PROVOCATIVE EXCHANGE TO "TEN DAYS THAT CHANGED AMERICA FOREVER!"

PROVOCATIVE EXCHANGE TO “TEN DAYS THAT CHANGED AMERICA FOREVER!”

James R. Fisher, Jr., Ph.D.
© October 14, 2008


“The last temptation is the greatest treason: To do the right deed for the wrong reason.”

T.S. Eliot (1888 – 1965), American-born British poet, critic and dramatist

A CHICAGO READER COMMENTS:

Hello Jim,

It took a while to digest your annotated anthology of this watershed period in the world's history.

Following your lead, I try to assemble in my mind the meaning of all these events. And, it's difficult to do without allowing biased paranoia to color the thought process.

You have a unique view of the world. You are sort of a humanistic scientist, a chemical engineering side that provides a systemic, cause and effect perspective of events, and the OD side that gives you insight into the complex and less predictable influence human behavior has on the outcomes.

In this situation, I try to view it from a chemist's perspective.

It is easy for all of us to point fingers at irresponsible borrowers, greedy mortgage brokers, consumerism, irrational exuberance of the stock markets, lack of regulation, confusing mortgage securities and, ultimately, the swaps that guaranteed inordinate risk. Crash. People failed and we all fell together. Not true. None of it!

Think of this as a slow chemical reaction with a predictable outcome that required a catalyst along the way to complete. The desired outcome is a transfer of wealth. Is it odd that the only people paying here are the poor and the middle class, both as holders of equity and as taxpayers?

Yes, it's true that the top that earns 30% of income pays 40% of taxes. That leaves us to pay the other 60%. Our progeny and we will pay for this for generations. Why, because the middle class grew too large and the poor were no longer so poor. Wealth was being redistributed in a way that did not suit the rich. The wheels were set in motion at a time we were more worried about Y2K disasters, unaware that the sea change would be much more subtle and complex.

The dot com bust was the first indication that the recapture of wealth could work. It was the tease, the taste of the good life that brought people back for more. More was presented as an economy of ownership. Buy-sell-buy again. You can't lose. Real cash dollars were paid for those homes. Someone has that last peak price in his or her pocket.

Who owns those mortgage securities that were covered by swaps which the taxpayer guaranteed through the buyout of AIG and others?

We point the finger and shout greed at Wall Street. I have a feeling this is much more sinister than we can comprehend. In the past I have always dismissed the "new world order" talk as ravings of a paranoid sect. I am still not in that camp. With these recent events leading to us accepting with open arms governments buying banks and consolidating power I am starting to think a bit differently and in need of someone to talk me down.

Regards,

Michael


DR. FISHER RESPONDS

Michael, I thank you for your candor and your provocative response. At the outset, I want to assure you I don’t plan on talking you down from your views but filling in your broad outline.

I have watched little guys like me live well beyond their means ever since I was in my early twenties and had a family of my own. When I could afford a $100,000 house in 1964, I bought a $25,000 house. It was quite grand for the price in picturesque country.

It was a two story brick ranch home with a full basement with seven foot ceilings, a former living and dining room, a family room, two fire places, three bathrooms, a winding stairway with carpeted steps, hardwood floors in four bedrooms on the second floor, and a full kitchen, some nearly 4,000 square feet, including the finished basement.

I include the basement because, I had it completely paneled except for the utility room and divided into a playroom for the children on one side, and the other a study with a fireplace, built-in book cases floor to ceiling on two walls with all the floors tiled.

When I was promoted to form a new company in South Africa, I put it on sale for $30,000 in early 1968, and it sold in three days. The house was situated in a suburb of Louisville in a place called “Anchorage,” which had a history going back to the antebellum days. I visited the place on Dorsey Lane in 2003, and all the small evergreens planted so long ago were now 15 feet high and framed the backyard. The house was essentially as it was in 1964, but now valued at more than $300,000.

When I could afford a Cadillac, I bought a Chevrolet. There were only two exceptions to this frugality. I dressed the part and wore high-end Hickey Freeman three-piece suits, and topcoats, monogram shirts, pricey ties, calf high sox and Florsheim shoes. It was my uniform. We Irish love uniforms. I was a poor boy in a rich man’s world, and as my mother programmed me, I took advantage of being tall, good looking with a deep convincing voice and a presence.

The other extravagance was books, which incidentally, complemented my insecurity. My mother persuaded me at an early age that you get a report card every day, and you can never rest on your laurels. “Read and grow,” she would say.

This was my armament against a substantive world with many advantages that I did not have. It was also the weapons to take on the world on my terms and in my way. I can still hear my mother’s voice saying, “Go for it!” And my da’s caution, “You don’t belong, Jimmy, you’re not one of them.”

