Flow - At Work

I've been reading this book kind of sporadically. Part of the reason its been so sporadic is because I'll read a segment and it'll shake up me so profoundly, I'll have to just stop right there allowing it to sink in. I just had one of those experiences.

Some background, the whole point of the book is that the way to find happiness or as the book puts it, optimal experience is by pursuing "flow-inducing" experiences. Where you take on tasks with increased complexity, and in pursuing the activity you lose track of time and expand and grow in the pursuit.

Here's the segment:

"Occasionally cultures evolve in such a way as to make everyday productive chores as close to flow activities as possible. There are groups in which both work and family life are challenging yet harmoniously integrated. In the high mountain valleys of Europe, in Alpine villages spared by the Industrial Revolution, communities of this type still exist. Curious to see how work is experienced in a 'traditional' setting representative of farming life-styles that were prevalent everywhere up to a few generations ago, a team of Italian psychologists led by Professor Fausto Massimini and Dr. Antonella Delle Fave recently interviewed some of their inhabitants, and have generously shared their exhaustive transcripts.

The most striking feature of such places is that those who live there can seldom distinguish work from free time. It could be said that they work sixteen hours a day each day, but then it could also be said that they never work. One of the inhabitants, Serafina Vinon, a seventy-six-year-old woman from the tiny hamlet of Pont Trentaz, in the Val d'Aosta region of the Italian Alps, still gets up at five in the morning to milk her cows. Afterward she cooks a huge breakfast, cleans the house, and depending on the weather and time of year, either takes the herd to the meadows just below the glaciers, tends the orchard, or cards some wool. In summer she spend weeks on the high pastures cutting hay, and then carries huge bales of it on her head the several miles down to the barn. She could reach the barn in half the time if she took a direct route; but she prefers following invisible winding trails to save the slopes from erosion. In the evening she may read, or tell stories to her great-grandchildren, or play the accordion for one of the parties of friends and relatives that assemble at her house a few times a week.

Serafina knows every tree, every boulder, every feature of the mountains as if they were old friends. Family legends going back many centuries are linked to the landscape: On this old stone bridge, when the plague of 1473 had exhausted itself, one night the last surviving woman of Serafina's village, with a torch in her hand, met the last surviving man of the village further down the valley. They helped each other, got married, and became the ancestors of her family. It was in that field of raspberries that her grandmother was lost when she was a little girl. On this rock, standing with a pitchfork in his hand, the Devil threatened Uncle Andrew during the freak snowstorm of '24.

When Serafina was asked what she enjoys doing most in her life, she had no trouble answering: milking the cows, taking them to the pasture, pruning the orchard, carding wool ... in effect, what she enjoys most is what she has been doing for a living all along. In her own words: 'It gives me a satisfaction. To be outdoors, to talk with people, to be with my animals ... I talk to everybody - plants, birds, flowers, and animals. Everything in nature keeps you company; you see nature progress every day. You feel clean and happy: too bad that you get tired and have to go home... even when you have to work a lot it is very beautiful.'

When she was asked what she would do if she had all the time and money in the world, Serafina laughed - and repeated the same list of activities: she would milk cows, take them to pasture, tend to the orchard, card wool. It is not that Serafina is ignorant of the alternatives offered by urban life: she watches television occasionally and reads newsmagazines, and many of her younger relatives live in large cities and have comfortable life-styles, with cars, appliances, and exotic vacations. But their more fashionable and modern ways of life does not attract Serafina; she is perfectly content and serene with the role she plays in the universe."

....

"But what of the case of an urban laborer, whose work is not so clearly tied to subsistence? Serafina's attitude, as it happens, is not unique to traditional farming villages. We can occasionally find it around us in the midst of turmoils of the industrial age. A good example is in the case of Joe Kramer, a man we interviewed in one of our early studies of the flow experience. Joe was in his early sixties, a welder in a South Chicago plant where railroad cars are assembled. About two hundred people worked with Joe in three huge, dark, hangarlike structures where steel plates weighing several tons move around suspended from overhead tracks, and are welded amid showers of sparks to the wheelbases of freight cars. In summer it is an oven, in winter the icy winds of the prairie howl through. The clanging of metal is always so intense that one must shout into a person's ear to make oneself understood.

