Thursday, April 30, 2009

Needed: Focus, Part 2

Picking up where I left off yesterday...

For fear of seeming superficial we direct our attention to life's dangers and horrors. Most of us want to belong to the ambient culture, especially the one that therapy has defined as "healthy."

We do it by showing enhanced awareness of everything that can and has gone wrong, to the detriment of what is going right.

To counter this unfortunate tendency, Winifred Gallagher prescribed directed meditation about the good things in life. To sustain herself through her cancer treatment, she retrained her mind to ignore the negative and focus on the positive.

When we feel threatened by potential dangers our minds are unfocused. When we have been traumatized we shift into pain avoidance mode and scan the world for cues that might signal imminent pain. Our eyes dart around, looking for signs of trouble.

To overcome that tendency we need to regain focus. And we need to get out of ourselves and out of the self-preservation mode that we fall in whenever we have suffered a trauma.

Then we can regain the focus and concentration needed to enjoy life and to work effectively.

Gallagher shows that we can, with sufficient work, gain some control over what our minds focus on, and that, by gaining such control, we can improve our mood.

It is an important lesson. Evidently, it derives from cognitive therapy. Less evidently, perhaps, it runs counter to the psychoanalytic practice of free association.

As a condition for treatment, psychoanalysis prescribed a lack of focus, a willful ignorance of the outside world. Its patients could then undertake an introspective journey into the hidden horrors of the forgotten past.

Also, psychoanalysts insisted that their patients say whatever came to mind, regardless of the effect it might have on any listener.

If an analytic patient made his thoughts into a coherent and logical statement, he was, by definition, allowing his thoughts to be censored. Thus he was not following the rule and was a bad patient.

Through the practice of free association, psychoanalytic patients were trained to speak in disconnected fragments, to be unfocused, to dart from one subject to another, looking for trouble.

By training people to master the unnatural habit of free associating, psychoanalysis was helping them to become socially dysfunctional.

If the therapy culture, with its focus on trauma and grievance, is mass-producing depression, then psychoanalysis, with its emphasis on a mind that speaks in disconnected fragments, is underwriting this production, one patient at a time.

The moral of the story is simple. If the culture is inducing habits that make you feel depressed, your mood cannot be analyzed as a product of a childhood trauma or poor parenting.

You might just be trying to be a member in good standing of a peer group that has bought into the therapy culture. And there is nothing abnormal about that.

Wednesday, April 29, 2009

Needed: Focus

When Winifred Gallagher was diagnosed with cancer she chose not to think about it. Surely, she underwent treatment, but as she did so she chose to retrain her mind to ignore negative information and to focus on positive stimuli and experiences.

In her new book "Rapt: Attention and the Focused Life" she explains that she chose to look "toward whatever seemed meaningful, productive, or energizing, and away from the destructive and dispiriting."

Much of her book-- which I only know from reviews-- addresses the question of why we ignore small pleasures and nice moments in favor of calamities, dramatic confrontations, and horror stories?

While Gallagher correctly approaches the question through Darwin, I would add a couple of thoughts about cultural bias.

How many of us live in a culture that tells us that we should focus our attention on the horrors that surround us, the tragedies that befall humanity, and the raw destruction that plagues the planet.

This culture tells us that people who make a habit of thinking negative thoughts are in closer touch with the truth.

If we don't follow its lead, this culture pronounces us superficial and meaningless. We will lose credibility.

Mainly because horrors count as the truth and people who think negative thoughts are supposed to be in touch with reality.

Enjoying the little things in life becomes become the province of the ignorant. People have been conditioned not to talk for very long about the fun they had at a party. If they wanted this culture to respect them, they will immediately shift to the insults, the offenses against propriety, the awful behavior of one or more revelers.

And how many schools go out of their way to avoid the positive developments in human history, the better to focus a child's minds and attention on everything that has ever gone wrong?

How many of them teach that the awful things that happened outweigh the good?

Is that the definition of an educated person?

Obviously, these cultural influences reflect depressive thinking. We must assume that some of our more talented and culturally savvy depressives decided to deal with their anguish by disseminating it to everyone else.

They worked to create a culture that would train us in the habits of depressive thought.

Was it because misery lives company? Or because when more people are miserable, then misery feels normal? Or because they wanted to punish all those optimistic spirits they blamed for their depression?

Whatever the reason, it is not a good thing.

Tuesday, April 28, 2009

Bess Levin Wrestles John Thain

Among financial journalists Bess Levin is sui generis. As editor of she offers up a continuous stream of ribald commentary about the comings and goings of the major players in business and finance.

Most often her comments hit their mark. On rare occasions they go awry.

Yesterday, commenting on recently deposed Merrill Lynch CEO John Thain, Levin decided to make a sly mockery of Thain's daily regimen. Link here.

That regimen was well described in the Wall Street Journal: "Now he [Thain] spends his time networking, and says he is optimistic that he will get another chance to run a publicly traded company. He still puts on a suit every day, even though he no longer has an office to go to."

About which Levin, straddling the thin line between irony and sarcasm, grasped the meaning: Thain was not adjusting well to his new role as househusband. Then she added that he was "choosing to cling to a (professional) life that no longer exists."

From there Levin happily shared her reverie of Thain, decked out in his bespoke duds, taking command of a gaggle of stuffed animals. I will spare you the details.

At the risk of sounding like a killjoy, I will offer a small qualification. When you have been laid off, it is generally a good idea to act as though you are still working. Even if that means putting on a suit and tie in the morning.

It is better to dress for where you are going than for where you are.

And when your reputation has been as badly damaged as Thain's has, you can start recovering it by comporting yourself with dignity and decorum.

Would Thain do better to sulk around the house in his pajamas bemoaning his fate? I think not.

Jim Rogers on Buying What You Know

In a post last week I was happy to offer some advice from legendary investor Jim Rogers. Link here.

Rogers was advising people to buy what they know. If you are an auto mechanic, you have a specialist's knowledge of, for example, lube. You should use that knowledge to make investment decisions.

Rogers feels that it is better to invest predominantly in businesses you understand than to diversify your portfolio into a hodge-podge of products you do not understand.

The Rogers advice, also popularized by the great Peter Lynch, has become a mantra for some, and risks being misapplied.

Slogans that get passed around promiscuously are easily misapplied.

In my post I qualified Rogers' advice by adding that no matter how much you know about lube or video games, you also need to look over annual reports, balance sheets, and so on.

Now, as it happens, Rogers himself has included these caveats in his new book, "A Gift for My Children." Link here.

According to a review on Bloomberg,(link here) Rogers says that before investing in a business you also need to read all the company's financial statements, including the footnotes.

Then you should go out and verify the accuracy of those statements. Rogers tells us: "Talk to customers, suppliers, competitors and anyone else who might effect the company."

If the original slogan made it sound too easy to be true, these qualifications guard against potential misunderstanding by showing how much hard work goes into buying what you know.

Monday, April 27, 2009

Dealing With Rudeness

I cannot guarantee that this story is true, but it is surely instructive.

A New York art dealer was trying to sell a painting to a Japanese collector. Each time she called the collector the latter responded that he wanted to think it over. Finally, the dealer got frustrated by his indecision and blurted out: What's the matter with you? Can't you make up your mind?

Evidently, the dealer did not know that the Japanese consider it rude to say No. When they say that they are thinking it over, that is code for No.

It is roughly equivalent to an American being asked out on a date, and responding: I'm sorry, I have other plans.

In cultures that are designed to ensure harmonious interactions, people avoid statements that might connote rejection and that might provoke angry reactions.

This does not obviate the fact that the dealer's remarks are rude in any culture. They are likely to provoke a hostile reaction.

Your job, if you are on the receiving end of such a provocation, is to avoid hostility.

The dealer is rude because she is trying to relieve the collector of his free will. Her remark demeans him, and attempts to ply him to her will.

But the collector should not overtly take offense and should not throw the remark back at her. There is no virtue in responding to rudeness with rudeness.

I would also advise against a more obvious reply: Now that you mention it, I have made up my mind, and I have decided never again to do business with you.

That too is a threat, and if it provokes contrition there would be no way of knowing whether the contrition is sincere or self-interested.

Besides, you should never sever ties with someone over a single insult. To justify an extreme action, you would need a series of insults followed by insincere apologies.

Of course, the collector might try irony, though admittedly this is difficult in a foreign language. Irony would have him saying: Thank you for your concern.

