Podcast • May 11, 2012

Dan Ariely on the “Irrationality” of American inequality

Dan Ariely of Predictably Irrational fame, makes the arresting point that from the standpoint of fairness and equity in the distribution of wealth and power, the vast majority of Americans (90-plus percent) would prefer to ...

Dan Ariely of Predictably Irrational fame, makes the arresting point that from the standpoint of fairness and equity in the distribution of wealth and power, the vast majority of Americans (90-plus percent) would prefer to be living in Sweden. Which is to say: Mitt Romney’s scariest nightmare, “a European-style welfare state,” may be just the briar patch that most of us Bre’r Rabbits long for.

Dan Ariely is the Israeli-American psychologist, now at Duke, who has made a big name and career in the Dan Kahneman school of “behavioral economics.” The special Ariely gift is for surveys and social experiments that probe the gap between what we want and what we choose when we buy a house, pick a mate or vote for president. I’m bringing to the conversation my own probe for symptoms and causes behind Tony Judt‘s dying diagnosis, in Ill Fares the Land, that “something is profoundly wrong with the way we live today… We cannot go on living like this.”

Main roots of Judt’s and our own unease seem to pop right out of Dan Ariely’s experimental surveys — typically clever in their simplicity. First, when he asks his thousands of respondents to estimate the real division of wealth in the US, and then to propose an ideal distribution, we Americans confirm our sentimental attachment to a polite tilt of privilege. We cherish our mythic legacy of quasi-egalitarian social democracy, with no extreme concentrations of wealth or poverty. But what our answers really confirm is our delusion about the economy we live in now. The top 20 percent of the people in fact own 84 percent of the goods, and the bottom 40 percent of us, barely floating on a sea of debt, own less than half of one percent of the wealth of the nation. We live across roughly double the rich-poor gap measured in Germany, Japan and Denmark. By the standard “Gini coefficient” of wealth inequality, the US ranks with Turkestan and Tunisia, just a tad more equal than Chad and Sri Lanka.

The second key question in Ariely’s survey is even simpler; the answer is a slam dunk. Respondents were shown two pie charts — one with the actual American shares of wealth, in which 60 percent of the population nearly disappears with less than 5 percent ownership altogether; in the alternative, modeled on Sweden, the top 20 percent owns 36 percent of the wealth (almost double its claim by sheer numbers) and the bottom 20 percent owns 11 percent (about half its numerical share). In Dan Ariely’s study (with Michael Norton of the Harvard Business School), 92 percent of us Americans want to live Swedish-style instead. Women (93 percent in favor of the Swedish model) are a ever so slightly more egalitarian than men (90 percent for Sweden). But the results come out very nearly the same — Republicans and Democrats, richer and poorer, NPR listeners and readers of Forbes Magazine.

What we hear eternally in political chatter is Joe the Plumber’s dread of “spread the wealth” government, and Newt Gingrich’s alarm about “European Socialism.” And now the screech from Mitt Romney’s ex-Bain partner Edward Conard in the Times Magazine that we need bigger payoffs and “twice as many people” in the high-end investor class — in short, that we need a lot more inequality. But Dan Ariely’s evidence is that in the most steeply skewed social order in the industrialized world, we’re miserable about being skewered on the contradictions in a proud democracy that’s eroding fast at the foundations.

Dan Ariely brings, yes, the social-democratic biases of the Israeli left. He is imprinted unmistakably — body and soul — with the scars of severe burns he suffered as a teenager in a freak explosion: his face and most of his skin were remade over three excruciating years in hospital, all of the immeasurable expense covered by Israel’s socialized healthcare. Without it, as he told me, his family would have been bankrupted, his care might well have been curtailed.