Joe came to the United States when he was five years old, and he left school after fourth grade. He had been working at this plant for over thirty years, but never wanted to become a foreman. He declined several promotions, claiming that he liked being a simple welder, and felt uncomfortable being anyone's boss. Although he stood on the lowest rung of the hierarchy in the plant, everyone knew Joe, and everyone agreed that he was the most important person in the entire factory. The manager stated that if he had five more people like Joe, his plant would be the most efficient in the business. His fellow workers said that without Joe they might as well shut down the shop right now.

The reason for his fame was simple: Joe had apparently mastered every phase of the plant's operation, and he was now able to take anyone's place if the necessity arose. Moreover, he could fix any broken-down piece of machinery, ranging from huge mechanical cranes to tiny electronic motors. But what astounded people most was that Joe not only could perform these tasks, but actually enjoyed it when he was called upon to do them. When asked how he learned to dal with complex engines and instruments without having had any formal training, Joe gave a very disarming answer. Since childhood he had been fascinated with machinery of every kind. He was especially drawn to anything that wasn't working properly. 'Like when my mother's toaster went on the fritz, I asked myself: 'If I were that toaster and I didn't work, what would be wrong with me?' ' Then he disassembled the toaster, found the defect, and fixed it. Ever since, he has used this method of empathetic identification to learn about and restore increasingly complex mechanical systems. And the fascination of discovery has never left him; now close to retirement, Joe still enjoys work every day.

Joe has never been a workaholic, completely dependent on the challenges of the factory to feel good about himself. What he did at home was perhaps even more remarkable than his transformation of a mindless, routine job into complex, flow-producing activity. Joe and his wife live in a modest bungalow on the outskirts of the city. Over the years hey bought up the two vacant lots on either side of their house. On these lots, Joe built an intricate rock garden, with terraces, paths, and several hundred flowers and shrubs. While he was installing underground sprinklers, Joe had an idea: What if he had them make rainbows? He looked for sprinkler heads that would produce a fine enough mist for this purpose, but none satisfied him; so he designed one himself, and built it on his basement lathe. Now after work he could sit on his back porch, and by touching one switch he could activate a dozen sprays that turned into as many small rainbows.

But there was one problem with Joe's little Garden of Eden. Since he worked most days, by the time he got home the sun was usually too far down the horizon to help paint the water with strong colors. So Joe went back to the drawing board, and came back with an admirable solution. He found floodlights that contained enough of the sun's spectrum to form rainbows, and installed them inconspicuously around the sprinklers. ow he was really ready. Even in the middle of the night, just by touching two switches, he could surround his house with fans of water, light, and color.

Joe is a rare example of what it means to have an 'autotelic personality,' or the ability to create flow experiences even in the most barren environment - an almost inhumane workplace, a weed-infested urban neighborhood. In the entire railroad plant, Joe appeared to be the only man who had the vision to perceive challenging opportunities for action. The rest of the welders we interviewed regarded their jobs as burdens to be escaped as promptly as possible, and each evening as soon as work stopped they fanned out for the saloons that were strategically placed on every third corner of the grid of streets surrounding the factory, there to forget the dullness of the day with beer and camaraderie. Then home for more beer in front of the TV, a brief skirmish with the wife, and the day - in all respects similar to each previous one -was over."

Running, praying, and scriptures every day makes me happy and productive

Coming off our vacation I got out of my routine and for about a week afterward I just stopped going to the gym, I stopped running... And I stopped reading scriptures and got lazy with my prayers...

At any rate... This past Monday night, I was extra impatient with my kids, trying to get them into bed, etc, etc...

I decided to go to the gym for a quick run... Once back, I was in a much better mood. My daughter was still not asleep. I was able to talk to her much more gently, with much greater compassion. I've been running every since (and praying and studying)...

Its definitely not getting me to loose weight (my diet is not under control for that), but it makes me feel so much better. I can't live without my quick daily runs...

Thanks Sara for letting me do it.

