On Mark Thoma's bad advice from economists post

Mark Thoma has a note on the paper he is giving at the AEA which makes the case that economists can sometimes worsen a situation by giving bad advice - as happened in 2003-2007, apparently. 
It is a nice model, and it is a nice and mildly heterodox paper, but I  think it gives way too much respect to economists. Bad advice sounds so... neutral.

 As the very unprofessional and not nice Matt Tsibbi wrote in Griftopia, one economist in particular, Alan Greenspan, gives us an example not so much of bad as of malign advice. He gave a speech lauding ARMs in 2002 - which he intoned was a good deal if interest rates weren't going up - and then turned around and used all his power as Chairman of the Fed to raise interest rates.

Malign advice wouldn't be mildly heterodox, but would cross the boundaries. So instead of using herding models culled from economics,  I would turn to other models to explain the economists supported Great Moderation cul de sac. It is simply that the counsellors work for the Czar. The economists work for the plutocrats. This clears things up enormously. And instead of turning to complex models generated in economics, we can turn to a model developed practically in another parallel field - the field of confidence games. First you pull the grift. Then you have to "cool the mark out". In February 2008, on my little blog, I sorta predicted what was to come under this aegis, and I don't think I did so bad. This was before Lehman, before Bear Stearns.

"Erving Goffman wrote an often referenced paper in 1952 entitled On Cooling the Mark Out. To understand this election year, LI advises our readers to read it.

The paper begins by describing the confidence game, which involves roping a mark, getting him to invest, financially, in some scheme or game, and clearing him out. At this point, the confidence gang has the option of simply leaving the mark behind. But…

“Sometimes, however, a mark is not quite prepared to accept his loss as a gain in experience and to say and do nothing about his venture. He may feel moved to complain to the police or to chase after the operators. In the terminology of the trade, the mark may squawk, beef, or come through. From the operators' point of view, this kind of behavior is bad for business. It gives the members of the mob a bad reputation with such police as have not. yet been fixed and with marks who have not yet been taken. In order to avoid this adverse publicity, an additional phase is sometimes added at the end of the play. It is called cooling the mark out After the blowoff has occurred, one of the operators stays with the mark and makes an effort to keep the anger of the mark within manageable and sensible proportions. The operator stays behind his team﷓mates in the capacity of what might be called a cooler and exercises upon the mark the art of consolation. An attempt is made to define the situation for the mark in a way that makes it easy for him to accept the inevitable and quietly go home. The mark is given instruction in the philosophy of taking a loss.”


This pretty much describes the two cases we have before us this election year. The ruinous Bush years involved two con games that were entwined one with the other. We have the con game that keeps us in Iraq, one fully supported by the ropers in – the governing elite – and we have the con game that is now busting, the full fruit of Bush’s economic policy, which involved minimizing regulation of the financial markets while maximizing the amount of money they had to play with. In this way, credit could fill up that hole where compensation from work used to be – and so productivity gains could be appropriated at a much higher rate by the richest, while home equity could be tapped, via mortgages, for the good life by the debtors.

Goffman points out that the mark’s psychology is a tricky one. To an economist, it might just look like utility maximization. But…

“In many cases, especially in America, the mark's image of himself is built up on the belief that he is a pretty shrewd person when it comes to making deals and that he is not the sort of person who is taken in by any thing. The mark’s readiness to participate in a sure thing is based on more than avarice; it is based on a feeling that he will now be able to prove to himself that he is the sort of person who can "turn a﷓fast buck." For many, this capacity for high finance comes near to being a sign of masculinity and a test of fulfilling the male role.”

Warmonger psychology unerringly follows this primitive but powerful gender program. This army of pissants shows all the signs of having had trouble emerging from the sack of their twelve year old selves, when, apparently, the separation anxiety produced by throwing out their G.I. Joe doll became frozen in place. A smaller contingent of this army – much smaller – forms the viewing core of financial porno tv networks, like CNBC. These people actually believe that they are part of the confidence game gang, which is how they came to mouth a rote optimism that had as little relation to reality as your average automobile ad has to how you would really drive an automobile.

“A mark's participation in a play, and his investment in it, clearly commit him in his own eyes to the proposition that he is a smart man. The process by which he comes to believe that he cannot lose is also the process by which he drops the defences and compensations that previously protected him from defeats. When the blowoff comes, the mark finds that he has no defence for not being a shrewd man. He has defined himself as a shrewd man and must face the fact that he is only another easy mark. He has defined himself as possessing a certain set of qualities and then proven to himself that he is miser ably lacking in them. This is a process of self﷓destruction of the self. It is no wonder that the mark needs to be cooled out and that it is good business policy for one of the operators to stay with the mark in order to talk him into a point of view from which it is possible to accept a loss.”