The hope in Dan Ariely’s forecast for American politics and culture is for people who can hold out a while. How much do we need to change? I asked him:

A lot. I’m not a Biblical scholar, but after Moses came down from the mountain and saw the people of Israel celebrating the Golden Calf, God basically punished them by getting them to walk in the desert for 40 years, so that a generation would die. It might take a generation. That might be a reasonable time scale. The current generation that is running things might not be the right one. It might be that the generation that went to college during the financial crisis is the right generation — even if a lot of them are out of work. They’re thinking about what to do. They don’t have the Princeton-to-Wall Street path. They’re thinking of other things they might do with their lives, and because they don’t necessarily have jobs they are open to following their passions. My understanding is that volunteering is up. People are trying all kinds of things. There’s an increasing interest in graduate degrees — education is always counter-cyclical to the economy. This is a generation that saw the breakage of some ideologies of perfect capitalism, ready to revise their thinking. And they might be the right people to envision a new approach. The protests are a good signal. They’re a step in the right direction.

Dan Ariely with Chris Lydon in Boston, May 2012

Podcast • February 25, 2011

Peter Hessler’s New China: Is this any way to live?

Peter Hessler, covering the new China for The New Yorker, made himself the rising star of the John McPhee school of reporting. It’s not just that he’d taken McPhee’s writing course at Princeton — known ...

Peter Hessler, covering the new China for The New Yorker, made himself the rising star of the John McPhee school of reporting. It’s not just that he’d taken McPhee’s writing course at Princeton — known sometimes as The Literature of Fact. (“I prefer to call it factual writing,” McPhee has said.) It’s more that Hessler got the hang of circling a vast subject until the proportions of the story reveal themselves. (“Cycles of one year, fifty years, a thousand years: all these different cycles spinning around…” as McPhee put it, about his masterpiece on Alaska, Coming into the Country). In China, Peter Hessler made it a habit to return on schedule again and again to families and factories that intrigued him; sometimes he had five years’ observation under his belt before he began to write his story — in The New Yorker and then in books like Country Driving, his latest. Our conversation here is about the unconventional fruits of that long grazing — not least the discovery that this “new China” we find so challenging is just as new and maybe much more pressured and exhausting for the Chinese. The Wei family, for example — Hessler’s friends and neighbors in a small town north of Beijing — set the pattern over the last decade of spiking prosperity and crashing all-around health.

I was with [Wei Ziqi, the father of the Wei family,] through a number of events, including his son’s becoming very sick, to the point where his life was in danger and Wei Ziqi and I, and the other family members had to work together to try to get him medical care… The next year is when his business really started to take off. One thing that really struck me was that he had been so incredibly calm while his son was sick, very rational and easy to talk to and amazingly stoic, and I found him much more unsettled by his initial business success. … Then I realized, people in this village are used to people being sick, they’ve been through this before, that’s an experience that they know how to handle in a sense. But they’re not used to having a loan out, they’re not used to having a new business, they’re not used to trying to interact with city folk who are customers, and that was harder for him. … In America, people who had gone through this illness with a child would have been devastated at points, and he never had that reaction. But he was much more stressed by having a loan, which doesn’t stress out Americans very much (maybe it does now).

Business in China comes with a lot of vices. When I first met him, he had a very healthy lifestyle, he was working in the fields and so on. In China, if you’re a business man, you smoke. It’s part of the routine … it’s a very important type of communication between males in China. … Most men doing business smoke. So he started smoking, he also started drinking. … The more successful he became, the more he smoked and the more he drank.

Peter Hessler in conversation with Chris Lydon in Boston, February 9, 2011.

Peter Hessler lives and writes in Colorado now, waiting a New Yorker assignment to the Middle East. He came home at a moment when “Americans are not feeling great about themselves,” but he’s been feeing what we take for granted: striking examples of “common decency” every day in America, people volunteering serious time and talent to local life, social involvement not to be observed in China. What he remembers about China is “energy… buzz, people on the move. They are good-humored people. They get the joke.” What he notes about both places is that “It’s not a race. It’s not a zero-sum game. I don’t think it’s as directly competitive as people say. China and the US have been good for each other over the last twenty years. It’s great for the US that this has been a stable part of the world.”

Podcast • October 1, 2010

John Mearsheimer: Why does a smart country act so stupid?

When Barack Obama delivered his defining “dumb war” denunciation of war against Iraq in October, 2002, he was a state senator standing in at Chicago’s first big anti-war rally for the invited keynoter, John Mearsheimer, ...

