Dirac's blog

Or: How I Learned To Stop Worrying and Love Instant Runoff Voting

Much speculation and analysis has been made about the 2000 Presidential Election. The bitterly contested election is still the subject of much fervent debate, especially among Democrats. Given the wide dissatisfaction felt for the current administration, especially among those who supported Al Gore in 2000, it's no surprise that the subject of the would-be Gore presidency in 2000 still stirs such anger and controversy. Some good has come from this debate, as old ideas such as the necessity for the Electoral College in a modern age of universal suffrage and new ideas such as electronic voting have been called into question and analyzed. As voting is one of the few means we, as citizens, have for directly influencing the government, it is important that the aspects of voting be closely monitored, analyzed, and understood.

While I, too, would have much preferred a Gore presidency over the current administration, there is one aspect of the debate where my fellow Gore supporters have erred: the false belief that Ralph Nader "robbed" Al Gore of the election. A minority of Democrats feel that Mr. Nader's and the Green Party's platform of strong environmental protection too closely encroached on Mr. Gore's strong environmental policy, thus "splitting" the votes of environmentalists, a group that traditionally votes with the Democrats. Due to the extremely slim margin needed for Gore to win Florida, a shift in a small number of Green Party voters would have given Mr. Gore the presidency.

There was a time when the advocates of socialism argued that it would lead man to material abundance, whereas free-market capitalism would lead only to increasing misery and would ultimately collapse under its own internal stresses. You don't hear that too much these days, and for good reason. A century of empirical evidence has shown the contrary — that the free market leads to increasing wealth and material freedom, while socialism leads us only to poverty, state supremacy, and ultimately, mass murder.

While glancing over Digg this morning, I happened upon a post that linked to a blog entry entitled, "Got a problem? Ask the public schools to solve it!" The blog post refers to an article that appeared in the September 2007 edition of Harper's Magazine entitled, "Schoolhouse Crock: Fifty Years of Blaming America's Educational System for Our Stupidity", written by Peter Schrag. The blog post asserts that one of the four major points of the article is that the "[p]ublic education system is trying to do something unprecedented" by "educat[ing] every child — regardless of race, creed, socio-economic level, family background or mental and physical challenges." I found it absurd that a nationwide magazine would publish a story stating that America's free public education was "unprecedented" in a world where other countries offer free college education. As such, I immediately went out and bought a copy of Harper's to see if this was the case.

After reading the actual article, I must say that the blog entry misses the point of the article entirely. Mr. Schrag's piece goes far beyond the four simple 'important points' the post identifies. Furthermore, the first 'important point' presented by the post, the one that motivated me to purchase the magazine to begin with, is completely inaccurate. Mr. Schrag never expresses an idea that what the American educational system is doing is anything extraordinary. Nearly every industrialized country in the world offers its citizens free education, with many offering them a free college education as well. To state that the US public school system is doing something unique and "unprecedented" by educating all of its citizens, is, at best, ignorant, and at worse, is a gross misinterpretation of the article and represents a dangerous America-centric world view that ignores the achievements of other countries. After reading Mr. Schrag's article, I can say this 'important point' is never made in the article.

In light of last Friday's discount rate cut made by the Federal Reserve to sooth the nerves of traders and mortgage brokers, a question returned to my mind. This question has puzzled me for quite some time, disturbing my slumber since I was old enough to grasp the seemingly subtle, yet ultimately obvious interaction between business, the government, and people:

Why has America developed an inverted social democracy: a democracy which values the welfare of corporations and other juristic persons¹ far more than that of real persons?

The moves in the financial market and souring sentiment among bankers, consumers, and financial analysts over the past week has done nothing but reinforce the obvious cause and effect relationship between the ease of lending and cheap credit in recent years and insatiable appetite for credit the average American has developed, as I've outlined in my separate and ongoing series on Credit and Consumerism. The past few days have proved very interesting, with the markets remaining volatile while the major central banks in the world, including the Federal Reserve and European Central Bank, have pumped billions in dollars and Euros to spur liquidity in the markets.

A particular story stood out among the weeping and gnashing of teeth that's been plastered on front page of financial news sites over the past few days. The leading mortgage lender in the United States, Countrywide Financial, has decided to 'tighten lending standards' going forward. In addition, facing troubling financial standing as its subprime loans falter, the company is accessing an $11.5 billion line of credit to stay afloat.

This raises a few interesting points. First, why did it take a complete disaster in the subprime mortgage market to force the nation's largest mortgage lender to "decide" to tighten its lending practices? As always, the company thought that the climate of free and easy lending with no risk or accountability would continue indefinitely. Why deny lending to people who have over extended themselves when you can make billions off of closing fees and interest while the times are good? "Eat, drink, and be merry", so the saying goes, but it follows that "tomorrow we die." Just like a child in a candy store, Countrywide, along with most mortgage lenders, decided to gorge itself silly on the sweets available today, ignoring the bellyache to come tomorrow. Unfortunately, now all of these mortgage lenders have come down with a bellyache.

In the previous installment I introduced the lending institutions and practices that sate our country's desire for debt, especially the debt of those who have little regard for the consequences associated with irrational borrowing. In this installment, I wish to examine some of the products that have been introduced over the last decade that have lead to the decline in the financial health of the average consumer. These products were either non-existent before the late 1990s, or in a realm so dangerous that only speculators or the uneducated gambler would have the wherewithal to sign on the dotted line.

In light of last week's stock market selloff, pundits, columnists, and online journalist have in no short order offered insight, analysis, and predictions. Many expound a sky-is-falling mentality, committing the fact that the Dow Jones Industrial Average closed at an all time high above 14,000 points just the week before to ancient history. That was then, this is now, in their opinion.

While not all columnists have taken this view, many are running articles about 'what to do now' or 'safe bets in an uncertain market'. This sort of after-the-fact hindsight bias has been rampant in financial literature for longer than I have been alive and does nothing but reinforce a completely illogical 'buy high, sell low' strategy. This will certainly be the subject of many of my upcoming discussions.

That said, a few of the more in depth online journalists have provided excellent commentary on the underlying economic conditions that have lead to this series of events. It seems clear that to some extent the era of easy and cheap credit (cheap not only in interest, but in ease of acquiring loans) beginning in the 1990s has changed the socio-economic landscape of America and many other westernized countries. The subprime mortgage "meltdown" (as the large media outlets like to term it) that began several months ago has started to creep into prime credit holders and corporate debt.

Once upon a time, there existed a realm where ideas and arguments weren’t condensed into fifteen-second sound bites. The weight of arguments were not measured in the treasure, popularity, or opinion of kings, but the soundness and validity of the underlying facts. During that age, an orator’s ability to gather information and wield facts as dangerous daggers poised to strike the throats of the despot, dictator, and denier alike was sought and feared, honored and coveted. Victory on this battlefield of ideas and logic was not measured in net profits, “exceeding analysts expectations”, PAC contributions, approval ratings, or House and Senate seats won or lost. No, victory was the triumph of the most logically sound idea. This idea most likely did not start life before debate, but was the offspring of an orgy involving public discourse, debate, and deliberation; the idea impregnated in the minds of those courageous enough to think freely, seek new avenues to solutions, and blaze their own path. Only after this free exchange of information has taken place can any group truly arrive at the most logically sound, fair, and appropriate solution to any problem.

Today’s political, ideological, and information landscape has strayed far from that ideal portrayed in Raphael’s masterpiece. Over 2300 years since the death of the great philosophers, we’ve become a people where money and manipulation reign supreme; the great metropolises reduce to serving merely as menageries for our materialism.