A Ringing Bell: More Than Music at Play (The Politics of Experience)
November 15, 2008

The many long, thoughtful responses to Crowds Ignore World Renowned Violinist: What Does This Say? support my basic contention that much more is at play here (bad pun intended) than just commuters' likes and dislikes and the "recognition of beauty."

Longtime contributor Eric A. submitted the following provocative email and essay on the subject:
This may "tweak your nose" as the response says, but I believe that the Bell experiment intersects a lot of cultural assumptions that need to be examined. Ran Prieur is far better at this than I am--instinctively zeroing in on the unspoken argument--but I simply fall back on cross-cultural studies, to compare Native ways to familiar (western) ones. The difference is so jarring, you can sometimes see yourself.

They are the best comparison because only 1st nation cultures seem to have retained a sense of immediate experience. That "what I like" is valid, but personal. That is true of law (they decline to outlaw any but the most wayward activities) and religion (each person meets God directly or not at all) as well as in the smaller things. No "civilized" culture has retained an immediate, personal experience.

Civilization runs like China's bureaucratic Confusianists, not like Taoist masters. So we inherit this orientation to always look to others for that which we should look to ourselves. I find this to be the single sickness of civilization, the cause of their violence and staggering soul-loss: that they are not allowed to like what they like--to be what they are--but must rather like and be as the teachers, the authorities, COMMAND them to be.

If I could change one thing to heal the world, it would be this.

Here is Eric's essay, "The Bell Jar: Slipping Out to Look Within." My comments on the subject follow.

I'm astonished at how much both you and the Journal make of “Pearls Before Breakfast”. I wouldn't have stopped for Joshua Bell either, but the reason is simple: I don't like classical music.
Both their article and your response hinge on two basic assumptions. One, that there is a single universal standard of beauty and excellence; and two, that Mr. Bell is that standard. Once those assumptions are laid out in the first lines “Best musician, Best Music, Best Violin” the rest of the article is a foregone conclusion.

But it's more than that. As you pointed out, the rest of the article is a down-the-nose look at the editor's disappointed astonishment at the blind cupidity of people. Why? Well, presumably he likes classical music and in true human fashion he expects everyone else to like it too.

In my defense, if it had been the Chieftains at the top of the escalator at 8:00 on a busy morning I would have stopped; and that is no idle comparison. The Chieftains are also the world's best musicians, also child prodigies, playing music often far older, and they certainly have the wherewithal to own the best instruments. But then I like Celtic music. As Robert Burns said:

“My pretensions to musical taste are merely a few of nature's instincts untaught and untutored by art; for this reason, many musical compositions affect my simple lug no otherwise than merely melodious din. On the other hand, by way of amends, I am delighted with many little melodies which the learned musician despises as stupid and insipid.”

But it goes deeper than that. Why is it necessary for me to defend my dislike of classical music but not necessary to justify a dislike of rap, Country, Balinese or Aboriginal? And why is my case only worthy to be heard if I can wax eloquent and quote 18th century poets? The articles dance with the idea of why people need some “expert” to tell them Bell is good, or classical is good, and why they need to pay $100 for it. But they miss something: perhaps the reason is that they don't like it either, and so need to be convinced that they do by peer pressure and persuasion; that is, “the smart, with-it people think this is really good: if you're a smart, with-it person, you'll think this is good too.”

So if yourself and the editor of the Wall Street Journal like classical music, bully for you. I note that the few who truly stopped were musicians, and classical ones. Like listening to a foreign poet, they understood the unique language of Classical, and I imagine that, like Burns, each gravitates to what they know and have learned. I've trained my ear to hear Celtic, but no less to folk, ambient, world music, American pop, alternative, and 30's jazz including violin master Stephane Grappelli... but not Classical. Classical sales as a proportion of music sold argues that worldwide most people agree with me: classical is not the “best” music because if it were “best”, then more people would like it. The same is often said of the millions who prefer Tolkien to Joyce's “Ulysses”. But who is to say what is “high art” and what is not?

The assumption underlaying all this is that the experts are “right”; that they are our council and authority no less than the priests of the Middle Ages: that only they are learned enough to decipher God's work. We are not to have our own immediate experiences without their approval. If we don't like as they do then the fault is our own. It cannot be that we just happen to like different things in a world where both of our personal experiences are equally valid; someone must be “right” and “wrong.” If you are not an expert—and we have paid gateways and degrees for this sort of thing--it's clear your way is wrong.

This is the very thing discussed here, this is the removal of people from their environment which makes them blind. That they do listen to the experts about what they should want and feel, instead of doing what they themselves want, and feeling what they themselves feel. That's why it's true that commuters are oblivious to their surroundings—they already followed the experts, the salespeople many years ago and that's why they are where they don't wish to be, in a soulless train station on the way to unloved work, the same as the last 5,000 joyless mornings.

And in self-preservation of forcing themselves to experience what other people say they should like, but they themselves do not, they have become so far removed from immediate experience they wouldn't know it if it hit them with a brick. I know because I do it, and because I live in spaces designed by soulless theory and not visceral joy, and every day I interact with the frightened and shell-shocked, who have each chained up their childish joy in a hidden closet for their own protection—which is simply to say, I'm your average American.

If you want the proof that we believe experts and not ourselves, ask yourself why I am not legitimized unless I quote an “expert”, and why my expert (Mr. Burns) needs to be bigger than your expert, and why my music (Celtic) needs to be older than your music (Classical) to be legitimized? Isn't it enough for me to say, “Few people are capable of expressing...opinions which differ from the prejudices of their social environment. Most people are even incapable of forming such opinions. ” without having to reveal that Einstein said it? Why is it forbidden for us to simply like what we like, and say—clearly and directly—what we feel? What's with the battle of experts?

