I wrote last time about the concept that Goldman is employing:  “all that is not illegal is permissible”.

When they say they did nothing wrong, they mean they did nothing illegal.

If some judge finds that what they did IS illegal, they will find another judge.  If all judges find what they did was illegal, they will make new laws.  If that doesn’t work, they will simply re-organize under some other legal structure and continue to do what they wanted in the first place.

So……how do you win a game?

I assure you it is not by being the best at something.  Hard work is a VERY difficult way to win.  It is a high effort strategy that, in real life, doesn’t often work.

Why can’t you win by being the best and working hard?

Because the rules change (and there is always some fool out there willing to work harder).

In sports, the rules stay mostly the same; the game is defined.  We enjoy the fairness; we scream when the rules (which are limited since the game is well-defined) are broken.

In life, the rules can change; the game can change.  There is no “score”, no tidy buzzer at the end that tells you when its done.  Those who win are those who make the rules.

Goldman can use its influence, its special knowledge, and its money….to make the rules or change them if needed.  They don’t break the law because they make the law.

When I was in business school I was taught attractive industries are those with high barriers to entry.

Here is how you make your industry attractive:   bend the rules in your favor.

Capitalism in the United States is not about competition and free markets.  It is about manipulating the rules of the game in your favor.  That is the easiest way to win any game.  It doesn’t require nearly as much hard work and is a much better guarantee of success.

Think about it:  How can you win long term if there is a level playing field?  The best strategy is to un-level the playing field….not to work harder.  If your long term strategy is working harder, you won’t be on top long…there is always some idiot out there willing to work harder.  If your long term strategy is hard work, you will kill yourself doing it.

I think Goldman’s strategy is simply how capitalism in the US works:  its a plutocracy.  The rich are bending the rules to make sure they stay rich.  The rich are largely smart, and we are busy working hard, so we don’t realize the bait and switch.

I remember the story of Mickey Mouse from business school.  Whenever the early Mickey Mouse movies get close to lapsing their copyright and entering the public domain, Disney simply gets the law changed to extend the copyright.

The pharmaceutical industry peddles treatments that work better than placebos….the treatments don’t have to work better than sunshine, getting friends, eating healthy, taking vitamins, exercising, etc….and often they don’t, but they can’t sell or patent exercise.

They even invent new diseases to match “cures” they have found (had you heard of erectile dysfunction before Viagra?).   You rig the game.  If you can “cure” erectile dysfunction, then you need to make it a disease.  Shyness is a disease now too (social anxiety disorder).

In short, the patent system CREATES the current pharma industry.  The industry manipulates those rules to protect their profits; they don’t want free markets.  Its much more profitable to define diseases or massage the drug approval process regulations.

Also, no business wants free markets……they want free markets when it suits them…and then closed markets when it doesn’t. The patent system creates a closed market; that’s good for copyright holders.

Multi-national corporations (who are also quite well-connected and resourced) want free trade…because it allows them to move goods and labor unfettered.  The only group you can bet for sure will benefit from that arrangement…is the multi-nationals themselves.

Who do you think writes these laws?  The industry almost HAS to write them; because they are the only ones with enough expertise to do so.  Would you want some blowhard politician writing laws about an industry they have never even worked in?  The industry groups draft the laws and try to get the politicians to sponsor them.

Banking is the ultimate special privilege industry:  It gets to create money…and he who creates the money, makes the rules.

If you’re looking for a lesson in my rambling here it is this:   The winners make rules.  Everyone else whines about working hard.

If you beat me 100 to 2 in basketball and I re-define winning as having the lowest score….then I win.  It doesn’t matter how good you are.

Goldman contends they have done nothing but sell what other sophisticated investors wanted to buy.  Did they do anything “wrong”?

Hmm…….

I want to draw a distinction between ethics and morals:

Ethics is a set of rules, often set by a group, that defines right and wrong.  Morals are our own personal definition of right and wrong.  The two will hopefully be similar, but not always the same.

Goldman’s claim is that they have broken no rules:

They sold things others wanted to buy.

They made the best profit they could.

They did not break the law.

If you add a bit of personal responsibility (morality) to those claims though, the statements change:

They sold things others wanted to buy - - - EVEN though it was complete crap.

They made the best profit they could - - - EVEN when it came at the taxpayers expense or through special connections.

They did not break the law - - - EVEN though they perverted the intention of the law.

Goldman is basically claiming that if they didn’t break any rules, then they didn’t do anything wrong.

When we all know that is complete crap; its a lawyer’s excuse…finding some way of weaseling out of responsibility when it is plain to everyone they’re a bunch of crooks.

Not that I’m necessarily singling out Goldman.  The “profit motive” is a ruthless amoral code; it is the economic phrasing for “the end justifies the means”.

For Goldman, and many other companies, all that is not illegal is permissible.  The law is something to avoid and manipulate.  The spirit of the law is irrelevant.

So, to wrap up…Yes, Goldman has done something wrong….not breaking rules is not the same thing as doing what is right.

I actually wanted to write something about economics as I read this great article today about industries that don’t see much productivity improvement over time and how that affects us currently.  Check it out.

Instead I will write about married life.  I have been married a little over a month; she lived with me for 3 or 4 months before we got married.

So how is it? Similar to how it was before, except a little better…that’s my answer.

People say shit changes after you get married.  I’m sure it does.  I change even if everything else stays the same, and it never does.  I haven’t been married long, so I guess you can check back in a few years and see if I still think its the “same but better”.