The Financial Crisis - A Recap

I just heard a really great interview with the author of this book: http://www.amazon.com/Too-Big-Fail-Washington-System/dp/0670021253/ref=sr_1_1?ie=UTF8&s=books&qid=1256103580&sr=8-1
and a New York Times financial reporter.

The interview is here:

http://www.npr.org/templates/story/story.php?storyId=113938903

He gives a pretty graphic behind the scenes description of what happened during the financial meltdown...

What most people don't realize was how close both Morgan Stanley and Goldman Sachs and GE were, all three, in going bankrupt.

A few days after Lehman went under, AIG had to be rescued... Then Morgan Stanley, Goldman Sachs and GE were on the brink and would have went under except for a few things that happened (Morgan would have went taking out Goldman, taking out GE).

What saved them was allowing Goldman and Morgan Stanley to become bank holding companies and that Warren Buffet invested in Goldman and some Japanese investment firm invested in Morgan, this brought more money into those firms. Saving those firms saved GE... This save was only temporary. What really saved the companies and the entire system was the TARP money that came in October.

The author makes a point I really believe in. That Hank Paulson acted in good faith. That he really believed we were on the brink, and we probably were, and that he did what he did because he really believed he had to to save our entire economy - indeed the world economy.

He also makes the case that what's happening now is not right either. Both Morgan and Goldman are making record profits and giving their employees huge bonuses. To be fair, they are not making the same risky bets that were made before the crisis (author's words), although these profits have come through trading and winning on an increasing stock market..

But what's sad is these firms were bailed out by tax payers and there's not a firm recognition by these firms of that fact.

And the greater question is even bigger? What does this crisis tell us about capitalism.

The problem is that our system is designed to incentivize people to do what it takes to make money for the shareholders... Nothing about an obligation to the broader community as a whole, and that really is capitalism's greatest weakness because often what is good for a shareholder is not what's good for all of society...

A lot of what happened pre-crisis was legal but reckless and pretty evil. And many people want stronger regulation, which would probably help... But regulation is a flawed approach to this problem because we had regulation pre-crisis, but the regulators simply did not do their job.

Democracy and capitalism only work well when individual people as a whole are honest and ethical, work hard and try their best to do right by themselves and their community. In many ways we've lost that in our society, and we've lost it broadly.

I'm not sure government or regulation or new laws or anything else can really solve that problem.

Less than two weeks away

Thanks for so many of you for supporting are drive to raise money for diabetes research. I've previously posted about this here and here

Many of you have responded by registering for the walk, donating money, and passing on the message. We deeply appreciate that. For those of you who cannot, we understand and appreciate your support anyway. For those of you who want to support but have not yet done so, please do so now (or soon), time is running out. If you plan on walking, please register so we know.

I'm still trying to find someone to fund our t-shirts, but there's a chance we may not do t-shirts this year... But I have not given up yet. But hopefully that won't be a blocker for you...

Thanks again for your support.

As always here's our video:

The Case for Obama's Conservatism

What does it mean to be a conservative anyway? I don't know, but I prefer the definition that its a practical adjustment to events, with the intention of keeping the whole show on the road as coherently as possible. But that's probably being unfair to liberalism which could also fit into that definition. Many its a definition of a political moderate.

But when you truly feel that your country and nation is generally on the right track and you feel that you want to basically keep things as they are. Of course, nothing is perfect, and our country and our government, both those who serve and the institution itself, can be improved upon, can and should adjust to the challenges of a rapidly changing world. But by and large, I feel we have the institutions in place to do just that.

Which is why essentially I believe I am a conservative and its why I'm a supporter of Barack Obama because I feel that his style and substance matches closely to what our current global and national challenges require. His is a conservative approach, a pragmatic approach, which is why he is giving heartburn to those polarized on both sides of the political aisle.

For me its a good sign a politician is hated from both ends of the spectrum - it shows a willingness to compromise, a willingness to find the pragmatic center. Sometimes the center solution is not the right solution but its the best solution given the political winds that blow. Our political system is designed with two political parties diametrically opposed to one another, and especially on domestic issues where Congress has a lot of power, our political system sometimes requires the good instead of the best solution.

There's a good reason for this. So much better to mute a really good leader's ability to effect really positive change so that you can mute a really bad leader's ability to affect disastrous change.