The real tragedy of this experiment is that the experimenters could not see that they themselves are getting orders from yet other experts instead of their own hearts. They are the people of whose noses they tweak. They are the expert-cowed ones, not the philistines who buy Joshua Bell tickets but are presumably too dense to appreciate him. Or perhaps in their passion for their own music they follow their hearts, but cannot accept that other hearts might differ from theirs, and that there need not be one standard of beauty for the world. And thank God for that, as otherwise we would abandon our spouses and mill about the last remaining “ideal” spouse. Please continue to love your spouse and your music with all your heart, and I will continue to love mine, and we can each discuss their relative merits over our favorite vintages, safely within our own unique happinesses.

So the Wall Street experiment needs to be revised. Rather they should ask, “What is the best live, solo music as measured by the speed of attracting a crowd in a particular Washington subway at 8:30 in the morning?” Because isn't that really a different question?

Thank you, Eric, for an exploration of the key topics I sought to raise. I agree with you that "experts", or perhaps more accurately, "group-think" is the key issue here, along with how we respond to that propaganda/persuasion/training, etc.

But your essay also made me wonder what sorts of politics of experience were at play which I missed in my own entry on the subject.

CHS comments:
It seems I need to revisit some themes I tried to explore in the original entry Crowds Ignore World Renowned Violinist: What Does This Say?

1. I don't just like classical music: I specifically mentioned rock and jazz, and noted that I enjoyed classical Persian music, which I'd never heard before. My point was that music works on a level beyond "likes and dislikes" and that in my view, the children's desire to stop and listen was proof of this.

If you know nothing of a musical tradition and structure, can you still want to stop and listen? I would say yes. I would also ask: if you've never heard classical Persian, for example, (or any other mode of music), then how can you even know what you like and dislike about it?

2. Children are also proof in my view that music transcends what "experts" have commanded or judged; the kids wanted to stop and listen even though they had not been told to like or value classical music.

3. Let's say someone says they don't like rock and roll: what exactly is he/she rejecting? A Day in the Life by the Beatles, or Jimi Hendrix's Star Spangled Banner? To say someone doesn't like rock is rather broad, isn't it? Ditto for classical music. I understand Eric's rejection of elitism, but we should recall that classical music was also popular music in its day; it was not tainted with an "elitism" tag. We should also be wary of falling for an anti-intellectualism that masquerades as anti-elitism.

The Chinese have embraced Western classical music; are they now a nation of pointy-headed intellectual elites we should loathe and scorn because classical music is a priori an elite interest? Or do they understand something we don't?

But my main point is that music played well expresses something immediate which requires no knowledge. So is it bias that deadens our sense of hearing, or is it being in a hurry, or both?

4. Let's estimate that at least 10% of the commuters passing by either liked classical music or were familiar with some strands of that tradition. This would be about 110 people. Let's also assume 10% liked Celtic music, and the Chieftains had donned the garb of street musicians and offered up an impromptu concert.

How many people would stop to listen to masters playing either music? Some readers suggested the pieces Bell played were too downbeat to attract an audience. Perhaps. But anyone with a passing interest in classical music would at least have noticed. So would more Celtic fans have stopped for the Chieftains? If so, what would that say? or would the Chieftains have attracted an audience of people who knew nothing of Celtic music but liked what they heard because it was more upbeat and rousing?

I don't have answers; this is my way of noting the subject is muddied. We could also speculate that only 1% of the commuters (11 people) even liked classical music, and thus half of them stopped. We could also speculate that 99% "don't like classical music." But have they ever heard enough to judge? How would you respond if someone says they "don't like rock"? Is it OK to dislike classical music and jazz because those are viewed as elitist, but not OK to dislike rock because it's so obviously a broad bias based on something other than the actual music?

5. My thesis was not based on elitism, but on the opposite premise: that music was universal, and that "not listening", for whatever reason, lay at the heart of the 1,100 commuters' disinterest in Bell's playing. Is Celtic music more appealing than classical or jazz? Maybe, but both jazz (Dixieland, swing, bossa nova, etc.) and classical were the popular music of various eras, and it is wrong to dismiss them as "elitist" because there are overtones of snobbery associated with them now. That is a cultural artifact, not a characteristic of the music itself.

6. My point (not well stated, it seems) was that if 10% of the random sampling of commuters had at some point been willing to pay to listen to classical music, or even shown up for a free concert, bought a CD, etc. then it was a pretty poor showing that only 5% of that 10% who had some appreciation of that type of music seemed to be aware of Bell's presence and gifts.

7. Is Shakespeare also an elitist interest? His work was very popular in its day, as entertainment, not as "heavy elitist lifting." Ditto Charles Dickens and Mark Twain, both of whom remain popular much as Beethoven et al. remain popular in some circles. Does that make Twain and Dickens elitist interests?

8. Our educational system seems to have done a poor job of doing anything regarding classical music except constructing a gargantuan bias against it as "elitist."

If you don't like classical music, why is that so? It certainly pleased crowds of non-elites for hundreds of years. Do we not like it now solely because it has been associated with those pointy-headed elites we love to hate, they of phony pretensions, etc.? Do we also hate Shakespeare and Melville and a host of other material we are taught are classics?

Or do we dislike them because they are presented in such a boring, dead-handed manner? Is music appreciation even taught in schools now? I suspect not. So are we disliking something for its elitist pretensions rather than the music itself?

It is certainly safe to like country-western music in the U.S., and politically hazardous indeed to like and value classical music. That alone puts you in the line leading to the "class struggle" guillotine.

9. We can thus discern a Politics of Experience at work here. Eric and other readers perceive an elitist agenda at work, as in, tsk, tsk, the zombie middle-class consumers have no ear for beauty, etc. This is certainly a healthy skepticism; we should be alert to this sort of fawning, pretension, etc.