The main advantage is Companionship:  I’m a loner by nature, and can’t say I ever much felt lonely when I was un-married.  HOWEVER, sometimes you don’t notice something until its gone.  If I enjoy the companionship now, that must mean in some sense I was missing it before, even if I didn’t know it.

The main disadvantage is always having to play well with others (ie. your wife).  This can also be translated to:  lack of alone time.  If I am in a bad mood I inevitably take it out on her…not actively, just by way of the fact that I am ill and she happens to be there.  In turn, she is sometimes ill and, due to proximity, she takes it out on me.  So….in marriage you will always increase the amount of time you have to deal with ill moods by a large amount…double.  You deal with yours (1X), and you deal with hers (2X).  That’s unavoidable.  (She is getting the bum deal here.  I’m ill a lot.  She isn’t.)

There are also a couple of  neutrals to marriage:

Anxiety:

This is like the companionship thing…I never noticed the anxiety until the anxiety was gone.  When you are single you are always looking; you just don’t notice it.  It creates a mild, constant anxiety.  You need to be a little better at your job, have a little better car, be a little funnier than you are….all in service of the fact that you may meet a girl/woman whose standards you have to live up to.  You need to (and want to) be ready for this awesome chick who you are going to marry.  That’s stressful (even though I never realized it).

On the flip side, you have a new stress:  making sure you and your wife (and possibly kids) don’t end up living in the streets.  That’s self-explanatory, and stressful.

Help:

With two people, there should always be someone around to help out….so you shouldn’t have to do as much, and if you do you can always get help.  That’s crap.  Its true that you have help….but you also have MUCH more to do (marriage creates more work than it gets rid of).  Good thing someone else is around….I need the help.

In the end, I think marriage makes you a better friend, family member, employee….a better person.  You SHOULD have to deal with someone else all the time; otherwise you are too self-absorbed.

Basic assumptions are rarely questioned.  One has to be pretty astute to even understand what the basic assumptions behind something are.  If you don’t know; you can’t question.  Even if you do, you have to be inclined to care.

I’d like to question two basic assumptions today:

Assumption 1: Kids should go to college:

I disagree.  Some kids should go to college (by college, I mean a 4 year degree).  For most it is a gigantic waste of time/money and they should stop being misled into attempting it.

So which kids should go?  Speaking practically, the ones that should go are the ones that are currently getting something out of it, as in the ones, at a minimum, who are graduating (never mind whether the degree is useful).

If you are in the bottom half of your high school class…don’t go to college.  About two thirds of you never graduate.   70% of high school graduates now go to college.  Those numbers don’t add up.  Why go?  It leaves you in debt, and out of the workforce (a year of good work experience is worth far more than 1 year of random classes).  It is a waste of time.

With our battery of endless aptitude tests and 12 years of high school grades, we know with a high degree of accuracy which students will do well in college.  Quit misleading the others into thinking it is worth their time to go.  It is dishonest if high school kids aren’t told that college isn’t always a good idea.  It is simply avoiding reality.

That being said, people should always be able to bet on themselves.  If you want to go to college anyway, and beat the odds….please do.  Life is full of people beating the odds; however, make no mistake:   the reason we like those stories so much, and why they stick in our mind, is because they are exceptional, because they are out of the ordinary.  We all want to believe we can beat the odds; it makes us feel good.

However…..We can’t all be above average.  That is a fact.  We are not all future managers, CEOs, sports stars, rappers, singers, etc.  Those at the top of their profession are compulsively dedicated and often very talented.  Most of us are just not willing to work that hard and often don’t have the natural talent; accept it.  Also, from a statistical point of view, we just can’t all be at the top of the pyramid.  It is numerically impossible.

I’m not going to post here (lack of time) on what we do about it…the fact that inequality of all kinds simply exists, and it must exist, whether it is politically correct to say so.  I’ll simply say that if you want to be above average, you need to be aware enough of your position to realize that you can only be so because others are below average (you depend on them).  Be thankful they exist, and treat them well; tomorrow you may be one of them.

UPDATE 6/10/2010:  Someone else (NY Times) had the same idea I did.

Assumption 2:  Economic growth is good:

On average the US economy grows about 3% a year.  That seems good, right?

Yeah, its good in many ways.  Would 6% growth be better?  Sure.

No one really questions whether growth is good.  “A rising tide lifts all boats” right?  Uh…maybe.  Or a rising tide sinks those without boats.

Anyway, I’m not even going to broach that subject here.  Let’s take a step back…even further…way further…to the concept of 3% growth itself.  Is it even possible to grow at 3% forever?

No.

People are quite poor at understanding exponential growth.  We tend to conceptualize growth as linear; its a good rule of thumb that applies in most situations.

Does 3% growth look like this?

No.  That’s linear.

Here is 3% growth in a series of 150.  Think of it as a series of 150 years (but it is simply units, could be days, or miles, or whatever).

That’s a neat upward curve. Perhaps we think it would be good to grow like that?  The fact is that we do grow like that for the most part.

Here is 3% growth in a series of 350.

Here is where we start to see the issue.  It plods along at almost nothing for majority of the series and then towards the very end, it shoots off the chart (no pun intended).

That’s not sustainable.  All systems like this eventually collapse. A good analogy is bacterial growth.  It looks like this as well, and then, when it is about to shoot off the chart and grow out of the petri dish…it exhausts its food in a fit of growth, and the colony dies….quite quickly.

