Saturday, December 1, 2007

War Spending and the Declining U.S. Dollar

Much has been made of the United States’ astonishing deficit spending in the first half of this decade, and also of the rapid decline of the value of the U.S. dollar, but not everyone wants to draw the link between the two. Historically and in the present case, deficit spending is the main cause of currency declines, and in a much smaller way, the decline in currency adds to the budget deficit.

To get the bigger picture, you need to see the cause of the deficit spending. Some would want to blame the Bush tax cuts, but while those tax cuts are certainly hurting the U.S. economy, they are not nearly large enough to account for the deficits we are seeing. This is a deficit caused by deficit spending, and specifically, spending on the U.S. invasion and occupation of Iraq.

There are other ways to measure a war besides money, and the millions of people dead and millions more homeless are the real story of the war, but it is also important to look at how much money is being spent. If you measure the war according to military spending, the U.S. war in Iraq is probably already the most expensive war undertaken by the United States, which also means it is the most expensive war undertaken by any country ever. Unless the United States winds it down precipitously, it is likely to have an official cost over 1 trillion dollars, with the unofficial cost much higher. And that money is borrowed.

You don’t borrow and spend that kind of money with no consequences. Economists describe currencies like the U.S. dollar as “deficit currencies.” In traditional economic thinking, it is impossible for a country like the United States, buying more than it produces, to maintain the value of its currency.

Warren Buffett put it this way four years ago: “In effect, our country has been behaving like an extraordinarily rich family that possesses an immense farm. In order to consume 4% more than we produce — that’s the trade deficit — we have, day by day, been both selling pieces of the farm and increasing the mortgage on what we still own.”

In the most dire scenario, we risk becoming a “tenant nation.” Our own currency becomes worthless and we own so little of our own land that we no longer have much collective control over the prices we pay for housing, farmland, and the other essentials of life and work.

The federal budget deficit adds to the trade deficit and speeds up the decline in the dollar — and the federal budget deficit in this decade is basically the Iraq war. Without the war, the federal budget could be in a small surplus and could be easing, instead of accelerating, the decline in the dollar.

The declining dollar also worsens the budget deficit, as the government has to spend more dollars for the products and services it has to buy from other countries — mainly energy.

There were those who supported the Iraq war because they thought it would mean more oil for the world. Perhaps that will come to pass, but if it does, it will not benefit the United States. The declining dollar means that, for Americans, the price of gasoline can only go up.

Nearly half of U.S. imports are energy — crude oil, natural gas, nuclear fuel, electricity, and so on. The only way we can eliminate the trade deficit is by importing less energy through a combination of using less energy and creating more energy ourselves.

It would take an investment of around $1 trillion — a huge amount to spend, but not larger than the Iraq war — for the United States to have energy independence. And the cost could be smaller if technological breakthroughs drive down prices or if people find new ways to conserve energy. The decline in the U.S. dollar is likely to continue until the economy returns to its peacetime footing and the country decides to take the idea of energy independence seriously.

Thursday, November 15, 2007

Earliest. Christmas. Ever.

The Apple Store in King of Prussia closed for remodeling at the end of October, and is scheduled to reopen November 16. Just in time for the Christmas shopping season, right? Well, maybe not. By closing for the first half of November, this store might have missed almost half of the Christmas shoppers.

Black Friday, the day after Thanksgiving, is the beginning of the Christmas shopping season according to the traditions of American retailing. Yet Christmas shopping has been getting earlier year after year. Shopping early is especially important now that consumers are comparing online offerings to products they find in stores. Some of the purchasing decisions need to be made by the middle of November so that the products can get shipped to the purchaser and again, in some cases, to the gift recipient. So this year, many retailers started their seasonal discounts three weeks early, and shoppers got an early start.

Today, November 15, I saw heavy traffic and crowded stores and parking lots. It is clear that the Christmas shoppers are already out in numbers.

And so Black Friday, which has not really been the beginning of Christmas shopping for many years, may this year mark the middle of the Christmas shopping season, the point where retailers can figure they are over the hump. Retailers are worrying for the first time this year about how many consumers might have finished their shopping before the Black Friday sales circulars arrive in the mail.