But as someone who likes classical music in the same way I like Hendrix, some flavors of jazz, world music, raggae, etc. etc. etc. I also detect an anti-intellectualism passing for anti-elitism, i.e. a rejection of classical music as emblematic of an anti-elitist stance which effectively blocks the ears as well as the very independent thought we all claim to support.

10. It seems Eric and I agree that the goal is to foster and be tolerant of self-directed independent thought. But it seems to me the defenders of commuters' ignoring Bell are following a largely political script which casts classical music as an elitist construct which is rightly rejected and/or ignored as having no relevance. appeal, etc. except as a statement or "brand" of elitism.
Can classical music be heard in America without referencing political biases and scripts?

It appears that is difficult indeed. It is certainly anyone's "right" to dislike classical music, along with disliking rock, jazz, raggae, rap, etc. etc. But I have to wonder if any adult is able to actually just listen to classical music as child does: without political scripts interfering with the music "as it is."

Additional reader commentaries on the topic: Readers Respond to "Bell Plays the Subway".

Thank you, Timothy H. ($30) for your most welcome, exceedingly generous donation to this site. I am greatly honored by your support and readership.

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Crowds Ignore World Renowned Violinist: What Does This Say?

Last year The Washington Post asked one of the world's finest violinists to play the part of a street musician in a Washington D.C. subway station. Pearls Before Breakfast: Joshua Bell plays the subway.

"It was 7:51 a.m. on Friday, January 12, the middle of the morning rush hour. In the next 43 minutes, as the violinist performed six classical pieces, 1,097 people passed by. Almost all of them were on the way to work, which meant, for almost all of them, a government job. L'Enfant Plaza is at the nucleus of federal Washington, and these were mostly mid-level bureaucrats with those indeterminate, oddly fungible titles: policy analyst, project manager, budget officer, specialist, facilitator, consultant.

No one knew it, but the fiddler standing against a bare wall outside the Metro in an indoor arcade at the top of the escalators was one of the finest classical musicians in the world, playing some of the most elegant music ever written on one of the most valuable violins ever made. His performance was arranged by The Washington Post as an experiment in context, perception and priorities -- as well as an unblinking assessment of public taste: In a banal setting at an inconvenient time, would beauty transcend?

A onetime child prodigy, at 39 Joshua Bell has arrived as an internationally acclaimed virtuoso. Three days before he appeared at the Metro station, Bell had filled the house at Boston's stately Symphony Hall, where merely pretty good seats went for $100. But on that Friday in January, Joshua Bell was just another mendicant, competing for the attention of busy people on their way to work.

Bell always performs on the same instrument, and he ruled out using another for this gig. Called the Gibson ex Huberman, it was handcrafted in 1713 by Antonio Stradivari during the Italian master's "golden period," toward the end of his career, when he had access to the finest spruce, maple and willow, and when his technique had been refined to perfection. Bell bought it a few years ago. He had to sell his own Strad and borrow much of the rest. The price tag was reported to be about $3.5 million.

In the three-quarters of an hour that Joshua Bell played, seven people stopped what they were doing to hang around and take in the performance, at least for a minute. Twenty-seven gave money, most of them on the run -- for a total of $32 and change. That leaves the 1,070 people who hurried by, oblivious, many only three feet away, few even turning to look."

OK, so what does this say about American culture and society? First, let's start with all the excuses. It was rush hour, people were in a hurry, Bell was standing in an inconvenient spot for listeners, commuters couldn't hear because they were wearing their iPods, etc. etc., blah blah blah.

Bell played from 7:51 a.m. until about 8:34 a.m., which left commuters a full 25 minutes to get to work even if they'd stayed to hear the entire free concert.

Perhaps it required some deep knowledge of classical music to grasp that something special was happening? Then why did children want to stay and listen while the adults hurried past?
Was it distaste for mendicants and beggars in general? Did the commuters lose their sense of hearing in their haste to hurry past the street musician?

Let's cut the excuses: all these middle-class Americans ignored Bell and his music because no "expert" was there to tell them he was good. As the Post article put it: IF A GREAT MUSICIAN PLAYS GREAT MUSIC BUT NO ONE HEARS . . . WAS HE REALLY ANY GOOD?

As an amateur musician, I believe music transcends "learning" or even familiarity; that's why the kids wanted to stop and listen, even though they knew nothing of Bell or the music he was playing. He could have been playing bluegrass, or classical Persian music or a banjo, and his ability to showcase the music would have burned brightly.

A few years ago I attended a concert given by some of the world's finest players of classical Persian music, an ancient and quite complex heritage with which I had absolutely no familiarity. Nonetheless, I was as transfixed by the music as those in the audience who clearly knew the music if not by heart then certainly intimately.

I saw Joshua Bell in concert in San Francisco last month, and was stunned by his mastery, fluidity, "attack" (verve, if you prefer) and ease while playing complex pieces (Tzigane by ravel and Rondo capriccioso, Opus 28 by Saint-Saens), neither of which I had never heard before.
There are many other superb violinists (I've seen Midori play, and hope to see Hilary Hahn some day) but Bell seems to combine the suppleness of Oistrakh with the clarity of Heifetz. I'm not trying to get fancy here; I'd be just as happy to enthuse about various versions of Little Wing (Jimi Hendrix) or Spain (Chick Corea).

My point is simply this: the level of musicianship and pure power/emotional expression created by someone of Bell's abilities will sink deep into any human being's limbic core, regardless of the music or instrument, unless their defenses have been hardened to an impenetrable state.
Maybe the urban environment of American cities is so dreadful that we've all constructed defenses so thick that we literally don't hear street musicians.

Of course I wonder: would I have stopped? (Only one person actually recognized Bell.) I would hope so, but maybe not. I often give street musicians a buck or some quarters, because even though most are no better musicians than I am (i.e. mediocre) I always feel some live music is better than none, expecially in gloomy, barren subway stations and street corners.