When Barack Obama delivered his defining “dumb war” denunciation of war against Iraq in October, 2002, he was a state senator standing in at Chicago’s first big anti-war rally for the invited keynoter, John Mearsheimer, who’d been booked elsewhere.

It was John Mearsheimer, the foreign policy scholar at the University of Chicago, who’d drafted the ad — op-ed in the New York Times on September 26, 2002 — that I keep pinned over my desk 8 years later. “WAR WITH IRAQ IS NOT IN AMERICA’S NATIONAL INTEREST,” was the headline. Signed by 33 university-based analysts, the ad was a marker then of rare vision, independence and mettle in the “expert” ranks. (My interviews with these uncelebrated heroes are here). Their ad came to stand also for the sorry truth that hitting the target smack-on in these surreal times is not often a good career move. All of that was before Mearsheimer and Stephen Walt at Harvard wrote the book that made them famous, The Israel Lobby.

In conversation here at Brown this week, Mearsheimer is reviewing a course that’s been “all down hill” for nearly a decade. We face four big unfixable fiascos abroad, in the Mearsheimer brief — all legacies of the “radical, reckless” George W. Bush. Afghanistan is being driven by demography and war back into Taliban control. Iraq, centrifugal by nature, continues to tear itself apart. Iran is not about to foreswear nuclear sophistication. And Israel, hell-bent on extending settlements, will defy the world’s pressure for a two-state deal with Palestinians; a Greater Israel, with apartheid rules, will be “a festering sore” on the American imperium for decades to come.

For President Obama, Mearsheimer sees no ways out, no “clever strategies” at hand. Obama might better have told the country in the Spring of 2009 that, on sober review, our problems were beyond solving any time soon — that we had to lower expectations and be prepared to shift directions. But Obama has mostly stayed the Bush course with softer rhetoric; and lots of people are angry at him because none of the problems are getting fixed.

Mearsheimer makes (to me) the intriguing argument that the great snare and delusion on the way to these quagmires was the first brief “successful” war on Afghanistan in the autumn of 2001. What felt like a quick and easy toppling of the Taliban so soon after 9.11 persuaded the Bush warriors that the combination of air power and special forces could wreck regimes and install puppets almost overnight. This was the premise for the invasion of Iraq — with dreams of turning over Syria and Iran after that, on the way to transforming the Arab and Muslim worlds. In time, that Afghan victory proved a “mirage” and a trap. The Taliban hid out, then resurged. Hamid Karzai proved both incompetent and corrupt. Iraq proved to be a bottomless quagmire, and nine years later we are still bleeding in Afghanistan.

The confounding riddle for Mearsheimer in all this is why the upper reaches of the American establishment have been so slow about examining the damage, so stubbornly set in doctrines that don’t work. He underlines the correspondence between the Iraq disaster and the money meltdown that Michael Lewis memorably set out in our conversation about The Big Short last spring:

The big question in the United States is how is it that a country with so much intellectual capital could have screwed up not just foreign policy so badly, but the economy as well. … Virtually all the economists and all the key business people thought that the American economy was in terrific shape, and hardly any of them foresaw the tsunami that hit us in 2008. Something is fundamentally wrong here.

Let’s go back to the discourse about the Iraq war. The fact that so few prominent people in the national security establishment foresaw a problem here is really quite remarkable. I don’t think you had to be very smart to understand that invading Iraq was likely to lead to disaster. …

So this leads us to the question: what is wrong in the United States? How is it that a country with all this intellectual capital could have been simultaneously wrong about two such fundamentally important issues, the economy and foreign policy?

Truth be told, I don’t have a good answer.

John Mearsheimer with Chris Lydon at the Watson Institute, Brown University, September 27, 2010.

Podcast • September 27, 2010

Robert Reich: Soak the rich for their own good

Robert Reich is the point man in economics of the “Democratic wing of the Democratic Party,” as Howard Dean used to say. That is, he’s been the burr under the saddle of the Wall Street ...