The problems of high energy costs have consumers feeling pessimistic and, according to surveys, likely to spend less on holiday gifts than last year for the first time in years. But a feeling of caution is not the only reason for cutting back on gifts.

All this early holiday shopping is a sign that giving gifts has become an obligation for many of us, something we want to get out of the way so we can get on to the things we enjoy about the holiday season. And if something that was supposed to be an inspiration has become a burden, it makes sense to scale it down to try to bring it back into balance.

I have heard so many stories of people who have given up holiday gift-giving entirely that it doesn’t surprise me any more. It is not that people want to keep their money — in many cases they’re giving it to charity instead, and sending around cards with pictures showing where the money will be used. They just want to avoid the hassles of gift-giving.

I have to imagine that it is the competitive side of gift-giving that is causing people stress. As soon as you imagine that the gifts you give have to be at least as good as the ones you receive, you turn gift-giving into a competitive arena, a sport with winners and losers. It’s no wonder then if it starts to feel stressful.

But instead of giving up gift-giving entirely, it makes some sense to not make such a big thing out of it — to focus on nice, simple, pretty gifts that don’t necessarily have to be valuable, memorable, or perfect. This puts gift-giving back in its original place, as one part of a larger social occasion.

Whether it’s a matter of scaling back, spending cautiously, or a combination of the two, it seems that people are doing less Christmas shopping this year — and they’re getting it done early.

Wednesday, November 7, 2007

Looking for Real Money at General Motors

General Motors today announced an astonishing financial loss during the latest quarter — a loss so big it amounted to twice the company’s total value.

One of the world’s largest auto makers, GM is worth around $20 billion according to the stock market. GM already had a negative net worth last quarter, so the loss of $39 billion would seem to give it a book value of negative $43 billion — a head-swimming number that you have to look at several times before you realize it is not a mistake. That works out to something like negative $75 per share — again, not a misprint. You would think any company that owed so much would be bankrupt, but GM says no one there is losing any sleep over it. It turns out it wasn’t real money, but a mysterious and hard-to-explain tax-related asset that expired. CEO Rick Wagoner put it this way: “No impact whatsoever on our cash position, no impact on our ability to use the tax offsets in the future, and from my perspective, really no change whatsoever in our outlook or optimism about the future of getting the business turned around.”

The problem with this explanation is that the losses, all $39 billion of them, are entirely real. GM was actually losing money faster than it reported for the last several years. It made its losses look smaller than they were by accumulating this mysterious no-cash-value tax-related asset. They just now reached the point where the accounting rules they follow said they couldn’t stretch out this imaginary asset any longer. So the losses didn’t really occur all at once, but they really did occur. And the fact that these losses occurred does have an impact on cash flow and does cast a shadow over the company’s future prospects.

One reason companies get themselves into trouble is that they start making distinctions between “real money” and “pretend money.” It’s no surprise, then, when the “pretend money” seems to disappear while no one is watching. Yet all money is real. If you have to say it’s there, then it exists. It doesn’t matter if a company tells you they’re only losing funny money or Monopoly money — it’s still money and the company’s managers are showing an insufficiency of skill in losing it rather than gaining.

The world has placed a great deal of confidence in General Motors — that is the only way any company that is $43 billion in the hole can keep going. The sooner the people at General Motors start to see the confidence the world has in them as a real thing — not a mere abstraction, but something they can actually use, as real as the “real money” people have entrusted them with — the sooner they can make the company relevant in the world again.

Thursday, October 11, 2007

The Un-Bankrupt and the Lending Crisis

Tightening consumer bankruptcy laws was supposed to be good for lenders. Banks pushed hard for the legislation, which made it virtually impossible for a consumer with a salary to file for bankruptcy. Borrowers could no longer go bankrupt, so they would have to repay their loans — right? Unfortunately, it seems that this is what lenders were thinking, and their overconfidence brought us to the lending liquidity crisis everyone is talking about now.

When the bankruptcy law changes were being considered, there were voices saying that the changes would actually benefit consumers. Bankruptcy is a stain on your reputation, they said. Instead, a penniless consumer could simply stop making payments, and that would be the end of the matter. In practice, there would be nothing a lender could do about it. Bankrupt or not, if a person does not have any money, you can’t get any money from them.