Growth requires input….we are growing something (the economy), and we need raw materials to make that happen.  Those raw materials MUST eventually deplete, as does the food in the petri dish.

Even if you give the bacteria more food or a bigger petri dish, it doesn’t matter.  The growth curve will eventually catch you.  You won’t be able to shovel in inputs faster than the growth.

I’m not being all environmental. I’m saying it is simply impossible, under any set of circumstances, to maintain 3% growth indefinitely.  We need to accept that reality and plan for it.

Speaking of reality:  The concept isn’t “Save the Planet”.  Trust me; the planet isn’t going anywhere.  We’re not even trying to save life on this planet.  Life is pretty resilient; it survives.  “Save the Planet for Humans” is a more accurate.  I guess that doesn’t fit as well on a bumper sticker?

Sometimes I think so.  It can’t be true though.  IQs are going up (Flynn Effect).  I do think people are uniformed, but certainly people have always been uninformed.  With the Internet providing more information that we can ever possibly wade though, and college attendance at an all time high, there is no excuse for being uniformed…moreso I believe that since all that information wasn’t even available in the past that people are actually more informed now that ever.

So…people are smarter and more informed than ever.  Why are they such idiots?

Hmm….well, maybe they are informed, but informed of the wrong information (which makes them seem dumb)?  That is a hard hypothesis for me to get my head around since if I were also misinformed then me commenting on other people’s misinformedness would be making the problem worse.

I know people are misinformed (including myself); however I know that; so not being an idiot might simply be knowing that you don’t know.  A healthy skepticism (even of yourself) is not exactly inspiring, but it is a useful bullshit detector.

I think people are apathetic.  They may be relatively well informed and intelligent; they just don’t give a fuck.  Republicans or Democrats?  Why does it matter since they both pander, lie, and misrepresent?  Fox or MSNBC?  Doesn’t matter.  They both spin. 

You just give up maybe.  After all, you still have to get out of bed in the morning…focus on what you can control.

Anyway, my bullshit detector is stuck permanently on, so here you go:

Health Care:

Lots of debate these days about this. 

Spin: “National Health Insurance will ration my care.  There will be long lines.  I’ll die on a government list waiting for my surgery.” 

Fact:  Yes.  Your health care will be rationed.  HOWEVER, IT IS ALREADY RATIONED….by money.  The rationing goes like this:  If you have money, you get care.  If you don’t have money, you don’t die on a government list waiting for treatment, you die at home unable to even see a doctor.

Why must health care be rationed?  You can’t provide unlimited use of something and expect that it won’t eventually consume all resources.  Everything is rationed in some way; most things are rationed by money (others by law, etc).

So does that mean you will not receive some services that you want, or if you do, then you may have to wait?  Yes.  That is what it means; however, bear in mind that this is ALREADY the case.  Public health care just changes the means of rationing.  Besides, as shown below with life expectancy, rationing doesn’t seem to change health outcomes.

Why not let money continue to ration?  I guess that is fine, except that our current course is unsustainable (costs too much), and what happens when you don’t have the money/lose your insurance (Medical bills prompt more than 60 percent of U.S. bankruptcies.)?  Are you willing to risk that?  US insurance is tied to jobs, and people change jobs a lot more than they used to…you will get caught in between at some point and find out that private health insurance is unaffordable (the same private insurance industry that says there is no need for reform). 

Spin:  We have the best health care in the world.

Fact:  People with money have the best health care money can buy.   On average we do not have the best health care in the world. 

In fact, we are 50th in the world in life expectancy.  Most/All the countries in front of us have some sort of government supported health care and so must also ration care in some form.  Despite that (or perhaps because of it), they are in better health than us.  Additionally, Cuba is 55th…with a life expectancy pretty much the same as ours (78 years).

Why is life expectancy an important metric?  Easy:  Shouldn’t all health care improve health?  Isn’t the ultimate reason for being healthy to stay alive?  You can argue about quality; however, quantity (life expectancy) is a good overall measure, and we are losing to other countries with socialized medicine.

Spin:  The Free Market will save us.  The answer to all economic questions is capitalism.

Fact:  I can’t even begin to tell you how fed up I am with the free market religion. 

Let’s talk about the free market incentives for the health care gatekeepers:  Insurance companies.  Ultimately, whether you get health care or not (at least in the US) is about whether or not you have insurance.  Try paying cash.  You’ll go bankrupt.  (The reason for this is beyond the scope of this article.)

Here is how the free market is supposed to work (I’m self-selecting an example that shows free market incentives in a positive light):  Mitsushiba (or any company) makes a TV.  It is the best TV, but it is expensive.  You don’t even really need a TV though; it is elective.  You can do without.  Still, Mitsushita is proud to offer an awesome TV at a good price, and they make a profit.  They make the profit by selling you what you want (the ability to watch TV) for a price you are willing to accept (after all, there are other TVs and in the end you didn’t HAVE to buy a TV at all). 

Now let’s examine the incentives of the health insurance industry:  HealthCon (or any company) sells health insurance.  It is expensive, and you HAVE to buy it (unlike a TV).  There are a few other alternatives (a handful of major players nationally), but their prices are all similar (expensive), so it doesn’t much matter which one you go with.  They make a profit as well, but not by providing you with the service you want (health care) in exchange for the money you provide.  They make a profit ONLY if they deny you the service you have paid for.  Let me repeat that:  Health insurance companies only make a profit if they don’t provide health care (the very thing they are supposed to be in business for).

In short, to argue that the free market can save health care is simply….misinformed.

