From today's The Big Picture:
We are moving into the height of the political cycle over the next few months. It is apparent that the Republicans will nominate Romney and he will battle Obama for the right to be president of the U.S. Over the years I have received emails and had discussions with many people, some of whom I only know via the deep reach of the internet, about my political beliefs. These often confuse people because they are not clearly liberal or conservative, and usually not moderate. However, my beliefs do have themes that at times seem to align me with liberals, conservatives, and even radicals. In individual conversations I have encouraged people not to stereotype me, but to engage in discussions about issues.
One of my beliefs is that with the growth of the population, the introduction of technology into every aspect of our lives, the continually increasing complexity of how we communicate, and the growing desire to impact systems at all levels, our species is experiencing radical change at a pace that most of us have difficulty absorbing. At the individual level of existence, how we feel in our own skin can be anywhere from terrifying to electrifying, either creating excitement for life or fear of living. Thus we seek small groups that we can identify with that are having similar internal experiences as ourselves. We may seek to join a group of people who feel threatened by change, or who are challenged and invigorated by change. These groups come into conflict with each other and are becoming more and more vocal. They have new ways of contacting others who may have a similar experience at an even larger level of organizing through the internet, and if so inclined can link directly with those who are organizing around their shared inner experience of how the world works.
These are very interesting times. Some folks believe the political process is more polarized than ever. I believe that is relative to our age and political experience. There is certainly a polarization going on between the two major parties and within the major parties. My experience goes back to the 60′s and remembering the street battles, the loss of life at Kent State, Jackson State and other places, the yelling and the left wing suggesting we abandon families and other institutions that they claimed to be dysfunctional. At least today many of the violent political responses to differences are thus far rare. I disliked the rhetoric of the left in the 60′s, and experience the rigid positions of the far right today as being little different in the goal of dominating the political system and equally distasteful.
I believe in equality. Equality really means what it says. All people should have equal access to all systems of organizing without bias of age, sex, religion, nationality, race, or any other way that we attempt to differentiate ourselves from others. I believe in justice. All citizens of the U.S. should have the right to a system that allows us access to stating our case and bringing forth the opportunity for justice when there is the possibility of a wrong that has been committed. I believe in protecting the environment. This is a no-brainer and I am often amazed by those who see the environment as only being something to take from and not protect. If we want to survive as a species, we must take all necessary steps to protect the environment. If we want to have a high quality of life, we must protect the environment.
I believe in managing our resources, both financial and environmental. Financially there is one relatively simple rule to abide by. As we are witnessing right now, it is important to pay as you go except in times of great emergency. By most economic standards, the U.S. government, while accumulating debt, kept the debt at manageable levels until the year 2000. Beginning in 2001, our nation's will to pay for war and medical programs collapsed. We allowed our government to lower taxes when they should have remained the same and eventually increased to pay for the cost of the wars our government entered. Once we paid for our defense and medical expenditures, taxes could be lowered. Now we are faced with a nation that has no choice but to dramatically reduce its defense and dramatically change how Medicare functions.
Sometime in the next 4 years, the U.S. is going to have a financial crisis. It is almost inevitable. The only thing that can postpone it without huge changes to the tax system, the way we manage issues of defense, and a revamping of our government sponsored medical systems is if the economy allows for low interest rates to continue. If interest rates start climbing, it will impact the cost of our federal debt and will most likely lead to the financial unraveling of the U.S. government and, of course, the U.S. economy. At that point in time, massive changes to our tax system and our expenditures will take place or we will have the destruction of the dollar by rampant inflation.
I also believe in what I think of as selective regulation. If you ever want to study, or work within an area that brings forth all of the psychological difficulties of trying to create or manage wealth and all of its implications, spend time working in or studying the financial sector. Having spent 40 plus years in the financial sector, I know that it needs to have the tightest regulations possible to prevent systemic risk, the outright stealing of money from customers or the legal manipulation of the system to benefit the company and not the customer. History demonstrates regularly that human beings are not capable of managing their desire to accumulate wealth no matter what the cost to the larger system.
We also need environmental regulations to prevent those who would destroy the environment in the name of quick profits and unsustainable job creation from killing the planet. But we also need freedom from unnecessary regulation that prevents job creation and stifles creativity. These are difficult areas to manage. There are those of us who put ourselves first and the health of the larger system second, or who do not care about systemic issues at all. Individuality as the primary value can lead to the collapse of the larger system.
