Archive for March, 2007

I was perusing the Times this morning and came across this op-ed piece that I found quite fascinating. It touches on a lot of the themes and issues we’ve discussed here on Urbanagora about the supposed strength of the American economy and our “low” unemployment rate. It’s a Times Select article, but if you’re a college student you get access to Times Select for free if you give them your college email address. Enjoy

Currently the most emailed story on the BBC website is entitled, “Irish EU’s ‘worst binge-drinkers.’” This story raised the interesting question in my mind of whether stereotypes exist because they are true. Alternatively, do stereotypes exist that are not true? Obviously no stereotype describes every member of a class, but that’s not the question and I don’t find that line of argumentation to be a persuasive reason not to stereotype people. I find it more persuasive that stereotypes, which are often negative, reinforce and degrade the members of the object class and thereby increase the likelihood of perpetuating the contents of thestereotype.

For those of you who have parents with retirement portfolios, or if you have somehow managed to invest yourself, you have probably been watching the stock market with more than a little trepidation and confusion. China causes a 400 point tumble? A subpar lender takes a hit, and somehow that affects the Dow? Why are the big names (ahem, Greenspan) so worried about an economy downturn? What does this mean for my five shares of Walgreen’s?

In a perfect world, adequately valuing a share of stock requires the balancing of several factors, ranging from the micro-economic to the macro-economic. But its not a perfect world, and investors don’t play their cards (the securities), they play the table (the market). What that means for the market is more than a little troubling.

One of my favorite lectures I had in undergrad dealt with human choice and two of my favorite bars in St. Louis. The first bar, Cicero’s, was famous for its numerous beers; over 40 on tap, with an additional 60-70 bottled brands. The second bar, Blueberry Hill, was across the street, and was famous for their ambiance; they only had about 10 to 15 brands of beer, most of which were your standard brands, with one or two novelties.

Now imagine you are at Cicero’s, and you are at the bar. You are interested in trying a new beer, so you are looking up at the menu. The bar is packed, and there is a long line. Right when you get to the bar, you luck out and a bartender asks what you want. You do not have the time to analyze all your choices; you are overwhelmed. So, based on the time constraints and choices, you probably take a well-known brand you are comfortable with, and don’t achieve your goal. You get a good beer, but you don’t the “best beer,” so to speak.

Now you go to Blueberry Hill, with the same circumstances. The bartender asks you what you want, but since there are significantly fewer choices, you can better analyze, and you take one of the novelties. You sip, and are satisfied having found the best beer.

Now, the professor was not advocating that choices should be curtailed; he was advocating that humans do better with fewer choices and less information when there is a significant time restraint.

I think this is what is happening in the modern stock market. With the advent of the internet and increased disclosure requirements, people have to act incredibly quickly and with authority if they have any hope to make any money, via informational arbitrage. But, due to the time restraints, they can only look at a few indicators to determine how to place their bet. Generally, investors look at one number, at least with regards to quarterlies and annuals, and that is profit, generally per share. If a stock is even a penny off the estimates, it can take a huge hit.

So now, individuals and institutional investors are highly focused on quarterly and annual profits, but not on corporate governance or product development unless either of these functions reach critical mass. Because of this phenomena, we can have destabilized markets when a single or a few major actors fail at governance or development (see Enron).

But to me, the more significant threat in relying on quarterly or annual profits is the reliance on sales growth. The United States is consumer driven, specifically the private consumer. Currently, the private consumer spends more than they make every year, meaning they have negative savings and are relying on debt. Now I don’t want to say debt is always bad; if you have debt for education or for a house, its understandable. However, if annual net savings consistently remains negative, at some point, national private consumption must fall or drop, if for no other reason then the average joe has maxed out his/her credit and has limited incoming cash.

When private consumption falls, absent any significant technological or corporate development which will add value to the national economy, the stock market will fall, and fall hard. So will the dollar, as foreign investors will bail and switch their currencies back to euros and yen.