I've even fantasized about trying a street-musician gig with my Les Paul guitar, just to see what it's like. Last time I rode the Paris Metro, (2004), a violinist and his girlfriend boarded the train and played short pieces between stops; the girlfriend squeezed through the crowd with the ubiquitous hat to collect spare euros, and then the couple departed for another train. All rather charming; perhaps the same type of subway players can be found in U.S. cities.

Would I have stopped to hear Bell if I had kids in tow and was trying to get them to school? Probably not, but again, I would hope that I'd sacrifice three minutes to hear Ava Maria played live by a virtuoso--on fiddle or guitar or what have you. Or hopefully I would have relented and lingered had the children resisted my single-minded haste.

Or just maybe, Bell's soaring music would have shaken me free of my usual goal-driven blur. At the very least, I hope I would have recognized, "Wow, that guy's good."

The painfully obvious conclusion--that we have little ability to make their own assessment of what's "good" and beautiful and moving--is supported by the abject state of the other arts and literature, where dreck is hyped by "experts/critics" and willingly bought by consumers aspiring to the finery of "culture." It's more like the "experts" and critics are raving about the Emperior's new clothes and consumers are nodding earnestly, even as the Emperor is parading around buck naked.

Which brings us to Herbert Marcuse's One-Dimensional Man. Polymath Richard Metzger, who was kind enough to interview me for the immensely popular BoingBoing site (Of Two Minds: An Interview with Charles Hugh Smith) recently reminded me of Marcuse's work.
One-Dimensional Man: Studies in the Ideology of Advanced Industrial Society posits that the Model 1.0 industrial society member (and we can extend this rather safely to Model 2.0 post-industrial society member) has been reduced to a one-dimensional consumer who is manipulated into a type of serfdom via marketing of what Marcuse terms "false needs" and what I have called Manufactured Aspirations Empty Dreams, Manufactured Aspirations, Marketing Poverty: the Positives of Poor (October 27, 2008).

Here is wikipedia on One-Dimensional Man:

Marcuse argued that "advanced industrial society" created false needs, which integrated individuals into the existing system of production and consumption via mass media, advertising, industrial management, and contemporary modes of thought. This results in a "one-dimensional" universe of thought and behaviour in which aptitude and ability for critical thought and oppositional behaviour wither away. Against this prevailing climate, Marcuse promotes the "great refusal" (described at length in the book) as the only adequate opposition to all-encompassing methods of control. Much of the book is a defense of "negative thinking" as a disrupting force against the prevailing positivism.

I would also add our "education industry" to the list of pernicious influences, as this middle-class crowd's inability to even sense "this guy is something special" calls into question our educational system's support of critical thinking "for oneself."

It seems inescapably obvious to me that this random crowd of by world standards well-educated middle-class workers was utterly clueless largely because the "signs" provided by context and "experts" were lacking. They were perfectly happy to shell out $100 to see Joshua Bell perform in a symphony hall with marketing announcing his greatness with snippets of critical praise.
But left to their own two ears (or even one good ear), they failed to recognize or "decode" the purity of the instrument's unparalleled sound, the brilliance of the violin or the aching beauty of the compositions.

The Post coyly hinted at the all-too-obvious conclusion to be drawn: Joshua Bell playing for free in the subway was casting pearls before swine. Note their title: "Pearls Before Breakfast."
There are many other examples of this same "tell me what to value, tell me what to buy" phenomenon--the very antithesis of "individual critical thinking" we hold in such esteem. For example: famous authors submit their latest manuscript under a false name and are promptly rejected by dozens of publishers.

Hmm.

Critics rave about books by Haruki Murakami, and so aspirants to "culture" dutifully buy copies which soon gather dust, a bookmark at page 19 marking their final progress in a work which offers so little reward for the great effort of attempting to make sense of it.

Now as the entire mainstream media is being swept toward "everything is free" oblivion, mainstream "experts" (critics) may well be losing their grip on aspirants' hunger to be told "what's good" and "what's important."

So we step down a rung, so to speak, or if you prefer, up a rung, to youtube's popularity ratings: if a million other people watched this video, it must be good.

How will this affect the one-dimensional reduction of "citizen capable of self-generated critical thinking" to consumer? To the degree youtube has stolen mindshare from the print media, not at all: youtube is merely the latest, most compelling iteration of mass marketing.

Now you turn to youtube and other Web-based venues to be told what's cool, what's hot, what's good and what's not.

I will freely confess to being a poor choice for "critic of reductive consumerism." I tend to listen to one song or piece of music 100 times rather than listen to 100 songs once. I tend to buy (yes, foolish me, buy) classical pieces played by different musicians so I can hear various master's interpretations of the same music.

As a writer, (by all available critical and popular evidence, a thoroughly mediocre one), I wonder what separates us 99% of authors with virtually no exposure, sales or critical "stamps of approval" --yes, this guy/gal is good, go buy their work--from those whose work is "decoded" as "good" because cultural experts have deemed it so.

You know the drill: Herman Melville's ground-breaking The Confidence Man The Con in Confidence (October 4, 2006) was rejected as garbage in 1857 in favor of some reputedly "fine literature" which is now utterly forgotten. Popular "experts" get it wrong so often it's amazing we don't just blindfold ourselves and throw darts to choose "what's good."

If the average middle-class American can pass blithely by greatness and beauty without even the slightest shred of recognition--7 out of 1,070 is essentially statistical noise, i.e. zero--then what hope does any creator have for appreciation, recognition or (gasp) sales? I think the answer is clear: zero, unless the gods of popular taste/marketing deem it so, ubiquitously and relentlessly.

Joshua Bell at $100 a ticket: good. Joshua Bell for free: worthless.

