Yesterday I found myself in a political discussion that included my very lonely Republican friend. Eyes rolled when he claimed the Clinton administration was to blame for the mortgage fiasco. His argument is that during the Clinton era, lenders were pressured by the government, and by interest groups, to loosen loan standards in order to increase minority home ownership. This strategy reportedly worked splendidly while home prices were increasing. You know the rest of the story.
My Republican friend followed up with a link to an article that I have seen twice in the comments to this blog, so I hereby promote that link to my post:
I'm not persuaded by the article, but neither do I discount it entirely. My problem, as always, is that I don't have enough knowledge to make a judgment about it. It sounds credible, but that doesn't mean much.
At best, the pressure to increase minority home ownership was only part of the problem. The executives in the mortgage industry must have known that the increased lending activity would make them even more stinkin' rich than usual, at least short term. In the long term, they would be living on their yachts. Without the greed angle, the executives might have better resisted what they knew was a risky path.
Second, as Warren Buffett said when he saw all the complicated financial derivatives based on mortgage activity, "My eyebrows are huge!" He didn't actually say that, but he did warn that trouble was brewing in the derivatives game long before it was obvious to people with normal sized eyebrows. So the exotic and complicated financial derivatives market made a bad situation worse, and that had nothing to do with the liberal agenda.
If there is any truth to the idea that the Clinton administration was a major cause of the mortgage crisis, you have to ask yourself why the media is mostly ignoring that angle. If it isn't true, does anyone have a link to a rebuttal?
In other words, public opinion is starting to line up with the opinion of economists. Did the Dilbert Survey of Economists have any impact on that move?
The biggest reason for the move in the polls probably has to do with McCain's support of Republican policies that are widely seen as the source of the problem.
Second, the financial problem is complicated. The only thing we ignorant voters know for sure is that we want someone with a high IQ to sort out this mess on our behalf. No matter how much you love McCain's philosophy, track record, moral compass, common sense, or anything else about him, he doesn't come close to Obama in pure brain power. For most issues, that probably doesn't make much difference. For an issue of this complexity, it might.
Third, I think the Dilbert Survey of Economists probably had some impact, at least with the free thinkers of the Internet. A lot of people, including me, assumed before the survey that most professional economists would lean Republican. The fact that so many economists are Democrats, and support Obama, is both a surprise and hard to ignore.
I wouldn't have funded the survey if I didn't have this blog. And I wouldn't have this blog if people didn't leave comments. So if the Dilbert Survey of Economists ends up changing the world, and you have ever left a comment here, you were part of something important.
User Shaqbark had a great comment about the notion that the rich don't have enough money to put a dent in the financial problems:
[The "rich" don't have enough money to make everyone else rish. Confiscate all the wealth of the wealthiest ten percent and I'll bet it would not pay our debts for a month. Then what?]
The United States is one of the richest countries in the world, and in 2000, the mean wealth was $143,727 per person. In the United States at the end of 2001, 10% of the population owned 71% of the wealth, and the top 1% controlled 38%. On the other hand, the bottom 40% owned less than 1% of the nation's wealth.
Hence, the rich actually DO have enough wealth to make EVERYONE in the US rich - if it were possible to redistribute this wealth without causing massive inflation, which it would not be.
One of the best-kept secrets of the rich is that being wealthy (not just having lots of zeros in your bank balance, but being able to have a life of leisure, space, and privacy) requires other people to be poor.
When famous bank robber Willy Sutton was asked why he robbed banks, he reportedly replied "Because that's where the money is." And when our next President, no matter who it is, and Congress try to unscrew this financial mess, they will quickly realize two things:
- It will require a crapload of money.
- Poor people don't have money
Like a group of Willy Suttons, they will come after the rich because no one else will have any money. The fairness part of the debate will become moot.
The problem is that the rich are the only group powerful enough to stop the government from raising their taxes. So my question to you today is this: What is the best way to confiscate money from the rich?
There must be some way to give the rich a spoonful of sugar to make the medicine go down. Somehow the impression of unfairness has to be mitigated so they comply willingly. Allow me to jump to some bad examples to make the point.
Suppose the next President made the following pitch. "This is a once-in-a-century cash crisis. To get us through, we are going to tax the rich heavily for the next ten years. In return, the rich will each get two votes in every election."
Now remember that the spoonful of sugar can be more psychological than economical. A double vote is the one sort of thing a rich person can't already buy. And it wouldn't have much impact on democracy because there aren't that many rich people. Everyone gets something. The poor get money, the rich get slightly more influence.
