Sunday, August 31, 2008

Racism in the Election


The media is preoccupied with when and how the “race card” will be played in the campaign. But it is already in play for most of us - unconsciously. The real questions are how to play it right.

The basic fact is that as long as there is an unconscious, we will all be prey to racist thinking. It starts in the nursery when children learn to discriminate their caregivers from “strangers.” They cry or recoil in the presence of “strangers” and we can laugh, then, because we know that those “strangers” usually will be assimilated into the mental categories of “friends” or “family” – or else the child will learn to conceal and control his suspicion and fear. For most Whites, need it be said, most Blacks remain “strangers.”

In full-blown institutional racism, such reactions eventually get to be aligned with economic or social competition and amplified by group pressure. It becomes virulent and destructive. But even if society wakes up to the problem, even if discrimination is prohibited and opportunities for jobs and education are extended, the mental category of “stranger” and the mistrust it arouses will remain in the mind. It becomes a part of unconscious perception.

5% of whites in a recent survey said race would not affect their vote, but 19% said it would affect others they knew. “Welcome to the murky world of modern racism,” Charles Blow wrote in The New York Times on August 8th , “where most of the open animus has been replaced by a shadowy bias that is difficult to measure. As Obama gently put it in his race speech, today’s racial ‘resentments aren’t always expressed in polite company.’ However, they can be — and possibly will be — expressed in the privacy of the voting booth.”

For me, the frightening fact is that, often, it will not even be experienced as resentment. It remains as a vague discomfort, an undetectable shudder, an uneasiness that is felt but usually not understood. As a result it will be attributed to something else – but it will form the basis for action.

What we don’t know we know about racism is how much we still recoil from “strangers,” how hard it is to trust those who are different.

Tuesday, August 26, 2008

Another Sacred Cow: Deregulation


With the collapse of Lehman over the weekend, the distress sale of Merrill Lynch and the looming collapse of Washington Mutual and AIG -- and who know what else -- the urgency of imposing some form of regulation is beginning to be more widely recognized. It is increasingly apparent that, without it, we are facing a financial disaster of unprecedented proportions.

Paul Krugman writes in this morning's New York Times: "The real answer to the current problem would, of course, have been to take preventive action before we reached this point. Even leaving aside the obvious need to regulate the shadow banking system — if institutions need to be rescued like banks, they should be regulated like banks — why were we so unprepared for this latest shock?"

He accuses our financial leaders of playing ""Russian Roulette," but that is simply another form of denial. Taking such chances is based on believing that you really can't lose.


The mortgage crisis brings home again our need for some form of market regulation.  Without it there is little check on speculation or manipulation and great danger of markets running amok.  But regulation seems now to be in that great dead zone of ideas that we can't get our minds to engage.

So haunted with associations to old style capitalism, so discredited, such a bad idea, we stop thinking as we get close to it.  Whether it is the fear of ridicule from our peers, or the fear of being ostracized, or just the fear of being seen as stupid or out of touch, we keep our minds at a distance from the danger.  The surge of growth that followed deregulation, the victory of capitalism with the breakup of the Soviet empire, the power of special interest and their lobbyists on Capital Hill, the evisceration of existing regulatory agencies -- all have become sources of intimidation to anyone interested in curbing the power of corporations to compete freely in the market.

"Groupthink" has familiarized us with how groups censor and proscribe thoughts that deviate from an emerging consensus.  The failure of Kennedy's advisors at the Bay of Pigs, Nixon and Watergate, even Bush and the famous WMD -- all are good examples of how thought gets obliterated.  This dead zone of thought operates on a larger scale -- but it too is fueled by anxiety and fear and is no less pernicious to rational solutions to the problems we face.

To be sure, old style regulation did stand in the way of growth, and deregulation did seem to fuel significant growth.  Moreover, critics will add, there remain a host of regulatory rules that businesses and banks must comply with. But, surely, there is a middle way now in playing an active role to guide the private sector away from the disasters of unbridled competition.  If Washington can't do a good job of it, perhaps a quasi-private amalgam of senior financial statesmen, ratings agencies, and foundations could step up to the plate.  But in order for that to happen, we would have to face the need -- and to do that we would have to keep the need in mind.

What we don't know we know about deregulation is how frightened we are to do that.

Wednesday, August 20, 2008

Scapegoats Wanted


Just as our search to pin the blame on those responsible for the sub-prime mortgage crisis is winding down, the search for those responsible for the high price of such commodities as oil and wheat is revving up. We seem to need victims to account for our systematic failures. In the first case, the heads of investment firms rolled, and some firms themselves were dismembered. Now “speculators” are seen to be driving up the price of commodities – though, as yet, no fingers have been pointed at specific individuals. No doubt, they will be as Congress goes into action.

So long as investors search for increasingly profitable investments, banks and hedge funds will try to fulfill the demand. And because they are under increasing competitive pressures to produce results, they will take greater and greater risks. And, needless to say, caught up in their competition with each other, increasingly, they will tend to minimize the dangers. Greater and greater emphasis on “risk management” will not protect investment firms from the pressure to produce results in a competitive environment.

To be sure, some leaders of investment houses have been particularly imprudent and careless, and no doubt there are those who speculate in commodities futures. But so long as they are competing to succeed against each other in attaining unrealistic results, some will fail. So long as they keep looking to each other to see where they are in their own competitive race, they will minimize the dangers. And then some will be tarred and feathered with the blame for the whole fiasco.

It is a bit like campaign reform. No sooner does Congress pass legislation to restrict the influence of big donors and the power of lobbyists to affect the political process, than new loopholes are discovered. So long as campaigns are going to be more and more expensive and the benefits of winning increase, those running our campaigns will find loopholes to keep the system going. All can agree that the system needs to be reformed, but no one wants to give up a competitive advantage. It becomes a mass collusion.

What we don’t know we know about this is how we are all implicated: The banks that promoted cheap mortgages and home equity loans, the companies that continued to securitized them as they became less secure, the investment houses and funds that kept the bandwagon going, the regulatory agencies that looked the other way, and the home owners who minimized the dangers of debt. Most important: What we don’t know we know is what we would have to think if we didn’t have scapegoats to distract us and take the rap: our unrealistic hopes for endless gain, and the flaws in the system that keeps such hopes alive.