Other times, the middle ground happens to be the exact correct solution. The Constitution was created as a result of many compromises - between big states and small, between those who wanted a strong federal government and those who wanted all of the power left to the states, and so on.

It struck the right balance.

So, call me a moderate, or a pragmatic, I call myself a political conservative.

On that note, I came across two links that strike just the right cord for me.

This post describes why the Obama administration acted in reality pretty timidly in response to the worst economic crisis since the Great Depression, both in respect to the bailouts and the financial crisis.

If you read progressive-minded economists like I do, they ripped Obama's (and Bush's) bailouts because they didn't go far enough. They wanted Obama to follow the Swedish model and to effectively take over the failing banks, recapitalize them with federal funds, and then turn them back over to the public sector (while first firing all of those blasted CEO's that got us into this mess).

And that is what, in fact, Christina Romer suggested was required:

"Romer believed that the banks wouldn’t lend again until they were well capitalized. For banks in severe stress, she favored creating a government-backed “bad bank” to take the toxic assets off the banks’ books and then recapitalize them with government funds—essentially a version of nationalization, and what the Swedish government had done during that nation’s financial crisis of the early nineties. This argument was quickly rendered moot because of the cost. There wasn’t much money left in the TARP kitty, and any chance of getting more from Congress had ended with that morning’s news: A.I.G., which had received a hundred and seventy billion dollars in federal money, had handed out multimillion-dollar bonuses to the executives responsible for the company’s demise. Axelrod said, 'The one thing that was absolutely clear was, we were not in a position to go back to Congress.'"

I've been having some pretty hardcore debates with some extreme progressives who wanted to see this kind of overt nationalization (temporarily) and many smart economists also favored this approach. But my argument was that it just wasn't possible politically even if it was the right thing to do.

And of course, most economists that I read believed the fiscal stimulus was far too small:

"I’ve seen a fair amount of commentary on the part of Ryan Lizza’s profile of the Obama economic team where Christina Romer recommends a $1.2 trillion stimulus proposal and they wind up with just a bit more than half of that out of deference to the tender sensibilities of the United States Senate. "

A significant portion of that stimulus came as tax cuts which were added as a way to win Congressional support no matter that they were the least effective portion of the stimulus.

So, on both accounts, probably the best response was a much more bold response. Obama instead was relatively tepid. The result was he did enough to avoid the worse and maybe enough to allow the economy to ever so slowly find the bottom and work toward a recovery, but not enough to really fully fix our most severe problems (our banks are still not lending, unemployment is still too high).

The side effects of a bank bailout that really did not lead to a necessary overhaul is that we have fewer banks (the smaller banks in trouble were allowed to fail via the FDIC nationalizing them for a very short time and reallocating their assets to other institutions), those banks are more powerful, and its unclear whether they've learned their lessons sufficiently to avoid another bubble/bust cycle.

But an overhaul would have been expensive and there's little chance Congress would have went along...

Now to the second link by Bruce Bartlett, a true conservative, one of the authors of the supply side economic philosophy that was so effective and such an important part of Reaganomics.

He outlines why tax cuts and other supply side aspects of Reagan's economic policies were so important in the early 1980's to address excessive demand in relation to supply, the resulting inflationary conditions and the high tax rates, and why those conditions do not exist anymore.

In many ways, George W. and Jimmy Carter are similar, both were inexperienced when they were elected president, both were ambitious and ideological, but unfortunately, neither ideology was appropriate for the problems they faced.

In so many ways Reagan was a breadth of fresh air. I was young when he was elected, but what he said made a lot of sense especially for the time he lived. Free trade introduced greater competition and brought more and better products into our markets. He had this sense of optimism and confidence and was able to face the communist threats effectively. He moderated his foreign policy stances at the right time, willing to reach out to previous adversaries when it made sense.

A while back I read this book about the history of North and South Korea post Korean war and I was impressed with the role Reagan played in helping South Korea make the transition from a military dictatorship into a free and open democratic country.

But the 1990's really was a transitionary decade and we live in a much different world now. And the economic problems we face right now are much more aligned to what we faced in the 1930's. But the Republican party has not evolved appropriately. Really, neither has the Democratic party.