Or suppose the rich were required to fund alternative energy projects directly, and in return get some equity, like a mandatory venture capital model. I would much rather give my money to a specific venture with a tiny chance of payback, as opposed to the general tax fund.
I would also feel okay about a tax increase if 100% of the extra money went to buy healthcare for those who couldn't afford it, and I knew how many people that was. For example, if I got a tax bill from the government with a specific dollar amount, and next to it an estimate of the number of people it will give healthcare to, I couldn't feel so bad about it. I'll only get pissed if my money goes into some general fund to buy bridges to nowhere.
Or suppose Congress makes a deal with the rich, something along the lines of raising their taxes only if the government reforms something in particular that is widely agreed to need reform. I wouldn't mind paying extra taxes if it inspired the government to be more effective or efficient going forward.
Or how about requiring the rich to buy foreclosed houses, with a requirement that they rent them to others for the next 15 years? The rich can qualify for the lowest loan rates (or pay cash), so the credit problem would be solved. While the rental income wouldn't cover the loan and other costs, there is some potential that the investment could turn at least neutral when home prices rise in the future. Low income people would get extra places to rent, and rich people wouldn't feel so screwed if they owned property that had some chance of breaking even. And banks would be solvent.
And suppose you require the rich to install solar panels and other energy solutions to each foreclosed home they purchase, and optionally roll that expense into the mortgage. That would create lots of jobs and reduce national energy consumption at the same time.
In business school we learned that you can usually reach a deal whenever two parties put different values on things. Do you have any better ideas for how the government can confiscate money from the rich and make everyone happy about it?
Kamen also invented a device that will inexpensively create energy from manure. It works best if you have livestock, but there's no rule that says you can't crap in it yourself. This will lead to new sayings replacing the venerable "I have to go drop a penny," and "I have to see a man about a horse." In the future you will be able to say, "I have to go pinch a watt," or "power the Kamen."
Do you feel hopeful yet?
Then on 9/18/08 its fraternal twin appeared. Readers were quick to let me know.
In my defense, it isn't a case of laziness. Drawing is the hard part for me, not the writing, and both comics were drawn from scratch. It isn't a case of running out of ideas; I always have plenty of those, thanks to readers submitting material. So what the hell is wrong with me? I'll use this excuse to give you a tour of my creative process.
Every comic starts with a basic premise, either from my own experience, reader suggestions, or the business headlines. I typically start drawing the first panel of the comic before I know where it is heading. The premise tells me which characters will be involved and where they will be. It helps to start drawing right away because I feel as if I am making progress. No writer wants to look at a blank screen.
When the characters appear, it's almost as if they suggest dialog. I think a similar thing happens for movie writers who find it helpful to imagine a specific actor in a role when creating dialog. Seeing a character helps you find the right voice.
Once the first panel is drawn as a rough draft, I tinker with the words. I might do a first draft of the writing all the way to the end just to make sure the characters appear in the order they will be speaking. I'll go back and fiddle with the wording between spurts of drawing. As I get deeper into the process I inevitably have the following thought: Did I already do this exact comic, or does it just seem that way because I have been thinking about it for the past hour?
I've created 365 Dilbert comics a year for 19 years. I remembered all of them for about the first four years. Now it is impossible. So I sit there for a few minutes rummaging through my memories and finding nothing but spider webs. At this point I will digress and give you my untested theory about creativity:
Creativity is highly correlated to poor memory.
For me, ideas stream through my head at a frantic pace. I feel like a bear trying to grab a salmon. If my paw misses its target, that salmon is gone for good. I don't dwell on it. I just lunge for the next salmon. I think people who have fewer thoughts per hour have time to let them settle in and form memories. It's just a theory.
To make matters worse, every few months I like to draw a generic character that has something horrible happen to his head. I just like how it looks. Sometimes the head explodes. Sometimes it turns into a skull, or shrinks, or enlarges, whatever. These are especially hard to remember because they get lumped in my memory and congeal over time into "things that happened to heads."
The punch line for my recent repeated joke, "Clean up on aisle three," wasn't original the first time I wrote it. It's funny in part because the phrase is so common, even in the context of humor. When you pair a common phrase with an uncommon situation, such as an exploding head, the reader's brain has a little hiccup over the juxtaposition, and that triggers the laugh reflex. Gary Larson was the master of that method. His Far Side comics often featured unusual characters in bizarre situations saying things you hear all the time.