Robert Reich is the point man in economics of the “Democratic wing of the Democratic Party,” as Howard Dean used to say. That is, he’s been the burr under the saddle of the Wall Street wing that chased Reich, as Secretary of Labor, out of Bill Clinton’s Cabinet after the first term. Robert Rubin, imported from Goldman Sachs to reshape Clinton’s thinking and de-regulate finance, used to threaten to quit if Secretary Reich kept railing about “corporate welfare.” But it was Reich who left, and Rubin who stayed in the saddle, burr or no — who became Treasury Secretary and sponsored Larry Summers as his successor; the same Rubin who made Summers president of Harvard and then, after the meltdown, put his own and Wall Street’s stamp on the Obama era, too.

Reich’s new tract Aftershock, neatly coincidental with Larry Summer’s retirement from the White House, is a polite populist’s effort to seize a teachable moment in this season of anger. The disease in the economy and the public mood, he’s arguing, is not debt; it’s not even that we’re living beyond our means. It’s the 30-year trend to an obscene concentration of wealth — one percent of the population reaping more than 20 percent of the income — that has so diminished the means, so drained the purchasing power of the average American. Few politicians and policy wonks are as clear as Reich about the remedy to rebalance and build the whole economy: boost all incomes under $50,000 with direct supplements; and restore real taxes on the biggest earners with a marginal rate of, say, 55 percent. Today’s pattern of concentration, speculation, bust and stagnation recapitulates the crisis of the Great Depression, he’s saying. And it calls again for a Great Teacher:

What Obama needs to do is connect the dots. Americans don’t see the big picture. They don’t see the narrative. They don’t hear the story. They don’t understand that we’ve had three decades of flat wages, that almost a quarter of all income is now going to the top one percent. They don’t understand the connections between all of these issues and problems. They don’t see that there is a large tapestry here. A leader needs to weave that tapestry, show how one thing is related to another. We’ve not had a president who did that since Ronald Reagan. The tapestry he wove was the wrong tapestry; it bore no relation to reality. But at least he explained. He showed how “a” relates to “b” relates to “c”. He did connect the dots…

Robert Reich with Chris Lydon in Cambridge, September 24, 2010

Podcast • June 3, 2010

Nassim Nicholas Taleb: The "Fragility" Crisis is Just Begun

Nassim Nicholas Taleb is one of the great wiseguys or wisemen of the moment. Quite possibly both. For a world that wants better than the fatuous “perfect storm” account of the economic meltdown — or ...

nassim-taleb.jpg

Nassim Nicholas Taleb is one of the great wiseguys or wisemen of the moment. Quite possibly both.

For a world that wants better than the fatuous “perfect storm” account of the economic meltdown — or of BP’s gusher in the Gulf, or of 9.11 for that matter — Taleb has revised and extended his cult classic, The Black Swan. His anomalous “black swan” (since swans are by definition white) has three properties: it’s (1) any one of those unforeseen developments that comes (2) with big consequences and (3) a concocted cause-and-effect after-story. In conversation, Taleb is trying to get us to let go of “causes” and fix on the word “fragility.” He is explaining — sometimes elliptically, aphoristically, through metaphors, jokes and old folk wisdom — why “the economic crisis has barely begun,” why indeed we seem to have entered the Age of the Black Swan.

In a Letterman List, our conversation might be reduced to this:

10. Mother Nature is robust. Large modern corporations are fragile.

9. When the big bridge collapses, the “news” interest will be in the last truck that made it over, when the real story should be about the fragility of the bridge.

8. Somewhere in every Black Swan story there’s a turkey. The turkey has a clear understanding of history, and of growth. The nice farmer feeds him every day, and the turkey keeps getting fatter. Then comes Thanksgiving. It’s a Black Swan for the turkey. But not for the butcher.

7. We can say safely that the Black Swan started entering society with agriculture, with the fact that we started settling. Complexification started then… In my tableau of what’s fragile and what’s robust, the nation-state is a fragile entity, whereas city-states are more robust. So the creation of the nation-state created this big unpredictable event, that First War. Even those who saw it coming didn’t see the damage it was about to cause. So the First War probably is the most consequential one, and it came in two volumes…

6. I think that today we are entering a different world of Black Swans because of the Internet.

5. Newspapers make us stupid. They overexplain with “causes” of things that can’t be checked. And because they are driven by the sensational, they misrepresent risk. I prefer the social filter of news, over dinner or lunch. Anything that draws me away from face-to-face contact is harmful to my health.