Thank you, Stephen M. ($50) for your outrageously generous donation to this site. I am greatly honored by your support and readership.

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"Housing a Buy:" Where Is the "Real Bottom"?

The second wave of "now is a good time to buy real estate" lemmings has just raced off the cliff to their financial ruin. Sadly, this "housing is now cheap" rush to buy was easily predictable years ago.

Not to toot this site's horn, but isn't reality tracking this chart I posted in August 2006? Phase Transitions, Symmetry and Post-Bubble Declines. Doesn't the recent blip up in sales of foreclosed properties look like "Phase 2"?

Please go to www.oftwominds.com/blog.html to view the 7 charts.

Just as one of many such examples, here's a clip from a recent New York Times article A Town Drowns in Debt as Home Values Plunge:

Kenny Rogers, a data security specialist, moved into Mountain House last year, buying a foreclosed property on Prosperity Street for $380,000. But the decline in values has been so fierce that he too is underwater.

The Martinezes bought their house in early 2005 for $630,000. It is now worth about $420,000. They have an interest-only mortgage, a popular loan during the boom that allows owners to forgo principal payments for a time.

But these loans eventually become unmanageable. In 2015, Mr. Martinez said, his monthly payments will be $12,000 a month. He laughed and shook his head at the absurdity of it."

Next up: my chart of how the U.S. housing bubble bursting would take down the global economy. Isn't reality playing out rather closely to the scenario depicted here in 2006? Housing Dominoes Fall (July 26, 2006)

Here's another one from 2006 which also seems to be playing out:

The point here is that the forces unleashed by the global credit bubble popping and global deleveraging will play as large a role in domestic (U.S.) real estate valuations as any factor anchored in the domestic economic landscape.

So when does housing really bottom? Perhaps looking at when mortgage re-sets finally exhaust forced selling/forcelosures offers one clue:

Based on this chart, it looks like re-sets finally decline around 2012.

We can also consider how far housing needs to fall to return to its historical macroeconomic role in the U.S. economy. Based on this chart, we can guess real estate measured on a national basis will have to fall at least 50% from its peak to reach previous troughs.

Notice how the last real estate bubble which peaked in 1990 reached a mere 115% of GDP. The 2005-6 bubble top exceeded this by such a degree that we can suspect previous bubbles will not be adequate models.

If GDP shrinks, as it is wont to do in deep recessions, then housing will have to fall even farther to reach its historical norms.

We can also look to previous bubbles for some guidance. What jumps out of this chart (obviously dated, but nonetheless still relevant) is how the housing bubble now bursting in the U.S. ran longer and reached higher extremes than previous bubbles. This alone suggests the decline will, in the way symmetries tend to work, be longer and deeper than previous bubbles.

Note that the Depression-era decline actually overshot to the downside, dropping below its starting point--a key feature of post-bubble behavior. Thus we must be open to the possibility that housing values could drop below 1997 levels, perhaps reaching all the way back to 1985 levels.

On the optimistic side, consider the aftermath of the 1990 housing valuation peak. Real estate values declined (or went flat, which when inflation is factored in, is a decline in real value) from late 1990 through about 1997--a seven year stretch of stagnation/decline.

If this pattern holds, we can then set the top of this bubble at 2006 and add 7 years, yielding a date of 2013 as the eventual bottom.

Lastly, we can ponder "long cycles" and speculate that this 2012-2013 timeframe for a bottom matches up with various long-cycle charts rather well. But we need only refer to recent history, circa 1990-1997, to reach the conclusion that potential bottom-fishers might want to set aside their buying urges until 2012-2013.

Longtime correspondent Lloyd L. answered my Veteran's Day question regarding how many offspring of members of Congress were active duty U.S. Armed Forces. Thank you, Lloyd, for this up-to-date information:

Killed in Combat:
Baucus-D-MT: nephew (USMC)

Family members serving:
Biden-D-DE: son (Delaware National Guard)Johnson-D-SD: son (Army)
Musgrave-R-CO: son (Navy)
Wilson-R-SC: 3 sons: (2 SC National Guard, 1 Navy)
Skelton-D-MO: 2 sons (Army and Navy)
Aiken-R-MO: son (USMC) plus another son about to graduate from Annapolis
Webb-D-VA: son (USMC)
Emerson-R-MO: stepdaughter (Army)
Hunter-R-CA: son (USMC)Ros-Lehtinen-R-FL: stepson (USMC) and daughter-in-law (USMC)Brownback-R-KS: niece (USMC) and nephew (USMC)
Hulshof-R-MO: brother-in-law (Army)
Bond-R-MO: son (USMC)
McCain-R-AZ: son (USMC) plus another son about to graduate from Annapolis

Vets Aren’t Taking the Hill

In the current 110th Congress, only 28% of U.S. senators and 23% of U.S. representatives have served in the military (active duty, Guard, or Reserve).
That percentage has been declining steadily since it peaked at 74% in the House (1969-70) and 78% in the Senate (1977-78). (See the post-WWII year-by-year changes.)
Not all of the results are in yet, but it looks like this year’s election will continue that downward trend.
In the Senate, there are ten certain seat changes so far, including Senators Obama and Biden. Three of the departures are vets, and none of the eight known replacements are. Of the three remaining open races, the only incumbent vet is Sen. Stevens (R-AK), and the only vet challenger is for Sen. Chambliss’ (R-GA) seat.

That means the new Senate will have a minimum of 25 vets, but could have up to 29 if both veterans still in contention win and if vets are appointed by the Illinois and Delaware governors to fill the Obama and Biden seats.

In the House, there are 50 certain seat changes so far. Fifteen of the departures are vets, and only 12 of the replacements are.