Goffman’s analysis of the mark points us to the form of the presidential election – that Halloween for grownups. Whoever the candidates are, they will represent wings of an established power that has made suckers of the vast majority of the population over the last four … eight… twelve…sixteen years. An established power that has assured America that the costs of running this empire will always be paid by third parties – whether these consist of tropical countries dealing with the forces unleashed by the American appetite for junking up the atmosphere with CO2, or Middle Eastern countries struggling with the yoke of American oppression in a more direct form – the soldier in their face, the mercenary who shoots them for fun in the traffic jam. Of course, this isn’t true. Those costs will come back here. The cost of the Middle East adventure can be seen in the run up of oil prices, a very small intimation of a much larger and connected group of problems that come with running out of prestige and power in a large area of the world while at the same time maximizing the number of people who hate you. As for CO2, it will turn out that melting the glaciers in the west during the drought cycle was not a good idea. The American west, overpopulated, overdeveloped, its water overpromised, is going to learn the lesson of the Hummer, too. This isn’t just something we can sluff off on Bangladesh.

“For the mark, cooling represents a process of adjustment to an impossible situation ﷓﷓ - situation arising from having defined himself in a way which the social facts come to contradict. The mark must therefore be supplied with a new set of apologies for himself, a new framework in which to see himself and judge himself. A process of redefining the self along defensible lines must be instigated and carried along; since the mark himself is frequently in too weakened a condition to do this, the cooler must initially do it for him.

One general way of handling the problem of cooling the mark out is to give the task to someone whose status relative to the mark will serve to ease the situation in some way. In formal organizations, frequently, someone who is two or three levels above the mark in line of command will do the hatchet work, on the assumption that words of consolation and redirection will have a greater power to convince if they come from high places.”


It is going to be an excellent year for spectators."

Economists, on this reading, are not the real makers of the con game - but necessary intermediaries in keeping the mark cool. Their advice will always hurt the majority of a population, sometimes destroying the traditions and lifestyles they have spent lifetimes building, sometimes encouraging exploitable excesses in those lifestyles, etc. At no point and in no way are economists, generally, your friends. Although they are sometimes so self-conned that they think they are. Nor are they your worst enemies. They work for your worst enemies.
So, I suppose, this is their role, give or take an exception or two.

the credentializing society

I like Lorrie Moore’s short stories. That is, I like them enough to read them when they come out in the New Yorker. I admit, I am not one of the world’s big readers of short stories.  If they are not funny, like George Saunders when he was funny, I have a tendency to begin with high hopes and invisible pats on the back (here I am, fulfilling my cultural duty) followed by a tendency to peak ahead at other articles, which engross me in I don’t know, some profile of a forgettable pop singer, some crime story until I shake myself temporarily free of a text that I know, rationally, holds a content as trivial at least as the short story incident I have abandoned and return to characters that I have, in that brief interval, forgotten to the extent that I have to begin over. What I am saying here is that I am unfair to short stories.

But Lorrie Moore’s stories have such an easy flow that they hold me, like a story about some celebrity will hold me – I am bonded to the text by the lesser boredom of the text in contrast with the greater boredom outside the text of other things to read or even, horrors, to do. It is in the balance of boredoms that this little superannuated smartass, this me, shares the Zeitgeist with all other readers of newspapers and magazines. Especially as that balance of boredoms, now, is dispersed among the moronic inferno of the internet, the twenty four seven access to the perpetually trivialized world in which the sensational never really reaches the sensations at all. The consumerist death of the nerve endings, y’all.

Anyway, to resume, so I picked up Lorrie Moore’s novel, A Gate at the Stairs. I am not so far very happy with it. But I notice that Moore sometimes needs to stumble around a bit at the beginning, so perhaps I will persevere. What I want to write about here, though, is the narrator’s curious habit of writing things like this:

“I had come from Dellacrosse Central High, from a small farm on the old Perryville Road, to this university town of Troy, “the Athens of the Midwest,” as if from a cave, like the priest-child of a Colombian tribe I’d read about in Cultural Anthropology…”

Perhaps curious habit is the wrong way to get at what I find curious about this sentence, which is the way that a learned, or least a bit learned allusion has to be credentialed in American writing. You can’t just introduce a metaphor taken from an anthropological text in a novel, apparently, in America without immediately tracking it to its source in a classroom. For on no account are we to think that there are characters out there in the American hinterlands so bold and savage as to read “Cultural Anthropology” on their own, say in one of the public libraries that every urb in America is equipped with.

If this allusion had been to say the Sopranos, there would be no credential tracking required. American characters are permitted to know about car types, sports figures and tv shows without exculpatory information being provided as to just how they know about these things. But of course, the American character doesn’t come equipped, from birth, with knowledge of V-8 engines, the Dallas cowboys, and Kim Kardashian. I think Moore’s gesture here – a gesture I fully recognize, one I see made in numerous American novels – points us to the weather in our ‘meritocracy’. The era of culture has long been liquidated in favor of the era of credentials. There are the odd warriors out there who don’t accept this: for instance, Oprah Winfrey, bless her heart, thought that one could simply pick up a Faulkner novel and read it. Or at least read it in a book club (which mix, rather shamefacedly, the classroom and the card club).