4. Grandmothers had a rule of thumb after the Great Depression: work and save for a few years before you get into risk… Unpredictability and debt are not friends.

3. On bailouts: My analogy is to the gambler who is now gambling with the trust fund of his unborn great-great-granchildren… Prudence should be the first thing on the agenda of governments, not speculation. Stimulus packages are speculation… We are gambling on a massive recovery. It’s too big a gamble, and besides it’s immoral.

2. In the economic crisis, and in the Gulf of Mexico, what we should be discovering is not who made what mistake, but the fact of fragility. Alas, what we don’t learn is… that we don’t learn.

1. No government can fortify something that’s inherently fragile.

Quotes and paraphrases from Nassim Nicholas Taleb with Chris Lydon in Providence, June 2, 2010.

Podcast • April 14, 2010

James Kwak: The Problem is Bank-o-cracy

Click to listen to Chris’s conversation with James Kwak. (42 minutes, 19 mb mp3) James Kwak extends Michael Lewis’s point and feeds my fascination with apocalyptic hysteria and helpless torpor as the twin markers of ...

Click to listen to Chris’s conversation with James Kwak. (42 minutes, 19 mb mp3)

James Kwak extends Michael Lewis’s point and feeds my fascination with apocalyptic hysteria and helpless torpor as the twin markers of American politics these days. He makes it believable that the angry Tea Party wackitude in the far countryside and the smug sleepiness inside the Beltway and the media mainstream are both symptoms of the same “quiet coup” that James Kwak and his writing partner Simon Johnson diagnosed in The Atlantic last Spring.

To Simon Johnson, former chief economist at the International Monetary Fund and now professor of entrepreneurship at MIT, the deeper condition of the American republic looks all too familiar. The essential problem — easily recognizable if we were looking at, say, Thailand or Korea or Russia — is known in the trade as “state capture,” meaning the accretion of overwhelming political power by a financial elite, an oligarchy, known in our case as Wall Street, or in the title of the riveting analysis by Johnson and Kwak, Thirteen Bankers. The idea of “capture” extends by now past the political parties, Congress and the controlling agencies of the executive branch. James Kwak, in conversation, quips that “capture” encompasses “media capture,” too, and “ideology capture.” And the same oligarchy seems to be working its will in foreign as well as domestic misadventures:

JK: One of the parallels between the financial crisis and the Iraq War is that despite all the things that have gone wrong we still have largely the same people. We see the same people on TV, the same people in Congress telling us how we should understand the crisis and what we should do next. And during the Bush Administration people were saying, “Why didn’t anyone get fired for the Iraq War?” And the same question applies now: Why hasn’t anyone been fired because of the financial crisis?

I think there’s another parallel as well, which is that, again, the cover-up that’s going on by Wall Street today is this idea that the financial crisis was an accident, that it was a lot of people making mistakes—it was lenders making bad lending decisions, and homebuyers making bad borrowing decisions, and rating agencies making bad decisions when they rated these toxic securities, and unbelievably these investment banks holding onto their own toxic assets, and then regulators being asleep at the switch.

CL: Perfect storm.

JK: Yes, exactly. It’s the perfect storm theory. And what they’re trying to do is they’re trying to analogize the financial crisis to a natural disaster. How do you blame someone for a natural disaster? And you hear the same language from the Administration. You hear Timothy Geithner saying, “Well, do we want to protect against a hundred-year flood or a 30-year flood?”

I think this is all deeply wrong, and it’s an exact parallel to the Iraq War. Because you know, as we all remember, we invaded Iraq, we didn’t find Weapons of Mass Destruction, and what did people say? They said, “Oh, it was bad intelligence.” So people gathering the intelligence made mistakes, people analyzing the intelligence made mistakes, people brought the intelligence to President Bush and Vice President Cheney and they made an error of judgment because of the bad intelligence, and then a majority of the Congress went and voted for this war because they had been misled. It’s the same idea. It’s the same idea that it’s all an accident, it’s not our fault, it’s somebody else’s fault and it was just a big mistake. And in both cases that is just fundamentally wrong. I mean, we invaded Iraq because our political leaders wanted to invade Iraq, and our Congress voted for it because they did not want to be seen as voting against a war in the run-up to an election, and that’s all there is to it.

