The Markets and Obi Wan

The markets are tumbling again this week, apparently on Tuesday’s testimony of Drs. Fauci and Redfield before the Senate Health Committee. They warned that the coronavirus is far from contained and that a too-rapid easing of social distancing and stay-at-home restrictions will likely trigger a second wave that could be even worse than the first.

The New York Times reports:

The comments appeared to rattle the markets, driving the S&P 500 down as investors weighed the potential of a second wave of infections against Mr. Trump’s promises that the economy would bounce back once stay-at-home restrictions were lifted.

Seriously? The financial markets are skittish because someone contradicted Trump’s assurances? Trump is a raging narcissist, a pathetic little man whose bombast and lies do not (as he intends) glorify him but starkly highlight the absence of his soul, the smallness of his mind, and the pettiness of his character. Since assuming office he has lied over 18,000 times. One might reasonably begin the count with his inaugural speech, where his language, tone, and “American carnage” imagery were at odds with every measure of objective reality.

The talking heads on television and cable news outlets, especially those which aspire to be information platforms for business, always come back to one word: predictability. “Markets like stability and predictability,” they say. Meaning, the financial markets don’t much care who is in office as long as policy isn’t changed on a whim and without warning. Meaning, the financial markets might be spooked for a moment when a Democrat is elected — on the presumed fear of regulation — but these brief periods of volatility soon smooth out and the markets go on as before. Because they like predictability.

The truth is, the financial sector really shouldn’t like deregulation: it’s the anything-goes, anything-can-happen, nobody-is-accountable temperament of the Wild West that roils markets; its unpredictable nature is by definition unknowable and its consequences unforeseeable, opaque to even the best crystal ball. If we learned anything from the 2008 financial sector meltdown, it was (or should have been) that deregulation begets instability, and that even the best computer models are as clear as mud when it comes to really predicting the future. It’s looking more and more like we didn’t learn that lesson, or any other; just as the 2008 crisis echoed the 1986-1995 S&L debacle. The echoes of history reach all the way back, and after each recovery we take two steps forward and then, when things stabilize, at least one deregulatory step backwards.

Trump wallows in unpredictability; he boasts about it; he sows chaos wherever he goes. It is his briar patch. Burnout is a well-known consequence of working in the White House pressure cooker but Trump’s administration churns personnel at an alarming rate. (Insert joke here about the ten-day period of employment known as a Scaramucci. Oh, you were there a month? Three whole Scaramuccis?)

Financial markets aren’t the only institutions that appreciate stability. Diplomacy might be an art, but it requires some level of predictable behavior and rationality: it’s difficult to negotiate if you have absolutely no idea how the person across the table will respond. (Trump believes this is his strength, that being unpredictable is the art of the deal. To the rest of us it’s a sign of serious mental illness and instability.)

The markets like stability; they want order; they crave predictability. Trump is a known, compulsive, congenital liar whose only objective is to stroke his self-image. To that end he will say anything. With his reelection prospects (already slim, as I discuss here) in tatters he makes assurances nobody should believe about the pandemic being past while Dr. Fauci, the Director of the National Institute of Allergy and Infectious Diseases, tells the Senate and the nation that the virus will be with us for some time yet. Indeed he has been telling us all along that a resurgence in the fall is likely.

All of which brings me, finally, to Obi Wan Kenobi, whose Jedi wisdom might be the most appropriate answer to anyone taking action of any kind on the strength of Trump’s promises and reassurances. Who is more foolish, the fool or the fool who follows him? And if you’re invested in those markets: caveat emptor.

Mr. Herbert Spencer’s Social Statics

Though the phrase survival of the fittest is often used to convey the gist of Darwin’s theory of natural selection and evolution, it was Herbert Spencer who first coined the phrase; and by it he intended the kind of winner-take-all mentality that seems embodied in today’s GOP: in a word, social Darwinism.

In the context of civil society the idea that the strong should clamber over the weak is repugnant. It is not even a sound economic and business principle, for if competition ensures innovation and lower prices (both good for society), then in any given market — let us say, for example, for widgets — the logical and eventual outcome of unfettered cutthroat competition will be monopoly or, at best, a duopoly.  Competition of the kind pro-business politicians usually say they mean cannot exist without strong antitrust enforcement; it should be noted, then, that these same politicians usually want to weaken the antitrust laws.

But in a civil — and civilized — society, the notion that the fittest will survive and the weaker elements of society will wither, fall away, and die, is as morally repellent as it is antithetical to the foundational belief that all men are created equal.  “The Fourteenth Amendment does not enact Mr. Herbert Spencer’s Social Statics,” wrote Justice Holmes, dissenting in Lochner v. New York, 198 U.S. 45 (1905), a case decided upon the — ahem — libertarian notion, resurgent in our era, that government has no authority to interfere in any economic aspect of the individual citizen’s life.

