Economics and psychology revisited

Awhile back I commented on Galbraith's The Great Crash by emphasizing mass psychology as an important part of economic booms and busts. Today David Brooks in The New York Times has a column on the economics of technical innovation versus heavy industry: http://www.nytimes.com/2009/12/22/opinion/22brooks.html. Brooks emphasizes institutions, culture and psychology as important to the technologically- and organizationally- based economy we have now. He ends with the statement that "When it's about ideas, economics comes to resemble psychology." So true and so long in being recognized by the academic part of the discipline.

Mystery Books as Portrait of Technological Development

During the blizzard, I finished listening to the current bestseller The Girl with the Dragon Tattoo. My previous mystery was Blood Work by Michael Connelly, published in 1998. In Blood, one character has a car phone, but the detective is continually looking for pay phones and leaving messages on answering machines. A reporter can search The Los Angeles Times archives, and the author explains carefully how this could be because he can't presume the reader is familiar with computer searches. Photo enhancement is possible. Fast forward ten years to Dragon, whose plot hinges on hackers who anonymously download the content of peoples' hard discs and take control of their computers. The detective himself can manipulate pictures with Photoshop. Could this decade have been the fastest change in our personal control (or lack of it) over our information sources ever?

When do we need to know?

This morning at the Press Club members' breakfast table, I mentioned that the Hirschorn Museum in DC is going to build an inflatable, blue egg-shaped structure that will be erected twice a year on the top of the museum. The story was in the Washington Post today, and on the New York Times web site yesterday. Apparently this blue balloon will be able to house a 1,000-seat temporary auditorium. As a temporary structure, it can be put up on the mall without the usual procedures.



A young journo-geek across the table informed me authoritatively that this was old news because it had been on DCist, a blog, yesterday. This later set me to wondering how much it matters whether I discover(ed) this fact yesterday, today, or tomorrow, assuming I ever need to know it. Would it matter if I just happened to notice a giant blue egg on the museum one day? Why do I need to know "breaking news?" Is this question blasphemy and a violation of the First Amendment?

The appeal of the mystery story

Having finished two serious treatments of the Cold War and one of the 1929 stock market crash, I find myself searching for entertainment, but wondering why a mystery involving murder and crime is relaxing. (It's Blood Work by Michael Connelly.) Upon reflection, I think it's because the classic mystery story has the elements of storytelling that have appealed to people since they told stories around the fire in caves: believable good vs. believable evil and a resolution at the end. Real life and much of modern literature don't provide these gratifying elements.

Economics vs. mass psychology

I just finished hearing a recording of John Kenneth Galbraith's The Great Crash for a book club. Not able to attend the meeting, I promised several people who asked what I thought about it that I would post some comments. Galbraith emphasizes the mass psychology of a stock bubbles, going back into history and examining the beginnings of the 1920's bubble. He is a bit inconsistent, spending some time early in the book explaining why the Federal Reserve followed an easy money policy, but later dismissing that policy as a reason for the boom and consequent bust. We are left with mass psychology and almost fraudulent optimism as an explanation for the boom - people didn't want to miss the chance to get rich quick. Galbraith goes into great detail, month by month and day by day in late 1929, to trace the history in an ironically mocking style.

In the end, the story reduces to mass psychology combined with minimal regulation and oversight. Since then the United States has gone through cycles of regulation and deregulation, along with a few more bubbles and consequent busts - for example, the dot.com boom and the recent housing boom. The contrast between the present and the 1930's depression is that, despite the severity of the current recession, it has been ameliorated by permanent programs and current policies. The opposite situaiton prevailed in the 1930's. Deposit insurance and unemployment compensation prevent bank runs and maintain consumer spending to some degree. Federal Reserve policies to make loans available to encourage businesses to invest and hire and the stimulus package are in stark contrast to the policies of the 1930's that exacerbated the downturn.