You can go the other way too. I often mix unusual wording with mundane office situations to produce the same mental hiccup. Why say you attended a long meeting when you can say you watched your irrational optimism circle the drain, starving and screaming at the same time?
And always end with a clean finish. Like this.
For me, the real goal of the survey of economists was to give voters an appetite for useful and unbiased information, so you demand it in the future. I consider all of the criticisms of this survey to be steps in the right direction. That's where the conversation should be, and not so much about lipstick and pigs. If your reaction to the survey was "That's not enough information," I call that progress. Demand more.
How Biased Is the Survey?
The most striking result of the survey is that there are far more Democratic economists than Republicans, and both sides strongly support their candidate. Does that tell us anything useful at all?
Economists crossed party lines on the questions of International Trade, Environmental Policy, Immigration, Reducing Waste in Government, and Reducing the Deficit. I didn't include a question about a gas tax holiday, because the idea has already expired, but economists crossed party lines on that issue too. That suggests a degree of objectivity on an issue level. The crossover issues, plus the rankings, are important no matter who gets elected. That will tell you if your president has the right priorities.
Everything we know about human nature tells us that people are usually rational when the choices are relatively simple and the data is known. For example, your choice of a grocery store is probably a rational decision based on things you easily understand, such as distance, price, and selection. But tribe loyalty tends to take over when the data is less clear, such as choosing a religion.
The way this applies to the survey of economists is that you should expect them to cross party lines when the data is clear and understood, and to lean toward party loyalties when things get fuzzy. That's how humans are wired. We like our team.
At the top of the list of economic priorities, according to economists, are education and health care, arguably the two fuzziest topics. Unless the candidates have told you how much their plans would cost, and where the money will come from, it is a stretch to say they have plans at all. Given the lack of clarity on these two issues, and the number of variables involved, I would expect economists to be relatively more biased on those issues than on simpler issues. How much more biased? The data doesn't tell us.
A number of you also pointed out that most of the economists in the survey are academics, so it is no shocker that they put education at the top of the list. While education does pass the sniff test as being one of the most important economic issues, it is not clear that an extra dollar for schools is as useful to the economy as an extra dollar for health care or alternative energy. While we can all agree that improving education is a worthy objective, its position in the number one spot on this survey has to be viewed with a pinch of skepticism.
The big question this survey raises is why so many economists are Democrats in the first place. Democrats tell me that highly educated and rational folks, such as economists, gravitate toward the best argument. Case closed.
Republicans tell me that liberals, mostly Democrats, drift toward academic jobs where they can best suck on the public teet. It's easier to be a tenured professor than it is to run a company, so the thing that economists have in common is laziness as opposed to intelligence. And perhaps, think the Republicans, the so-called Independents in this survey are mostly liberals too, essentially Democrats who aren't joiners. And besides, if economics was a real science, most economists would be rich.
I have no data to support any theory of why so many economists are Democrats. But once someone picks a party, it's a sticky choice. It would be naïve to assume it doesn't influence opinions where the data is unclear.
Did We Learn Anything?
I learned a lot from the survey results. I was surprised by the rankings of issues, and I didn't know where the economists would cross party lines. That information is important for keeping the next president honest no matter who it is.
I was happily surprised at how many economists are Independents. And I was surprised that Democrats and Republicans stuck to their party lines so closely. I expected McCain to be the winner on most economic issues. I was wrong.
If you looked at the survey results and concluded that you can ignore economists when it comes to picking the next president, I would not fault you for that interpretation. After all, a third of the experts say there would be no difference between the candidates on several important economic issues. That's good to know because it gives you cover to allocate more weight to non-economic issues.
Personally, I think it is useful to know that economists didn't cross party lines on the question of who would be the best president. I'll keep that in mind the next time an economist expresses an opinion on this election.
The survey changed the focus of my own thinking to the top priorities. For example, assuming education is the top priority, and assuming it's more of a pre-college problem, where is the best leverage point? We're probably well beyond the point of diminishing returns for extra funding, except for the worst of the schools. We know that kids do best in school when their parents are managing the process right. If either candidate had a plan for educating parents on how to help their kids succeed in school, I think that would be compelling.
On health care, the second most important economic issue, I would be persuaded by a candidate who made the following argument: We're going to try something that already worked someplace else. It will cost x billion per years, but we can save twice that amount if you voters start eating right, smoking less, and exercising more. It's your patriotic duty to get off your butt.