It is settled by various decisions of this court that state constitutions and state laws may regulate life in many ways which we, as legislators, might think as injudicious, or, if you like, as tyrannical, as this, and which, equally with this, interfere with the liberty to contract…. The liberty of the citizen to do as he likes so long as he does not interfere with the liberty of others to do the same, which has been a shibboleth for some well known writers, is interfered with by school laws, by the Post Office, by every state or municipal institution which takes his money for purposes thought desirable, whether he likes it or not.

198 U.S. at 75

More recently it was argued that government cannot compel the purchase of health insurance, that individuals should be permitted to decide how to spend each of their hard-earned dollars. Freedom! Freedom of contract, in Lochner; or the “freedom” to self-insure against catastrophic illness.

Very well; we will grant you the right to refuse health insurance if you will permit us to refuse you entrance to the Emergency Room when your appendix bursts, or when you suffer a heart attack, or when your carelessness in the kitchen threatens a digit. After all, you took the risk and assumed that you would not need health insurance; now you want the rest of us to pay for your ER visit, your cardiologist, your orthopedic surgery. In fact you assumed no risk at all, betting that the rest of us would backstop your bad decision. This is freedom defined through a looking-glass and exercised at the expense of others: exactly what laws and government are intended to prevent.

If you find this line of argument — you decided to roll the dice so man up and take your lumps — offensive: you should. But it is not the inverse of the libertarian freedom-of-contract, freedom-to-self-insure argument; it is the identical logic applied and imposed from the other direction.

The Fourteenth Amendment does not enact Mr. Herbert Spencer’s Social Statics, and the Constitution and the laws and social structures that rest on it do not constitute a suicide pact. So, please, Michigan militiamen: your desire to “liberate” your state from “tyrannical” social-distancing orders is an unconstitutional affront to your neighbors’ desire, their right, to continue living without the unnecessary threat of disease and death that your liberation would impose on them.

Empathy

Decades ago Richard Nixon’s Southern Strategy kicked off a cold civil war; Ronald Reagan kept it going with his apocryphal story of a Welfare Queen, George HW Bush had Willie Horton, and George W Bush had the duplicitous Swift Boat Veterans for Truth. In the 1990’s Newt Gingrich weaponized “traditional values” in congressional elections and the culture wars, begun thirty years earlier (by Goldwater acolyte Phyllis Schlafly) were fully joined.

Trump isn’t the disease. He’s a symptom. He is the apotheosis of a cynical process begun by Schlafly and Roger Ailes, continuing in a straight line through Gingrich and Palin and on to Jim Jordan, whose feverish House speechifying would be hilariously funny were it not so scary: if he believes even half of what he says he is simply incapable of coherent thought and critical analysis; if he doesn’t then he is a proven liar.

So if Trump and all these others are symptoms, what is the disease? Why is our congress deadlocked, our legislative pipeline gridlocked? Why is our political discourse coarse? If politics is supposed to be the art of the possible, why is even the smallest compromise seemingly impossible? It comes down to one single word: empathy. There has long been an empathy gap in American politics: Republicans have none, Democrats a surfeit. (This might be a good time to point out the misleading way many polls are reported: breaking results down by political affiliation might seem useful but it has the effect of elevating the Republican Party to a status it does not enjoy. Independents and Democrats each outnumber registered Republicans.)

Politics is the art of the possible: compromise. But compromise is impossible in an environment where one party routinely engages in the most toxic rhetorical excess, demonizing policy differences and branding them as an Enemy who is seeking no less than the destruction of the nation. Compromise requires empathy, and a willingness to view the world — just for an instant —through someone else’s eyes. Before you judge a man, it is said, you should walk a mile in his moccasins.

The signal event in the transformation — or disintegration — of the Republican Party was the rise of Newt Gingrich to Speaker in 1995. What began as an election device to demonize the Other became, in Gingrich’s hands, a weapon of legislative havoc, a wrecking ball aimed not just at New Deal and Great Society programs but at the people who would preserve them and their legacy. Empathy is rhetorically conflated with sympathy, and both are denigrated as signs of weakness. That demonization is, ironically, itself a sign of weakness, the kind of professed certainty and absolutism that betrays fanaticism. (“The fanatic,” wrote John LeCarré, “is always concealing a secret doubt.”)

The transformation of the GOP into the POT is complete: there are no scruples (only “winning” is important), there is no objective truth (only “alternative facts” are allowed), and there is no actual leadership (only a bloviating void determined to airbrush failure after failure). Perhaps, in a few years, a new center-right party will emerge to honestly debate the things that must be debated. Everybody wants to win; but winning doesn’t mean somebody has to lose. Compromise used to be possible; it will be possible again when empathy is properly embraced as a political tool and a sign of strength.

The Spinning Plates: A Fable

There once was a man who lied incessantly but who suffered no consequence for it: a modern-day Pinocchio whose nose did not grow when he lied, nor did any other calamity befall him. He simply lied, day in and day out, and if anybody called him a liar he flew into a rage and threatened to sue for defamation.