For all its faults, bankruptcy is at least an orderly process. The court finds out who all the lenders are and decides who gets what. By contrast, the new un-bankrupt consumers, financially bankrupt but not allowed to file for bankruptcy, are about as easy to sue as the “un-dead” of zombie movies. The situation can turn into a free-for-all among the lenders involved, fighting it out against each other in court with legal ground rules that are as clear as mud. Lenders who want to take advantage of the tighter bankruptcy laws can spend enormous sums of money on lawyers.

Even worse from the lender’s point of view, the un-bankrupt are not subject to any of the restrictions that bind a person who is legally bankrupt. An un-bankrupt consumer can hide their money, give it to friends and family members, spend it, pay their lawyer anything they want without having to wait for a judge’s approval. The chances of a lender who sues an un-bankrupt person of getting any money before the defense lawyer gets it? Not particularly good.

Others can debate exactly what the standards for consumer bankruptcy should be. The point here is simply that lenders who thought the tighter bankruptcy laws would benefit them were sadly deluding themselves. And it seems many of the largest consumer lenders brashly went out and lent money to just about anyone.

The problem was kept under wraps for a short time by the low initial interest rates of many loans. Sometimes called “teaser” rates, these initial fixed interest rates gave way to market rates at some point, resulting in monthly payments that everyone knew all along the borrowers would not be able to pay.

The problem came to the surface last year in states with job market problems, such as Georgia and Michigan. It is clear now that it has gone national. All across the United States, consumers are defaulting on loans in unprecedented numbers. This is not, as some have suggested, the result of the current economic slowdown. The lending crisis and record high oil prices appear to be the two important causes of the slowdown.

The lending liquidity crisis is affecting banks in various countries, but it is important to note that it is limited to loans made in the United States. It was the United States that changed its personal bankruptcy laws, and the bad loans at the center of the crisis are all located in the United States.

In the short term, the most important thing that needs to be done is to prop up the banking system. Without strategic intervention to prop up troubled banks, the banking system worldwide could collapse, with all the major banks going bust. Governments, central banks, and even money center banks have stepped in in recent months with unprecedented amounts of cash to prop up troubled banks in the United States, Germany, and the United Kingdom, and this will have to continue as new trouble spots emerge.

In the long run, the problems caused by lender overconfidence can be cured with some very simple reforms in lending laws. Lenders need to stop lending money to consumers who do not have the income to repay the loans. It is not necessary to make it illegal for lenders to make these loans, as some have suggested. But when lenders choose to lend money to a consumer who is patently unqualified to borrow it, the lender should be prevented from going to court to collect the money from the consumer. The courts do not exist to prop up incompetent and unscrupulous lenders, and that particular abuse of the legal system could be stopped with a relatively simple piece of legislation.

Of course, most lenders would be very careful not to make any loans that were not legally enforceable, so that change in the law would also ensure that the overconfidence of lenders that led to the current crisis would not come back to create another crisis in the future.

Saturday, September 8, 2007

Squeezing the Low End of the Labor Market

I have been hearing stories for the past two months of employers having trouble hiring workers for low-paying jobs, especially in sectors like retail and food that traditionally have high turnover. The fact that this squeeze is occurring during the summer, when the labor market is largest, is a troubling sign for retailers who may end up more than a few workers short later on in the year. There shouldn’t be too much sympathy for the employers, though; there are, in fact, plenty of workers available. But it takes the larger employers a period of time to adjust their pay scales, and until they realize their pay is now too low, and take steps to bump up their wages by around 75 cents an hour, workers could be hard to find.

It is easy to imagine reasons for this change in the U.S. labor market. There are more retail locations open than ever. Some foreign workers have been deported (even pop star Lily Allen was booted out last month — sorry, Lily, I don’t know what our government was thinking) and others have been discouraged from entering the country. In a country that has hundreds of new millionaires every day, more young workers than ever are entering the labor market already wealthy and with little incentive to work at jobs that pay slightly less than a living wage.

Employers can adjust to a smaller labor pool by taking other steps to boost productivity so that all the work can get done with fewer workers. In retail, new, easier-to-use cash registers shorten the lines that form when there aren’t enough cashiers working, and employers may look for similar investments in labor-saving equipment elsewhere. Employers may also look for ways to streamline jobs so they can be done by workers with less training, such as shortening the menus in restaurants — and employers who never took training very seriously may have to start doing so.