Interestingly, all six remaining open House races have a veteran in play. In three cases -- Reps. Goode (R-VA), Jefferson (D-LA), and Reichart (R-WA) -- the incumbent is a vet and the challenger is not. In the other three, the challenger is a vet and the incumbent is not.
So the new House will have a minimum of 93 veterans (a decline to 21.4%) and would stay at 99 (22.8%) only if the veteran is elected in all six still-undecided races.

Thank you, Patrick G. ($20) for your most welcome generous donation to this site. I am greatly honored by your support and readership.

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America's "Social Welfare State:" Worst of Both Worlds

In honor of Veterans Day, a question: how many congresspeople have children on active duty in the U.S. Armed Forces? (A few years ago it was 7 out of 535 members of Congress.)

We are all familiar with the "social welfare state" model of the northern European nations: very high taxes which pay for very high services to citizens. Taxes can run upwards of 60% in some northern European nations, and the benefits of those high taxes are free education up through the graduate level, universal healthcare, etc.

The U.S. has chosen a different model: social welfare for the nation's elderly, moderate taxes, a national security complex which spends more than the rest of the world's armed forces combined, and enormous deficits covered by borrowing trillions of dollars. I say this not to create an outpouring of outrage, but as a simple, undeniable statement of fact that the U.S. government spends the vast majority of its social welfare/entitlement funds on the elderly and very modest amounts (in comparison) on its young.

Education is still heavily subsidized of course, at the state level and at the Federal level; but nonetheless most college students in the U.S. exit their education with gargantuan student loans. In other words, though education is subsidized in the U.S. (at the graduate level, often through research grants), it is by no means paid in full by government.

Children in poor families can get subsidized healthcare through Medicaid and other programs, but we nonetheless have to draw a distinction between this sort of "apply and we may grant benefits" program and universal care.

All social welfare programs in all nations are heading for a demographic brick wall: the pool of retirees is growing far faster than the pool of workers needed to support the welfare spending. Despite the best intentions of all involved, 2 workers cannot support 1 retiree's pension, healthcare and elderly services. So governments all over the planet are running deficits to cover the rising costs of this "social contract"-- a social contract that no economy will be able to pay for out of taxes alone.

Borrowing vast sums is a short-term way to bridge the widening gap between workers and retirees, but it has its own costs--interest must be paid essentially forever on every dollar we borrow today.

In other words, even societies willing to trade 65% tax rates for universal education and healthcare will find they are unable to pay the benefits promised as the pools of workers and retirees approach parity.

The only way out is to reduce benefits and reduce the cost structure of the entire economy so the reduced benefits still provide the coverage we seek for our elderly.

The U.S. has the worst of both worlds: a "social welfare state" mindset of entitlements and a "low taxes promote growth" mindset of free market capitalism. The last 27 years has proven that low taxes do promote growth, but they are no match for entitlement and "national security" spending which rises at 6-8% every year even as the underlying economy grows at around 3% in good times and less in bad times.

Rather than face up to this fundamental contradiction, we have simply borrowed the difference, papering over the painful fact that low taxes and rich benefits cannot be reconciled:

Notice how the explosion in Federal deficits began when Reagan-era tax cuts kicked in, even as entitlements continued their steady upward march. 9/11 launched GWOT (global war on terror) which currently consumes $189 billion, not counting Homeland Security.
Here is fabulous depiction in detail of the Federal Budget. (Zoom in for more detail.) In general, here are the "biggies" of the $3.2 trillion Federal budget:

Medicare/Medicaid: $624 billion
Social Security: $644 billion
Department of Defense: $515 billion
other national security, non-Pentagon (intelligence services, Dept. of Energy, etc.) $101 billion Global War on Terror (grab-bag of goodies, something for everyone! Includes two "hot wars") $294 billion
Department of Education: $59 billion
Department of Health and Human Services: $68 billion
Interest on the external debt: $260 billion
2008 deficit: (estimated) $408 billion

As I noted in When Will Housing Really Bottom? (Part I) (October 6, 2008), the "real" Federal deficit is already $800 billion and rising:

Frequent contributor Michael Goodfellow located a fascinating and deeply disturbing data series on the U.S. Treasury site for "Debt to the Penny". According to these up-to-date figures, the Federal deficit has increased $1.061 trillion in only a year. Michael wrote:
Request 10/1/2007 to 10/1/2008 and you get a daily table. Here are the first and last lines:
10/01/20075,057,236,452,359 4,005,315,947,997 9,062,552,400,356
10/01/20085,850,791,254,967 4,273,433,812,160 10,124,225,067,127

Subtracting the Debt to Public (first column) you get $794 billion in the last 12 months. The Total Debt (last column) line goes up $1061 billion. I assume the difference is the amount owed to the Social Security Trust Fund. (Note: this last entry reflects the fact that the government "borrows" the Social Security surplus every year to spend and enters the theft as a "debt we owe ourselves.")

The MSM has reported that the Federal deficit is on track to hit $500 billion this year, yet here we see that it has already increased $800 billion, even without accounting for the $600 billion the Fed has loaned banks or the bailout costs of $850 billion ($700 billion to "friends of Hank" and $150 billion in pork/tax credit giveaways).

So what's the point? Just this: there is a fundamental dishonesty in our national spending. We refuse to cut our entitlements or "defense" spending, yet we also refuse to raise taxes to actually pay for the benefits and programs we say we want.

I submit that it is a moral wrong to borrow money to "fill the gap" between what we want from our government and what we are willing to pay in taxes. Either slash spending to match revenues or raise taxes, but it is morally bankrupt to borrow the money and saddle future generations with a debt so stupendous that the interest alone will crowd out spending for decades to come.

