When Wisdom Isn't Conventional

I have a great friend who is an excellent high net-worth financial adviser and who sends an occasional newsletter related to investment markets and macro economic issues. In the most recent email, which contained a narrative overview of the events of 2008 (and what an extraordinary timeline of events that was), the newsletter posited the following paragraph, which I think reflects a certain conventional wisdom about what happened September through November that I want to challenge:

Financial disasters that once would have sounded like alarmist fantasies occurred on a weekly basis. Banks failed, oil and gasoline prices smashed old records, and the federal government agreed to pump trillions of dollars into the financial system just to keep it afloat. The upheaval helped elect Barack Obama president and may have ushered in a new era of tighter government regulation, ending more than two decades in which free-market philosophies reigned.

The real kicker here is the connection between market "upheaval" and the election of Barack Obama, almost as if, as many cable commenters would say, that if economic matters are dominant, then Democrats get elected, and if national security or foreign affairs are dominant, then Republicans get elected.

Certainly we can look to limited historical patterns where this supposition holds true, but I do not think that's what happened at all this year. And so we shouldn't afford ourselves the false luxury of this conventional wisdom, lest we lose a deeper appreciation of what actually transpired.

The insidious nature about incorrect conventional wisdom ("CW") is that the reasons it may be incorrect correlates strongly to the complexity of the issue involved, thereby missing the deeper insight required to have a full and accurate grasp on that issue.

This year wasn't an election about "general climate" factors related to economics vs national security, for example. No, far from it. The nation was obviously reeling from years of bad news and a diminishing sense of the meaning of "America" in these modern and complex times.

As I watched it, I thought the primary thrust of the election was about an intense public reflection about the future meaning of the word "American" with which we all identify.

From the bitter election battle in December 2000, to 9/11, to the threat of lethal homeland terror, to natural catastrophes including fires and especially hurricanes like Katrina, Rita, Ivan, and Ike, to the Abu Ghraib revelations, to extraordinary renditions and warrantless wiretapping debates, to critical and multiple intelligence failures, and of course most recently since 2007 to a crumbling economy in the midst of an official recession since 2007... it's just been a breath-taking period for America and Americans that has shaken us to our core deep down, I think.

In that light, it appears to me that the election season since 2007 was infused with competing visions of how to define America in the future. Broadly speaking, Democrats and progressives pushed for an idea of a "new" America based on values of inclusiveness, diplomacy, the collective well-being, and of course "hope" for better days and newer more successful ways ahead.

Broadly speaking again, Republicans seemed to offer a future America based on the proven successes of America's past, an American "restoration" of its strong traditions, international strength, the triumph of rugged individualism that helped build the nation to greatness, and American exceptionalism globally - the "shining city on a hill."

While each of the two major parties had strong and imperfect standard-bearers, these contrasting visions were on display since the early campaigns of 2007.

In normal times, perhaps these contrasting visions may have still been in play, however the extraordinary circumstances of the past several years and the current climate of both international and domestic complex challenges led to a greater urgency behind the choice of vision for the next Executive administration. And Americans had the historic opportunity to witness both parties campaign against that urgent backdrop.

It is false to presume the conventional wisdom that the competition between Republicans and Democrats is simply about where to focus the nation: domestically or internationally, where Democrats supposedly win on domestic and economic issues and Republicans on international and security issues. The visions advanced by each party encompassed a broader notion of the meaning of America and how the country should face the myriad challenges now at our collective feet. This was especially true in the most recent election cycle.

Business types often fall into the CW that in 2008 when the economy fell into an emergency in September, the election outcome was fated in the favor of Democrats. But one particular episode in September at the time the crisis exploded weighed far heavier on the election results, I think, than the emergence of the severe economic threat alone and traditionally held "advantages" of either party. Namely, we saw how each presidential candidate responded to the proposed immediate measures to shore up the financial sector.

In that episode, I believe John McCain acted in a way that clarified Americans' perspective about which candidate had the stronger ability to achieve their vision for America in the future. McCain now infamously "suspended" his campaign (while continuing campaign operations and advertising), flew to Washington D.C., and pledged to cancel the first presidential debate in order to "focus" on the crisis and produce results. But he didn't produce results, or at least not in a way that was apparent to most Americans. And without the legislation he promised as a prerequisite for the debate, he did in fact show up for the debate anyway.

In contrast, Barack Obama pushed the idea that the president must be able to do multiple things at once (the "walk and chew gum" argument). I don't think that idea won as much as McCain's actions failed.