The conflict between these two voices I hear in your words, as they reverberate across the hinterland, and came for me to be like rubbing two sticks together to became my fire.

I’ve never looked up to any man, although I admire many; never felt any man superior to me, although I esteem some; never felt trapped by an olive branch or a golden parachute, although they have been offered. I am not better than any man, but no man is any better than I am. My da wanted to protect me from the many beatings I have taken, but my mother relished the opportunity to witness the fight.

Being a reader, especially of novels, it has always amazed me when engineers and scientists brag about not reading novels. Novels have provided me with a better insight into humanity than my social and psychological graduate education.

Reading taught me to conceptualize, to quickly find the flaw in the argument of others. Though they be my superiors, I often put them on notice because as I had to earn their respect they had to earn mine as well. Territorial imperatives were not justified by position power. In that sense, I feel I am still 50 years ahead of today’s professionals who remain obsequious and timid in the face of the status quo.

It was only because I was successful selling that I went up the ladder. It was quickly apparent as a research & development chemist that I was in the wrong pew. Selling was supposed to be temporary, but as my young family grew, I knew I made my bed and so made the most of it.

What I didn’t realize in the quiet of the laboratory, as I moved onto a world stage is that the stories of imperial exploitation once associated with the Spanish, British and Russian Empires were equally true of corporate America. I was now an agent to exploit Third World countries of their natural resources because if we didn’t do it someone would, and they would not be nearly as benevolent.

Miners in Jamaica and Surinam extracted the raw bauxite and our customers refined it into aluminum, and I went along with the rationale, knowing that the miners were paid only pennies on the dollar for their work.

Then as luck would have it I found myself in South Africa in the cauldron of apartheid. I might even have gone along with this self-deceit if my gardener had not been murdered on my property, and treated as if a dog was run over and killed.

Not able to deal with this, I went to my pastor for solace, and was given none. I talked to the nuns at my children’s school, and they were even more abrupt. The priests and nuns were missionaries from Ireland, and wanted no trouble with the government. Then I thought, they are quiet about the government, but I was equally quiet about corporate America.

The corporate game has not changed. What is happening now is not the Great Depression revisited; it is far greater and more obscene and duplicitous than any novelist could imagine. The morality of the times has allowed and even sanctioned it.

Now, every man, woman and child in America will pay in the four figures for this chicanery, for the absence of moral authority, for a quarter century of nobody in charge. That includes us all as nobody has questioned if making money is truly the pursuit of happiness, nobody has questioned an economy driven by credit and financed by speculators abroad, nobody has stopped to question the hype which is as ephemeral as air. We are not the first society to accept rhetoric as reality, and we won’t be the last.

There is no profit in blaming Wall Street or Main Street or some ethnic group. We are all complicit in this in one way or another. Nobody forced anyone to buy what they could not afford, to carry eight to ten credit cards in which they could only pay the minimum due each month, making the credit card companies rich and them poorer for the practice. People have been living this way not simply for months but for years.

Christopher Lasch went to an early grave trying to get our attention. “In the Culture of Narcissism” (1978) he profiled the anxious 1970s, when we were self-absorbed, obsessed with sexual liberation only to become imprisoned in our libidos, seeking therapy in unabashed consumption. He followed this with “The Minimal Self” (1984) in which people had lost confidence and negated superiority or elitism finding solace in becoming obsessively self-analytical. Dr. Phil, et al. now benefit from this obsession. Then he wrote “The True and Only Heaven” (1991) in which he addressed rising material expectations and falling competence, responsibility and citizenship. These studies illustrate the retreat from our values to become slave to our appetites.

Michael, it has been truly a bumpy economic ride of late, and nothing that you say is far off the mark. We as a society are changing, which is Lasch’s point, and not for the better.

A long time ago, I read a book by Edward Bellamy (1850 – 1898) titled “Looking Backward” (1888). It was a utopian romance looking back from 2000 to 1887. Bellamy envisioned the case of economic revolution with prophecies of a new world order in 2000 A.D. from his 1888 window. In his utopia, there is no money. The state has given everyone no matter what they do a card, which contains the same amount of credit for a year’s expenses with no chance for anyone to spend their credit foolishly or starve.
If a person cannot handle his credit wisely, a supervisor is provided to help him.

Crime is treated as a mental disease with criminals placed in hospitals and treated as mental cases. Theft is silly when everyone has the same things.

The head of government is the president, who is controlled by Congress, which has far greater power. Boards made up of old professionals, report to the president, and control education and medicine.

A woman chosen by the women of the country has the power to veto any bill concerning the rights of the female population.

There is no public discontent with government, and wonderful international cooperation. As I said, it is a utopian romance, but it made an impression on my young mind, and perhaps was a contributing factor in my writing “A Look Back To See Ahead” (2007).