In some cases that will make the dealer aware of what she has just said and will be offering her an opening where she can apologize.

A good response by the collector will not accuse or attack, but will allow the dealer to take back what she just said.

The collector might signify the same thing by withdrawing from the conversation on an invented pretext. Something like: Excuse me, but I have to make another urgent call.

This would not involve accusing the dealer of being rude, but it will allow him to signify as much, more politely. Then, she can mull it all over at her leisure and make a free choice about whether or not she wants to apologize.

If she chooses not to, then the relationship has been set on the path to permanent rupture.

Sunday, April 26, 2009

The Great American Torture Debate

Justin Frank is a distinguished psychiatrist and psychoanalyst. Apparently, he feels that his knowledge of Freudian mythology qualifies him to reduce complex political issues to psychobabble.

On today's Daily Beast he declares that if President Obama does not immediate prosecute Bush administration officials who were responsible for counterterrorism he is missing the chance to purge the nation of its sins. Worse yet, he would be in deep denial. Link here.

Being simple of mind and empty of spirit Frank has no questions or doubts. He assumes that these officials were torturing poor Khalid Sheikh Mohammed, and that therefore we as a nation are guilty of war crimes. Only a public purge can assuage our guilt.

Let's see. Khalid Sheikh Mohammed forced Daniel Pearl to announce that he was a Jew and then cut his head off. The same Khalid Sheikh Mohammed also committed an act of war against the United States on September 11, 2001.

Who you calling war criminals, Justin?

Do you really feel that badly taht Khalid was discomforted on a waterboard? How about some sympathy for Daniel Pearl, Justin? Or did you repress that memory?

Like his cohorts on the radical left Frank limits his empathy to the poor misunderstood Khalid. Remind me now: what is the psychiatric term for people who feel sympathy for homicidal maniacs?

Like any good psychoanalyst Frank sees the world as a guilt narrative. Crime, punishment, penance, redemption... where have I heard that before? The story is older than Freud, but Freudian theory has mined its resources with uncommon skill.

Frank does not engage the debate about good or bad terrorism policy. He does not even castigate Alan Dershowitz for proposing that courts be allowed to issue torture warrants. Not at all. He jumps straight to his politically correct conclusion, and declares the people who practiced and condoned enhanced interrogation were sadists, which means that they were inflicting these pains on people because they found it all to be oh so sexually exciting.

How does Justin know this? Because it is Freudian dogma. Didn't you know?

Justin had previously pronounced George W. Bush the sadist-in-chief. And he suggested that this sadism had been formed in the crucible of the dreadful upbringing his dreadful parents had visited on him.

How does Justin know this? Surely, he wasn't there. Surely, he did not interview the principals. Unhappily, he was unwilling to let an absence of reliable information get in the way of a good bout of character assassination.

Oh, and by the way, what is the psychiatric term for people who use clinical categories for slander and character assassination?

An interesting sidelight here. Since Tina Brown is nothing but fair and balanced, on the same day that she published Justin Frank she also posted an appreciation of George H. W. and Barbara Bush by Christopher Buckley. Link here.

Read Frank and Buckley on the Bush family and tell me which one rings truer. Ask yourself which one has had direct knowledge of the people involved and which one seems to be projecting his own fantasies?

To buttress an article that is in serious need of buttressing, Frank compares the sadistic torturers of the Bush administration to a woman patient of his who he imagines has been torturing him by refusing to allow him to help her.

Another question: what is the psychiatric term for someone who feels that he is being waterboarded when a woman refuses his offer of "help?"

It seems to be a strange metaphoric matrix for the old notion of teasing.

Anyway, Frank explains that this young woman was abused by a sadistic father, and that now she is identifying with her father and casting Frank as the abused little girl, and sadistically torturing him/her.

Apparently, Frank has a poor tolerance for incompliant women. If the quality of Frank's clinical interventions resembles the quality of his thought in his article, I can think of lots of reasons why a sentient individual would reject what he considers to be "help."

At the top of the list would be: sanity.

Has this woman really been helped by the revelation that she is a sadistic torturer?

The next time she does not want to comply with a man's offer of "help," she now can choose between giving in or feeling that she is sadistically torturing him.

How many times have men tried to seduce women by asking them to have mercy?

Clearly, this has nothing to do with medicine or science. My own analyst was honest and intelligent enough to call this practice what it is: seduction. I recall him once announcing that people who wanted to learn how to practice psychoanalysis should read Kierkegaard's "Diary of a Seducer."

Justin Frank uses psychoanalysis to reduce complex political issues to ad hominen arguments.

Didn't he learn in Philosophy 101 that ad hominem arguments are the last refuge of the feeble-minded?

Blinded by Enlightenment Therapy

I am of three minds about Zen therapy.

First, I have seen many people helped by meditation. There is scientific data suggesting that meditation works. I am for it.

Second, I admire the honesty of connecting psychoanalysis with Zen practice. It is more honest to see a correlation between therapy and religious practice than to continue to claim that psychoanalysis is a science.

Third, I am most impressed by the fact that by linking Zen to therapy, certain people have convinced insurance companies to pay for what is essentially a religious practice.

These remarks are occasioned by yet another effort to revive psychoanalysis, this time in today's New York Times Magazine. Link here.

The article tells the story of the fateful encounter between Zen Master Lou Nordstrom and a Buddhist therapist, one Jeffrey Rubin.

Here, as often happens, the work of therapy revolves around the concept of abandonment, specifically the therapist's fear that his patient will abandon treatment.

Clearly this manifests a syndrome that inflicts no small number of therapists. I consider it sufficiently prevalent to merit inclusion in the next DSM. I recommend calling it: empty couch syndrome.

The work of therapy involves making the patient feel guilty about wishing to end treatment and thus materially harm the therapist, and allowing him to feel empowered to cure the therapist by staying in treatment forever.

(For the record, given that such a line of interpretation is potentially self-interested, I believe that no therapist should ever use it. Patients have every right to exercise their own judgment,and to continue or discontinue treatment for whatever reason makes sense to them. Therapists should be ethically bound to respect such decisions.)

Anyway, after Rubin convinced Nordstrom that abandoning treatment would be like abandoning himself-- how better to manipulate emotions-- the veils lifted and Nordstrom had "a tearful reunion with" his "narrative."

This caused a "rush of revelations" that convinced him that he no longer needed psychotherapy. He decided that he really needed someone like a social worker-- or a coach-- to help him reconnect with the real world.

Alas, the revelation was too little, too late. And it was short lived.

One night Nordstrom got up to go to the bathroom. Perhaps he was overly thrilled by his enlightenment, perhaps he was trusting his inner light to illumine his house, but he chose not to turn on the lights.

Before he knew it he had tripped on the stairs and fell down, breaking his hip, his pelvis, his sternum, and a few ribs.

Did this mean that he was so thoroughly absorbed in his narrative that he lost track of reality? Was it just a stupid mistake, facilitated by a failure to see that enlightenment does not work on the outer darkness? Or was it a sign that therapy had made him so self-involved that it had shut down his ability to see danger?

None of this appealed to his canny Buddhist therapist. This latter was at-the-ready with an interpretation: Nordstrom had been acting out an unconscious suicide wish!

Lucky for him that he had discovered it before he really hurt himself.

Here Rubin is simply doing what psychoanalytic training taught him to do: turn a stupid mistake into a meaningful experience.

Fortunate fall, anyone.

But Rubin is also telling his patient that the true meaning of the experience is that he must continue therapy.

Friday, April 24, 2009

Unlearning Rudeness

No one really wants to be rude. Polite is so much easier.

Very few of us get up in the morning and make a list of the people we want to offend that day. When we do insult someone, it is more likely to be inadvertent, based in ignorance, than intentional.

Mostly, we just want to get along. We work hard at it. We cultivate harmonious relationships, more so when rudeness seems to be the order of the day.

In everyday interactions we avoid conflict and confrontation. If someone invites you to lunch and you do not wish to go, you will first drop a series of more or less subtle hints. If he cannot take the hint, you might feel obligated to spell it out, to state your position clearly.

Some would call this being open and honest in expressing yourself; it feels like what the therapy culture prescribes.

Nonetheless, it is rude; it risks creating enmity and drama. It incites the other person to want to retaliate. In everyday social situations you should be straightforward and direct only when you have no other choice.