There are two ways to avoid this, neither of which is easy. You either (a) convince the public to stop spending in a way greater than their means, so that investors take a hit and are compelled to evaluate stocks on a more holistic method or (b) we need another technological jump, comparable to the internet, to buy us more time. I prefer (a), if we can swing it, but will settle for (b). Either way, something has to change to substantiate the current value of American stocks.

Folks that have listened to me speak are certainly aware that I’m a proponent of what is termed SMIILE–Space Migration, Intelligence Increase and Life Extension. Ever since the death of Robert Anton Wilson, I’ve been meaning to tell some stories about him, Doctor Leary, the Illuminatus Trilogy and the High Weirdness Weekend(tm). If you don’t know who Timothy Leary is, I suggest you follow this link first.

Let me start out by talking about my buddy, Scout. When I arrived at the University of Illinois in 1970, I felt intimidated by the older hippies there. Even though most of them were three years older or less than I was, they had lived through massive changes within the Twin Cities–the start of the Community Council (the alternative city government), the establishment of West Main Street in Urbana as the Hippy Ghetto, the burning of the North End and the campus demonstrations and riots. Being a poor farm boy from a graduating class of 28, it was hard to get the cow manure scraped off of my shoes.

Scout was my native guide. When he drew himself up to his full height, he nearly reached 5 foot 2 inches and his weight managed to hit 93 pounds if he had just eaten and not shot any speed for a day or two. This was before the radical hippies had long hair in the Midwest, so he had a ducktail with a goatee and handlebar mustache. To tell the truth, he looked like the Mayor of Munchkinland would, had the part been played by Satan.

Scout taught me how to tell stories, how to flirt with a woman and that being from a small town wasn’t necessarily a handicap, since we had a tendency to speak plainly. He introduced me to the rest of the hippies and made sure that I was as comfortable as possible.

He had a great story, though, about Doctor Tim. It was the autumn of one of the years right before I got to school. Scout was wandering through the basement of the Illini Union and noticed a tall man in a white robe with a flower-chain around his neck who was wearing sandals in an Illinois November. Scout walked up to him and said, “Doctor Leary, I presume?”

Scout would say, “He dug it!” and go on talking about the wise sage and his philosophies. At the time, Leary had mysteriously vanished from prison and the Weather Underground was hiding him somewhere in the country. Every week, there would be a “Leary Sighting” somewhere or another. Finally, the Doctor surfaced in Switzerland.

Fast forward now to the early 1980s. Leary had been recaptured and spent a few more years in prison. I had lost track of what was going on with him, since I was drinking about as much as he was at the time. Imagine my surprise when I found a flyer announcing a debate by him and G. Gordon Liddy, (the man who had arrested him while Liddy was working for the State’s Attorney’s office in NY state.) They were going to be at the Auditorium in the next week, so a bunch of us got together and got there very early to get good seats.

It was a strange, strange debate. Liddy took the side of the traditionalist, all-American believer in patriotism and manifest destiny. Leary didn’t really look at the audience as much as look through them at a cosmic target somewhere on the other side of Venus. He spoke of trans-humanity resulting from the unlocking of higher states of conciousness and how they would allow us to colonize the galaxy. Liddy kept looking at him with raised eyebrows and Leary would smile knowingly across the intervening space.

Afterwards, my friends and I decided to head for Coslow’s, which was a campus bar that was a socialist/intellectual hangout. (They also had nachos that people had crawled six blocks after a hard night of drinking to obtain.) We had reached Daniels Street, the home of the Frat Bar Extraordinaire, Kam’s, when we noticed a very lost-looking Guru of Psychedelia talking to a not-so-bright, but extremely beefy bouncer.

“Excuse us, Doctor Leary?”

“Yes?”

“What seems to be the problem here?”

“Well , these nice young men from a fraternity told me that this would be a good place for me to get a drink, but the attendant here at the door doesn’t want to let me in.”