Spin:  We need a limited public health option, if any.  Any public option that competes openly with the private health insurance industry will eventually lead to nationalized medicine.  (I’ve heard this poppycock many times as an argument against the public option.)

Fact:  Left unencumbered, the public option would indeed compete with private health insurance.  Why is that an issue?  Isn’t competition good?  The only scenario under which a public option competing with private health insurance would lead to nationalized medicine is if private health insurance couldn’t compete (ie.  people CHOOSE to go with the public option because it was cheaper or better). 

By arguing for a restricted public option, private insurers are basically saying “We couldn’t compete with an open public option.  It would drive us out of business.  We couldn’t make a profit.”  Really?  I thought anything government-run was inefficient and wasteful and private industry would always beat it.  I guess big business is all for competition, as long as it doesn’t compete with them.

Also, there is no competition presently.  Health insurance is an oligopoly…not much different in effect than an monopoly.

Spin:  Governments are inefficient.  They make a mess of any market they enter.  Private industry is superior.

Fact:  Let’s go one by one:  “Governments are inefficient.”  I agree they often are in practice, but that needn’t always be the case.  If you look at admin costs as a percentage of health care expenditures for other countries; theirs comes in below the US’s private industry number.  Also, it is a little two-faced for the health care industry to argue that governments are inefficent; private industry’s inefficiency (bulging costs) is how we got in this mess in the first place. 

“Government makes a mess of any market they enter”:  Again, no.  Think of the FLSA (Fair Labor Standards Act).  People (of any age) worked all day long in terrible conditions before the government stepped in to regulate.  Governments do make messes…..but so does private industry (think financial meltdown); again, it is two-faced to say governments mess up markets when the private industry also messes up markets even without government intervention…..which then requires large government bailouts on the taxpayer dollar.

“Private industry is superior”:  Taking my two examples above of  TVs and Health Insurance, Private industry is good at providing TVs (when that set of incentives is in place), but bad at providing healthcare (the incentives are wrong).

Spin:  Public health care costs too much.

Fact: Uhh…

Public health care will cost too much?  Seriously, it ALREADY costs too much.  That’s why we’re having this conversation in the first place.  If that isn’t the pot calling the kettle black.

We already pay for it; we just don’t get anything out.  If you mean public health care as it is in European countries, then it will cost LESS than it currently does.  The reason we will never see that is that any system we put in place now will have to pander to the current system, so we’ll end up with some messy compromise. 

Alternative Energy:

Alternative energy is important.  Oil is not sustainable (nor are humans).  We must make changes; however, some I think aren’t so well thought out.

Spin:  Biofuels are the future!

Fact:  If you mean turning corn, grass, or basically anything organically grown into fuel….its a terrible idea.  Food prices will rise worldwide as that land is used to produce fuel instead of food.  Those billions of people worldwide who barely have enough to eat care far more about corn or rice than they do about whether we can drive our Priuses around using biofuels.  You can’t eat a Prius.  You can quote me on that.

Spin:  Batteries dude!  

Fact:  Batteries are not power, they store of power.  I’m not arguing against more efficient batteries; I’m just saying batteries are not a substitute for oil….they are a complement.  Oil produces electicity, which is stored in batteries. 

To that end, oil itself can be thought of as a battery.  It is storing power in the form of hydrocarbon bonds that we release to do work (eg. make energy, run cars, etc).

The difference is that nature, in the form of oil, has already gathered the energy, already stored it in a fairly stable form.  In the case of batteries, we still need to provide the energy as input. 

Again, batteries are not an alternative energy; they are an alternative store of energy.

Myth:  Solar energy is the future!  Nuclear power is the future!

Fact:  Solar energy is the future!  All life on earth is powered directly by the sun (plants) or indirectly by consuming things that are powered by the sun.  Nuclear energy is the future!  If all things on earth are powered by the sun…..what is the sun powered by?  Nuclear energy. 

Bottom Line, we should take note:  Nature has a way of pointing out the most efficient mechanisms for things (except the wheel….how did it not invent the wheel?).

The Cost of Doing Nothing:

Spin:  “It would’ve been worse if we had done nothing.”  “We must act now; the cost of doing nothing is too great.”

Fact:  I hear this all the time in the media, in politics, in business.  Is the cost of doing nothing greater than the cost of acting now?  The answer is easy:  Impossible to say.  Untenable.

We hear the cost of doing nothing argument currently about health care; we also heard it with the financial crisis.

People use the phrase as a way to promote expediency.  “We must act now…or else!”  Or else what?

The suggestion (or whatever we must act now on) may or may not have merit, but often it is simply impossible to prove what would’ve happened otherwise.  What was the true opportunity cost that decision?  We don’t know in most cases.  You can search for analogies in the real world to try and see, but it is easy to argue those away.

In the end, the “cost of doing nothing” argument is a complete waste of breath.  It doesn’t signify anything.  It is unsupportable and does not promote dialogue.  If you must do something then the merits stand on their own, not as an alternative to “or else”.

I would like to point out that Roger Federer is a little girly:

I mean the guy cried.  I don’t think its only because he lost; I think he loves tennis, and was touched by the fans, and is aware of his place in tennis history, etc….but the fact still remains he cried:  Not very manly.  Nadal did give him a man hug though, which I thought was sensitive, but not overly girly.  1 point for Nadal (besides being the Australian Open, French Open, and Wimbledon champion).

In the end, I think I like Federer more.  A little humanity in our sports stars is nice when contrasted with other sports.