Bellamy’s society looks very much like socialism or communism, and it was neither, or perhaps both but in a democratic utopia. At least his society was not driven by the “Robber Barons” who were prominent in his time such men as Mellon, Carnegie and Rockefeller, among others.

The Robber Barons were great wealth creators who didn’t let the law of the land impede their conquests. There were the gangs of thugs employed by Carnegie to keep unions out of his steel mills, even resorting to murder, Secretary of Treasury Mellon resorting to exploit the tax code to award the rich, and Rockefeller creating an absolute monopoly over drilling, transportation, refinement and sale of petroleum until the government stepped in.

It was a lawless age for the rich when Bellamy wrote this little novel, which was widely popular, and predicted a new social order. Surprisingly, it came to influence economic thinking in both the United States and Europe.

These wealth creators assuaged their sins by creating free public libraries across the land (Carnegie), an important financial institute (Mellon), and a medical research institute (Rockefeller), and this is how these men are remembered. I’ve read books on them and they were not nice men but great Americans capitalists.

Your chemistry analogy on the transfer of wealth is captivating. A catalyst, as you know, either accelerates or retards a chemical reaction to completion. Stoichiometry implies that the mole fractions that go into the reaction must equal the mole fractions once the reaction is completed. It follows Newton’s Law that mass can neither be created nor destroyed, only transferred from one state to another.

Again, you are right about the wealth creators. To be winners there must be losers, for someone to accumulate great wealth someone must lose in the bargain, a zero sum game. Yes, they have paid more taxes than their numbers, but we wealth providers in our labor and consumption pay for their misadventures, folly, fraud, corruption, and incompetence as the current situation illustrates.

Gates, Jobs & company broke through this pattern when giants like IBM and Xerox ignored the new age of software and computers. These atypical wealth creators were college dropouts operating from garages. What happened once they became billionaires? They exploited the system, as did Carnegie, Mellon, Rockefeller, et al.

It is as if there is no cure for the malady, lobbying government for their special interests, averting the law, price fixing and even suborning perjury by doing one thing and saying they have done another. Remember the cigarette companies? Wealth creators see themselves as a law unto themselves and essential to our economic survival.

Michael, I see them important but no longer intimidating dinosaurs. More than a hundred years ago wealth creators were saying and doing the same things we hear and see today. “We create jobs,” they say, “we are the backbone of the economy.” Fifty years ago CEO Wilson of GM said, “As GM goes so goes America!” Unfortunately, he was right.

There is change in the air. In a way, the current economic crisis is a good thing. People have placed nearly 100 percent of their trust and well being in the surrogate parent of their corporate employer. Now they realize they have been betrayed; now they have been forced to grow up; now it has finally dawn on them that they must trust themselves first and foremost to survive.

Now they know their brains, ingenuity and creativity are not to fill the coffers of a few, but to meet their own needs and those of their neighbors. We are moving back to the pre-industrial guilds, where there are no bosses, no performance appraisals, no pecking orders, no special parking, no bonuses for the few, and a Holiday turkey for the many, no shinny glass mega-structures blinding out the sun, but instead millions and millions of cottage industries in homes, garages, reclaimed defaulted buildings across the land.

These new grown up adults will prove the casinos that grace the landscape are but an apparition as they won’t count on luck but pluck as they use their computers and Internet to develop skills and sell their wares in a new day. This will force a new social, political and economic structure on society. It will not occur in my lifetime but it will occur.

A hundred years ago we were not even 100 million strong, and less than ten percent of Americans were high school graduates, and less than five percent college trained. A hundred years ago the majority of workers could not read or do simple mathematical calculations, now literacy across the country is as high as 80 percent with more than 75 percent of adults high school graduates and more than 50 percent college trained. A hundred years ago the workforce was male driven with females not able to vote or prove their mettle in the workplace. Now, that has all changed. The old rhetoric no longer computes yet it never tires of being offered.

So, I have no intentions of backing you down from your strong views. I do offer a caveat. We all have biases and many of them are a product of our home, school, church, workplace, community and the media. It is how they claim power and control over us. In subtle ways, they project our angst on this or that group as the source of our failure to make adequate progress when it is never the case.

We are likely to feel the full weight of this pressure when we start acting and thinking for ourselves, and rely on our direct experience, not secondary and tertiary sources. It is times like now that chaos feeds change, and change looks for scapegoats to justify departure from the status quo. Those with the most to lose have been known to turn group against group leaving them free from the free for all.

We are programmed in our ethnic cultures to be insulated and even isolated, seeing other groups as the culprit to our disadvantage when this is only an orchestration from the highest levels.

Christopher Lasch saw this and attacked it with academic panache. The other night I watched a panel of experts discussed the financial crisis, many of them Jews. Paul Krugman received the Nobel Laureate for Economics for 2008, who is also a Jew. It would be wrong minded to say Wall Street and the financial crisis is the result of a Jewish cabal.