Let us call that normal human behavior.

In most cases people act rudely because they do not know any better. They may be new in town; they may be inexperienced in the ways of certain segments of the social whirl; they may have suffered a cultural influence that convinced them that being rude is hot or cool.

Rudeness often involves local customs and manners. In some places it is polite to spit tobacco juice into a spittoon. In most places it is not.

In some places good table manners require you to keep one hand on your lap. In other places you must keep both hands on the table, lest anyone start imagining what you are doing with your invisible hand.

Correcting someone else's rudeness poses a significant social challenge. Sometimes people are grateful for the lesson. We have all felt somewhat uneasy for not knowing the rules in a new place and have felt grateful that someone took the time to inform us.

At other times we become defensive. When you are not aware that you are giving offense, when you are feeling that you have a situation under control, you will be taken aback when someone informs you that you are mistaken.

Say you flash someone a gesture that your culture sees as a wish for good luck and prosperity. How would you feel if someone from another culture informed you, however gently, that you had just flipped him the bird?

We hesitate to inform adults that they have abysmal table manners. For an obvious reason. The person who receives the message will feel embarrassed, even humiliated, and will associate the negative emotion with the messenger who incited it.

Most therapists, for example, avoid any attempts to correct behavior. Say a man tells you that his girlfriend broke up with him because he always chews with his mouth open. Would you tell him that she is right and that he ought to learn how to eat in polite company? Many therapists would rather not go there.

Coaches and managers deal with these issues all the time. In coaching situations the person has presumably agreed to try to learn how his behavior is affecting others and how he can change it for the better. He may not like what he hears, but he has signed up to hear it.

When your job involves correcting rude behavior, you must always assume that the person's mistakes are unintentional. They should never be taken as a meaningful expression of an unconscious emotion.

The person who acts rudely by explicitly rejecting an invitation to lunch is not doing it on purpose. His rude behavior does not express his wishes or desires or feelings.

Besides, if you accuse people of being rude on purpose, you will be setting a bad example yourself. Accusing someone of being rude on purpose is, dare I say, rude.

Impugning someone's character and questioning his motives is a sure way to provoke conflict. The recipient of rudeness will often feel a need to retaliate, thus prolonging a drama, or even turning a drama into a feud.

But if you tell someone that he is being rude and he keeps doing it, can we then say that he is being intentionally rude?

Here I would say No again. He might continue to behave as he did because it is a habit. Where he came from it might even be a good habit. Now, he does it automatically, without thinking about it, even if he knows that it is rude.

It takes more than a moment of embarrassment to change a bad habit. But the moment of embarrassment is still a good place to start.

Thursday, April 23, 2009

The Real "Secret"

What if someone discovered a magic elixir that would help you to live longer, would increase your chances of beating cancer, would make it more unlikely that you will catch cold, would lower your risk of heart attack, would help you lose weight, and would promote brain health?

Would you want to know what it is? Would you take it? Would you want to know why there aren't any infomercials trying to sell it?

Surely, you would.

The answer might be surprising. This "secret" is not hidden away in some guarded vault. It is all around you, in plain sight. As Tara Parker-Pope told us in the New York Times a few days ago, it is: friendship. Link here.

Why have we not all embraced it? Perhaps because it requires work, far more work than taking a pill or a supplement. And it also requires good behavior, something that is often in short supply in our celebrity-driven culture.

As Parker-Pope presents it, psychologists have been wracking their brains to discover the keys to family relations and true conjugal love, while they should have delved more deeply into friendship.

Professor Rebecca Adams of the University of North Carolina put it well: "There is scads of stuff on families and marriage, but very little on friendship. It baffles me. Friendship has a bigger impact on our psychological well-being than family relationships."

And yet, all of the interpretive keys that psychotherapy has taught us to use to decipher hidden motives lead back to family.

Why has friendship been neglected? I do not think that the oversight has been intentional.

Developmental psychology has good reason for beginning with the mother/infant dyad, moving on to the family unit, and then assuming that every other relationship merely replicates the basic family structure.

But this assumes that we never really put away the toys of our childhood, a dubious assumption, and one that ought at least to be questioned.

If it all goes back to your childhood relations with your parents and siblings, then, what matters is blood ties. And the central moral fact about blood relations is that they do not produce a connection that is based on behavior. You do not have to do anything to be related by blood. And you only have to do the minimum to stay connected.

It takes a major effort to be disowned by your family.

As for romantic love, mostly we believe that it is a precursor to the creation of a new family and new blood relations. We also hope that it will be unconditional.

Don't we expect that true love will entice people to overlook the kind of bad behavior that a friend would never tolerate? True love provokes emotional excesses that would kill most friendships.

Friendship, however, is a social tie. F
riendship feels like belonging to a group, like having earned one's place within a group.

If societies are alliances between families, then they are modeled more on friendship than on blood relations.

And friendship promotes ethical behavior. To maintain a friendship you need to behave yourself. If you want to have a lot of friends you need to develop the good habits that build character.

Thus, Aristotle saw friendship, not romantic love, as the basis for ethical behavior in human community.

Friends are more therapeutic than family because, as Aristotle put it, we tend to see the best in our friends. Being your best self and seeing the best in those who are close to you makes your relationships more harmonious and enhances your self-esteem.

Freud saw human life as a family romance writ large. As a result, he wanted us all to see the worst in our blood relations. Freudian therapy is about exploring the limits of human depravity: molestation, incest, patricide.

But a process focused on the worst in self and others could hardly be therapeutic.

Nowadays research shows that patients are most likely to improve in therapy if they have a good human connection with their therapists. This suggests that therapy works best when there is something like a friendship between patient and therapist.

All those years of advanced psychological study and now they tell us that what really matters is the ability to get along. I venture to guess that precious few clinical psychology programs have courses in how to be a good friend!

If friendship is the basis for improvement in therapy and if friendship is a social tie that involves neither blood relations nor libido, then the transference-- considered as a re-enactment of unresolved childhood eroticism-- can only be an obstacle to anyone ever getting better.

Wednesday, April 22, 2009

Moral Superiority

Way back when, Wall Street's Masters of the Universe routinely sent large chunks of their bonuses to elite universities.

It made good sense. Being a major benefactor of a prestigious institution brings a reflected glory; it also facilitates one's child's access to a superior education.

Of course, these Grand Poobahs were so busy making money that they did not pay attention to what was being taught at said universities.

They had neither the time nor the inclination to decipher the double talk and mumbo jumbo that had become a staple of far too many humanities courses. How could these Masters of the Universe stoop to worry about deconstruction and Slavoj Zizek?

Had they done so, they would have discovered that the tenured professors occupying chairs with their names on them were teaching that capitalism and the American way of life were unmitigated evils, unworthy of any respect.

Fueled by Wall Street bonus money, among other sources, humanities departments at major universities had become hotbeds of Nietzschean resentment.

The irony is too rich to avoid.

Then one day the world changed. Wall Street crumbled and the Masters of the Universe found themselves diminished, demeaned, and disrespected. Men who wore finely-tailored suits on New York subways were greeted with stares of derision and contempt.

They should not have been surprised. This attitude had been carefully cultivated in major universities for decades. The financial crisis gave it an opening; it was at the ready with myths that would explain it all.

Wall Streeters had been so blind to the threat that they did not just finance the professors who were working tirelessly to undermine their status and prestige. Many of them also financed the political campaign of a president whose goal was to impoverish them and to empower the intelligentsia.

Our new president, a budding philosopher-king if ever there was one, has now channeled advanced university thinking into his foreign policy.

If you were surprised by Obama's recent apology tour, you were not paying attention when all these thoughts were being disseminated in our educational system.

Dorothy Rabinowitz put it well in today's Wall Street Journal: "Five decades of teaching in colleges and universities across the land, portraying the U.S. as a power mainly responsible for injustice and evil, whose military might was ever a danger to the world-- a nation built on the fruits of greed, rapacity, and racism-- have had their effect. The products of this education find nothing strange in a president quick to focus on the theme of American moral failure."

Of course, any product of this education will console you with the idea that, thanks to Obama, we now occupy the moral high ground. Through the moral strength of Obama we have shown ourselves to be superior to our enemies and friends alike.

It is also true that no one ever won a war by occupying the moral high ground.

The fact is, moral superiority is for saints and martyrs. (And also for aggrieved academics.) Being morally superior means being able to tolerate extreme pain to serve a cause that transcends the mundane.