The “man bag” is a bit much though (or should I just call it a purse?):

Next Topic, Jesus:

Remember in college we all took the World Religion class?  I think its a requirement at most schools, so everyone took something at least similar.  We learned about Joseph Campbell and the common myths/stories inherent in all religions.  The Greek gods and the Roman gods….pretty freaking similar.  Greek/Rome is just one instance; however, we learned that obviously the religions are borrowing from each other.

Islam as well borrows from Christianity, which borrows from Judaism, which borrows, I assume, from something else all the way back to pagans and two cavemen smoking weed and staring at the stars under a moonlit sky.

I never noticed I suppose in that religion class that the Jesus myth was not treated the same; we never studied its antecedents.  We assume it happened (virgin birth, son of god, rise from the dead, etc) in a vacuum for the first time.  That it was special.

Guess what?  The Jesus story had already been told….in Egyptian mythology (one of the oldest in existence).

Old testament: ”I am the LORD thy God from the land of Egypt, and thou shalt know no god but me: for there is no saviour beside me.” Hosea 13:4″.  But lots of things are said in the Bible.  What does difference does one verse make?

Well…I used to read these crazy book by Graham Hancock, and while most of it was shite, some of it was interesting:

The life of the Egyptian God of Horus closely resembles that of Jesus.  There are a lot of comparisons in the chart in this link, and some of them are tenuous at best; however, the fact remains that the similarities (special births, son of god, miracles performed, crucifiction, resurrection after 3 days, etc.) are likely more than coincidence.

It is significant because we remember the Isrealites were formerly Egyptian slaves, so it would’ve been natural to co-opt Egyptian mythology (which was still worshipped when the Israelites were there), just as the Romans did with the Greeks.

I’m not making any comment on whether Jesus really existed, whether he rose from the dead, or whether people added to his story where convenient after he as gone (would he have been any less significant if he’d not been born under a star, had a virgin birth, or hadn’t turned water into wine?)….I simply do not know that.  But what I do know is that people make shit up….and usually when they do, they steal ideas from other people.  The Jesus myth is not unique.  The Hebrews took the framework from Egpytian mythology, with which they were very familar…having been in Egypt for 400 years.

Next Topic, the mind of God:

To simplify, being that there are so many commonalities in our myths and religions, that either means a) people borrow from each other (if we assume people are making up the myths), or b) God tells the same story over and over again (if we assume God is handing down the stories as the religions say).

If I were God (funny to think about), would I tell the same story over and over, or would I tell different stories?  I think I would tell the same/similar stories, because if I told different stories the people would eventually share the stories and thus they could converge anyway.

Alternatively, if I told different stories, people naturally war with each other, and so only the winning stories would remain…thus again you end up with the same/similar stories.

All roads lead to the same/similar stories.  It doesn’t matter what you start with.  In this case, the mind of God is not required.  All the stories will end up similar.

And this I think is what I took away from my World Religion class:  The winners tell the stories, the story remains the same.

So many people have contacted me through Facebook lately.  Its strange to relive some of that; sometimes to be forced to.  Tessa wrote me recently.  I lived with her for a bit at Ein Gedi…in 1997 I think it was.

Here is what she said:

so i have been thnking a lot lately bout ein gedi etc, it was a long time ago now!! gemm has beautifaul photos of kids, have you children yet?? life in uk, ok, but not spent much of my “adult” life here. where are you now? how do you remember those days? take care tessaxx

My response:

Tessa,
Ha!  Feeling a little nostalgic lately?

Hmm…”How do I remember those days?”

I guess I don’t really for the most part (except when you send me an email and it makes me think about it).  Those years seem disconnected from my current life, like they don’t apply.  Its almost like I disappeared for 5 years or so….on another planet.

Every once in a while I’ll see something on TV, and think “I was there once; there is a great restaurant I ate at just around the corner”, but it seems very distant.

The memories are nice, but they are also hard to live with since life will never be as new and exciting as those years were.  You are only young and conquer the world once.  I’ve come to accept that.

I live in Atlanta, GA.  I play tennis.  I like to drink fancy beers.  I am an HR Consultant.  I own a house, and hang out with my friends.  I love my mom and my sister; don’t get along so well with my dad.  I complain and get sad sometimes, but I’m very fortunate.

That’s it.  The story there doesn’t really include “and for 5 years I hit 30+ countries, learned to speak another language, sailed the Mediterranean, saw the Taj Mahal, the Pyramids, Petra, Machu Picchu, trekked the Himalaya, rode camels in the Sahara, blah, blah, blah, etc.”  Those things are interesting bar stories and come up sometimes, but it just doesn’t apply to most things I do.

I love those years…in a crazy way.  Its something no one can take away and it will always make me a little special.  If I had worked those years like my friends, I would have a little more money now; I might be married, but I would never have ice climbed on a glacier in Patagonia.

And yes…Gemma’s kids are cute, and no, I don’t have any kids.  I’m not married.

Thanks for the nostalgia,

Elliott

Oh well.  I think I’ll go back to my wine and Monday nights on HDNet.

……………………….To understand me, you must understand this.

I haven’t read/written much about happiness lately; I just read this article and decided I would revisit.

So what did I learn reading that article?  Nothing that I didn’t already know.  Let’s recap some happiness facts in no particular order:

1)  Money makes you happier until you can pay for the basics of food, clothing, shelter.  After that you’re “Keeping up with Joneses“.  (On a side note I would love to meet the Jones family.  They are obviously doing very well if everyone is trying to keep up with them.)  Other countries are happier than the US, and happiness doesn’t correlate strongly to GDP.

