Saturday, October 1, 2011

The Financial Disaster Tour Comes To California

Michael Lewis visits California, talks to Ahnold, goes to San Jose, and then Vallejo.  Along the way, he visits UCLA (h/t Ritholtz):
The road out of Vallejo passes directly through the office of Dr. Peter Whybrow, a British neuroscientist at U.C.L.A. with a theory about American life. He thinks the dysfunction in America’s society is a by-product of America’s success. In academic papers and a popular book, American Mania, Whybrow argues, in effect, that human beings are neurologically ill-designed to be modern Americans. The human brain evolved over hundreds of thousands of years in an environment defined by scarcity. It was not designed, at least originally, for an environment of extreme abundance. “Human beings are wandering around with brains that are fabulously limited,” he says cheerfully. “We’ve got the core of the average lizard.” Wrapped around this reptilian core, he explains, is a mammalian layer (associated with maternal concern and social interaction), and around that is wrapped a third layer, which enables feats of memory and the capacity for abstract thought. “The only problem,” he says, “is our passions are still driven by the lizard core. We are set up to acquire as much as we can of things we perceive as scarce, particularly sex, safety, and food.” Even a person on a diet who sensibly avoids coming face-to-face with a piece of chocolate cake will find it hard to control himself if the chocolate cake somehow finds him. Every pastry chef in America understands this, and now neuroscience does, too. “When faced with abundance, the brain’s ancient reward pathways are difficult to suppress,” says Whybrow. “In that moment the value of eating the chocolate cake exceeds the value of the diet. We cannot think down the road when we are faced with the chocolate cake.” The richest society the world has ever seen has grown rich by devising better and better ways to give people what they want. The effect on the brain of lots of instant gratification is something like the effect on the right hand of cutting off the left: the more the lizard core is used the more dominant it becomes. “What we’re doing is minimizing the use of the part of the brain that lizards don’t have,” says Whybrow. “We’ve created physiological dysfunction. We have lost the ability to self-regulate, at all levels of the society. The $5 million you get paid at Goldman Sachs if you do whatever they ask you to do—that is the chocolate cake upgraded.”
The article is worth reading, if just for the optimism at the end.  The first three pages (online) with Schwarzenegger didn't really do much for me, but the challenges in San Jose and Vallejo were very interesting.  In the end, Vallejo gives some hope.  I've always felt some concern with the position of Mish, that all the governments should file for bankruptcy and screw over the public workers, but once Vallejo hit bottom, they have seemed to have some real conversations about what matters.  I'd prefer to have such discussions before hitting rock bottom. 

While I'm generally pessimistic about the human condition, I do hold out some minor optimism about citizens being able to rationally deal with the problems that face us.  Here in Ohio, Senate Bill 5, which is facing a referendum, tried to deal with some of the issues mentioned in the article.  Unfortunately, it was a one-sided, one-size-fits-all approach, which was railroaded through the legislature.  It  made public employees out as the enemy, when they happen to be your neighbors.  Many of the bill's provisions will have to be enacted at some point, but bundling them all up and slamming them through the legislature wasn't the way to get there.  Republicans need to work on that civility thing, if we are going to work through the challenges we face.

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