I think that episode, at the exact time most Americans started really to tune into the presidential race, and during the exact time the economic crisis came into the full public spotlight -- in that moment McCain lost the confidence of the electorate. And therefore I think the election was less about which set of ideas about America prevailed, and was more about which candidate was better equipped to succeed in his vision.

Conventional Wisdom has a strong allure. It is common, well-established, accessible, and in the Stephen Colbert sense, "truthy." But CW can often be flat wrong and therefore dangerous in its complacency about issues that require deeper insight. And that's why anyone seeking accuracy in an ever-increasingly complex world should regard CW with a high degree of skepticism.

Perhaps I'm wrong about my view in this particular instance of CW. But it goes without doubt that CW is a threat to our individual judgment about important matters in our own individual lives if left unexamined.

The unexamined life may in fact be worth living, but perhaps it cannot be lived as well.

New Rule: Sell Low, Buy Low

Recently at a good friend's holiday party I met a very nice woman who wants to leave her house of 20+ years where she raised her children to move into a single story, smaller house. She has a very common problem: she no longer can climb the stairs to and from her master bedroom and bathroom every day without difficulty.

For many young families, floor plans with all bedrooms up offer a very good value -- they get a functional layout downstairs for family activities and 4 bedrooms or so upstairs including the master, which also usually keeps the footprint of the house small so that it fits well onto a small but affordable lot. Using upstairs space for livable square footage is also a good value because upstairs square footage is much less expensive to produce, since a house only has one foundation, one roof, one set of plumbing stacks, etc. On a per-square-foot basis, single stories are often priced higher than comparable two-story homes for this reason (and a few others).

Some young parents also feel reassured sleeping close to their young children.

[An often overlooked advantage to having a master suite upstairs is that it typically allows for a much larger master suite.]

But in a few decades, those young parents become empty nesters and their many years of hard-work may leave their bodies a little less forgiving with the stair climbing up and down all day every day.

So the lady at the party with whom I was speaking felt like now is not a good time to sell in the market, particularly because she paid at the high end of the market cycle in the early 80's and it's difficult to face a lousy investment return on a house, even though the house has served as the main family stage for those many years. Memories aside, the simple numbers are disappointing. I get it.

So I asked her if she wanted to stay in the same area, and she said yes because her adult children still live in the general area.

"No problem, " I said. "You may sell your house for less than you might have a few years ago, but you're also going to pay less for your next house."

This is the new rule for taking advantage of the current housing market: sell low, buy low.

So for many people who might want to downsize or even buy a bigger house, if the goal is to stay within the same general market area, then it would hold that however much the market may be depressed, it's depressed on both the selling and the buying side. So yeah, you might not get to sell for as much as you would like (nobody ever does in Houston), but you will get to buy for less in the same market!

Not to mention the historically low interest rates right now for qualified buyers. (Well qualified buyers have no excuse not to be in the housing market right now. Move up, refinance, whatever, but now is your time.)

Think of the California market circa 2005, for example. What use would it serve for a couple to sell their 1200 SF home for $1.5 million if all they could do was buy another comparable 1200 SF home for $1.5 million?!? This is why Texas saw so many people relocate from California and other areas, because cashing out was only possible by selling in the high market and moving to buy in a market that wasn't so wildly out of control (ie, Houston).

It occurs to me that the reverse is now true in most housing markets. Sure prices may be a little down year-over-year, which makes the thought of selling daunting if one doesn't have to sell. However the market also has good buying opportunities coupled with historically, ridiculously low 30-year fixed interest rates.

In conclusion, it is not a buyer's market. It is not a seller's market. The forces affecting each side are relatively balanced when you think about it. So it's not a bad time to sell if what you want to do is turn around and buy. So don't give up, the opportunity to get what you need or want is still very much available in this market.

Obama to Eliminate All Earmarks

Just incredible. Breaking news on CNN right now, President-Elect Obama has said his budget will eliminate all "earmarks" going forward, sometimes called "pork" or "pork barrel spending." These are usually spending items inserted by congresspeople into wholly unrelated bills that never come up for review before a bill is passed, earmarks included. Usually the earmarks benefit the home district of the congressperson sponsor, and there has been a long-standing gentleperson's agreement in congress not to block or interfere with each other's earmarks.

There was a lot of talk in the presidential campaign about earmarks. An infamous earmark was "the bridge to nowhere" introduced by former Alaska Sen. Ted Stevens. And nominee Sen. John McCain promised to gut earmarks and pledged to expose their sponsors, thundering in rallies to raucus applause, "And you will know their names, my friends, I will make them famous, and you will know their names!"