One especially encouraging sign is that employers seem more willing than ever to hire high-school age workers, a group that for decades has been mostly frozen out of the job market. It is a sign of the declining influence of labor unions — they were behind the move a century ago to prevent young people from working — that adolescents are entering the job market in large numbers now with relatively little resistance.

It is this last effect that is likely to have the greatest long-term benefit for the economy. It’s a matter of economic development. A 17-year-old with an income has a better chance to buy a vehicle, get a career-oriented education, and have a smooth, productive entrance into the broader labor market. This is a huge step forward compared to those who are forced to start out their adult working lives looking for unskilled jobs within walking distance of home. College is the biggest expenditure that teenagers make, so it stands to reason that more income for teenagers means more of them can go to college.

And this last effect is the reason I think you’ll see more of the corporate conservatives in Washington insist that the United States must let in more foreign workers. Corporations maintain their power in part by keeping workers off balance, and that is hard to do if an ordinary 17-year-old can gain the economic power that comes with a car and a college education. By letting workers get off to a quick start in life, a high level of teenage employment undermines the big corporations’ grip on power. But while corporations can expect to get a small measure of relief from Washington, it will surely not be enough to bring back the depressed labor market of the past.

Those who imagine that teenage workers will blow all their newfound money on handbags and music CDs are sadly behind the times. Teenagers actually spend less on clothing, accessories, and entertainment than the 20–59 crowd, and they save a higher fraction of their income than any other age group. And so even though they face new economic disadvantages, such as the high cost of insurance and college, we can expect most of them to enter the job market ready to get things done. The economy will never be the same.

Wednesday, August 29, 2007

A Million Dollars in Debt

An AP story this morning laments the recent hesitation by banks to issue new million-dollar mortgages to home buyers. Specifically, the issue has to do with “jumbo” mortgages, those over $417,000. Home mortgages over this limit cannot easily be resold by banks, which are stuck with them if anything goes wrong. Home buyers, according to the lending and real estate specialists interviewed for the story, have picked up on that hesitation and in many cases are not even shopping for a home unless they really need one.

The situation is frustrating to real estate agents, who now find it hard to sell homes that, from the agents’ perspective, the buyers can easily afford. Yet in the bigger picture, this may be a good thing.

Because when you look at what it means to “easily afford” something, it is not really a question of qualifying for a loan and being able to make the biweekly payments. Taking the buyer’s point of view, unless you want the banks to end up owning most of your money, you cannot “easily afford” to buy a home if you have to borrow a million dollars, or half a million, to do it.

This kind of high-stakes borrowing adds to the volatility across the economy because of the economic inefficiencies and losses involved in the occasional bankruptcies and defaults that follow. An economic downturn can trigger millions of bankruptcies, which in turn magnify the economic downturn. The economy, then, is on a more solid footing if these high-stakes loans are kept to a minimum.

Of course, some people need to borrow money to buy a home or other building, but it works out better in the bigger picture if people don’t borrow much more than they really need, and don’t borrow at all if they don’t need to. There are even people who need to borrow money to buy million-dollar homes. But for most people who find themselves in that situation, it makes good sense to put off that purchase for a few months or a year or two so they can save their money and borrow less, or perhaps not borrow at all. Apparently this is what many high-end home buyers are thinking now. They’ll save a small fortune in interest charges and fees and eliminate some personal risk, and as a bonus, it makes the economy more stable too. And even if it took a small economic crisis to get people to look at this approach, the fact that they are doing so seems like a good thing.

Monday, August 27, 2007

Why Food Still Matters

Several readers have asked me why, if I am the “shamanic economist,” I write so much about food. This would have seemed a peculiar question just a century ago. Then, economics was all about food, which along with clothing and shelter was considered one of the three necessities of life. Economics acquired its nickname, “the dismal science,” around that time as a result of a theory put forth by a few American economists that purported to explain why there would always be masses of people starving to death. It almost seems a cruel thing to suggest now, yet up until that time it was all that history had ever known — when times were tough, people went hungry and often died because of it. And, in case anyone needs to be reminded, hunger remains a problem for half of the world’s population, and mass starvation is still a threat when disasters strike the most politically troubled areas of the world — reasons enough for food to continue to be a subject of interest for economists.

