Another rough day in the markets

It feels as if we are getting closer to the edge. The 10-year treasury was down in the 1.7s today.

More Marx

Now Businessweek of all places is arguing Marx is relevant again, even if his ideas are flawed.

As misguided as Marx was about many things, and as pernicious as his influence was in places like the U.S.S.R. and China, there are pieces of his (voluminous) writings that are shockingly perceptive. One of Marx’s most important contentions was that capitalism was inherently unstable...

But wait. What Marx and his acolytes underappreciated was capitalism’s power to heal itself. It may have been his fatal intellectual mistake

I think this just shows all the more clearly we need to rethink the economy in the 21st century, not go back to the 19th century

Stress and insomnia across America

The world feels grim right now. I think everyone feels a little trapped and under stress, as the economic outlook is clouding over. People are losing jobs or having to stay in jobs they have no option but to stick with for the time being. Change is speeding up and uncertainty is rife.

Europe looks worse by the day. Credit is out of control in China. The Middle East is on the boil, as the Palestinians seek a UN declaration of a state and the Arab Spring has storms.

And it's Monday morning.

It feels like 2008 again.

Of course, we must be resilient and also look for opportunities. I'm seizing the chance to refinance the mortgage at 3.25%, the lowest rate in sixty years. But a lot of the motivation is just having lower payments in a period of turbulence.

Things seem tight with tension, like a wound-up spring.

Barbara Ehrenreich's Bright-Sided: How Positive Thinking is Undermining America

I just finished reading Barabra Ehrenreich's book Bright-Sided, as a counterpoint to Martin Seligman's book that I discussed here.

She comes from an older left perspective, and has written vividly about the problems of the disadvantaged in books like Nickel and Dimed, which I enjoyed reading a few years back. 

Her main target is positive thinking. And by that she mostly means the Norman Vincent Peale-type of "visualize the money you want and you will get it" belief system that she traces back to the "New Thought" movement of Mary Baker Eddy and other 19th century thinkers.

Americans tend to be optimistic. But it was not the vast bounty of a new continent that made Americans incline to optimism, she says. Instead, it  arose in large part as a reaction against an older, darker Calvinist America which has almost disappeared, at least in formal conscious terms.

Americans did not invent positive thinking because their geography encouraged them to do so, but because they had tried the opposite.

People trembled that they were already damned beyond any hope, because they were not part of the 'elect' that God had chosen before they were even born. Many people, especially women, were stricken by 'neurasthenia' and confined to bed for weak nerves for much of their lives.

"New Thought" released people from this, and encouraged the belief that one could influence the world by wishing for things or by force of will.

The problem is this spiralled into stupidity over the decades.  It became attractive to shallow salesmen of all kinds and in due course ended up as the 'prosperity gospel'.  Some people evolved an undemanding Christianity which consisted of soliciting God for piles of cash or a new mercedes. The "law of attraction" suggested people could get what they want simply by wishing for it, or meditating on a picture of money.

All of this is open to ridicule, and ridicule it she does. She attacks Rick Warren in particular for blurring the difference between corporate and religious leadership.

Then her problems start. She turns her attention to attacking Seligman and positive psychology as well. But here she seriously misfires. She acknowledges

Positive psychologists are usually careful to distance themselves from the pop versions of positive thinking... Seligman dismissed pop positive thinking as "fraudulent" and promised that, within a decade, "we'll have self-help books that actually work." Positive psychologists do no subscribe to the law of attraction or promise to make their readers rich. In fact, they have a certain contempt for wealth - not uncommon among academics - and focus instead on the loftier goal of happiness and all the benefits, such as health, that it supposedly confers. (p148)

So does mean she separates recent positive psychology from older sales babble? No. She seeks to implicate Seligman and others in pop positive thinking in a kind of guilt by association argument anyway.

Indeed, she cynically argues that positive psychology can be explained by a fearful psychology profession reacting to the introduction of effective anti-depressants in the 1990s.

..these could be prescribed by a primary care physician after a ten-minute diagnostic interview, so what was left for a psychologist to do? (p150)

She has even deeper problems with her argument. She reads Seligman's previous book, Authentic Happiness;

But just as he seems to be on the verge of embracing hedonism, or at least a kitschy version thereof, he pulls back sharply in a burst of Calvinist disgust, enjoining the reader to  "strive for more gratifications, while toning down the pursuit of pleasure... Abandoning the positive emotions , Seligman's book goes off in search of "character", which he admits is a Calvinist-sounding concept - "nineteenth-century Protestant, constipated and Victorian."