However, human nature and the consequent mass psychology are not going to change so it is likely that there will be more bubbles based on the idea that, "Conditions are different this time." Regulators, like generals, may have a tendency to plan for the last war, rather than for unexpected new problems, such as the mortgage backed securities created outside the regulated banking system in the recent boom and bust.

"Nostalgia Ain't What It Used to Be"

I was reminded of this Yogi Berra quote when reading Yours Ever by Thomas Mallon, as one of the readers for the Arts Club of Washington's literary award. The book reviews famous correspondents as diverse as H.L. Mencken and Heloise and Abelard. Mallon laments the instantaneous nature of email as opposed to the lags in letter writing when recipients would be reacting to events long past, or commentaries on the same event would cross in the mails. The letter writers themselves constantly lament the delays for which Mallon expresses nostalgia. Mallon also feels that electronic communication has degraded the population's writing ability; I think that is debatable because more people communicate in writing on a daily basis than ever before. It could be argued that the telephone degraded writing more than email has. Ah, readers, do you write more and better, less or less and worse in this new age? Do you lament the lags in communication when separated from your correspondents?

Forget the cake, let them wear gowns

On "Black Friday," I was walking with a friend in Georgetown who suggested we go into Georgetown Park, an upscale mall, to see the Christmas decorations, which were minimal in this recession year. What surprised us were the number of stores that were showcasing elegant evening gowns in their windows - until we realized the gowns were in windows of empty stores, in lieu of covering the windows with blank paper. We estimated that about half the stores were displaying gowns. One wonders how many people are metaphorically displaying gowns in this recession as well.

Art as Character?

I have just read the the most amazing two sentences in a book that describes the high end art market where new work can be over a million dollars, Seven Days in the Art World, by Sarah Thornton: "In a world that has jettisoned craftsmanship as the dominant criterion by which to judge art, a higher premium is put on the character of the artist. If artists are seen to be creating art just to cater to the market, it compromises their integrity and the market loses confidence in their work."

So the "why" matters more than the "what?" How does the "market" know the artists' intentions? Is there anything to this house of mirrors? As a person whose art, as I often describe it, would have been avant-garde (no longer an acceptable phrase apparently) in 1880, I can only wonder at the need of wealthy people to find an activity this way. Bill Gates and his charities are looking very good.

Art as Religion?

Sarah Thornton, an art historian and sociologist, writes in Seven Days in the Art World that contemporary art has become a kind of alternative religion for atheists. She adds, "Moreover, just as churches and other ritualistic places serve a social function, so art events generate a sense of community around shared interests." Another convivium! The religious approach to art, I have sometimes thought, leads to the intensity of feeling that art organizations seem to generate. Differences of opinion become moral issues, so, apropos of Jim Leach's point quoted in another post on this blog, opponents are "immoral."

Words matter

Friday I reported for the National Press Club's Web site on a speech by James Leach, former Republican Iowa Congressman appointed by Obama to head the National Endowment for the Humanities. The article is at this link: http://www.press.org/wire/article.cfm?id=1666. Something I didn't emphasize in the story is an emphasis on the importance of words - calling another country "evil," referring to cultural differences as "cultural wars," or designating a difference of opinion as "moral" has consequences. Reactions, he noted, may be stronger than actions. The "evil" don't need to be understood, "war" implies violence may be justified, and the opposite of "moral" is "immoral." Comprehending history and culture, subjects of the humanities, would temper this polarizing vocabulary, he asserted. I agree. But how do we introduce nuance into discussion?

Creating So We Can Create

An acquaintance who has published books is also a fellow member of the Press Club, the Arts Club and my Monday morning painting workshop at the Torpedo Factory. I asked him what he was writing now and he explained that he had taken up art in the hopes of overcoming a writer's block. That reminded me of my beginning with art when I was having the common graduate student's problems with my dissertation and a friend warned me that I would never finish it unless I took up a diversion; she recommended art. This sent me to the Laguna Gloria art center, located in Sam Houston's former home in Austin, Texas where I was attending the University of Texas. I did get my degree so I owe my economics career to art! I hope my colleague finishes his book. Are we the only people who create so we can create?