And food is important even beyond the question of hunger. Food is more than just the fuel that keeps the human body going. It is also fuel for the human brain. One of the most potent economic resources you can bring to bear in your own life — mental focus — depends to a great extent on how you eat.

It can be tricky. The ultimate brain food is sugar, but eat too much of it and you get a buzz that can keep you from thinking coherently for a few minutes. Eat a little sugar (ideally as part of a complex food) and it gives your brain a boost for an hour or two, but that might be followed by a decline, over the next two hours, to a level of mental functioning below what you would have if you had not eaten. Going hungry can make some people mentally sharp, but unfortunately, the only thing they can think about consistently is food. Eat lots of sugar over a long period of time and it can cause metabolic diseases. So it is not easy to say how you can make the most of your brainpower in connection with sugar. More complex foods can provide similar results without the specific dangers of concentrated sugar, and of course, with those, there are even more scenarios to consider.

Another important issue with food is its long-term effect on health. This is especially a concern with junk food, a broad category that includes everything from cheeseburgers to donuts. Some of the components of junk food are specifically known to be harmful — harmful enough that the quality of food people eat has significant economic impact.

It has been calculated, for example, that a fast food meal is so bad for your health that it can be expected to shorten your life by more than the time you theoretically save by selecting fast food. Add this up across the whole labor force, and we can say that fast food depresses economic activity by killing off workers prematurely.

The best current example is trans fats. These are heavy artificial oils made in factories by chemically combining natural plant oils with acids and other chemicals. Trans fats are known to cause long-term damage to cell walls and are specifically linked to heart disease, so they have been banned in a few places, and giant restaurant chains — Dunkin’ Donuts is the latest example — are removing trans fats from all their recipes. Fried food will still have some trans fats because they also form in cooking oil, especially as it is repeatedly heated and cooled — this the main reason restaurants are supposed to replace all their cooking oil every day (some, though, still reuse the same cooking oil for a week or more at considerable risk to their customers’ health). Trans fats also occur in meat when animals are fed junk food. Still, taking trans fats out of the recipes will probably take away more than 90 percent of the trans fats, making a huge difference in the health effects.

Removing trans fats from junk food is especially important because the health consequences from food are the greatest for the people who will eat just anything. It is hard to estimate how many heart attacks may be avoided by the change in Dunkin’ Donuts’ recipes, but the number is surely at least in the thousands. The cost savings to the economy as a whole are enormous. Even if you just look at the medical care that won’t be needed, it’s enough to dwarf the incremental cost of the natural cooking oil.

In ancient times, everyone took it for granted that food was the most important thing in life. And food is still important, more important than we modern people want to give it credit for. If economics includes the question of how people working together can get the things they desire, and if you look at the central role of food in people’s lives, then you can’t have a proper study of economics without taking a look at food.

Tuesday, August 21, 2007

The CD Alarm Clock, and How Countervailing Power Is Undoing the Planning System

Yesterday, I bought myself a CD alarm clock. Looking at this transaction in economic terms, it might seem to be nothing more than a simple consumer purchase of a durable good. Yet something more is going on. This purchase also leads to a change in lifestyle — and it is part of a trend that is changing the way the economy is organized.

A CD alarm clock in itself is the unremarkable combination of an alarm clock and a CD player. Instead of waking up in the morning to the sound of a radio, I can now wake up to the sound of a music CD. The CD clock takes on more significance, though, when you look at the reason why a consumer would buy a CD clock ($30) instead of the less expensive clock radio ($20): to wake up in the morning without having to listen to those annoying commercials on the radio. Other people are getting the same result in other ways: satellite radio subscriptions, public radio stations, Internet radio stations, and MP3 music players. It is not hard to arrange to wake up with commercial-free audio programming, and more and more people are doing it.

This trend is an example of countervailing power. If you look at the two parties at the endpoints of radio advertising, the advertisers and the consumers, each has ways of exerting influence on the other, and this influence should help keep the exchange in balance. Consumers long ago stopped devoting attention to radio advertisements. Yet advertisers had a way to respond, by producing their audio content in a way that makes it more insistent, although this is also what makes it annoying. Consumers are now responding by limiting their exposure to radio advertising. Consumers listen to the radio just half as much as they did a few years ago and are more likely to listen to commercial-free radio when they do tune in. One response from advertisers has been the recent legislative initiative to silence Internet music radio by requiring exorbitant per-listener music royalty payments from the Internet music radio stations, yet this is only a small step, as Internet radio is just one of dozens of ways for consumers to get audio programming.

