Sunday, February 21, 2010

Munger to Friedman to Diamond!

When it rains it pours.
Yesterday I read Charlie Munger's parable about "Basicland"--called depressingly enough, "Basically, It's Over." Here's the gist of it: America has squandered its birthright, walked away from its core values of hard work, thrift, and pay-as-you go, and embraced casino capitalism. Now the game is over; we've crapped out.
Today it was Tom Friedman's turn: "The Fat Lady Has Sung." Friedman isn't quite sure who to blame. Maybe it's the Boomers for eating the nation's seed corn; or Obama for not presenting a coherently integrated set of policies to rebuild America; or the Republicans for not having anything they're for. But he's pretty sure, like Charlie, that the game is over, and we lost.
Which takes me back to Jared Diamond's book "Collapse." Today I got to the end, where Diamond asks, in effect, how could all these societies have gone so wrong? How did they end up as historical footnotes, each an Ozymandias of its own?
He offers 4 explanations:
1. The fail because they don't anticipate a problem before it arrives--they either don't recognize it or, even though they've seen it before, they've forgotten what it looks like.
2. They fail because they don't perceive the problem, even after it arrives--the leaders are too far from the field to see the evidence, or they suffer from "landscape amnesia"--they don't recognize the slow pace of change that leads to disaster.
3. They fail because they don't attempt to solve the problem--either because a group of people are unwilling to change, because the status quo still serves their needs; or because of the "tragedy of the commons" leads all people to continue with the status quo behavior, unwilling to be left out of their share of the (admittedly self-destructive) use of the resources; or the power elite simply continues to rule badly over the masses; or they continue to cling to values and behaviors that no longer work, but that have defined them for years; or because group think and denial keep them from embracing change.
4. They fail because, by the time they might try to do something, it's too little too late, or too expensive, or simply beyond their capacity to solve the problem.
Of Diamond's list, I find myself drawn to Point #3: why do people fail to act, even after they see the problem?
My own view is that we're all captives of the models in our heads; of how we've done things in the past; of the values and behaviors that "got us this far." In the face of criticism from the Munger's and Friedman's of the world, we tend to resort to group think and denial. "They can't be right, we've always gotten through in the past using this approach, nothing's really different this time."
But the hard truth is, America is still an experiment.
That's the way the Founding Fathers felt about; it's a Republic--if we can keep it.
I'm with Munger and Friedman on this one: it's up to us to see the problem, look the brutal facts of life in the eye, and change our behavior--and question values that we've either adopted in place of our original ones or that no longer work in an economy that's global--and get back to work.
The other option is to turn into a chapter in Diamond's book, joining the Mayans, the Easter Islanders, and a litany of societies that disappeared, clinging to their habits and behaviors, all the way to oblivion.

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