerful work of one man — Joseph J. Cassano, a former executive with Drexel Burnham Lambert — Michael “the-junk-bond-king” Milken’s old investment bank. Cassano helped found AIG Financial Products in London and built it into a very profitable, very independent entity within AIG that leveraged AIG’s tremendous financial strength and standing to sell ever more speculative products. AIG Financial Products, being drastically overleveraged, eventually imploded. Cassano left and now lives quietly in a Knightsbridge town-house. (I love this picture from the NY Times; Cassano peering around the corner in his bright red shirt like a con at the perimeter of the prison yard.)

When McCain debated Obama last week after supposedly spending several days in intense economy-recovery sessions he didn’t seem to have much of a grasp on what had happened to cause the problems in the first place, nor on what needed to be done to avoid them happening again. It was as if invoking the specter of regulation caused him such shudders that it wobbled his brain off-kilter.

John McCain at a loss

Ideally, regulation is what we do when we don’t want something bad to happen. Avoiding regulation is something we do when we care more about a belief or concept than real-world consequences.

The Bush administration has been bad for America and the world for many reasons, but there has been one overriding and all-pervasive reason for its badness — the arrogance of favoring faith over fact. The administration has consistently argued for, lied for, evaded for, invaded for, and bullied for its ideologies in the face of the evidence against them. They have set the bar very low for what a government can do to manipulate and subvert in the name of ideology and get away with it.

All that being said, when the congress began beating up on Paulsen and his three page proposal I felt for the first time in a long time that we were seeing government in action. Rusty, creaking, inept as it may have been, the house gave us the hint of an idea of what it should be doing for us — working in our best interests. For once we got a glimpse of the invisible hand.

The Invisible Hand Part 1

Related posts from around the web:

Walter Williams and Bryan D. Jones: The Most Important Election … - Choose McCain and likely opt for a third term of the governing philosophy that has pushed the United States back toward the economy of the Great Depression. Select McCain and keep the governing approach of unregulated free market …

McCain Touts Plan to Privatize Bailout [3rd attempt] - “The problem with the earlier plan,” McCain explains, “is that it relies on big government to save the banks. My plan puts the bailout in the hands of the free market, which is the only solution that works in times like these.” …

On postulates and their place in shaping our lives.

“Wishful thinking,” so says Roger Cohen, “often masquerades as analysis.” He’s referring to those who warn that the days of U.S. world leadership are numbered. And yet Cohen could have been speaking of himself. He refers to the United States as “the most vital, open, self-renewing and democratic society on earth.” And says that to imagine that Europe or China “can become powers of influence equal to the United States within the next half-century is implausible.” (Did he forget about the rapid decline and fall of empires far grander and more imposing than that of the present day United States?)

As the hook for his thesis Cohen uses the fascination of the rest of the world with the current presidential election. They come with their cameras and microphones, Cohen surmises, because they recognize the importance of America and America’s choice of leader. But throughout the terms of Carter, Reagan, Bush, and Clinton (twice), the rest of the world viewed American politics as uninteresting, its leaders more or less interchangable. Surely, the reporters come from far afield because American politics is suddenly interesting. They come for the spectacle of an African american man competing with a woman for the democratic candidacy, and to goggle at the spectacle of ever-more-wacky conservatives pandering to the religious right at a time when the rest of the civilized world has long since disentangled its politics from overt religious influence.

While Cohen alludes to the horror the world feels at the Bush presidency and legacy, he doesn’t dwell on it. Why? Well, I suppose because that would destroy the foundation of his argument.

What kind of leadership does Cohen think that America has been providing to the world on human rights, civil rights, education, environmental protection, and economic development? I’m sure the world can do without the kind of leadership we’ve been providing on interventionism, dissembling, torture, cronyism, intermingling of church and state, and corporate corruption.

Last week I expressed simultaneous excitement and disquiet at the news that a team of scientists had synthesized life in the form of a bacterium. This week, the Science Times ran a fluff piece about a secret message (the name of the Venter Institute and the names of those on the team) encoded into the genome of the bacterium by arranging the letters of the constituent amino acids in a particular sequence. On reading about this, the ratio of my excitement to my disquiet dropped considerably. Move over natural selection, here comes Will Shortz.

Another team of scientists, this time anthropologists, have been looking back 650 years to the time of the Black Death to try to learn something about the plague that killed millions across Europe. They have deduced that the plague, which was previously thought to have killed indiscriminately, taking the young, the old, the healthy, and the sick, in fact tended to kill those who were weakened by previous illness, age or malnourishment.

These three examples of conjecture give us insight into the philosophy of the concept.

In the first instance, we have Roger Cohen speculating from a position of fear. He conjectures that the doomsayers about American supremacy are wrong because he wants them to be wrong.

In the second instance, we have a team of scientists playing with nature, conjecturing about the boundaries of scientific achievement; the insertion of a secret message into the genome reveals a lack of gravity about their work and the seriousness of its consequences.