In theory, the potential for this kind of response and counter-response is supposed to keep an economic relationship relatively in balance. Yet in some cases, as in the example of radio advertising, it seems to have the opposite effect. Each party stakes out more and more extreme positions until there is scarcely any relationship left. Some advertising messages today, in their attempts to cut through the clutter of commercial radio, are so jarring that just hearing them can ruin a listener’s whole day. And some listeners are so annoyed at the intrusion of radio advertising that they are determined to shut it out completely, even if that means no longer going into restaurants where commercial radio is playing.

Perhaps this result, where the parties go to extremes instead of finding a workable compromise, is more likely when there is little economic validity in the relationship to begin with. Consumers, it must be conceded, get very little benefit from radio advertising, so why wouldn’t they eventually find a way to block it out completely? And advertisers, for their part, have only the slightest interest in the long-term effects of their messages. If an advertising campaign brings people into a store this week, then the thought that it might help drive listeners away from the commercial radio medium over a period of years is of little concern.

Of course, the flight from advertising is not just affecting radio. Television viewing hours have been falling for years, and when people watch television shows, they are more likely than ever to purchase the shows online so they can see them without commercials. Newspaper circulation is falling rapidly, and while magazine circulation is holding up, people are less likely than in the past to read the magazines they get.

Advertisers look at their advertising opportunities as windows into a consumer’s day. Most of the day, consumers are out of reach — asleep, at work, reading books, exercising, and so on. The decline in commercial radio is taking away two points in the course of the day when advertisers could get into consumers’ heads: waking up and driving.

The declining reach of advertising is not just a case of advertisers worrying about nothing. The effectiveness of advertising can be measured in many ways, and it all points to the same conclusion: advertising is having less impact. One of the best ways to measure the effectiveness of advertising in general is by measuring brand awareness, and brand awareness is declining. For example, people often cannot tell you the brand name of the camera, refrigerator, or blue jeans they own. Asked to identify the top brands of televisions in the United States, consumers are more likely to pick Zenith and RCA, brands from decades past, than Vizio, Samsung, and Polaroid, some of the current market leaders.

Technology is letting consumers steer clear of advertising. So what does this mean for the economy? It is troublesome news for the planning system, the large-scale half of the economy that traditionally has depended on long-term planning. In order to sell to consumers the products they are gearing up to promote and distribute, large companies depend on a degree of control over popular culture to create the level of consumer demand they have planned on — and this mainly means advertising. If advertising no longer reaches consumers, and the consumer response can no longer be guaranteed, then the planning process becomes an empty exercise. The plan to sell 10 million units of the New Hot Product is useless if consumers aren’t even aware that the New Hot Product is something they are supposed to be buying.

In this context, the ability to advertise on the Internet is little consolation. Internet advertising is largely self-selected. It reaches consumers only after they are interested in a subject. This is a real boon to some advertisers, but it is useless as a way to drum up demand for a new product that consumers don’t yet know or care about.

If consumers cannot be controlled, companies are having to rely more on predictions of consumer behavior, preferences, and trends. Focus groups, which assemble a random group of consumers for a short meeting to gauge the reaction to product concepts, are part of this research, but these results can be misleading. A focus group is naturally curious about the subject of their work, and this is a curiosity that consumers at large do not share. Lots of products that succeed brilliantly at the focus-group level fail to capture consumers’ attention out in the real world.

One way to make predictions more accurate is not to try to predict so far into the future. Half a century ago, it was common for a large company to plan initiatives that could take five years. Now, planning does not extend more than 16 months into the future unless it’s absolutely necessary. The shorter planning horizon may seem surreal sometimes, as corporate committees prepare to launch products that will be designed and named at a later date. Yet this is what it takes for a big company to avoid unnecessary risks when consumers are hard to predict and control.