So here is the thing. Ehrenreich is desperate to implicate Seligman in the foolishness of "visualize a pile of money and you will get it" pop positive thinking. But he actually turns out to not only reject that view completely, but if anything fall on the other side of her huge Calvinist/post-Calvinist divide.

He is saying something wholly, completely different to the vapid positive thinking she attacks, but she cannot bring herself to quite acknowledge this.  At best, her argument is blurred and confused. At worst, it is wilful misrepresentation.

What most annoys Ehrenreich, however, is her claim that positive psychology is in practice a conservative way to prop up the status quo, in the interests of those in power.  It

today offers much to warm the most conservative hearts, including its finding that married and highly religious people - preferably fundamentalists, are happier than other people, as are political conservatives. Happiness, after all, is generally measured as reported satisfaction with one's life - a state of mind perhaps more accessible to those who are affluent, who conform to social norms. who suppress judgment in the service of faith, and who are not overly bothered by societal injustice. (p169)

If there was something to positive psychology,  this would be deeply threatening to the left. If conservatives in practice are happier than liberals, then there must be something wrong with the concept of "happiness".

She sees it as an excuse for indifference or inaction:

Positive psychologist's more important contribution to the defense of the status quo has been to assert or "find" that circumstances play only a minor role in determining a person's happiness.... Indeed, if circumstances play only a small role - even 25% - in human happiness, then policy is a marginal exercise.  Why advocate for better schools and jobs, safer neighborhoods, universal health insurance, or any other liberal desideratum if these measures will do little to make people happy?  Social reformers, political activists and change-oriented elected officials can all take a much-needed rest.  (p171-2). 

(My bold). This is the heart of it. If happiness or well-being is the objective of social policy, it could weaken or undermine the rationale for many of the old left's favorite programs - which she naturally strongly favors. And this is why she is so desperate to smear Seligman and others with the taint of pop positive thinking, even when the ideas do not fit in her "positive thinking v Calvinism" framework at all.

Positive psychology might not undermine the objective of programs - such as better schools. Indeed, much of Seligman's work is on improving educational outcomes. But it would make it much more difficult for people to argue that the problem of schools or poverty is simply one of "more resources" or "redistribution" alone.

It would also put more of a spotlight on consequences and outcomes rather than simply budgets.

She goes on to blame positive thinking for the financial crisis. She cites, for example, the "happy conviction" that prevailed inside Countrywide Financial, the company which is the poster child for the subprime credit disaster.

She somehow neglects to mention that subprime and loose mortgage standards were pushed as a policy objective by Democrats, who saw it as a way to boost minorities and the poor in precisely the activist way she celebrates. The government eventually lost $300 billion having to bail out the government-sponsored enterprises, Fannie Mae and Freddie Mac, which had become the most powerful lobby of all in Washington. Millions of poor people and minorities lost their homes to foreclosure.


She finishes with an appeal to "realism":

The effect of positive "thought control", which is always presented as such a life-preserver, has become a potentially deadly weight - obscuring judgement and shielding us from vital information. .. How can we expect to improve our situation without addressing the actual circumstances we find ourselves in? .. Worldwide, the most routine obstacle to human happiness is poverty. (p205-206)

She seeks to turn the argument back to traditional  liberal priorities.

For centuries, or at least since the Protestant Reformation, Western economic elites have flattered themselves with the idea that poverty is a voluntary condition. The Calvinist saw it as a result of sloth and other bad habits; the positive thinker blamed it on a wilful failure to embrace abundance. (p206).

And here is ultimately the source of her hostility. It is the old argument about deserved versus undeserved poverty.

It is pointless to discuss well-intentioned government programs if they do not actually work in practice. This is one point which eludes her and much of the traditional left.  See my post on record poverty levels in the US after forty years of Great Society spending here.

We have spent trillions and - apparently - poverty is as bad as ever. We need to think about what we can do about that. Simply transferring income does not solve the problem.

So ultimately I see the book as justified in its attacks on pop positive thinking. But it is a hatchet job in bad faith when it comes to positive psychology. The reason is political motivation, if not outright political panic. It raises uncomfortable questions about the nature and outcomes of social policy.  And those questions ought to be asked.