2)  Genetics tell most of the story of your happiness.  Whether you win the lottery or lose an arm in a lawnmower accident….you stay basically as happy as you were before.  (there is some debate on whether you can inch aggregate happiness up in a Bentham-style “greatest happiness of the greatest number”…we’ll see.)

3)   Happiness is generally composed of 1) moment to moment pleasure, 2) engagement with your life (how much you’re into your job, friends, garden, car-club, etc), and 3) a sense of meaning (how much you think what you do matters).  I personally think 2 and 3 are very similar.

4)  IQ, good looks, youth, athleticism, other natural talents, etc…..don’t affect your happiness much.  I’ve seen research that people with high IQs are actually less happy (don’t feel like digging that up).  Also, older people tend to be happier in industrialized nations.

5)  Your relative position in society makes you happier than your absolute position (unless you’re dirt poor).  Better to have 100 bucks when your friend has 50 than have 1000 when your neighbor has 2000.  This makes a pretty good case for government wealth re-distribution.

6)  So what does make you happy?  Spending time with friends/family, marriage (in general), being grateful for stuff and telling others you are grateful for them (gratitude actually has a pretty large effect), doing nice things for others, contributing to something you believe in larger than yourself, getting lost in the moment (even if it is gardening…or drinking).

7)  What doesn’t make you happy?  Spending time alone, buying stuff/anything, chores, crap at work, loss of a loved one, loss of a job, financial troubles.

8)  What are we unsure about with regards to happiness?  It boils down to cause and effect….we don’t know what causes which in many cases (or maybe they’re just correlated).  Happy people do make more money, but does the happiness cause the money or does the money cause the happiness.  Happy people are healthier, but if you are unhealthy and convince yourself to be happy, will your health improve?  Married people are happier.  Does that mean marriage makes you happy or happy people stay married?  Don’t know.

9)  Experiences make you happier than things.  Oddly, a new car will not make you as happy as if you blew the money on a trip through Europe (on a side note I’m not sure experiences have made me any happier…I don’t have the things to compare it to, so I can’t really say.).

10)  The freedom of choice does not make you happier.  Choices can cripple (its called the Tyranny of Choice).  Freedom to do whatever you want causes anxiety.  It increases opportunity costs….so that everything you choose presents an internal analysis of the endless choices you did not make….all that you gave up.  You only get 1 thing…but you gave up hundreds to make that choice.  How do you know you made the best choice?  The more choices there are, the more comparisons you make….the unhappier you are (I call it the Cortez Solution, after Hernando Cortez:  Legend has it when he arrived in the New World he burned the ships that sailed him there to prevent any possibility of retreat…eliminating the possibility of mutiny…of his crew turning around and going home.).

11)  Happiness is not easy to achieve.   Apparently you have to work at it; but if you have to work too hard, then that will make you unhappy in itself, especially if you don’t get there….which brings me to my last point:

12)  The harder you seek “true happiness”, the more you will frustrate yourself by not being able to get there.   Happiness seems to be a by-product, not an end result.  If that is the case….why worry about it at all?

Can I sum any of that up into something that might help people be happy?  Sure:  Spend all your time with friends and family, volunteer for your favorite cause,  be grateful everyday and tell others about it, get hobbies that engross you, do a job you like and uses the things that you are best at (not that pays lots of money).  Stop spending money on stuff.  Don’t watch the news or read pop magazines (which constantly compare you to others).

I think its such an interesting question (obviously), because underlying much of what we do in Western society is this notion of “do what makes you happy”.  My parents said that to me a million times, “I just want you to be happy,” or “You need to do what makes you happy,” or even “Do what’s best for you,” but underlying the idea of “best” is “what makes you happy”….but we really have little idea of how to achieve that, or even if its possible.  Its nonsensical advice if no one knows how to follow it.

In the end, after all these years of trying to learn about how to get to happiness, I don’t think I can affect it much.  I still brood and I’m prone to nostalgia….I think the state of things is sad and that we could scarcely make it better if we tried (which we are and this is what we get).

I do think you can increase general happiness some amount, but what have you achieved?  We still live and die.  What does it matter to the universe if we passed our blip in time slightly happier than if otherwise?  It doesn’t.

Burn your ships and be thankful for it.

I have grown tired of asking questions to which I know there are no answers. Perhaps that is adulthood?

I ask more immediate questions these days: What will I do today after work? What will I do today at work? Where will I eat dinner? What kind of beer do I want to buy at the liquor store? Does anyone want to play tennis tonight?

Without the tennis, I think those are the questions Homer Simpson might ask himself each day.

I can’t recall definitively answering too many important type questions…ever. Actually, I guess there are a few:

Does God exist? Don’t know whether s/he exists. Firmly Agnostic. Its hard to prove the non-existence of something. I strongly suspect the Western anthropomorphized God is not real. I am even more certain that religions are invented by people…to ease insecurities, to gather people around common causes. The Bible was written by people. What makes one religion more true than the other? War. Whoever kills people of the other religion…those people are the only ones left to ask the question.

We cannot escape our biology: I believe in the Savanna Principle, and Evolutionary Psychology. Non-politically correct evidence will continue to pile up in the coming decade that our brain’s tendencies are a product of evolution just like our body’s. Women and men’s brains are different. There are reasons for gender stereotypes. Some subgroups are smarter than others. Some are taller. Some run faster. Many very interesting facts about beauty, war, mating, power, and the limitations of human nature will come to light.