And so, as the reach of advertising declines, the planning system is losing its central position in the economy. It no longer seems to be half of the economy, but something less than that. It is no longer so clearly distinct from the so-called market system that makes up the rest of the economy, but is forced to work within the constraints of market forces much of the time. Venture capitalists have become more important as there are projects to be financed that involve real risk that cannot be planned away.

And all this is happening as a result of lifestyle changes as simple as waking up to a music CD. As technology gives consumers more control over their lives and surroundings, it can only get harder for the big corporations to include those consumers in their long-term plans.

Monday, July 30, 2007

How Not to Create an Attraction Magnet

I recently received a mass e-mail message inviting me to “help in a really big experiment.” The “experiment” — actually an advertising campaign — is an attempt to create world peace by having many people focus on a short movie (at that argues that world peace is a real possibility. If enough people watch the movie and send it along, chain-letter style, to one friend every day, then surely, its authors imagine, world peace will result.

Now, the authors of this movie have seen The Secret, so they, more than the rest of us, should know that this approach won’t work. For those who aren’t up on all this, The Secret movie and book focus mostly on the Law of Attraction, which says that your thoughts and energy attract results that are in line with what you are thinking and feeling. Putting the Law of Attraction to work at the most basic level means that you can get what you want more easily if you stop fighting against the things you don’t want. Move your focus from what you don’t want to what you do want, The Secret tells us, and you will start getting more of the things you want. The perfect example from the movie: instead of being anti-war, be pro-peace.

According to the Law of Attraction, it doesn’t work so well to argue for what you want, because when you argue, you are focusing on the obstacles that would seem to keep you from getting it. Focus on obstacles, and what you get is more obstacles. You also aren’t supposed to worry about how you will create something, because there are likely many ways to do anything you might want to do, and concentrating on one particular approach tends to make you think about the obstacles you may find when you take that approach.

So here’s a so-called attraction magnet being sent around that is not only an argument and a how-to, but that actually shows anti-war protesters carrying banners and signs that say “War No More,” “Stop War,” “Mobilization Against War,” and so on, basically saying “war, war, war,” as far as the Law of Attraction is concerned.

Also problematically, the movie features a series of quotes about the importance of peace — quotes from U.S. presidents who attracted controversy because of their support for war. Including politicians in an attraction magnet is a dubious move because politicians are magnets for controversy and their implied presence is likely to interfere with many viewers’ attempts to feel good. Feeling good is no mere luxury in the process of attraction. Feeling good is essential. Among other things, it is much easier to focus consistently on the good things you want if you are feeling good.

And there is one more major problem with the movie as an attraction magnet. It contains nothing to represent what peace feels like at the individual level. Seeing results at the individual level is absolutely essential in attraction, because any attracting you do comes from your individual power to attract things specifically to you. Think of it this way. If you hold a magnet in your hand, you can’t use it to attract things to a building across town or to people you have never met. It will only attract things to you. So to attract peace, you have to focus on your experience of peace, or what peace looks like where you are.

Anyone can make an attraction magnet using commonly available web movie tools, or you can make a simpler one by cutting and pasting pictures from magazines. If you decide to make one, be careful that you don’t include any of the things we commonly think of that would prevent an attraction magnet from working. Don’t include even a shred of how-to. Don’t hint at anything that in any way shows “both sides of the story” — no obstacles, no mistakes, no arguments, no rationales, no compromises, no common ground, no “positive thinking.” Don’t include anything that feels bad, raises doubts, or distracts from the end result you are looking for. All these things are important in life, but when you really want to attract something, you set them all aside.

Instead, when you make your attraction magnet movie:

  • Focus predominantly on one specific result you want.
  • Make it so clear and specific that when you watch it, there is no doubt in your mind about what the result will look and feel like. Depict the result in a simple, obvious, and compelling way.
  • Make it a feel-good experience. Attraction magnet movies, like entertainment movies, usually use music and beautiful images to create the right kind of mood.
  • Keep it simple. Take out everything that doesn’t add to the effect.
  • Keep it short, usually 2–5 minutes, so you can watch it over and over again.

Popular attraction magnets focus on general ideas of success. You might see one that focuses on prosperity, another for health, another for love, and so on. When you make an attraction magnet for yourself, you can make it more powerful by making it much more specific. For example, an attraction magnet for your new job can depict specifically the kind of job you are seeking and what you will look like doing your new work. It’s like advertising to yourself — the more specific you can make it, the more meaningful it becomes.