My wife is business manager of a Jewish Day School, a place that cost parents as much as $7,000 for preschool and twice that much for the upper grammar school grades, and most of these parents are hardly rich. Many parents have to make deep sacrifices to send their children to such a school that is dedicated to academic excellence and the Jewish culture. It is no accident that many scientists, academics, writers and intellectuals are of the Jewish ethnicity because they believe in the power of “the word” and study harder than most.

When I was a college student home during the holidays, and would go to the library, my mother would ask me if I saw any of my friends there, and I would answer, “Only my Jewish friends.”

Similar arguments could be given for Hispanics that have come to dominate the southern part of my state of Florida. Dade and Broward counties have become Hispanic. Florida even has a Hispanic U.S. Senator born in Cuba. Some say, what about the African Americans that have been in this state for more than 300 years?

The answer is that Brown vs. the Board of Education was in 1954, only 54 years ago. You cannot make up 300 years in one-sixth of the time. You cannot overcome the mindset of subservience by the stroke of a pen. You have to work the problem. Some of the smartest students in my classes in graduate school in the 1970s were blacks, whereas I had none in undergraduate school in the 1950s. In a peculiar way, Hispanics who once were native to this land are returning. This is not wrong, but inevitable. We cannot put up barriers between borders in the new global world. We might as well try to capture the wind.

The common bias most blacks are on the dole is not only inaccurate but wrong minded. In point of fact more whites are on welfare than blacks in raw numbers and as a percentage of their respective populations. Studies over the past century have shown that unions preferred to support welfare to keep blacks out of the union job market competing with them for jobs. So, the so-called “Welfare State” was not a magnanimous proposition but kept people down and in their place. That, too, is changing.

Sadly, Native Americans have received little attention getting their vengeance by a rash of casinos across Indian reservations. Now, entrepreneurs are spreading the same pox from sea to shining sea.

Remember, it was not many years ago that businesses put up signs in their windows, “Irish Need Not Apply.” Now, Irish like Jews and Italians and other ethnicities are totally assimilated into the American culture.

Michael, I write for people like you, thinking people who are not slaves to the slogans, the promises and the planned actions that now fill the air from our two presidential candidates. Most political platforms are quickly forgotten once “their man” is in office. We elect a president, and then expect change to occur miraculously when that person is a flawed human being much like we all are with limited capabilities and vision.

It is the candidate that recognizes his weakness and complements it with strength is the true leader. People of great strengths have great weaknesses; and people of great weaknesses are often unaware of their great strengths. It is not 1929 or 1933 when FDR took office. FDR was said by one observer to have a first class personality and a second-class mind. This was no surprise to him. So, he surrounded himself with people with first class minds.

It will be January 20, 2009 soon when the new president takes office to face a very different world. .

Finally, with regard to my scribbling, it is an oral inclination that has gravitated to a writing fixation in my dotage. Permit me to explain.

I had a favorite colleague in Nalco Chemical named Bob Barney whom I used to have coffee with of a Monday morning before we hit the road. He thought me prescient because I looked inside developments in the company, never taking them at face value. This was true when the CEO addressed us at a regional meeting.

Over our Monday morning coffee the following week, he said excitedly, “I think things are going to be great, what do you think?”

“How will things affect you personally?” I answered.

His brow furrowed, and he repeated the question.

“I mean,” I continued, “how are they going to help you?”

He lit a fresh cigarette on the end of the one he was smoking, and said, “I don’t know do I?”

“Yes, you do,” I insisted, “that is why we met, that is why he addressed us, he used the same methods we use in selling, hitting our hot spots.”

“What hot spots?”

“Our security hot spots, our comfort zone, saying he’s going to take care of us, to increase commissions, improve the retirement package, provide more vacation days.”

“Well, they’re all great, so what’s your point?”

“First, are they beneficial to you, and if so, at what price? The package is designed to advance his agenda to increase his leverage to bump up productivity in the short term to increase his stock portfolio that is now traded over the counter. If you look at his stock options, he pays a fraction of the current price but needs to hold the stock for a minimum of six months before he cashes it in. He’s protecting his potential profit.”

“How do you know this?”

“It’s all in the annual report if you read it.”

“But that’s not fair, is it?”

“Fairness has nothing to do with it. It is legal. He’s worried about what is legal, not fair, or morally right. It’s the American way. It’s the capitalistic system.”

He looked at me suspiciously. “You’re one cynical bastard.”

“I believe I am,” I agreed with a smile.

“Why do you smile?”

“Did I smile?”

“Yes, you did.”

“I suppose it is because it is something that I have to hear out loud.”

“What is that?”

“That I’m not for sale.”