So this is a bit of a tremor under Washington D.C. today, I think. PE Obama said more details would be announced tomorrow on the subject. This is very encouraging news if it is successful and does bring serious budgetary discipline to Congress and the White House going forward.

[UPDATE 1/7/09 7:06AM: It appears I may have been too broad in my original take. Now it appears to me that Obama has promised that the proposed stimulus package bill will not contain any earmarks. Still, that's promising because the package is likely to be about $750 Billion or more. And hopefully it will herald a trend if successful.]

We'll Have Iced Tea. Never Mind! Gotta go!

Last night my business partner (my mother also) and I went to one of our regular "conference rooms" -- IHOP. I love IHOP because there is never a bad time of day for a fantastic omelet, not to mention those Harvest Grain n' Nut pancakes.

Nonetheless, even my ferocious appetite has its limits. The kid waiting on us approached our table and in as friendly a manner as he possibly could muster, he introduced himself and asked for our drink orders. Nothing wrong with that. Friendly, hard-working guy.

But he also sounded like he was just out of a hospital bed with pneumonia. Sniffle, sniffle, sniffle...

I saw in my mother's eyes that she would not be eating anything... or touching anything that poor guy tried to put on the table. At about the moment he walked away to get our drinks, the restaurant manager walked by our table and let out an echoing loud, hacking cough that almost made me grab my cell phone for help.

That was it. My mom and I were torn about the ugly prospect of being one of "those" types... to leave just after sitting down, and we debated it. But neither of us wanted to eat anymore. Or drink. Or sit there and risk it... So we waited for our drinks to come, and I told the waiter we forgot an appointment and couldn't stay. He was very polite and offered the drinks for free, but I did lay down a $5 that I hoped he would pocket, and we left (and had a wonderful meal at a new Mexican restaurant in The Woodlands).

Why do sick people go to work?

Obviously, people who rely on hourly wages or tips often feel compelled to go to work sick because if they don't work, they don't get paid, and that is certainly understandable. Debatable, but understandable for sure.

It's also part of our crazy health care system in this country that hard-working people who really need the money are least likely to have adequate insurance or insurance at all for when they do get sick and need basic care, such as for strep throat, a sinus infection, or a cold that threatens to get worse.

It seems everyone's favorite refrain this time of year, as more and more of us come down with nasally voices from stuffed sinuses and endless sniffles, is "it's just my allergies."

But the truth is that it's very difficult to tell the difference between allergies and a common cold. (The link has a great comparison chart.) In fact, treatments are much the same because the symptoms are much the same. The difference: with a cold, the body's immune system is reacting appropriately, whereas with allergies, the body's immune system is reacting inappropriately.

Hence, several over-the-counter and even prescription medicines are branded as "cold & allergy" relief, because they contain some combination of antihistamine, nasal decongestant, and perhaps a little ibuprofen. If you can get it, and if you can stand it, Pseudoephedrine works really well to dry things up (including your tongue though).

The Inexcusable Working Sick

There is one inexcusable type of "working sick" people. These are the people who have paid-time-off but don't want to "use up" a personal day, and so in exchange, they go to work and risk infecting all their coworkers and colleagues (who invariably do get infected in a nasty chain reaction lasting for weeks). Yeah, have a nice time on that extra day of vacation this summer, thanks a lot.

To be fair, however, some blame must be given to the common corporate practice of granting generic "paid time off" days to employees in lieu of separate "vacation days" and "sick days." At first blush, it seems nice that if you want to take a day off, you don't have to give a reason or call in fake-sick (which is inexcusable also). But I think what's really going on is that corporate HR departments decided that to avoid employee abuse of "sick days" with fake-sick call-ins, they would just lump everything together and probably wind up doling out fewer paid days off in total.

Talk about unintended consequences. This has been all the rage for at least 10 years or more in the Fortune 500. I don't know of a single study that has examined whether giving employees an unintended incentive to come to work sick has had any impact on how many sick days the entire workforce requires in any year. I wouldn't be surprised if the total number of days has actually risen. And unlike vacation days, being sick is not something people can plan, which makes the impact on productivity even worse.

In my company, we are pretty good and flexible employers. We try to pay honestly for an honest day's work, and we never expect employees to check their humanity (or their family) at the door when they come to work. However, an employee showing up for work while sick is a terminable offense in our office. Zero.... tolerance.... Anti-tolerance.