And in the third instance, anthropologists take conjecture and submit it to careful testing in order to help society better understand the pathology of epidemics, perhaps helping ultimately to save millions of lives.

Without conjecture we would have no progress. Conjecture lets us ask what will happen if? as well as did this happen because?

The basis for our conjecture and the intent of the conjecture determine whether the questions being asked have value and yield positive results. Or, not all conjectures are made equal. It takes little speculation to state that American world leadership will, one day, come to an end, that we will need to grapple with the troubling issues raised by the creation of synthetic life, and that the world will face the risk of new epidemics. What takes courage and foresight is to face these speculations with the integrity and seriousness they deserve.

And with that said I’m off to bet on the Giants to win the superbowl…

“Today, I am not the person I was ten years ago.” Karl Svensson, a convicted murderer, told his Swedish classmates at medical school when his past caught up with him. The prestigious Karolinska Institute eventually side-stepped the unprecedented question of whether to expel Mr. Svensson simply because of his past criminal acts — once a neo-Nazi, apparently, Svensson’s crime had been deemed a hate crime. Instead, the institute expelled him on a technicality — he had falsified his high school records by substituting his assumed name for his birth name of Hellekant.  The story raises two very interesting questions: 1. Can we change? and 2. Should a person who has committed this kind of crime be allowed to practice medicine (or another similar profession)?

The New York Times editorial board has endorsed Hillary Clinton as the Democratic candidate. Its opinions supporting the endorsement of Clinton for the Democratic and McCain for the Republican vote make fascinatingly candid reading. The Times’ opinion of Clinton again raises the question of whether someone, fundamentally, can change. It left me wondering whether Clinton has changed, and, if so, whether she has changed enough to overcome the disadvantages in her character that have revealed themselves so often in the past — her divisiveness and “I know best” intellectual hardness. The Times uses the example of her “famously disastrous foray” into trying to solve the healthcare issue to support its premise that she has changed and now displays a new understanding of what’s to be done.

I’ve written before about our capacity to change as it relates to the concept of free will and personal development. Being conscious allows us to choose between options, and to select options that may be difficult, unattractive or counter to our immediate instinct. Through this reasoning we can see that it is possible to develop new levels of awareness and new patterns of behavior, to make choices different from those we would have made in the past.

But if we examine the concept of behavioral change we find a composite concept. And we tend to conflate and confuse its constituent parts: When I ask, “can we change?” I could really be asking two separate questions. The first: “Can someone become altered such that the same impulses will lead to different immediate responses?” And the second: “Can someone become altered such that the same impulses will lead to different eventual responses?”

Ten years go, in an angry confrontation, Svensson reacted violently. His immediate response was to be urged to violence. And he acted on this immediate response by lashing out.

To say that Svensson’s immediate response may have changed, we would have to believe that he would not feel urged to violence if faced with a similar confrontation ten years on. I would say that we have very little reason to believe that Svensson or anyone could change in this way simply through reflection and remorse. Our immediate, instinctual response is pre-conscious, and therefore isn’t subject to conscious influence.

On the other hand, to say that Svenssion’s eventual response may have changed seems a much more reasonable and rational conclusion. Svensson, still feeling a violent urge, could now have a modified conscious response and resist the desire to lash out.

Svensson’s classmates were split over whether he should be allowed to stay on. Those that supported him said that he’d paid his debt and, by inference, should be trusted to have changed his conscious response to confrontation. But we can infer that those of his classmates who still distrusted him understood and feared that his immediate response to confrontation (or other stress) could and indeed would still be violent.

Should a violent killer, rehabilitated in his conscious actions, be trusted in the medical profession? To answer that question we would need to understand the degree and range of provocation that Svensson may react violently to, and the strength of his newfound ability to keep his emotions in check. In the absence of reliable ways and means to measure these variables, it would seem reasonable for society not to want Svensson providing medical care. Svensson has rights of freedom, but it also seems reasonable for society to say that he has forgone some of those rights (such as an unfettered choice of career) by his past actions.

So to Hillary Clinton: Although the circumstances are very different, we are confronted with the same logical argument. As I understand it, the instinctual fervor of Clinton’s liberal ideological passion inspired and limited her original approach to tackling the healthcare issue. Her newfound understanding means that she’s better able to consciously override her immediate divisive response. But the concern remains that she would encounter similar instinctual responses in a broad range of political situations.

As we’ve seen with Bush and as tends to happen to those in high office, the stresses and demands of the job certainly don’t make it easier to overcome one’s immediate responses. As the Times’ opinion points out, Clinton has been succumbing to these impulses during her campaigning, underscoring the perspective that we have reason to doubt that she has truly learned to keep her immediate responses in check.

Obama, on the other hand, reveals a more promising character for non-devisive leadership. This then narrows the gap between the candidates that the Times claims to exist, and perhaps even makes Obama the more logical choice. It becomes a matter of character versus experience. I for one would choose character every time.

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