Disclosure: I am 54, a mere 9 years away from collecting Social Security. I should be clamoring for the illusions, lies and moral corruption to continue until I "get mine." I respectfully refuse. Everyone who draws any entitlement or pay or contract from our government should take a haircut, or they should convince the taxpayers that their entitlement, program and pay is worth us paying another 30% in individual and corporate income taxes (individual income taxes raise $1.1 trillion, and the deficit is $400 billion officially, $800 billion in reality; you do the math. Taxes would have to rise substantially to fund the $800 billion shortfall).

We all have our ideologically purified "sacred cows" and "sacrificial lambs." I for one think most of the money allotted to Homeland Security is utterly wasted on useless contracts and useless procedures. Objective studies conclude that up to 50% of all Medicare spending is waste/fraud/paper-shuffling. Pentagon waste is legendary, and despite good-faith efforts at reform, there is undoubtedly billions lost, wasted, siphoned off, etc. in every large government program.

Many voice the opinion that any bureaucracy is wasteful, but this seems more an excuse to do nothing. Clearly, any bureaucracy is only as thrifty as its management has to be; the default setting is of course waste, poor oversight, etc.

Even as we load our children and grandchildren with crushing debts to fund spending on ourselves, notice how paltry the sums we spend on youth are compared to what we spend on the elderly.

Perhaps this is exactly what we should be doing, but we should own up to the Federal budget being a value-driven reflection of what we (or those of us involved in lobbying) value most.

"We in America do not have government by the majority. We have government by the majority who participate." -Thomas Jefferson

I am outraged that we spend 4.5 times as much paying interest on money which was mostly wasted/frittered away/mismanaged than we do on education at the Federal level. Is this any way to run a business, just run up the deficits and interest due until it crowds out all other spending?

Do we need both the F-22 and the Joint Strike Fighter? Maybe if the choice had to made between those billions and Medicare drug coverage, we would start caring more. If there were sharp limits on total Medicare coverage for any one individual, maybe we'd start caring more how the funds were spent on our behalf. Maybe we'd forego that second MRI test or decide we don't need 11 medications, that maybe 5 should be enough.

But as long as we can just borrow the difference between what we want and what we're willing to pay, all the hard choices are loaded onto future generations. That is morally wrong, morally corrupt, morally bankrupt.

The "easy" answer is to relentlessly cut the cost structure of our entire economy; no fighter aircraft should cost $300 million a piece, no MRI should cost thousands when the same machine produces tests for under $100 in other nations, no hospital stay should cost $10,000 or more a day, no drug should cost $1,000 a dose, and on and on and on and on.

Choice helps. That's also called competition. Let the military services themselves choose which aircraft to buy, rather than let pork-barrel politics in Congress decide who gets funded. Let the first specification be that no aircraft can cost more than $30 million, period; loading up the aircraft with too many specs is a cost-killer. Faster, better, cheaper should be the watchword in every agency, not just the Pentagon.

As long as we continue the immoral fantasy that we can just borrow from our children to avoid any hard choices, we richly deserve the completely insolvent, fiscally bankrupt government we're going to get to match the moral bankruptcy in our hearts.

New essay by Chris Sullins: "The Good Life", a thought-provoking mediation on hunting, living off the land, resource depletion, delusion, weaponry, war and much more--highly recommended.

Thank you, Ben Z. ($25) for your longstanding encouragement and generous donation to this site. I am greatly honored by your support and readership.

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An Open Letter to President-Elect Obama: The U.S. "Family Budget" and a Nation of Debt-Serfs

Dear President-Elect Obama:

Before we get down to business, let me observe that I lived just around the corner from you (on Clark Street) during the first years you attended our alma mater, Punahou School; I was working my way through the University of Hawaii at the time. I lived literally in the shadow of your apartment building. Do you recall a skinny red-haired kid with a battered VW Beetle? Probably not....

OK, on to business. Mr. President-Elect, perhaps the best way to understand the nation's grave predicament is to look at the American people as a family and the U.S. economy as the "family budget." This simple analogy may lack the appeal of high-powered academic models, but it does provide a remarkably easy-to-grasp clarity into the core problem you and your administration must face: the family budget is completely busted by a shattering, unprecedented excess of debt.
Put another way: to get our national "family budget" in perspective, just take an average over-indebted, underwater, maxed-out-credit-cards-at 21%-interest American family and add 10 zeros to their monthly shortfall.

Borrowing trillions of dollars to "get through this rough patch" does not address the core problem--over-indebtedness at every level and every stitch of the American economy--it actually exacerbates it by adding trillions in debt to the Federal government, which is already paying some $270 billion in interest on externally owned (i.e. not owed to the Social Security Trust Fund) existing debt this year.

Transferring private debt to the Federal ledger resolves nothing, and borrowing money to bail out irresponsible lenders and give debt-serfs slightly reduced mortgage payments will only set the day of reckoning off for an all too brief period.

The essential reality you and your team must grasp is that the entire era of low-interest, credit-bubble "prosperity" was a fundamentally bogus "prosperity". Mr. President-Elect, the sad reality is that as a "family" we have been borrowing about 10% of our entire GDP for years; it's as if the family budget was running a 10% shortfall/deficit which was "filled" each month with borrowed money.

If we consider the U.S. economy our "family budget," some $1.4 trillion dollars has been borrowed every year to cover the shortfall between earnings and spending. The truth is that every year of the "boom," American homeowners (or shall we stop being coy and say the truth, mortgage-holders) extracted $700-800 billion in real estate equity, and then added $300 billion or so to their credit card balances. Corporations and businesses also piled up astounding debt during this bogus prosperity, too, as did the Federal government.

Here is a chart which illustrates the exponential growth of debt in the era of bogus prosperity:

Please go to www.oftwominds.com/blog.html to view the charts.

The spike to the left in this chart is the Great Depression. As you can see, Mr. President-Elect, our current indebtedness makes the Great Depression excesses look like a mere amateur's warmup to the endgame we now face.