However, the reader of Moore’s novel – Moore evidently thought – is not going to accept the narrator throwing out allusions to Columbian peasants without some explanation – otherwise, she wouldn’t be “real”. That is, she wouldn’t be credentialed as real. In fact, she would be very real – you can go into, say, the Austin library and look at Michael Taussig’s The Devil and Commodity Fetishism in South America, which does indeed contain information about Colombian peasants, and you will surely find out that it has been checked out by people who are not taking courses in Cultural Anthropology at the University of Texas.

I am not taking the piss out of Lorrie Moore here, who only reflects the kind of defensiveness that grows in a credentializing culture about “knowing” high cultural things. What a relief to turn to entertainment, to drop the name Michael Jackson or to crack wise about Metallica instead of, say, Thomas Mann! The relentless tyranny of credentializing there takes the more perverse form of fandom, with all of the secret contempt one has for the obsessive, the attendee of sci fi or comic book cons, those who know all the lines from The Big Lebowski, etc.

Still, I’ve always been more on Ralph Ellison’s side, on the side of the Little Man at Chehaw Station:

“All right,” she said, “ you must always play your best, even if it’s only in the waiting room at Chehaw Station, because in this country there will always be a little man behind the stove.

“A what?|

She nodded. “That’s right,” she said. “There’ll always be the little man whom you don’t expect, and he’ll know the music, and the tradtion, and the standards of musicianship required for whatever you set out to perform.”

Now, we blast a thousand holes through the little man’s heart, we stuff his throat with SATs and grade point averages, we tell him that we got an A in the class, we try to dance on his grave – but that little man behind the stove is, I think, unkillable. Of course, I’m a romantic.

Loafing

I celebrate myself, and sing myself,

  And what I assume you shall assume,

  For every atom belonging to me as good belongs to you.

  I loafe and invite my soul,

  I lean and loafe at my ease observing a spear of summer grass.

“Loafe” is one of the great verbs, I think. Partly, this stems from the homonym “loaf”, as in a bar of something – bread, for instance. The loaf of bread is not something that can loafe – alas, it exists either on a plate for you to eat, recently made or at least shot up with enough preservatives to seem recently made, or it starts to look greenish and ready for the penicillin factory, at which point it is given the unceremonious heave ho into the waste can. Of course, when bread was much more precious and famine was a real possibility in the hinterlands and urbs of Europe, you would not be so cavalier with a loaf of bread.  Hans Christian Andersen begins one of his characteristic fairy tales (which mix sentimentality and a truly satanic sense of punishment) with the sentence: “There was once a girl who trod on a loaf to avoid soiling her shoes, and the misfortunes that happened to her in consequence are well known.” The backstory here is that Inge, product of a poor family but gifted with such beauty that she was adopted by a rich family, much to her satisfaction and pride, was given a loaf of bread to carry to her poor family and tossed it, instead, in a mud puddle so she could walk across it. Ah, the simple but symbolic actions that bring immediate grief in Andersen’s universe! “… the loaf began to sink under her, lower and lower, till she disappeared altogether, and only a few bubbles on the surface of the muddy pool remained to show where she had sunk. And this is the story.
But where did Inge go? She sank into the ground, and went down to the Marsh Woman, who is always brewing there.” As in The Red Shoes, it is Inge’s footwear that spells her doom: once she is underground, the loaf of bread is stuck like a lead weight to her foot, bringing her, of course, to the gates of hell. A very fine tale to tell children – what child would not like to see the Inges of the world get their comeuppance! But this loaf has made itself, in a sense, the very opposite of the loafing and inviting one’s soul among the tall grass that Whitman has in mind. The OED gives a rather unbelievable etymology of loaf – it is a “back formation” from loafer, which comes from Landlaeufer, a tramp. The earliest use of loafer according to the Oxford boys is in 1830. Henley and Farmer, in their 1927 slang dictionary, derive it from the French, louper.
From ranging about like a beast to tramping with one’s hands in one’s pocket, this was the image of the loafer in the mouth of the street, from which Whitman took his verb. But in so taking it, he strips it of its desperation – rather, he discovers a tramp Zen in the word. Unlike poor burdened Inge, Whitman loafing among the grass is unburdened and more than unburdened.
I am thinking of these matters of loaf because Adam is, supremely, a loafer – but not a walker, or tramper. He loafs and enjoys his soul not in the grassblades, but in the highly domestic foam bed or the bouncy bouncy or the pousette. Lately, he often tries to force himself up from the chest up – making a stab at the whole homo erectus thing. Poor guy, little does he know the griefs he is bringing on himself by coming out of the loaf and into the rat race. But such is history. Still, as he loafs, lolls, and lounges, I have slowed my own pace somewhat to his. Loafing and being at my ease is no simple thing anymore – magically, a screen or a book appears, and you are no longer inviting your soul but shooing it away. However, prisoner of the entertainment-security complex like all the rest of us, I am getting a small lesson in loafing from Adam. Who, in turn, is moved more and more often to burble a commentary about certain of the things in his line of sight, and certain of the sensations of what seems to be this  thing, this loaf, that has legs and feet and arms and hands and is, well, him.