Why are we here? To survive and reproduce. You don’t have to believe it…it simply is. If you don’t think that’s true, then you will not be long around to have the argument…the survivors win.

War is inevitable: Peace is not the norm. We go back and forth…tending towards war. Why? Those who are not good at war are not around long enough to worry about peace.

People will figure out a way: There are so many of us alive, it doesn’t even need to have anything to do with intelligence…if people have all possible ideas, then some of them will end up being correct or useful. We just need lots of people and lots of questions.

Power is its own end: Power corrupts; it is self serving. Human nature makes it extremely hard not to follow that path. The best idea is to diffuse and limit power so that not too much of it rests in any one person, since they will certainly abuse it…even if they’re smart…which isn’t always a guarantee.

The Constitution does that, and its brilliant. It limits and diffuses power…in effect, setting up a government that doesn’t have enough power to fuck anything up too badly….and then gives power to the States. The beauty of that is that it sets up a market for government and lets people vote on which rules are the best. Don’t like what’s going on in your state? Move to another one. What sucks is that the central government has taken so much power that the rules aren’t significantly different between states…so you can’t do that. Power corrupts.

Travel the world: It will change you forever and you will be better for it. Don’t read about it; don’t speculate on it; do it. It teaches you that you change someone’s life everyday and that there are so many ways to live and how dare anyone think they know what’s best.

Don’t get caught up in the hedonic treadmill: You can’t win. I don’t play games I can’t win. Human nature dictates you will do it anyway…some things you can’t avoid. Try harder.

History repeats itself: Enough said. Think it hasn’t happened before? It has. Like stereotypes, ignore history at your own peril.

You cannot derive an ought from an is: What is natural is not what is good (this is also called the naturalistic fallacy). I get tired of people trying to draw analogies from nature as a model for what should be. Guess what? Snake bites and shark attacks are natural. The bubonic plague is natural. Antibiotics are not natural. We invented them. No one ate the penicillin fungus and got better. We distilled and concentrated it. Humans…flawed as we are, decide what ought to be. I agree, “ought” is a slippery slope. As soon as you think you know what’s best, you start abusing power.

Beware of the Jedi Mind Trick: Don’t let people fool you with a) statistics, b) research, c) expertness d) The Aiken Solution, e) repetition, or f) any other poppycock that people use to try to persuade you. Stated another way: Be a Skeptic.

Reality is subjective: This has terrifically confusing side-effects, the most important of which is: two people with different opinions can be right about the same thing. That is a tough one to get through for most people.

Not to say everything comes down to opinion; some things are simply wrong. Other things aren’t though: For instance, let’s say I just got a new job. That’s great…for me. Perhaps the guy/gall I beat out was trying to feed the family…maybe not such a good thing then. The answer to the questions “Was it good thing that Elliott got the job? ” is not answerable in a traditional sense.

Many, many things on very large scales come down to this simple kind of distinction. Which is right? Same as before: Those who survive and reproduce and can write a not-so-flattering history about the other group.

Common Logical Fallacies: The study of logic, especially as it relates to human psychology is useful. Once we learn a) the tricks people use to trick us, and b) the common traps the brain falls into….the better off we’ll be. Reality catches up with you sooner or later in most instances. I could write another post on all of these.

Anything that can happen, will: This is a fun one too. People ask about genetically engineered humans, franken-foods, and self-replicating nano-robots…its all going to happen. We will do everything that becomes possible, because there is always someone willing…reality TV has proven that.

The Best of All Possible Worlds? Pangloss was wrong…and right. The world simply is. It is neither the best, nor otherwise. We decide. I have written extensively in the past about Happiness, and whether or not humanity has any use for it (although I assure you I have a use for it).

Any decision is better than no decision: There is a bit of game theory in this one. If you make no decision you will only get what other people want for you. If you make decisions, then you have a better chance of doing something that is good for you. You also stand the chance of making a wrong decision, but I think you stand less of a chance than if you leave it up to other people. Firm decisions are gold, and other people can coalesce around them.

People are neither good nor bad by nature: The brain is a mess of conflicting systems, and they don’t always agree. You can save a child from a burning building one day and rob a liquor store the next. Although people generally know what is right, they do not always do so. They more consistently act in accordance with the situation. Put a good man in a bad spot, and he’ll do what he needs to…morals be damned.

People matter: Don’t get distracted by achievements, or money, or sex, cars, houses, status, jobs, etc….people matter in the end. They witness your life and give it weight. Without them your life doesn’t exist. Without them there is no sex, job, money, status. People matter. We are a consensus of ourselves. The sole witnesses of a billion frantic lonely consciousnesses on a small rock on the edge of a normal galaxy in an unimaginably large universe. Period.

There is life on other planets: Religion? Please. We’ll be so fucking happy to find intelligent life on other planets it will change everything we do…and then we’ll go to war with them.

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Ok…that’s enough. I could go on, but I won’t. Now that all that is out of the way I can get back to the important questions: What will I do today after work? What will I do today at work? Where will I eat dinner? What kind of beer do I want to buy at the liquor store? Does anyone want to play tennis tonight?

What do you know that is true?

Or more to the point: does it make sense for me?

In a word, No.

I’ll explain why: A 150 to 200k dollar mortgage ends up between $1000 and $1200 bucks a month. Then you add on internet, gas, power, maintenance, cable, insurance, etc, etc, etc. The price is getting up there past $1500 bucks a month…not cheap for one person (me).