Mr. President-Elect, adjusted for inflation, our "family debts" should have risen no more than 43% from 1993 to 2007. Yet they rose an astonishing 300%:

Please note all debts tripled: mortgages, consumer credit (credit cards, auto loans, etc.) and total domestic debt, which of course does not include the Federal government's own $10 trillion in debt.

Mr. President-Elect, the reality is we are a nation of debt-serfs, unable to pay off our astounding debts and future obligations. Saddling our children with another $1 trillion in additional Federal debt every year will only bring the insolvency of our "family" closer.

The interest on the National Debt is a hidden tax, one which is about to grow by leaps and bounds to previously unimaginable heights. Thanks to budgetary legerdemain, there is confusion about the interest paid on the Federal debt. Allow me to explain: the Social Security system generates surpluses which the Federal government "borrows" and promptly spends, logging the debt as an internal one "we owe to ourselves."

Nice, but we also have so-called "external debt" which is the interest paid on Treasuries held by foreign and U.S. holders. Foreign entities currently hold some $2.7 trillion in Federal debt and trillions more in state/local government bonds, private mortgage-backed securities, corporate bonds and other debt.

As I have exhaustively documented over the years (please see The Price of Debt-Based "Prosperity": Slow Erosion, Inevitable Decline (August 27, 2008) Real Estate Bust: The Exhaustion of Debt (June 26, 2006) The U.S.A.: The Third World's First Superpower (April 16, 2008) , the interest on all this debt is growing rapidly.

For instance, just the interest on external Federal debt has risen from "only" $205 billion in 2005 to over $300 Billion for fiscal year 2009.

Those hundreds of billions are funds which cannot be spent on programs the "family" wants and needs. The U.S. is like a family so heavily indebted that they're borrowing more just to pay the interest on existing debt. Down that path lies insolvency.

Mr. President-Elect, this fast-rising interest is a stealth tax on our national "family." "Family members" are blind to its pernicious effects because it doesn't seem to affect their lives yet; their Social Security checks are arriving on time, their Medicare bills are being paid, and so they literally "don't care" about the interest which, like a tsunami, is building just beyond the horizon.
Mr. President-Elect, please don't scoff when I tell you the interest on our fast-rising debt will soon exceed the Pentagon budget. Only Medicare will be larger than the interest payments--much of which flows overseas, money which is not spent domestically.

You must understand this is not a "rough patch" which Keynsian "stimulus" spending will "fix"; we as a "family" have saved little, choosing instead to borrow and spend profligately. But borrowing isn't "free;" every trillion we borrow to bail out the banks, debt-serfs whose homes are worth less than their mortgages, auto companies, insurance companies, state and local governments--is there an end to this list?--incurs $40 billion more in interest each and every year for the life of the Republic--or until we declare bankruptcy and renege on our "family" debts. (And if interest rates rise, then that number could easily double to $80 billion a year for each $1 trillion we borrow.)

Mr. President-Elect, allow me to introduce you to a group which has not been seen in a long time: the Bond Vigilantes. The Vigilantes once demanded risk and return be balanced, and they raised interest rates as risk rose. During the credit bubble era, the Vigilantes disappeared; dead drunk under the punch table, gagged and stuffed in the closet, take your pick, but they have recovered their senses and are about to push global interest rates up.

Yes, the rates which were supposed to "stay low forever."

Mr. President-Elect, please note that China has announced it's going to spend $586 billion on its own economy, China Sets Big Stimulus Plan In Bid to Jump-Start Growth, which means the Chinese will have $500 billion less to spend buying U.S Treasuries. You may also have noted oil has fallen 60% per barrel, which means our Gulf oil exporting allies will have considerably less money to invest in our Treasuries, too.

With the biggest buyers of our debt sidelined by the global recession, then who is going to step up and buy the trillions in new debt being borrowed for bailouts and government deficit spending? The moment the Treasury can't sell hundreds of billions of new and rolling-over Treasuries at auction is the moment rates start climbing--and I can assure you that moment is not far off.

The sad truth is that there isn't enough money in the entire Universe to bail out our debt-serf "family." This isn't a "rough patch we need to get through," Mr. President-Elect, it is a culmination of an orgy of debt slamming into the demographic brick wall of 60 million Baby Boomers retiring and all expecting/demanding staggeringly unaffordable pension and Medicare benefits.

Simply put, Mr. President-Elect, Keynsian stimulus (a.k.a. "borrow and spend" deficits) has been the order of the day for a generation. There is nothing left to stimulate except our fast-growing interest payments to non-U.S. entities. We are truly a nation of debt-serfs, and denial will only work for 2009 at best. After that, cold reality will infringe on our fantasy world of "let's just borrow another trillion or two, it's just like free money."

Borrowed money is never free, and the money you spend paying interest is money you can't invest in productive assets. You are literally enriching the debt owners and impoverishing yourself.

There is only one solution to the debt-serf "family budget": reduce spending, reduce debt, stop borrowing more and start investing savings in productive assets rather than squandering borrowed money on a super-leveraged, risk-drunk "financial system," failed insurance companies, etc.

These realities are not popular, Mr. President-Elect, but the sooner the American "family" gets splashed with the cold water of their impending financial ruin, the sooner they can adjust to that reality and a balanced "family budget" which doesn't shift the burdens of our excesses onto future generations.

Will it be painful? Most assuredly; but then national insolvency will be painful, too.

Please feel free to send this to President-Elect Obama at change.gov, the Office of the President-Elect.

New essay by Chris Sullins: "The Good Life", a thought-provoking mediation on hunting, living off the land, resource depletion, delusion, weaponry, war and much more--highly recommended.

Thank you, Rodney M. ($10) for your most welcome generous donation to this site. I am greatly honored by your support and readership.

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