If the survey made you think about any of the issues on a deeper level, I got my money's worth.
As promised, here are the results of my survey of economists. You can see three views into the results today, and I plan to blog more about it this week.
(Format problems are because my blogging software is finnicky.)
1. My opinion on the results, on CNN.com http://www.cnn.com/2008/POLITICS/09/16/dilbert.economy/index.html
2. Detailed survey data: http://dilbert.com/dyn/ppt/Draft-report--9-3-08.ppt
3. Press release (below)
[Some contact information removed here]Dilbert Survey of Economists Democratic Economists Favor Obama. Republican Economists Favor McCain. Independents Lean Toward Obama.
Dublin, CA (September 10, 2008) – Scott Adams, creator of the Dilbert comic strip, commissioned a survey of over 500 economists to find out which candidate for President of the United States would be best for the economy long term.
Says Adams, “I found myself wishing someone would give voters useful and unbiased information about which candidate has the best plans for the economy. Then I realized that I am someone, which is both inconvenient and expensive.”
At considerable personal expense, Adams commissioned a survey of over 500 economists, drawn from a subset of the members of the American Economic Association, a non-political group, some of whose members had agreed in advance to be surveyed on economic questions. The results do not represent the AEA’s position. The survey was managed by The OSR Group, a respected national public opinion and marketing research company.
Nationally, most economists are male and registered as either Democrats or Independents. The survey sample reflects that imbalance.
3% Libertarian5% Other or not registered
1 Education 59% 14% 27%
2 Health care 65% 20% 15%
3 International trade 26% 51% 23%
4 Energy 61% 22% 17%
Technology/innovation 43% 23% 34%
6 Wars and
homeland security 58% 30% 11%
7 Mortgage/housing crisis 41% 18% 41%
8 Social Security 40% 24% 35%
9 Environmental policy 72% 9% 19%
10 Reducing the deficit 37% 29% 33%
11 Immigration 33% 29% 38%
12 Increasing taxes 79% 14% 7%
13 Reducing waste 16% 38% 46%
The economists in the survey favor Obama on 11 of the top 13 issues. But keep in mind that 48% are Democrats and only 17% are Republicans. Among Independents, things are less clear, with 54% thinking that in the long run there would either be no difference between the candidates or McCain would do better.
Adams puts the survey results in perspective: “If an economist uses a complicated model to predict just about anything, you can ignore it. By analogy, a doctor can’t tell you the exact date of your death in 50 years. But if a doctor tells you to eat less and exercise more, that’s good advice even if you later get hit by a bus. Along those same lines, economists can give useful general advice on the economy, even if you know there will be surprises. Still, be skeptical.”
[Some contact information removed]
Interview requests for Scott Adams can be directed to email@example.com. Adams will only be responding by e-mail for the next few months due to some minor surgery to fix a voice issue.
Update: Some of you will wonder how reliable a bunch of academics are when it comes to answering real life questions about the economy. You might prefer to know what CEOs think. But remember that CEOs are paid to be advocates for their stockholders, not advocates for voters. Asking CEOs what should be done about the economy is like asking criminals for legal advice. More on that this week.
And for my view on the value economists: http://dilbert.com/blog/?Date=2008-08-22
The result of my survey of economists is delayed one more day (I think). I’m timing it to run with an opinion piece I wrote for CNN.com, but the news about Lehman Brothers squeezed it off the page at the last minute.
[Insert your own joke about not having time to hear what economists say because we’re too busy with bank closures.]
I thought Hurricane Ike was going to bump my story today. There’s always something. I released my book God’s Debris in September 2001. That turned out to be a bad month for authors to get media attention. Another book, Dilbert and the Way of the Weasel was released the same month that the infamous Beltway Sniper was making national headlines. I was on my book tour, and all of my media appearances depended on how accurate the sniper was that morning.
I remember having dinner with a group of book publishers and asking them how many great undiscovered authors there are. They answered unanimously “none.” It was their view that every good author can get published because the publishing industry is scratching the dirt to find them. I think that’s mostly true. But how many books an author sells has a lot to do with what is happening in the news.
My first hardcover book, The Dilbert Principle, hit its stride in the summer, when there wasn’t much else happening in the news. The media attention was enormous. It was an easy and fun story and there wasn’t a lot of competition for people's attention. Sales were huge. But if it had launched during September of 2001, as my book God’s Debris did, it would have tanked. God's Debris was a solidly successful book, but sold maybe a tenth of its potential.
Timing is everything.