And with the financial crisis: I’m not saying that bankers wanted the financial crisis, but they engineered it. They engineered a climate of deregulation and non-regulation that allowed them to invent whatever products they wanted to, sell them to anyone they wanted to, increase their leverage so that they could make larger and larger profits, and they engineered that consciously. This was the product of intention, and it was bound to blow up. And it finally blew up. And that is the message that Wall Street does not want people to hear. They want people to think it was all a colossal mistake made by well-meaning people who had mistakes in their models. That is not what happened.

James Kwak in conversation with Chris Lydon in Boston, April 12, 2010.

Podcast • April 12, 2010

Michael Lewis: Our Appetite for Apocalypse

Michael Lewis is the non-fiction novelist of our apocalyptic American mindset in 2010. The heroes of The Big Short, as he puts it in conversation “were betting on the end of the world… The only ...

m lewis redoMichael Lewis is the non-fiction novelist of our apocalyptic American mindset in 2010. The heroes of The Big Short, as he puts it in conversation “were betting on the end of the world… The only characters you can really trust are the people who are delivering a very, very dark message.”

Michael Lewis, remember, was never really a sportswriter, despite Moneyball, Coach and The Blind Side. Nor was he ever a finance guy, despite the prescience of Liar’s Poker and his sure touch now with the Wall Street collapse of 2007-2008. Michael Lewis’s real business and his genius instinct is for resonant social fables that just happen to play out on ballfields and bond markets.

The Big Short is a high literary feat, complete with a real-life “unreliable narrator,” a particularly despised contrarian bond dealer, Greg Lippmann, who was betting brazenly against his own market. “The guy selling the best ideas is a completely untrustworthy character,” the author remarks. The true center of The Big Short is an atmosphere of anxiety that has developed a taste for the catastrophic. Lewis’s short-selling characters resonate because they’re acting out our common sense of “the probability of extreme change” in financial markets and in real life. It’s an anxiety that envelops Tea Baggers and Greenpeaceniks in the same cloud of anger.

ML: The broader thing about all these characters to me is that their attitudes, their approach to life, their ability to hear the data, was something that was marginalized in the system itself. They didn’t belong, none of them belonged, and they should have belonged. What is it about the system that doesn’t want them as a part of it? And it’s terrifying when all the people who were wrong are in charge, and all the people who are right are on the outside.

CL: It sure is. To me there’s a direct analogy to be drawn with the war in Iraq. The Congress signed off “oh well, he must know something.” Tony Blair embraced it. The media by and large encouraged it. A very, very few people said “are you kidding?” And yet the ones that warned against the war in Iraq got the same prize that your guys got for warning of the meltdown.

ML: Yes. Ostracism.

CL: Exactly, and they’re still ostracized.

ML: It’s funny. There is an analogy. And the analogy is there’s a kind of a blind faith in leadership that is the result in both cases of ordinary people feeling they can’t evaluate the situation because it’s too complicated. The financial system got so complicated, and the complexity became opacity. When Alan Greenspan stands up and says something, no one understands what he’s saying. But they think that’s a good thing, because it’s all so complicated they shouldn’t understand what he’s saying. And the fact is they should. The fact is, if things aren’t being explained in a way you and I can understand them, it should be a bad sign, not a good sign. But the complexity was turned on its head. It was used as a way to mask bad things that were happening.

There’s a joke in it all. The joke is that the financial system, and there are analogies to the political system, but the financial system wanted to do something it really shouldn’t do. It wanted to make lots of loans that it shouldn’t make. They created all this risk that was going to blow up the system. In order to do that they needed to disguise the risk. So to disguise the risk it used all this complexity, which served as a smokescreen. And the joke is that it ended up disguising the risk from itself. That the very people who created the smokescreen were engulfed in it, and they couldn’t parse the system they created.