Of course, in this economic environment, people may not only need the money, but they could also need the "face time" with the bosses to maximize their chances of just keeping their jobs. Ugh. Why must everything be so darn complicated? Why can't we just live in a black and white world? It sure would make being sick easier.

No matter. For me it's time for another dose of Benadryl, Flonase, and Pseudoephedrine.......

That Skinny Kid With the Funny Accent

Markos Moulitsas Zuniga is the most prominent person in the world of online progressive activism and publishes the largest and most influential political website in the world. Regardless of if or how much one agrees with him, he is an extraordinary person whose example serves to remind sincere Americans of all stripes what binds us at our common core.

In 2006, Moulitsas wrote about his entry and service in the U.S. Army.

Six weeks shy of my 18th birthday, I reported to Fort Sill, Oklahoma, to train as an MLRS/LANCE Operations/Fire Direction Specialist, managing operations and logistics for a missile platoon.

I was a mess of a human being. I was 5 feet 6 inches tall, weighed just 111 pounds, and didn't have a shred of self-confidence. In high school, I had been the short, skinny, Salvadoran war refugee with the funny accent who looked half his age (still do) and read books in the (then) lily-white Chicago suburb of Schaumburg. A deadly combination.

I was also a Republican. As a 17-year-old precinct captain in 1988, not even old enough to vote, I helped deliver one of the district's best precinct performances for Henry Hyde. I had a framed picture of me with George H. W. Bush.

From his bio:

The son of a Salvadoran mother and Greek father, Moulitsas spent his formative years in El Salvador (1976-1980), where he saw first-hand the ravages of civil war. His family fled threats on their lives by the communist guerrillas and settled in the Chicago area.

Markos Moulitsas is not the proverbial kid in his pajamas, blogging from his mother's basement. Far from it, bloggers and their blogs (at least the prominent ones), are the new and dominant political medium. Moulitsas has much to do with that. I am not a veteran, so I have come to my appreciation of the military as an institution from listening to veterans of all kinds, including Moulitsas, who writes movingly:

Military service is a sacrifice from the beginning. The cheap combat boots assigned to new recruits blister the toughest of feet -- after one particularly grueling 20-plus-mile road march with a 100-pound rucksack, I literally squeezed out blood from my socks. But basic training was the best thing to ever happen to me. They say they break you down in basic training so they can rebuild you into a real man. I was already broken when I arrived at Fort Sill. For me, it was all building.

Eight weeks later, I emerged a brand new person, this one weighing 140 pounds. And after my three-year stint, while I was stationed in Germany and missed deploying to the Gulf War by a hair, I emerged as a Democrat.

Many people go through life and find themselves at varying times on either side of any particular fence or another. Fences are, after all, simple and rather arbitrary constructions. No matter what labels we may assign ourselves over time, there is, at our core, something more solid, unmovable and real that transcends any label we'll ever come across.

The military is perhaps the ideal society -- we worked hard but the Army took care of us in return. All our basic needs were met -- housing, food, and medical care. It was as close to a color-blind society as I have ever seen. We looked out for one another. The Army invested in us. I took heavily subsidized college courses and learned to speak German on the Army's dime. I served with people from every corner of the country. I got to party at the Berlin Wall after it fell and explored Prague in those heady post-communism days. I wasn't just a tourist; I was a witness to history.

To be fair, Moulitsas goes on to suggest that the Army and military today is not the same as it was then, but his testimony certainly shows the potential of the institution, its history that produced most veterans with us today, and how our nation's international presence and even war offers transformative experiences for really the entire nation. Exactly what transforms and to what end is certainly worthy of reflection.

Not coincidentally, many of my favorite clients are veterans, and whether we talked about their service or not, I always learn a lot from them as human beings.

Markos Moulitsas Zuniga may have been a scrawny kid entering the Army, but he emerged as a ferocious force that continues today as he serves his country earnestly in different and prominent ways.

Moulitsas earned a JD from Boston University, near where I earned my MBA. Moulitsas is also a pianist and composer, and while there, he recorded a CD with a track named, "Along the Banks of the Charles," a reference to the Charles River, which divides the city of Boston and the city of Cambridge. It runs past downtown and along the campuses of MIT and Harvard. Moulitsas does a fantastic job of capturing what it feels like to be in Boston as a graduate student and break away from arduous study to retreat to the banks of the Charles... feelings of headiness, frightening momentum, and desperate optimism tempered by the high stakes of it all...

An appropriate way to begin blogging in the New Year of 2009.