Saints and martyrs accept the pain because they know that their suffering will be redeemed. They may gain the eternal joy of the Kingdom of Heaven or the transient of watching their ideas triumph as government policy.

In their minds this latter will transform the nation into a Heaven on Earth and will grant them the prestige that would have been rightfully theirs, had it not been stolen from them by financial professionals.

Tuesday, April 21, 2009

Advising the Investment Advisers

Consultant John Bowen offers this sobering assessment of client attitude toward financial advisers: "... in the current market downturn... research shows that four out of five affluent clients are thinking of switching to a new financial adviser."

Since Bowen's firm advises advisers on how to become more successful, let's examine how he proposes to solve this problem. Link here.

Mostly, Bowen tells advisers to offer customized investment plans to their clients. This implies, reasonably enough, that if your clients want to be treated as special, you should treat them as special.

This involves discovery meetings, getting-to-know-you meetings, and follow-up conversations. It also requires relationship development, trust building, extensive communication, and just plain getting along.

Surely, if your client does not trust you to be offering advice that is in his best interest, he will simply not listen to you.

All of this is on point.

Yet, a large number of advisers already present customized investment plans to their clients. It is not reasonable to think that 80% of clients are thinking of changing advisers because because they do not feel sufficiently special.

In my view the custom approach also fails for being too client-centered. The best approach is market-centered.

Bowen reflects the problem more than the solution. Many advisers are so worried about losing their clients that they are spending too much energy stroking wounded client egos. And they are offering too many bromides, and not enough guidance.

They need to step back from their clients' anguish and address the most basic questions: What happened? What might happen now?

Understanding the client is a good thing. Feeling for the client is a good thing. Understanding the market is a better thing.

Today, an adviser should have an opinion about whether the recent rally is the eye of the hurricane or an all-clear signal.

An investment adviser should have an opinion and an outlook about the state and direction of the market and about the condition of the macro-economy.

And he should demonstrate his understanding of the new market reality by showing appropriate emotion, and by avoiding now-discredited conventional investing wisdom.

No adviser should ever utter the words: buy and hold. If he does, people will rightfully get angry.

And advisers should consign the notion of a diversified portfolio to oblivion.

Famed investor Jim Rogers offered this view of portfolio diversification in Business Week: "Diversification is something stock brokers came up with so they wouldn't be sued [for making bad investment choices for their clients.] Henry Ford never diversified. Bill Gates didn't diversify. The way to get rich is to put your eggs in one basket and to watch that basket very carefully. You can go broke diversifying. Ask anyone who's diversified in the last three years." Link here.

But how do you know which basket to put your eggs in? Do you have to be a professional investor like Jim Rogers to know it?

Not at all. Echoing advice that another famed investor, Peter Lynch, has often touted, Rogers told us to invest in what we know: "If you're an auto mechanic, you know much more about your field than anyone on Wall Street ever will. You'll know when new products and new processes are coming out. These people can get extremely rich just by staying with what they know. If could be products that go into cars, like tire companies, or glass companies, rather than [only] auto companies."

Rogers should have added that while your personal knowledge is a great place to start, you should still do your due diligence. Questions about the company balance sheet, its profitability, and its creditworthiness should also be added to the list.

If your daughter loves to shop in a store, you should give some thought to investing in it. But don't go all-in on the basis of an eight year old's whims.

Of course, Rogers is assuming that we can all trust our own judgment and that we want to go out and make money.

John Bowen veers more toward ego massage when he assumes that people just want to preserve capital. This feels like the kind of thing you tell someone to console them after they have suffered a grievous loss. It's like saying: you may be broke, but you still have your health!

It is a nice thing to say, but it reveals a passive and fearful attitude.

If a client has been traumatized by investment losses, the best way to overcome the trauma is for him to go out and try to make some money.

When your instincts are telling you to hunker down, the better to avoid future trauma, the best approach is to attack the problem aggressively.

Surely, Jim Rogers does not have to be in the markets. He could easily sit back and collect interest.

And yet, he continues to invest. He knows that there is always a way to make money. The challenge is finding it.

Monday, April 20, 2009

Presidential Followership

In 1907 President Theodore Roosevelt ordered the American naval fleet on a voyage around the world.

The fleet was the nation's pride. It's mission showed a confident nation ready to shoulder greater responsibility and leadership in the world.

Roosevelt also believed that enhanced national prestige would promote American values and ideals abroad. For him that was an eminently desirable policy goal.

At the time the trip was considered a great achievement. France and Germany thought that a round-the-world voyage by 16 battleships was logistically impossible.

Roosevelt's gesture heralded the dawn of the American century. Instead of boasting about national greatness or pretending that submissive gestures bespeak virtue, Roosevelt displayed a great American achievement for all the world to see.

Lest we forget, he did it at a time of financial crisis, two months after the banking Panic of 1907.

Thanks to Theodore Roosevelt a proud and confident nation entered the twentieth century behind a proud and confident leader.

A century later President Barack Obama sent himself around the world and took it all back.

In his recent trip to the Summit of the Americas Obama was acting like someone who had no real interest in exercising leadership. He was happy to follow the lead of others, to acquiesce in the agenda set by nations that were notoriously hostile to the United States.

Obama refused to exercise leadership; he again excelled at followership.

Obama's agenda, if you wish to call it that, was to be one of the guys, to be part of the in-crowd, to be accepted, and to be liked as a person among persons.

By default the summit agenda centered around the grievances of Cuba, Venezuela, and Nicaragua. They used the summit to denounce the United States was an oppressor nation that was responsible for all of the political and economic failings that had happened south of its border.

Our multicultural president said nothing to assert American values. He sat on his hands. Perhaps he believes that all values are created equal or that we have no right to criticize others when we have not fully gotten touch with our own guilt.

Above all else, Barack Obama seems to need to be liked and accepted. If defending the pride and honor of our nation might cause people to dislike him, he says nothing.

This means that Obama still has not figured out what it means to be the leader of the free world, or even to be an alpha male.

When you are the alpha male, being one of the guys is not part of the job description.

Compare Obama to Theodore Roosevelt. Does Obama embody the pride, the confidence, and strength of character that Theodore Roosevelt had? Does he stand tall and proud to defend American values?

Would Theodore Roosevelt sit silently for 50 minutes listening to a foreign leader excoriate the United States for the poverty and underdevelopment of South and Central America?
Would Roosevelt have smiled warmly while accepting a Marxist screed arguing that the United States was an oppressor state?

Theodore Roosevelt asserted American prestige and power at a time of financial crisis.

Now, with America facing an epic financial crisis, Barack Obama has diminished American prestige, and has demoralized the nation.

You may or may not know it, but Obama is preparing us for lesser tomorrows. He even seems to believe that we deserve to suffer them, as penance for our national sins.

Saturday, April 18, 2009

Peggy Noonan Sees the Bright Side of Financial Ruin

Nobody ever mistook me for Nostradamus. Most days my crystal ball is fogged over, so I usually refrain from predicting the future.

Besides, a real prophet must have access to God's mind. Prophecy can only be true if God knows everything in advance and the prophet knows God's mind. But if God knows it all in advance, what place is there for free will?

If you make no claim to prophetic powers, you can still offer an hypothesis about the future.

When you predict tomorrow's weather, you are offering a testable hypothesis. Tomorrow will prove or disprove it.

When you predict the state of the climate in 2109 you have in Nostradamusland. Please do not insult us by saying that you know to a certainty what the climate will be like in 2109, or that your vision counts as a scientific fact.

If you imagine that a calculation can predict the future, repeat after me, three times: Thomas Malthus, Thomas Malthus, Thomas Malthus.

And didn't Nassim Taleb teach us that major events in the future are black swans. Meaning that the real future is the one thing that no has ever imagined.

Readers of this blog know that I have not always refrained from crystal ball gazing. Being sufficiently aware to know that clairvoyance involves an unusually large quantity of wishful thinking, I still soldier on.

We all do, and we all should do it. The way we see the future and the way we try to influence the future is crucial to the way we conduct our lives. It is better to plan for the future than to be constantly gazing into the past.

Fearlessly, I have joined the party of those who predict that our financial crisis will produce a new set of business values. People will work harder, be more polite, show more decorum, dress more professionally, and even return phone calls.