Michael Lewis with Chris Lydon in Boston, April 7, 2010.

Podcast • September 26, 2008

Candid Capitalist: John Bogle

John Bogle of Vanguard We asked the legendary investor, John C. Bogle, patriarch of the trillion-dollar Vanguard family of funds, for wisdom that would get us past the weekend in this financial rockslide. He sees ...
John Bogle of Vanguard

We asked the legendary investor, John C. Bogle, patriarch of the trillion-dollar Vanguard family of funds, for wisdom that would get us past the weekend in this financial rockslide. He sees an avalanche and three years of severe pain ahead, but something less than Armageddon, and no reason to realize Sarah Palin’s vision of another “great depression,” except that the Washington cast in the drama so far has been inept. “Embarrassing,” he said. John Bogle is famously a “value investor,” not a speculator. The overgrown financial sector of the economy is doomed, he says. But “America will continue to grow,” even in “fettered capitalism,” or whatever it comes to be called. And healthcare, technology, energy and consumer-product stocks will prove yet again to be good buys.

Click to listen to Chris’s conversation with John Bogle (30 minutes, 14 mb mp3)

Bogle is an insider who thinks, writes and invests like an outsider. At 78, he is a prolific, incisive, often philosophic observer who has written eight (8) books, best-sellers among them, since his heart transplant 11 years ago. He has always spoken as a common-sense sort of common man and often a very tough scold of his own industry.

We were looking for nest-egg advice and the broadest brushstrokes on the crisis. If Warren Buffett can get a guaranteed 10-percent return on his investment in Goldman Sachs, what stake should the taxpayers get for the companies they will bail out? Where, as Ralph Nader asks, is the shareholder uprising? If this is the end of market capitalism as we’ve known it, what is the common-sense name for the alternative system we are backing into?

I’ll tell you something about capitalism — and I somehow remember this, I don’t know how, from the first edition of Paul Samuelson’s textbook ‘Economics: an Introductory Analysis’ — my first taste of economics at Princeton University in 1951 — and what Paul Samuelson said in his introduction was, ‘The problem with capitalism, like the problem with Christianity, is that it’s never been tried.’

John Bogle, in conversation with Christopher Lydon, September 26, 2008.

Podcast • September 23, 2008

Slavoj Zizek: What is the Question?

The Elvis of the intelligensia, Slavoj Zizek, hot-links in our one-way conversation… …from nominating George W. Bush (for his trillion-dollar bail-out) to the Communist Party to Kung-Fu Panda, …from John McCain (“Bush with lipstick”) to ...

The Elvis of the intelligensia, Slavoj Zizek, hot-links in our one-way conversation…

…from nominating George W. Bush (for his trillion-dollar bail-out) to the Communist Party to Kung-Fu Panda,

…from John McCain (“Bush with lipstick”) to Naomi Klein,

…from Barack Obama’s risk of the “John Kerry syndrome” to the experience we’re all having of putting on the reality sunglasses in John Carpenter’s “They Live,”

…from the movies “Fight Club” and “300” (which he says left-populists should be studying) to his reading of gold-digger Kate Croy in Henry James’ Wings of the Dove as a plausible model of political militancy,

…from Immanuel Kant’s notion of the sublime, to racist jokes with a moral purpose.

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In New York on the last day of an American tour, absorbing the demise of Yankee Stadium and maybe of Wall Street as we thought we knew it, Zizek’s talk is a blast-furnace but not a blur. The theme through all Zizek’s gags is that the financial meltdown marks a seriously dangerous moment — dangerous not least because, as in the interpretation of 9.11, the right wing is ready to impose a narrative. And the left wing is caught without a narrative or a theory. “Today is the time for theory,” he says. “Time to withdraw and think.”

Dangerous moments are coming. Dangerous moments are always also a chance to do something. But in such dangerous moments, you have to think, you have to try to understand. And today obviously all the predominant narratives — the old liberal-left welfare state narrative; the post-modern third-way left narrative; the neo-conservative narrative; and of course the old standard Marxist narrative — they don’t work. We don’t have a narrative. Where are we? Where are we going? What to do? You know, we have these stupid elementary questions: Is capitalism here to stay? Are there serious limits to capitalism? Can we imagine a popular mobilization outside democracy? How should we properly react to ecology? What does it mean, all the biogenetic stuff? How to deal with intellectual property today? Things are happening. We don’t have a proper approach. It’s not only that we don’t have the answers. We don’t even have the right question.