“But sir,” said one courtier (for although he was just a small appliance salesman he fancied himself a king), “But sir, truth is an absolute defense.” But the man, not being terribly clever, did not understand and so became even angrier, and he glared at the poor fellow until he — poor soul — could take it no more and slumped where he stood while his employer stomped back to his make-believe throne.

The man’s lies had made him very rich, though not as rich as he always said he was; and his lies and his make-believe wealth had made him very famous, too. But this did not satisfy him, and so he looked for ways to increase his fame. The more famous he became, the less satisfied he was, and the more he lied. It was not enough for him to be on television with a large audience. He began to demand from his producers larger blocks of time, and more money to pay him for the valuable time he spent on television. And to extract even more payment he would lie about the size of his audience, because he thought the producers were fools who did not know how to read a Nielsen report or analyze a photograph.

Now, there came a time when something strange happened to King Wannabe — that was not his name, and he was not a king, but we have to call him something. It isn’t clear how it happened, or why, but one day he told a lie that was simply too much for the Universe to contain. No sooner had the lie left his mouth than *P O P* there was a spinning plate above his head. King Wannabe had a stick in his hand and had no choice but to keep twirling the stick so the plate would not come crashing down on his head. 

“What is that, sir?” asked a courtier, for he had never seen King Wannabe do much of anything except sulk and watch television. Certainly nothing that required any energy, or eye-hand coordination.

“What is what? Oh, this? This is for you to hold for me.” And with that he freed himself of the offensive object. Except that no sooner had the words left his lips than *P O P* another plate appeared above his head. “Oh, yes,” said King Wannabe. “I remember now. I ordered plates for everyone.” *P O P* *P O P* *P O P* *P O P* and the plates appeared in his small hand almost sooner than he could hand them off.

It happened at about this same time that King Wannabe found himself, for the first time, employed by someone else. He had never before worked for anyone except his father, or himself. But suddenly — because he had lied about his own competence — he found himself at the head of a Very Large Corporation with more employees and departments and products and just moving corporate parts than King Wannabe had ever known existed.

“That’s all right,” he said. “It can’t be that difficult. I’m so much smarter and better than everyone else.” Well, you can guess what happened. His hands were full again, and he had to yell for his lieutenants to come and hold these damned plates and you’d better not let a single one drop. For it turned out that the Very Large Corporation was itself in the plate-spinning business and it took a lot of expertise to keep them all in the air at once. In the entire history of its plate-spinning the Very Large Corporation had always kept the plates in the air, and had always had very talented plate-spinners. Plate-spinning was an honorable profession, and those who worked for the Very Large Corporation were held in high esteem. Men and women of great talent, in many fields of expertise, came and went at the highest management levels and their efforts helped the Very Large Corporation grow to be envied and even feared in some parts of the world.

But King Wannabe knew that he did not need the talents of talented people to spin his plates for him. He could do what he had always done — he could hand them to his underlings. After all, everyone who worked for the Very Large Corporation worked for him, and there were many thousands of them. Even if he lied all day every day for several years, generating plate after plate after plate, he would never run out of underlings who would keep his plates spinning. This soon became a problem when people who had worked in various departments — making plates, testing plates, glazing plates, cleaning plates, and, yes, spinning plates — began to leave, because King Wannabe was creating left-handed plates with all of his lies, and the Very Large Corporation dealt only in the finest right-handed plates.

“It’s no problem!” he said, and of course as he did another plate popped into existence. “We don’t need those people. We can hire them back whenever we need them. Everyone wants to work here.” Pop! POP! POP! King Wannabe was running out of underlings to hand his plates to, and he was running out of hands and energy to keep them spinning. Somehow, though, he did. Nobody was sure how and they were drawn to the hours upon hours he spent on television, doing nothing but lying plates into existence and keeping them all spinning above his head.

People are drawn to disaster scenes like a train wreck or a car crash. It isn’t that they want harm to befall anyone; it is simply a morbid human compulsion. More than that there is a certain fascination in experiencing the slowing of time, everything — life itself — suddenly in slow motion in the moments before the inevitable calamity.

And so it was with King Wannabe. Everyone watched. Everyone held their breath. There was nothing else they could do, and they did not understand how this small man had kept so many left-handed plates spinning, for so long, without any of them falling on his head.

Until, one day, they did. But there were so many plates by this time that the crash buried not only King Wannabe but his remaining underlings — few, and not nearly as competent as the right-handed plate-spinners they had replaced. The force of the crash brought other plates, right-handed plates being kept aloft by the remaining professionals, crashing down as well. In just a few seconds the Very Large Corporation was no more, buried under the broken crockery of an unpleasant and needy man too small and incompetent to hold a real job, who had somehow lied his way into this one.