Were they all to come to pass, this would be a good thing. The world would be a better place. The hard part is knowing the chaos that might befall us before this new age dawns.

In today's Wall Street Journal Peggy Noonan gazes into her crystal ball and offers some of her visions of our new world. Link here.

It takes gumption to do this, so let's give her some credit. Right or wrong, she set us to gazing.

Noonan does not just have a vision; she has a concept. She is prophesying, or washing for, a simpler, more authentic life, a life without most of the material appurtenances of modern life.

She seems to see us all becoming survivalists, living on a farm, awakened at down by the crowing of the roosters, and running out to tend the sheep and goats.

She calls this authenticity.

But would we really feel better if we turned back the clock to a time before the Industrial Revolution? Would life be more authentic if we jettisoned indoor plumbing and started building more outhouses? Would we be happier if we replaced central heating with pot-bellied stoves?

However down-to-earth Noonan's nitty-gritty vision is, it is wildly impractical. Without the efficiencies of modern agriculture and food distribution systems, many people would starve to death.

As for Noonan's other predictions, I sympathize with her wish that we see fewer faces frozen by Botox. Human communication would make a great leap forward if we went back to the time when people did not consider wrinkles to be an alien invader that had to be eradicated at all cost. I for one miss the time when faces were allowed to express emotion.

On the other hand it is not a crime to want to look good. It might be better to moderate our passion for extreme make-overs than to return to a distant past where a hardscrabble life caused people to look far older than their years.

I do not, however, see any real virtue to Noonan's vision of fewer and fewer people going to the gym. It is fine for people to take more walks in the park, but exercise is far better for your health, in more ways than one.

Besides, exercise is work; a walk in the park is leisure. If we do not value work, we are never going to work our way out of the crisis.

If some people aspire to a buffed look, fine. If that gets them to improve their health, I see no reason to use prophecy to try to induce them out of it.

The biggest problem with prophets is that people who gaze too long into their crystal ball often fail to observe what is going on around them.

It would be nice to think that the financial crisis might thrust us into the rough-hewn and authentic world that Noonan sees coming.

I fear that it will do just the opposite. Massive unemployment and a materially diminished lifestyle might also unleash demons.

The pitchforks that till the land can also be used as weapons. You might see it as authentic, but it is probably not what you had in mind when you were gazing through your rose-colored glasses.

Anyway, if Noonan is right and Americans are going to give up the fight to produce a thriving market economy, my prophecy-based advice is: start learning Chinese!

Friday, April 17, 2009

Losing Trust in Your Financial Adviser

Jeffrey Goldberg speaks for a lot of people when he opens his recent Atlantic Monthly article by saying that he and his wife "behaved in the way responsible cogs of capitalism are supposed to behave." Link here.

He had trusted the advice he was receiving from his broker, from respected finance gurus, and from talking heads on television.

And then, he got hit by a bus. Figuratively, of course.

Now, trying to recover his depleted fortunes, he travels around the country speaking to a diversified portfolio of finance gurus, from Robert Soros to William Gross to a survivalist in Arizona.

They all tell him the same thing. That he was a sap for believing that his broker cared for anything more than the commissions his trades could generate. As Bill Gross, the bond guru from Pimco tells him, the game is rigged against small investors.

Clearly, Goldberg's portfolio suffered because he had placed too much faith in expert opinion. Now he seems to believe that he needs to find more expert experts.

This conclusion is too facile. Not least because some of our most respected gurus got reamed by the market crash. If you had invested with Warren Buffett you would have lost, from peak to trough, approximately 50% of your assets.

Perhaps the market was also rigged against Buffett.

We should still ask whether Goldberg really did the right thing. He believed in the system and he believed in his expert advisers. And he believed that by acting as a true believer he would necessarily be rewarded.

But did he really understand the markets? If he believed that the markets were in the business of taking care of us or of making us rich, then clearly he did not.

If he thought that he could simply sit back in his chaise lounge while his broker worked for him, he did not understand the investing business.

Markets do not necessarily reward people who believe in capitalism. A religion might reward people who believe in God and who do all the right things, but the markets are functioning on a different plane.

Markets often reward hard work, work that you do for yourself, work that you might do in conjunction with an adviser, but work that cannot merely be done by your adviser.

Clearly, Goldberg is not in the position to spend all his time working on managing money. As a self-interested amateur his job involves making the best choice of a financial adviser.

While some advisers are clearly in it for the commissions, others are not. It is an investor's job to work hard enough to make a good choice of an adviser.

An investor's second job is to work with the adviser to develop a coherent strategy for dealing with the markets and a good working relationship.

If Goldberg did not hear from his broker for months on end, clearly, his broker was negligent. And yet, what prevented him from picking up the phone?

But let us grant that Goldberg, like many of us, was too trusting in the great financial minds who were assuring us that the markets would make everything well.

Is it a good idea to go to the other extreme now, and trust no one?

Whatever caused Goldberg to fire his broker, it is not necessarily a good thing for him to place his trust in the wit and wisdom of a survivalist who is speaking to him while standing in the snow in his bare feet.

Thursday, April 16, 2009

The Anorexia Gene

Here's an opening paragraph that caught my attention.

In today's Daily Beast Rachel Shukert wrote: "Just the other morning my therapist and I agreed that pretty much everything wrong with me can be traced, in one way or another, back to my parents. The revelation, which has cost my insurance company thousands of dollars, is hardly groundbreaking." Link here.

It may not be groundbreaking, but as Shukert describes in her article, "Was I Born Anorexic?" it isn't true either.

Recent research suggests that some people are genetically vulnerable to a condition that Shukert suffered from: anorexia. Link here.

Shukert concludes that her anorexia was not caused by inadequate parenting or slim fashion models. Apparently, she inherited her genetic predisposition from her father.

Her opening paragraph also alerts us to a curious fact about talk therapy. What really matters is getting patient and therapist to agree. It does not matter whether the points they agree on are true or not. What matters is the meeting of minds.

Therapy teaches you how to construct a coherent narrative-- usually involving a family romance-- that appears to explain your problem. It does not matter whether knowing it solves the problem. It does not even matter whether it corresponds to the facts.

The narrative must make sense and it has to elicit wholehearted mutual agreement.

Shukert is quite right to emphasize that her "groundbreaking" insight is worth what she paid for it. Which is: next to nothing. Her insurance was footing the bill.

As long as insurance companies are willing to pay for these extended explorations into these fictive causes of illnesses, patients will happily go along for the ride.

The European research that discovered the genetic predisposition declared that it afflicted 70% of hospitalized anorexics. But then, what about the other 30%?

I will follow Aristotle here and say that some people are anorexic by nature and some by habit.

If anorexia can be a bad habit, then the correct treatment issue would be: how can you break a bad habit. Or better, again from Aristotle, how can you replace a bad habit with a good one?

Hopefully, there will soon be a medical treatment for the genetic predisposition to anorexia. While we are waiting, we should be working on correcting a bad habit, not making the habit make sense.

At the least, we know better than to imagine that the cause of anorexia lies in inadequate parenting or excessively thin fashion models.

Wednesday, April 15, 2009

Make Sure You Use Protection

Kerry Howley reports on that some people really want to pay more in taxes: "Nevada's brothel owners say they want to be taxed at $5 per customer, presumably because industries that create tax revenue are less likely to suffer from political backlash."

Gives a whole new meaning to... protection!

Is It Therapeutic to Pay Taxes?

How do you get people to feel good about paying extra taxes? And how do you get them to vote for candidates who are going to increase their tax burden?

Easy. You tell them that it is a therapeutic experience. Like buying what the Church calls "indulgences."

I owe this idea to the great financial journalist, Robert Samuelson. Link here.

In his column Samuelson deftly draws back the curtain on our wizard-in-chief.

He argues that when Obama declares that green jobs, health care and education reform will solve the financial crisis, he is not merely misreading the problem. He is actively creating a "feel-good" culture where paying more taxes allays the guilt you should be feeling for having succeeded.

Samuel calls it a "post-material" economy. It is also a post-market economy.

In the name of a specious concept of social justice, and without there being any evidence or reason to back up the claim, the president is asserting that green energy and computerized medical records will create tons of high paying jobs.

Samuelson calls this a mirage, a way out of the reality of markets and into a world of fantasy.

