An "Independent" State of Mind

In keeping with the spirit of this blog, here are some really random thoughts I’ve been musing over recently. If you, my vast audience of one (or maybe two) have anything to add, please do…

Independent … of What?
What accounts for the increase in the number of self-declared “independent” voters in recent years?

Are they truly independent thinkers or simply too confused by the constant noise that passes for information to have an opinion to call their own?
Some say they vote for the man, not the party. But what does that mean? I like the candidate’s looks? He/she seems like a regular guy? She visited our town and I shook her hand?

When someone votes for a candidate one year and for his political opposite the next, one has to wonder; what are they thinking?

Some people may be apolitical or indifferent to what’s happening in the world, more likely to read the sports section than the front page. One friend told me “the front section is there to keep the sports section dry”. (I hope he was joking, but I have my doubts.)

Certainly many people are just too busy earning a living and don’t have time to inform themselves. I’ve been in this position myself. I always felt uncomfortable, exposed even, taking a stand knowing how little I really knew, especially when the issue was complex, requiring serious study-time to digest; time I just didn’t have.

Does the ‘independent’ label inoculate people from having to take a side, or even think? Is it a declaration that says ‘I really am an independent, thoughtful person … really!’ But, it’s so much more entertaining to watch TV, and what’s the point, anyway? I can’t do anything about it.

Some self-declared independents may be trying to project an image of “rugged individualists”, although I suspect many of this group would be as likely to think of themselves as libertarians.

It is reported that, demographically, disaffected Republicans account for the growth of independence voters, but my guess is that a good portion are former Democrats, as well.

Certainly, among their number, there are many thoughtful people who are truly uncomfortable with the extremes of either party; distressed with the idea of being associated with those whose ideologies leave little room for compromise or civil discourse. Although I think of myself as a liberal, I am frequently put off and embarrassed by assumptions or positions of other liberals, or by a particularly strident opinion about a subject that, from my perspective, is far from easy to digest.

So, what do you make of reports that show independents who voted overwhelmingly for President Obama abandoning him just ten months into his administration? Are they just empty windsocks, blown one way, then another, by blowhards like Rush, Beck, Hannity and O’Reilly? Are they free thinkers or just free of thoughts? Is independent just another work for fickle?

Venting Our Frustration
I’ve noticed (or strongly suspect) that the less someone knows, the more emotional he or she become when discussing an issue like, say, the war in Iraq or the financial and banking system. Is this a manifestation of frustration at not knowing, not having time to become informed, or a combination of both? (Or is there another explanation?) We become frustrated when events fail to conform to our preconceptions. No one is comfortable with chaos. It’s human to want to simplify the world to make it comprehensible – and frustrating as hell when we discover we’ve organized our worldview around faulty assumptions or beliefs.

Intellectual honesty is not the fashion. When was the last time you heard anyone say, ‘Oh, that’s interesting. I’ll have to rethink my position?’

Today’s media climate gives license to venting one’s frustration rather than admitting we had it all wrong to begin with and taking the time to digest new information. This is all the more difficult when our foundation knowledge is based on parental imprinting.

We’re more likely to cast blame than grapple with complex explanations. It feels so good to vent about greedy bankers or corrupt politicians. In today’s media climate, we’re less likely to listen to contrary views, much less empathize.

Speaking of the Financial Crisis
Many have expressed outrage about the bank bailout and the way the administration handled GM and Chrysler, but few have spent much time imagining what would have happened if the government had failed to act. What would a complete collapse of the banking and financial system have looked like? If this is the “Great Recession”, what would we have called it if the world economy had collapsed completely?

As we dig ourselves out of recession, this is a critical point the administration needs to explain clearly. Otherwise, criticism of how the financial crisis was handled will snuff out the nations memory of the events that lead up to the financial imbroglio, and what the consequences would have been. As Barney Frank put it, “no one ever gets credit for making a situation less bad”.

As justifiably angry as we are at having to throw billions of dollars at the problem and at the outrageous Wall Street pay packages, we forget or fail to imagine what would have happened if the banking and financial system had failed completely, as it surely would have if the Federal Reserve and Administration had failed to act.

Many millions of Americans have investments and depend on them for their retirement. At one point, the stock market was down to less than half of what it had been at its peak and even money market funds – which most people consider as secure as checking account – were on the verge of ‘breaking the buck”, or loosing money. What would the world look like if the stock market had declined half-again, continuing its slide to, say, a DOW index of 3000 – and the buck had been broken, now worth 90 cents or less? How many people would have had to defer retirement or come out of retirement? Money market funds are uninsured; there is no equivalent to the FDIC for mutual funds. There would have been a run on money market funds akin to the bank runs of 1929 (this almost happened when one fund briefly sunk to $.97). What would the social and political consequences have been? Aside from the affects that the freezing of capital – the complete unavailability of loans from any quarter to anybody – would have had, many more businesses and the people they employ would have been hurt. The failure of Wall Street would have bulldozed Main Street. Today, we have an official unemployment rate of 10.2%, and an unofficial rate of 17-18%, if you count those who have given up looking for work. What would an official unemployment rate of 25-30% look like? We know what 25% it looked like in 1932; it was a very dismal time. Put simply, people suffered.

OK, not everyone has investments or a money market fund. But one investment most Americans do have is their home. Home prices have declined by 15% and in some regions, much more. If money had dried up completely, how far would prices have fallen? 40%? 50%? More? What would the effect have been? Renters too have suffered, surprised when their rental property is suddenly foreclosed, forcing them to relocate quickly.

We hear of people who are “underwater”, with houses worth less than what they owe. Fortunately, only a small percentage have walked away from those homes or defaulted. But, if unemployment climbed to 25%, you are looking at a yawning downward spiral of frightening proportions. Millions of families on the streets, political chaos, perhaps even revolution. (There’s a lot more guns around now than there was in 1929, and they’re a lot more lethal.)

I haven’t even mentioned the effects on the international financial system, and the chaos a failure would have there, but it’s easy to imagine, in an age when communications are instantaneous, that a financial collapse would have lead to an immediate decline worldwide – deeper and more rapid than the crash of 1929; a crash that really occurred in slow-motion, over three years.

But all of this is abstract and speculative. As in the run up to the current recession and its aftermath, there will be many opinions from experts to the contrary, experts whose historical perspective is 30 years, or who can point out myriad reasons why this is unlike 1929. My answer is, you’re right, it would probably have been worse. The press towards easy answers – and the hunt for scapegoats like the trial of the two hedge fund managers recently concluding with acquittals in Brooklyn – will continue.

The difficulty in explaining how bad it could have been is that you quickly get into a web if speculative cause and effect that can’t be explained in simple linear fashion. Stocks and bonds collapse, capital freezes, runs on banks and mutual funds, job layoffs, price deflation … and more of the same, again and again – they all have feedback loops whose ripples adversely affect everything else. Our brains just don’t work like that.

For a view of what might have been (or might happen yet), I recommend John Kenneth Galbraith’s elegant, short book, The Great Crash 1929, published in 1955. Unfortunately, he took 26 years to come up with an explanation of what went wrong. Sadly, it will probably take as long this time too.

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So, depending on what kind of “independent” thinker you are – and who doesn’t think he/she is – you either take the time to learn as much as you can or you place your trust in someone else you like, and parrot whatever they say, like a ditto-head.