We are learning as a species. It has really only been in the last 100 years that we have even begun to study how organizations work, how the brain works, how we manage our emotions, what our bodies need to be healthy, how we are in relationship with our family, friends, community and now our internet acquaintances. All of these issues manage to emerge in our political systems that in many ways have not changed and resist change at every turn in the road. The current polarization I believe is representative of how political systems have always worked. But now we witness candidates and political operatives who have their own personal agenda that are really built around what they want for themselves, not what is necessarily best for the future of the U.S. They are willing to do almost anything to experience the rush of serotonin that comes with winning.
I have always been intrigued by systems and how systems work. I believe in levels of system and have learned over the years there is no really easy path to walk in trying to intervene or be with others in a system of two or a system of 350 million. It has been hard enough managing my own internal system, let alone trying to influence and, at times, simply be with others while being open to influence at the same time.
Now the biggest issue in our political system and most likely for most of us in our lives is being open to influence. It is a skill. It is hard to do. It means listening. It means reading pieces that you may not be willing to read. It means trying to understand how and why a political belief, a religious belief, an emotional response,or an intellectual position has happened and exists. It means learning about and accepting the experience of others, and not cutting yourself off from the knowledge of their experience. Being open is a very difficult challenge in a world that is now presenting more and more information about new knowledge, about how things are changing and how a ripple on one side of the world can become a tsunami for the entire world.
Being open to influence also means that we are fully aware of the very human dynamic of confirmation bias. Sometimes we like to think we are open to being influenced when what we are really attempting to do is to confirm what we believe. As soon as someone of a different persuasion says something that confirms your beliefs about how wrong they are, we crawl back into our shells and say, "see, I was right all along". Confirmation bias can be our worst enemy because it allows us to demonize those who are different.
In financial decision making, confirmation bias can lead to very bad decisions as we deny something that is happening that demands a quick response. Many money managers have sat and allowed losses to expand because they believed they knew more about what was happening than the market did.
The difficulty in any relationship is that if only one person is open to influence there maybe little likelihood anything will happen if the power is equally spread among both individuals. The same is true in politics. In today's world, neither the Republicans or Democrats have the motivation to be "open to influence". It is "my way or nothing". Ultimately this can and will lead to calamity. There have been times in the recent past where compromise took place, but it has been fleeting and without lasting impact. It was always a response to a crisis where it became obvious that compromise would only happen if it allowed for eventually winning a lopsided victory.
In my life I have seen people do battle over issues of power and control who should know better. Having power and control is an illusion. It lasts for a short period of time, and then those who are willing to do what is necessary to gain control will take over. When individuals and groups refuse to listen to those who differ, the ones who feel rejected will coalesce and offer greater resistance. Historically, in the governing process in the U.S. there has been a willingness to compromise. As we all know, it is now missing for the most part in the federal government because many are really not interested in governing — they are only interested in winning.
Hopefully the two major parties of the U.S. will cease to function as two opposing football teams in the Super Bowl. Hopefully we will learn to apply what we are learning about how our brains function and how systems can maximize their health, so that we can move towards systems of dialogue, a willingness to be influenced, and a view that recognizes that the health of any individual can only exist when the larger system believes in equality, justice, and supporting the environmental health of the planet.
How does all of this get reflected in the stock market? I have written many times that fear is the driving force in how the markets respond to events. It can be fear of losing, fear not being included in a big market rally, or it can be fear our own decision making process. If government becomes more rigid, and it becomes clear that there is little if any ability to compromise, the best place for your money will be in another country. The dollar will most likely collapse only because the world will fear that the U.S. will not be able to take the steps necessary to pay for the war in Iraq (it has never been paid for), Afghanistan and the cost of Medicare. If investors outside of the U.S. believe this to be true, the psychological, and in some ways very rational response will be not to own anything that is valued by the U.S. dollar.
We live in a world economy. That is one of the fast changing realities that many in the U.S. are in denial of on both the left and right. The power and influence of the U.S. is declining every year. Those who stand up on a stage, expand their chest, and talk about the power of the U.S. are living in the past. There is nothing we can do about the loss of influence, any more than Great Britain could in 1900. We need to adjust our vision and our way of behaving on the world stage.
If nothing else, it is only a numbers game. The population of the U.S. is 3% of the world's population and the real growth over the next 50 years will be in India, China, Brazil and other nations that have discovered their own paths to participating in the world's economy. The U.S. stock market will not be a safe haven. And in a strange way, the quicker we quietly move from a center stage of one, to a shared stage of many, the less the United States will be seen as a target to beat, and instead be seen as collaborator in solving the many problems that the planet faces. Just as we need to learn how to be in dialogue, to fully listen, and to be trustworthy human beings at an individual level, we also need to be able to do the same as nations.
Carl Haefling 4/2/12
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