In his words: "What defines the 'post-material economy' is the growing willingness to sacrifice money income for psychic income-- 'feeling good." Some people may gladly pay higher energy prices if they think they're 'saving the planet' from global warming. Some may accept higher taxes if they think they're improving the health or education of the poor."

If this is true, the Obama is also exploiting guilt. He did not create the guilt; he is simply mining its resources.

Schools and the media have taught us that our wages are wages of sin, and that our gains are ill-gotten.

Important members of the mental health profession have added that when successful people are unhappy with their lives, they must be suffering from unacknowledged guilt.

If that is what ails you, then charity is the cure.

If you do not feel very charitable, the government is going to help you out. You may not like it when the government raises your taxes, but, keep in mind that it is doing it for your own good.

When the government redistributes income, it is effectively practicing charity. It is taking from the rich and giving to the poor... or to the interest groups that supported the winning candidate.

If that does not make you feel better, then you need to get with the new culture.

Amazingly, this culture is not only embraced by those who stand to gain the most. It is often promoted by otherwise intelligent high-income individuals who stand to lose the most.

This tells us that it is not really very difficult to manipulate the minds of the rich and successful.

Tuesday, April 14, 2009

"The Marriage Go-Round"

If you were worrying about the end of American exceptionalism you can now take solace in the fact that America leads the world in marital inconstancy.

So saith Johns Hopkins sociologist Andrew Cherlin in his new book, "The Marriage Go-Round."

As a Wall Street Journal review summarized the results of Cherlin's research: "Virtually no other nation in the West can compare to the U.S. when it comes to divorce, short-term cohabitation, and single parenthood.... Americans marry and cohabit at younger ages, divorce more quickly and enter into second marriage or cohabiting unions faster than their counterparts elsewhere."

If inconstancy were a competitive sport, we would all be winners. And I would add my suspicion that we Americans spend more time and energy trying to understand our relationships than anyone anywhere in the world. Again, something we can all be proud of.

Of course, we still believe fervently in marriage. It's just that we are not very good at it.

Perhaps for all the effort we have put into understanding relationships we have simply lost sight of what marriage is all about.

At the least, marriage is not the expression of true love between two individuals. It has never been that, and is not likely to become it.

Also, marriage is not a mystical or spiritual journey toward self-fulfillment. If that is your goal in life, be kind enough not to drag someone else along for the ride.

For most of human history marriage has been a social arrangement. Until relatively recently, true love has been ensconsed in the glorious institution called adultery.

Clearly, it was a good thing to allow the participants to have a choice of mates. This modification dates to seventeenth century England, if you are interested.

But, companionate marriage, as it is now called, merely gave both parties a choice of mates. It does not say that either of them have to be madly in love. And it does not mean that they need to make a bad decision just so the world will know that they did not suffer any parental influence.

Marriage is an alliance between families and communities. You have the right to marry someone that no one in your circle of friends likes, but that that bodes ill for future marital bliss.

Marriage is a contractual relationship. It is sealed by public vows. If you are involved with someone who is not in the habit of keeping his or her word, what makes you think that he or she will honor marriage vows?

Marriage involves duties and responsibilities. It is not about luxuriating in bliss or following your heart's desire.

People who follow their bliss are probably more likely to divorce than are those who feel duty-bound to work at their marriage.

A modern marriage often involves two careers and child care responsibilities. That means that both parties must be organized. Without coordination you cannot have a life together, no matter how much you are in love.

Marriage is work. That makes it fundamentally different from true love. You do not have to work at falling in love; and love at first sight does not involve work, either.

If you are considering marriage, think beyond the question of how much the two of you love each other. Ask what kind of life you will have with your intended. With whom will you be spending your time; who will your mutual friends be; where will you live; how will your children be brought up?

Marriage is not therapy. It was not invented to maintain you in a state of constant ecstasy. If you get it right it will surely make you happy, but only as long as you understand that long-term happiness involves more serene contentment than unspeakable pleasure.

Monday, April 13, 2009

Can I Really Feel Your Pain?

The verdict is in: we have all been convicted of narcissism.

Financial crisis, terrorism, global warming, inadequate health care... the fault does not lie in our stars but in ourselves. Or better, we love ourselves too much.

If too much good feeling about ourselves got us into this mess, the genies of the mental health profession have reasoned that the solution must be... empathy.

Everyone has a different definition of empathy, but it must involve the ability to feel how it feels to have someone else's feelings.

At the risk of quibbling, the same therapists who have been selling empathy as a panacea for our narcissism have been exhorting people to express their feelings openly and honestly, no matter what effect it has on other people.

Put these two injunctions together and you get a boatload of cognitive dissonance.

Anyway, the ultimate statement of empathy is the old saw: I feel your pain.

You know the phrase well. A recent, highly empathic, lip-biting president adopted it as his slogan.

By now the term has become a shibboleth, a password that people sprinkle into conversation to show that they are card-carrying members of the therapy culture.

Some shibboleths make sense. Empathy is not one of them.

The problem with the concept is that, truth be told, I do not, I cannot, feel your pain. Your pain is inalienably yours. It cannot be shared. That is one of the reasons it feels painful.

I can surmise how it feels to be in your shoes; I can tell that you feel good about being in your shoes; but short of taking over your mind, I can never really know how your feet feel when you put on your Mephistos.

Even if you believe that you can feel someone else's feelings, the only way you can do so is by mirroring their expressions. When you read someone's facial expressions, you can tell that they are in pain. If you mimic their expressions, you feel something like their feeling of pain.

But if this is true, then empathy is just another name for narcissism.

What matters in this life is knowing that someone is in pain, not necessarily feeling their pain.

Look at it this way. If you feel someone's pain, and if they also feel powerless to make it go away, does your superior capacity for empathy cause you to feel both the pain and the powerlessness?

And if you too fell powerless, what good are you?

You should be able to tell from facial expressions when your friend is getting bored with your conversation. But that does not mean that you should feel bored. You should take the cue and either shut up or change the subject.

Take a more upbeat example. Say that a man knows that his wife loves receiving roses for her anniversary. Surely, this does not mean that he knows how it feels to be a woman receiving roses on her anniversary.

It means that he would do well to send the roses, with a note. Not because he feels her pleasure, but because he is duty-bound to make his wife happy.

For future reference, the note should not express his empathy and it should not limit itself to an expression of true love. For an anniversary, his note should confirm his commitment to their marriage.

But the social connection that exists between married couples is not based on empathy. It is based on duty and commitment.

I am sure you all know that if this man forgets to do his conjugal duty, he will not just be feeling her pain. He will be feeling plenty of his own.

Sunday, April 12, 2009

Bankers Go John Galt

When we say that populist outrage is mindless, it is not just a rhetorical ploy.

How else can you describe the Congresspeople who were huffing and puffing about how Wall Street bankers ruined the financial system and how they must now be punished.

Congress is now flexing its bureaucratic and regulatory muscle, deciding who does and who does not need a bonus, whose bonus should be taxed into insignificance, and who needs to be reproved in public for sins great and small.

Simply put, Congress is imposing a guilt narrative on the financial collapse. It is forcing those who still work at the major banks to do penance for their sins.

And Newsweek thinks this is not a Christian nation!

What has this gotten us? We know that we need the best minds and most experienced hands to steer the banking system back to solvency. And yet, as two excellent articles today point out, government interference and micromanagement have offered the best bankers little choice but to quit or retire. Links here and here.

So, the best laid plans have run into the wall of human freedom.

This is the message of the "going John Galt" movement. When they raise your taxes to the point where you are no longer really working for yourself, you have an inalienable right to refuse to work for decreased compensation and recognition.

It is not just about money. When your talents are not appreciated and respected, you are likely to lose interest in your job, whether or not you decide to keep doing it.

Congress has not only deprived our best bankers of financial incentives. I has also stripped them of their psychological capital, their status, their dignity, and their self-respect.

How many times would you accept being publicly berated by Barney Frank and Maxine Waters before you would start looking for a new line of work?

If you were thinking that our smartest bankers were going to hunker down and save the banking system, think again.

Many of them are long gone by now. For those who remain, the exit door is looking more and more enticing.

Friday, April 10, 2009

Selfish Actors?

A recent debate at the Harvard Business Review will resonate for readers of this blog. Link here.

Its topic: have business schools taught the wrong values, and, if they have, do they bear some responsibility for the current financial crisis?

Today I will focus on a point I have made, and that is well articulated by Stanford Professor Robert Sutton.