Currently, I pay a ridiculously low rent of about $500…that includes power, gas, internet, etc.

You can run the numbers on that as many times and as creatively as you like: Its a better financial decision for me to stay where I am…period.

But what about the tax write-off? After its all said and done that may lower my monthly payment by 100 to 150 bucks…no where making up the difference. Additionally, the vaunted tax break on mortgage interest really is no tax break at all, but simply avoids double taxation. How? Easy…you still pay tax on the value of the asset (property taxes). If you paid tax income tax on the mortgage interest and paid property taxes, you’d be taxed twice on the same thing. There is no real tax break for homes….simply the lack of being double taxed.

Additionally, even the mortgage interest you do write off is only eligible once you pass the standard deduction. If you can’t reach that, then there is no deduction at all.

But what about the equity? You don’t really get any in the first 5 years. Most of it is interest. There isn’t much difference between rent and interest.

But what about the small amount of equity you would gain? Yes…I would get a small amount. But I currently get another kind of equity each month paying rent that is very useful: Cash. The difference between my mortgage and rent ($1500 minus $500)….about $1000 bucks a month…is mine. I build a thousand bucks of equity every month by not buying a house. (In reality I spend some, but not all, of that. If I bought a house I would have to change my spending habits…which isn’t all bad).

But houses are good investments? A) Uhh…..not in my situation. B) I’m tired of hearing that “home values always go up”. The Titanic was unsinkable. The world was flat. Yeah, yeah, yeah. The fact is that they are dropping now. Yes…this very quarter.

But they go up in the long run? Uhh….in the long run we’re all dead. In the medium run though…not always. In Japan the market has been depressed for over a decade. In economics there is the concept of “no money left on the table”. If houses ALWAYS went up; everyone would buy them…thus driving up the prices. At some point the price becomes overinflated….and it must drop. That time might be now…or it might not, but to say “home values always go up”….that just isn’t true. In finance there is also the concept that “past performance is not an indicator of future performance”. I don’t care if housing has ALWAYS gone up in the past. That doesn’t mean it always will in the future.

Here are some other myths vs realities about home ownership.

Regardless, I’ve been looking pretty hard for something. I’ve seen just about every home and townhouse in the Smyrna area at this point. Why?

Well….if I’m staying in Atlanta, which seems to be the case since I’ve gotten a job I want….then I might actually LIKE to have a house. It may not be the best financial decision, but it is not a bad decision if that is what I want, and I can afford it.

I will say to those who buy a house because it is a “good investment”…you are speculating. If you’re going to speculate, you might as well buy stocks, or start a business, or even gamble. If you buy a house, fix it up, and try to sell it…you are speculating. You are running a small business. Nothing wrong with that…but lets call a spade a spade.

Buying a home is about wanting a home, and making a commitment to a place. If you start talking about doing it for the purpose of making money…then I hope you know about homes…because its the same concept as knowing about stocks, or a particular industry. The only thing that makes real estate speculating less risky than other types of investing is that there is less volatility. Home prices go up a little, or down a little…they don’t peak and trough nearly as quickly as stock prices (as a general rule).

Home buying also does not have the upside of stocks, or owning a business. A home remains a home, and the land remains much the same. The demand is much the same (unless there is a large, immediate influx of people with money to the region)…and the supply is much the same (it takes time to increase supply and it will never fluctuate wildly, unless there is an earthquake).

Stocks/owning your own business though…those can go from zero to a million bucks a month rather quickly. The building and real estate that the business sits on…its value will remain much the same, much as your house will; however, the value of the business, because it performs some other function that can increase in value (the service it provides)….can really appreciate quickly.

The price of a home can only appreciate as quickly as more people move to the area that have money (which increases demand)…or you happen to own a house that has features that are in vogue (which increases demand). Increases of supply (building more houses) decrease the value of your home.

But home prices do appreciate, right? Yes. For two main reasons (yes, this is a simplified explanation): 1) Inflation. Home prices largely track inflation. Since that runs at 3.5% a year or so…your home price does increase. But that is an illusory gain. 2) Increase in GDP: The economy itself (mostly productivity) grows at 3% or so a year. As total wealth increases, people are more able to afford homes. (You can argue, that its JUST inflation that matters. With a fixed money supply (notes in circulation), economic growth actually produces deflation, which would cause your home value to drop..even though it was actually worth the same amount in absolute terms.)

If homes aren’t really good investments, then why is everyone so high on them? 1) You can live in them. You can’t live in a stock certificate as an investment. That is hard to beat. 2) They tend to work out as investments. The reason being that they FORCE you to save money on the tail end of the loan when you’re building equity. Most people wouldn’t save any money otherwise, so it seems to work out for them. If they’d been more financially disciplined and invested the extra cash in the stock market…they might have come out ahead. But because no one does that, its useless to talk about. Home ownership IS a good investment for most people, because it is their ONLY significant outlay of cash that has any chance of appreciating…and it usually does…a little bit.

Lastly, yes….on the tail end of your loan, when you get to that point…its a good idea. You are essentially not paying ANY rent anymore. All the mortgage value goes to equity.

So…..will I buy a house? Yes…mostly likely, because I want one. It won’t be my best financial decision though. That would be to live in my parent’s house, never buy anything, save everything, invest heavily in the market, and wait to retire in a Central American country. I’d be living on the beach in Panama like a king (maids and all) by my early 40s…..and never work another day for the rest of my life.