Slavoj Zizek of In

Defense of Lost Causes, in conversation with Chris Lydon, September 22, 2008

It’s almost impossible, I discovered anew, to interrupt Zizek. And impossible also to stop listening. Here’s the experiment: if you can break out of the Zizek spell, leave a comment, please, about where and why he lost you. He had me to the end.

Podcast • May 14, 2008

Bad News in High Style: Kevin Phillips

Kevin Phillips: how bad is it really? People I know count on Paul Krugman in The Times to give us all the bad news we can believe in. But Kevin Phillips (a Nixon-brain turned populist ...
kevin phillips

Kevin Phillips: how bad is it really?

People I know count on Paul Krugman in The Times to give us all the bad news we can believe in. But Kevin Phillips (a Nixon-brain turned populist grand historian) not only trumps Krugman in the Cassandra Stakes, he also explains why Krugman and media in general have gone soft and squishy (“now that the financial clouds have lifted a bit”) on the global apocalypse coming in the convergence of our housing collapse, the explosion of public and private debt, the fall of the dollar, the rise of (a) China and (b) $125 oil, and the consolidation of finance (the debt business) as our leading industry. Phillips notes that the best of big media, meaning the Times, the Wall Street Journal and the Financial Times, hate to be out front with bad news. And Krugman, the best of the best, is too heavily invested in the Clinton Democrats’ myth of a renewable once-and-future politics of prosperity — and too polite to dwell, for example, on the financialization of the Clinton campaign base. Nobody I know tells the story of catastrophe with higher style and a broader sweep of knowledge than Kevin Phillips — in his new book, Bad Money and in conversation here:

Click to listen to Chris’s conversation with Kevin Phillips here (36 minutes, 16 MB MP3)

There’s a growing sense that the imperial era of the United States is over almost before it started. I think we’re seeing the weakness of the United States that has allowed the financial sector to take over the private economy… 20 to 21 percent of GDP is now finance, pushing manufacturing way down. I think what you’ll see happen to the US is… a degree of implosion that will involve everything from too much debt, collapsing home prices, rising oil prices and the declining dollar. It doesn’t spell the end of the United States, but it spells the end of the United States as the total big cheese in the world. We’re going to lose some of the yardsticks that everybody enjoyed for a long time…

We used to be leading world creditor nation, lead world manufacturer, leading world producer of oil; we’re now leading the world’s leading debtor, the largest importer of manufactures in the world, and we’re the worlds largest oil importer. It’s a disastrous transformation. The only part of the economy that’s really profited is the financial sector because an awful lot of the transition is towards more debt,

more credit, more living on things you can’t afford, more keeping up pretenses, and more ambition around the world and less to back it up. And the consummation of this in many ways has been the George W Bush administration…

They invade Iraq, partly in order to get Iraq’s oil which hasn’t been tapped too much historically, and they thought they might be able to get 6 or 7 million barrels a day, and they could use that to bust open OPEC, and that would bring the price down — that was their ambition. And the futures market showed briefly in 2003, that there was an expectation that oil would come down to $15-18 dollars a barrel. At the time it was $20-25 — and now its $120-125. The notion that this imbecility was orchestrated, totally contrary to what they wanted, by two people who came from the oil industry — we could have done better with two bums or two Good Humor men, than these two men from the oil industry who knew nothing about the forces they were unleashing…

There was the ‘neutron loan’ – it kills the people but leaves the housing standing. The real thing they did that made this thing gain legs, is that no matter how crummy the loans were, most were securitized…. It’s mindboggling — If these people were in the manufacturing business, production of these things would have been enjoined because they were unsafe. You have consumer safety product commissions and things like that — you don’t have a financial products safety commission, which we sure as hell should have.

Kevin Phillips, in conversation with Chris Lydon on Open Source, May 14, 2008