If the models and theories taught in business school start with the assumption that human beings act out of individual self-interest, are they encouraging future businesspeople to act selfishly. And does this selfish behavior seem to confirm an assumption that is both false and dangerous.

Sutton explains what happens when you assume that human beings are fundamentally selfish agents: "If you travel through life believing that all human beings behave this way, you will look to screw people at every turn and assume that they will do it to you given the chance. And if you act as if this is true of every human interaction, and treat everyone around you as if they too are always looking for short-term and selfish wins, you will create a self-fulfilling prophecy."

But how did such an idea become dogma. After, the idea of selfish actors does not even offer a cogent explanation of what happens in a marketplace.

When two people negotiate the price of a product, neither will get everything he wants. To ensure that the transaction takes place, each participant will have to compromise.

If it was not natural to compromise some of your self-interest for the good of the group, there would be no marketplace.

People who compete in an arena must place the integrity of the game over their will to win. the game cannot be played if people were willing to do anything to win. Ignoring the rules and displaying poor sportsmanship might give a team a competitive advantage, but its victory will be bittersweet.

Great athletes love to win, but they love the game more. So too do market participants. They love to win but they love the markets more. They will not destroy the markets just to get a great deal for themselves.

The recent financial crisis began when the markets seized up, when they ceased to function. This suggests that some of the participants cared more for themselves than they did for the markets.

Thursday, April 9, 2009

Should a Leader Want to Be Loved or Feared?

The question in the title of this post comes from Machiavelli. Yesterday, pseudonymous blogger Neo-neocon brought it to our attention in a thoughtful and incisive post about leadership. Link here.

Her reflections were occasioned by the adulation heaped on our president during his latest European excursion.

Machiavelli answered that if a leader cannot be both loved and feared, it is better to be feared. The reason, as Neo noted, is that it is dangerous to be loved and not feared.

Fear saves lives. If a leader can strike fear in the hearts of a nation's enemies, they will be less likely to attack.

The problem is not so much that Europeans love Obama. Or that European leaders fawn over him. The danger is that Obama believes the hype and succumbs to the charm.

Leaders should know better than to trust the adoring love of their fellow leaders.

How did European leaders show their love for Obama? By giving him nothing of substance to return home with.

Obama seems to be easily flattered. He does not seem to know that leaders should be wary of sycophants. While the leader is basking in the glow of adoration, someone is picking his pocket. The more the leader loves his popularity, the more often his pocket will be picked.

To shift the metaphor, it reminds me of La Fontaine's fable of the fox and the crow. The crow is sitting in a tree holding a piece of cheese in its beak. The fox flatters the crow by telling him how wonderfully he sings. When the crow falls for the ruse and starts singing, and drops the cheese.

Victor Davis Hanson noted that Obama's attitude manifests: "a form of narcissism that focuses applause on self, at the expense of the reputation of one's country."

A president who went around Europe apologizing for his country and puffing himself up at the expense of his predecessor, must fall in this category.

To enhance his personal popularity, Obama diminished national pride, prestige, and respect. Europeans were happy to hear it. They have no stake in American national pride, and gain prestige when America loses status.

As Neo points out perceptively, leaders should not be liked in the same way that you like your friends, your family, or your lovers.

A leader's person symbolizes the group he represents. If he talks down the group's achievements in order to talk up himself, he has failed the most basic test of leadership.

If the leader maintains a dignified demeanor he will enhance the self-respect of all members of the group.

Obama seems to be waving in this direction when he keeps saying that he wants to lead by example. But you cannot do it when you are apologizing all the time.

Setting a dignified example does not involve suggesting that nothing good happened before you were elected. It does not involve acting as though you are now, for the first time, proud of your country.

A leader must take pride in his nation's achievements. That way, he will be telling people that they are capable and competent, that they have achieved successes that can be build upon. The alternative, the Obama approach, merely undermines the nation's confidence.

When it comes to being liked, Obama is king of the world. When it comes to enhancing American prestige in the world, he has just been rolled.

The Mind of the American Male

We are all constantly on the lookout for insights into the human mind. For some people the male mind is especially mysterious.

So when we find a statistic that offers insight into the male mind, our antennae perk up.

That was what happened this morning when I saw a poll that Callaway Golf Corp. took
to celebrate the first round of the Masters Golf Tournament.

The question, asked only of male golfers was: given the choice would you rather play Augusta National (the club where the Masters is held) or have a date with Bar Rafaeli? As all red-blooded American golfers know Ms. Rafaeli graced the cover of the most recent Sports Illustrated Swimsuit issue.

The answer: 78% would have chosen a round at Augusta National.

So now you know what really matters to men, or to male golfers.

Then again, the statistic could also mean that most male golfers are happily married or that most are old.

Wednesday, April 8, 2009

Camille Paglia on Leadership

Today, the inimitable Camille Paglia has some excellent thoughts about presidential leadership, among other topics.

As always, she manifests a level of integrity that is refreshing in these politically correct times.

Link here.

Money, It's a Guy Thing... or Is It?

Tina Brown thought well enough of Daphne Merkin's article "The Brotherhood of Money" to rerun it in her Daily Beast. It first appeared in January; it reappeared yesterday. Link here.

The article was certainly worth a second read. Besides being compelling and well-written, it also raises a question that has mostly escaped scrutiny.

At a time when people are constantly talking about gender balance, no one besides Merkin has been asking why so many of the main actors in the current financial crisis are men. Mary Schapiro and Sheila Bair notwithstanding, it appears that money is a game run and controlled by men.

As Merkin states it: "Money, it goes without saying, is still a men's club of the most secretive kind. The fact that until recently men have been the sole breadwinners is not enough to explain this profound separation of the sexes when it comes to lucre, shiny or filthy."

In days of yore, as Merkin testifies, women in certain communities were told to ignore money issues. If they showed an interest in money it had to mean either that that they did not want to be taken care of, or that they were not confident that men could do so.

A woman's interest in money would have threatened the male role of provider, and would have made her a less attractive mate.

And it is probably true, even at a time when most women work outside the home,that many learn about financial issues only when they are forced to... by divorce, widowhood, or financial crisis.

While feminism has certainly opened the workforce to women, still and all, a
s Merkin says, the world of money is still a brotherhood.

Is that because that's the way men want it? Or are there other factors involved?

I hesitate to blame it all on the patriarchy because precious few women today feel beholden to do its bidding. How many young women do you know who want to be the helpmates of dominant patriarchs? Today's young women are far more likely to identify themselves as feminists.

If that is true, ask yourself this: When a young woman goes to college and takes courses in women's studies, will she be learning anything about finance and investment.

I think not.

Young feminists are being taught to deconstruct the capitalist hegemony. They learn how to protest injustice and to assert their grievances about the way they are treated on dates and in relationships.
They learn how to ferret out signs of sexism and to denounce them.

But they do not learn about balance sheets, investment portfolios, and the banking system.

Women's studies belongs to the humanities. They emphasize soft sujects, subjects that involve emotion and art, subjects that stereotypically exist within women's domains.

Part of the problem is that feminism holds as dogma that reality is constructed out of power relations that seek to exploit women.

But, money is about numbers. And like it or not, numbers are real. They are not a social construct. If you have learned from critical theory and deconstruction that there are no facts, you will never develop a good relationship with money.

Obviously, it is highly desirable that women learn about money, the better to gain more authority in the world, and the better to have control over their lives.

Blaming the problem on the patriarchy is too simple. If the patriarchy is trying to keep women out of the financial world, it has found a willing group of enablers in contemporary feminists.

Tuesday, April 7, 2009

The Value of Appearances

If you're looking for good advice about how to bear up in the current financial crisis, one excellent counsel is to keep up appearances.

According to Benedict Carey's article, "When All You Have Left is Your Pride," keeping up appearances will allow you to maintain your pride and self-respect in time of trouble. Link here.

Carey opens with this reflection: "Look around you. On the train platform, at the bus stop, in the car pool lane: these days someone there is probably faking it, maintaining a job routine without having a job to go to."

Many therapists, and the therapy culture at large, would denounce these people as: "shallow and deceitful, the very embodiment of denial."

Yet, as Carey reports, other psychologists have discovered that keeping up appearances "sustains good habits and reflects personal pride." Besides, he adds, it is "an extremely effective social strategy, especially in uncertain times."