But Obama really represents something new and in some ways is positioned to lead and evolution of the Democratic party into something contemporary and relevant. Currently there are no such leaders in the Republican party.

Bartlett makes many of the same arguments I've been making (not original with me, just a compilation of arguments I've accumulated from others that have made sense to me):

Bartlett first of all rips Bush's tax cuts and his economic policies in general:

"During the George W. Bush years, however, I think SSE became distorted into something that is, frankly, nuts--the ideas that there is no economic problem that cannot be cured with more and bigger tax cuts, that all tax cuts are equally beneficial, and that all tax cuts raise revenue.

These incorrect ideas led to the enactment of many tax cuts that had no meaningful effect on economic performance. Many were just give-aways to favored Republican constituencies, little different, substantively, from government spending. What, after all, is the difference between a direct spending program and a refundable tax credit? Nothing, really, except that Republicans oppose the first because it represents Big Government while they support the latter because it is a "tax cut."

I think these sorts of semantic differences cloud economic decisionmaking rather than contributing to it. As a consequence, we now have a tax code riddled with tax credits and other tax schemes of dubious merit, expiring provisions that never expire, and an income tax that fully exempts almost on half of tax filers from paying even a penny to support the general operations of the federal government."

The Republicans post-Reagan (and really during Reagan) adopted this "starve-the-beast" philosophy that didn't work:

"Indeed, by destroying the balanced budget constraint, starve-the-beast theory actually opened the flood gates of spending. As I explained in a recent column, a key reason why deficits restrained spending in the past is because they led to politically unpopular tax increases. But if, as Republicans now maintain, taxes must never be increased at any time for any reason then there is never any political cost to raising spending and cutting taxes at the same time, as the Bush 43 administration and a Republican Congress did year after year."

He also argued that Keynes was a conservative, in the sense that he was trying to save capitalism and that fiscal stimulus is only necessary when you hit the zero bound of interest rates. You just don't tax and spend to tax and spend...

"What both Keynes and Fisher said was that when the economy is in a deflationary depression the collapse of private spending had to be compensated for by public spending, because that was the only way to get money circulating and make monetary policy effective. While monetary policy would drive the recovery it needed fiscal policy in order to work."

"It seemed obvious to me right from the beginning that there was a close parallel between the causes of the Great Depression and the current crisis. The principal difference is that the former was caused by a collapse of the money supply resulting from the closure of many banks and the disappearance of their deposits, while the latter was caused by a fall in velocity resulting from a sharp decline in consumer spending following bursting of the housing bubble. (Because GDP equals the money supply times velocity, a decline in velocity has exactly the same effect as a decline in the money supply--nominal GDP must shrink, which causes both prices and output to fall.)"

"That analysis led me to support a large fiscal stimulus. Without public spending on goods and services I didn't see any way for monetary policy to be effective, thus prolonging the deflation at the root of the economy's problem. I was disappointed that so little of the February stimulus package went to the purchase of goods and services, which drives spending, and so much into economically ineffective transfers, which don't. But I understood that time was of the essence and that taking the time to design a better package would have required even more effort to overcome the economy's inertia, not to mention the political obstacles."

His conclusions are here:

"But as I try to explain in my book, my views haven't changed at all; it's circumstances that have changed. I believe that my friends are still stuck in the 1970s when tax rates were considerably higher and excessive demand (i.e., inflation) was our biggest economic problem. Today, tax rates are much lower and a lack of demand (i.e., deflation) is the central problem. I really don't understand why conservatives insist on a one-size-fits-all economic policy consisting of more and bigger tax cuts no matter what the economic circumstances are; it's simply become dogma totally disconnected from reality.

Nor do I understand the conservative antipathy for Keynes, who was in fact deeply conservative. He developed his theories primarily for the purpose of saving capitalism from some form of socialism. Same goes for Franklin D. Roosevelt, whose biggest economic mistake, I believe, was not that he ran big budget deficits, as all conservatives believe, but that he didn't run deficits nearly large enough until the war forced his hand. (I discuss these points in columns here and here.)"