“Hey, we know a much better place a block over, come on….”

So, we trooped over to Coslow’s where folks like Railroad Terry, his sister Jan and Rasta Wilson were already sitting at this bar’s version of the Group W Bench. The incoming four of us, including Tim, sat down and, of course, ordered nachos.

What followed was a couple of the strangest two hours of my life. We all talked about big things, future things, evolutionary things. The Good Doctor dominated the conversation, of course. He explained that human beings were a product of their brain’s wiring, which was a result of both their genetics and environment. This wiring enabled or retarded their development in life depending on how it agreed with what was necessary to get by in life. This wasn’t all, though. It was possible, using various psycho-active substances, meditation or ceremonial magic to rewire parts of the brain–the programming could be altered, just as a computer’s programs could be altered by installing new instructions. At closing time, we parted. Some of us were shaking our heads and the rest were very far away, envisioning a world where the evolved lived like some kind of secret superheroes.

Another nine years passed. I realized that I was not utilizing my full potential, so I found a job working on a project investigating the first few microseconds of the universe’s existence at Fermilab. The conversation with Leary had demonstrated to me that we could rise above our circumstances and that each one of us had the potential to contribute greatness to humanity.

During Labor Day weekend of 1991, kitten and I attended the World Science-Fiction Convention in Chicago. It was an amazing weekend, since during the period beginning on Thursday and ending on the following Monday, the following events were simultaneously taking place in Chicago:

The World SF Convention
The NORML Legalize Marijuana Activist Convention
The Chicago Jazz Festival
The opening of the Battletech Center, the first VR video arcade
The Libertarian Party Presidential Nominating Convention
The Wilson-Leary Virtual Reality Roadshow

I was fortunate enough to be able to attend the greatest panel ever in the history of weird–a full two hours featuring Tim Leary, Robert Anton Wilson, Robert Shea, and Philip Jose Farmer. During the panel, the members spoke on the nature of reality, the paranoid truths of the Illuminatus Trilogy, and “where do we go from here?” for humanity. Wilson threw in his pet theory that, since English didn’t have a number-for-letter transposition possible, anagrams were the way in which to do English gematria.

Following the discussion, I wandered down the street to where Leary and Wilson had their show set up. It had a bank of DEC computers and heavy air-conditioning. They had a helmet and glove combination. I sat in a chair and they fitted me with the helmet, which covered my entire field of vision, (even the peripheral) and slid the glove onto my hand.

The screen turned on on the inside and it was no big deal. It was a badly-depicted version of Seattle, nothing to see here…..

And then I turned my head, the view turned with me and my brain lurched (as did my stomach) when I suddenly was in the middle of a badly-depicted reality. Seattle was there, around me, moving. It was the strangest thing that I had ever seen. Then, Tim said, “Point the finger of the glove up.” And I did. And I began flying. I could control my movements with the glove. I soared over the skyline, did laps around the Space Needle and dive-bombed some orcas in the middle of the Sound. I did this for what seemed like hours, yet only took the fifteen minutes for which I had paid.

When I finished, I looked at them and said, “How long? How long before this is everywhere?” Tim chuckled and RAW said, “Well, my guess is that it’ll be used first for pornography and recreation long before it ever makes it to use in day-to-day life. That’s all right, when humanity needs it, it’ll be ready.”

They’re both gone now, but every time I walk down the road in TES:Oblivion or fly over Paragon City on my way to a meeting of the Global Heroics Supergroup in City of Heroes I think about them and raise a silent toast. We’re not there yet, perhaps a generation more, but we’re going somewhere else. Sometimes I worry I’ll end up like Moses on the wrong side of the Jordan forever in the end, but other times I know that I’ve been at least afforded a glimpse of the Promised Land.

Tom

(bumped up above the previous post so it doesn’t get hidden)

My DI column is up this week: “The Exaltation of Ourselves: How We Could Be the Generation that Ruins Everything.”