Ask yourself this: if you are in despair about being laid off, is it better to stay home and sulk or to dress up and go out as though you are still actively involved in the real world?

Keep in mind that the former is a true expression of your inner feelings. Anyone who follows the mantra to express his feelings fully will stay in bed.

Admittedly, the person who gets up, gets dressed, and goes out into the world is faking it. Yet, that is the path back to work. The alternative is the path to depression.

Carey is right to emphasize that a proud demeanor does not just help to manage others' impressions of you; it also produces good feelings.

An insincere smile will do more for your mood than a sincere scowl.

Too often, therapy has missed this point. It has been wedded to an inside/out approach to problems, and has looked contemptuously at the alternative outside/in approach.

Therapy has assumed that if you rearrange your mental furniture you will automatically do the right thing.

As I have noted before, knowing why you have gotten things wrong does not tell you how to get them right.

When we do the right thing, most often it is not because a thought has welled up from the depths of our soul and expressed itself in action.

We learn to do the right thing by emulating our betters or by taking advice.

If you do the right thing often enough, eventually it will feel sincere. But, just as you should keep up appearances even when it feels fake, you should do the right thing even when it does not feel right, and even when it was someone else's idea.

If you want to build character, it is better to pretend that you have it than to prove that you don't.

Monday, April 6, 2009

"The Talking-Cure Capital, New York"

Maybe it's harmonic convergence, but the last few days have seen three important New York Times articles about psychotherapy.

All were inspired by the return of the HBO series, "In Treatment." Alessandra Stanley and Michelle Orange wrote critical appraisals of the series, but Maureen Dowd outdid them both by offering that our new president was modeling himself on fictional therapist Paul Weston. She dubbed Obama "the first shrink." She allows us to hope that the first might also be the last. Links here, here, and here.

Both television critics are thrilled that Dr. Weston has exited the Maryland suburbs and has landed in Brooklyn. After all, as Orange notes, New York is the "talking-cure capital." Stanley outdoes her by declaring that New York is "the epicenter of post-Freudian civilization and its discontents."

Surely, they have a point. New Yorkers have indulged in intensive psychotherapy for decades now, to the point where treatment has become a common initiation ritual.

I think, however, that it time we asked a Dr. Phil question: Hey, New York, how's all that therapy been working for you?

Given the current state of the city's fortunes, one must say that it has not been working very well. Several months ago our now-fallen Masters of the Universe were lavishing praise on their $600 an hour therapists. Now, not so much. See my posts on this topic. Link here.

Maybe that is not very fair. It is fair, however, to ask how well therapy is working for our therapist-hero, Paul Weston.

Here the answer is clear: not very well. As the second season begins, he is, in Orange's words: "divorced, displaced, and being sued for malpractice...."

Or, as Weston expresses it: "I hate my life.... It's broken. Every day, it hurts.... OK, I have you. But you can't give me what I need."

Now we know what his patients can aspire to. He can teach them how to whine about misery.

Alessandra Stanley understands it well. She says that watching the show is like watching: "the spectacle of other people unraveling...." And she adds: "People go into therapy to learn from their mistakes, then make mistakes about what they've learned."

Surely, she is right. Why, pray tell, don't they have a therapy show about how people get their lives together? Is it because too often that is not what therapy is about?

Most therapists, as Maureen Dowd notes, limit their marketing to touting their enhanced listening skills. She makes Obama the first shrink because he went to Europe and declared that he had come to listen.

Two points are worth mentioning here. First, when a therapist does not judge someone's behavior, that does not mean that he is a good listener. It means that he believes the considerations of right and wrong are trivial. It can also mean that he has no moral compass.

Second, most therapists do not really listen to what you are saying. They are listening to what you are not saying; they are tuning into feelings you have not felt.

When therapists say they are listening, most often it means that they are reading your mind. And we know that it is a short distance from mind reading to mind control.

The next time anyone says that he or she knows your mind but that you do not, I hope you will protest.

Many therapists have a chronic habit of not taking what people say at face value. That does not make them great listeners. It makes them disrespectful.

A great listener does not put words in your mouth, feelings in your soul, and thoughts into your mind.

When we are talking about what Obama meant when he said that he wanted to listen, we are talking about something quite different. In the mouth of an American president, they mean what everyone in Europe understood him to mean... namely, that he was not going to lead. Why would European potentates not have been happy to have the mantle of leadership dropped at their feet?

If Dowd wants to emphasize that Obama was more likable than his predecessor, she may have a point. But it is bad form for the President of the United States to run around the world repudiating his democratically-elected predecessor, and criticizing the country he is supposed to be leading.

Here how the first shrink expressed his feelings about leadership: "In America there is a failure to appreciate Europe's leading role in the world. Instead of celebrating your dynamic union and seeking to partner with you to meet common challenges, there have been times when America has shown arrogance and been dismissive, even derisive."

That sounds like self-deprecation to enhance someone else's status. It is overly apologetic, weak and passive. And it certainly played badly back home, where people were listening carefully to the way that the president was degrading the country.

It is certainly not a negotiating position. Dowd imagines that Obama learned how to negotiate while being a community organizer. The problem is: community organizing is not about negotiating. It is about agitating, coercing, and dividing. Community organizers famously coerced banks into making loans to people who were not credit-worthy.

Skilled negotiators are unifiers. They seek out common ground through compromise and mediation. No one can possibly say that Obama has demonstrated those talents in the domestic political arena.

Today's Pew Research Center poll shows Obama to be the most divisive president in modern American history. Link here.

The first principle of good negotiation is to show respect for your adversary. Obama would do well to learn this lesson.

But, let's keep some hope alive. Despite what the Times reviewers say, New York is not really the talking-cure capital of the world. That honor belongs to Buenos Aires, Argentina.

The good news is: when it comes to dysfunction, New York still has a ways to go.

A Sleeping Giant Awakens

Dread can be a great motivator. With the Great Recession and the fear about losing jobs, there has been an outbreak of good behavior in companies across the country.

For the Business Week report on this phenomenon, link here.

To some this all seems a bit forced and unnatural. But I, for one, would prefer forced and unnatural good conduct to the alternative: arrogant, insolent, and rude behavior.

At a time when all the world's economists are debating whether capitalism has failed, I would suggest that bad behavior bears much of the responsibility for the current economic.

Even the most enlightened capitalist policies will misfire when the population has been inculcated with values that produce bad character.

Sunday, April 5, 2009

How He Got His "Blink" Back

When you counsel people on a variety of life situations, as I do, you eventually notice that certain basic principles apply well to different situations.

Friday, psychologist Brett Steenbarger demonstrated the point by explaining how some dating advice he once gave to a young man also applied to trading, blogging, and interviewing. Link here.

The principle is trial-and-error. Steenbarger was telling a young man: have many first dates and far fewer second dates.

He was saying: try getting to know many different women, but only pursue those with whom you have connected.

Most young people would profit from this advice. Being traumatized by bad dating experiences is an everyday part of growing up. And most people who have been burned by a date or a relationship will start developing trauma-avoidance strategies.

In the worst case, this leads to withdrawal from the dating game. If you really want to guarantee that you will never be traumatized by a date, the only foolproof way is to not to date. The same applies to relationships.

But this takes you out of the game. And, as Steenbarger notes, not being in the game is the only real failure here.

Other, less effective tactics, develop like this. A man who was dumped by his blond girlfriend decides that he will never again date a blond. The man who was burned by the sorority girl decides that he should avoid sorority girls. And the man who had a bad experience with a woman from the Midwest... you get the picture.

The next step is obvious. A man who associates blue-eyed redheads with relationship failure might conclude that he must date only brown-eyed brunettes. He might even fetishize brunettes because he feels that when he is dating one he is completely protected against the ravages that the last redhead inflicted on him.

Trauma causes people to lose their "blink." Here I am referring to Malcolm Gladwell's concept. "Blink" refers to the snap judgments we all make, about people, places, and things, that turn out to be uncannily accurate.

When you have been traumatized, your normally reliable "blink" starts giving you false signals.

Once a man loses his "blink" he does not know whether his attraction to this woman or his disinterest in that woman is based on something real or is merely a way to avoid a repetition of a past trauma.

And there is no mental exercise that will tell him. The only way he can find out is to go out on a date.

If he does it often enough, he will learn to get his "blink" back.

Experience teaches. And it does not merely teach: it heals. It helps people to correct the errors in judgment that are induced by trauma.