Two Sagas of the Cold War

Having finished listening to an audible book of The Hawk and the Dove: Paul Nitze, George Kennan and the History of the Cold War, by Nicholas Thompson, I have begun A Fiery Peace in a Cold War: Bernard Schriever and the Ultimate Weapon, by Neil Sheehan. The first book traces the lives of two policy "wonks" who agreed that the United States needed to counter aggressive Russian intentions after World War II, but differed on how to do it. They both influenced the formation of U.S. policy. Kennan would have emphasized political containment while Nitze was for more and more nukes. Sheehan begins by saying that both seriously misinterpreted Russian intentions, which were defensive rather than aggressive in nature, before presenting a history of the arms race and its consequences, focusing on the doers rather than the thinkers. How do we think about this contrast in interpretations? Does it contain anything useful for thinking about the multi-polar nuclear world we now inhabit? Has anybody else read one or the other of these books and can comment? Or comment from knowledge of the era's history?

Personal Globalization

Yesterday afternoon at the Phillips Collection concert, I was sitting in the front row next to an elegantly dressed couple who explained they were from Seoul, Korea and had known the pianist, a young woman apparently also Korean, "since before she was born." However, she was born in Montreal and gives concerts internationally. The husband said he learned she was playing in Washington yesterday from a newspaper and contacted her parents, his good friends, in Montreal. She and they were obviously fond of each other, indicated by warm smiles as she took her bows only seven or eight feet from them in the intimate setting of that music room. The wife stepped forward briefly to hand her a bouquet of red roses.

This caused me to reflect on how common international friendships and even families are. A friend of mine who worked at the World Bank had, at one time, her four children each living and working in a different country - the United States, New Zealand, Canada and Thailand. Yet she was in constant communication via the Internet. Does the enabling of such relationships more than offset some of the lamented displacement by email of face-to-face communication?

Wrong vs. Wrong

Dinner conversation last night migrated to the Afghanistan conundrum and evoked the thought that so many international relations issues are
"wrong vs. wrong," a choice between two or more imperfect options. How do we choose the "lesser evil?" What are the criteria for these situations?

Universal values?

Bob Abernathy, a host of a PBS program, "Religion and Ethics NewsWeekly," and a former NBC correspondent, gathered, with William Bole, interviews from the program into a book, The Life of Meaning. Abernathy, a member of the Cleveland Park Congregational Church, attended a meeting of the book club there last week and explained that they included an interview with Rushworth Kidder; president of the Institute for Global Ethics in Camden, Maine; because they wanted to emphasize that a non-religious person could be ethical. The title of the chapter is "The Good, without God." Rushworth comments that world survey work produces five universal values: honesty, responsibility, respect, fairness and compassion. Readers, would you add to or subtract from this list? Would the list be sufficient to remove the ethnic and religious violence plaguing the world?

Veterans Day Conversation

A conversation last night at the Press Club bar contrasted the acclaim accorded Iraq/Afghanistan veterans compared with the disdain in some quarters in the past for Vietnam veterans. The coverage yesterday noted it. What is behind this welcome development? Some hypotheses were the policy of embedding journalists with combat units so reporters grew to identify with soldiers, the shock of 9/11 creating a public willingness to fight back, and the evil of Saddam Hussein.

Conviviums

William Least-Heat Moon, the author some years ago of Blue Highways, has more recently published Quoz, a meandering travel book in search of quirky people and places along American roads. He introduces the word, "convivium," a place where unrelated people meet to talk, drink and sing in, he says, the original Roman meaning. He is seeking such places along the road and it led me to consider where we find them in our regular rounds. I think I have three; the National Press Club bar, the Arts Club of Washington, and the coffee hour at the Cleveland Park Congregational Church. For many people, a breakfast gathering in McDonalds serves. Are there other, somewhat less likely, places known to the readers?