Tuesday, July 24, 2007

Inspiring People to Move

People are talking about a new study that predicts 75 percent of U.S. adults will be overweight in 2015. It is a bizarre study, and not just because it uses body mass index as the measure of obesity. Body mass index can provide a crude approximation of how fat a person is, but it isn’t used to indicate obesity in most serious scientific studies because it doesn’t distinguish fat from muscle or a 30-inch waistline from a 40-inch waistline. It just doesn’t make the distinctions you want to make when you talk about the health consequences of fat. So the use of body mass index as a measure is questionable, but that’s not what is bizarre about this latest study. What is so bizarre about it is the way it applies demographics to obesity, as if your body weight is entirely determined by your age and sex, and not at all by your own actions, choices, and individual nature. Then it uses a simple extrapolation to predict the future, a technique that almost never works. The result is a prediction that no scientist would take seriously and that no responsible journalist would include in the news.

Yet you don’t have to be a scientist with a research grant to reach the essential point that the study makes, which is that lots of people in the United States are overweight or obese. Fitness is a multibillion dollar industry and it is almost all about people wanting to lose weight or keep from gaining weight. The size of the fitness industry is even more astonishing when you stop to consider how simple its objective is. All the exercise videos, all the machines, and 90 percent of the classes are geared toward the same simple purpose: to inspire people to move.

The fitness industry doesn’t emphasize that point because if people realized how simple fitness is, they might not buy all the equipment and services. But movement is all it takes to be fit. And not any great amount of movement, either. The difference between being out of shape and being fit is little more than the question of moving around for a small part of the day. About 3 percent of the time, day after day, is what it takes. The technical side of exercise, though critically important to competitive athletes, is mostly a distraction as far as beginners are concerned. It scarcely matters what kind of moving you do as long as you don’t hurt yourself by doing something too extreme or too repetitive. You could just get up out of your chair and move right where you are, jump up and down and side to side in some way, and it would work. If you wanted to give your movement some structure, you could go for a walk. Yet many people quickly feel discouraged approaching exercise in such a simplistic way. So the whole point of Sweatin’ to the Oldies or the Ultra Spinning class or the Bowflex machine is to get you through an exercise routine that you wouldn’t do on your own — to focus your mind on the process of moving so that you’ll continue to move for more than a minute or two at a time.

Why is it that people need inspiration or some special push to exercise? The human body, after all, is made to move, and we are only talking about getting up and moving around for maybe 3 percent of the day. You could still mostly sit around for the other 97 percent of the time. It doesn’t sound like much to ask. So what makes it so difficult?

The simple answer is that it doesn’t necessarily feel good to move, especially when you’re just getting going. And this is not about laziness, lack of interest, or a shortage of will power. To oversimplify, it is all about inflammation — the whole range of biological effects that cause breakdowns at the cellular level in joints, muscles, and other places in the body. When you think of inflammation, you might think of things like mosquito bites and sunburn, but for most people, the biggest causes of inflammation are food and drugs.

Some kinds of food are known to promote inflammation, while others help prevent it. Lots of people eat diets that could be described as inflammatory, with large amounts of animal protein, sugar, synthetic food ingredients, alcohol, caffeine, and polyunsaturated fat. If what you eat makes it hurt, ever so slightly, when you exercise, then it’s easy to see how the food could make it easy to gain and hard to lose weight.

On top of that, many ordinary drugs also have inflammatory effects. To make it worse, a sedentary lifestyle adds to the tendency to inflammation. So does a high level of body fat. So do many of the diseases that go with being overweight — the diseases that, presumably, create the need for the drugs I mentioned. So there is a vicious cycle of inflammation, lack of inspiration, lack of exercise, drugs, weight gain, and disease. We try to overcome this cycle by inspiring people to exercise using every gimmick we can think of, from flashy videos to fancy exercise machines to sexy exercise clothes. When it works, it changes people’s lives, but it works only a small fraction of the time. It is hard to inspire people to move when it hurts to move, even if it only hurts a little.

Yet you can break out of this cycle any time you want to. Just move. Ignore the initial discomfort and keep going. Keep going day after day and you find that it is soon not as uncomfortable is it might have been on the first few days. Eventually try to get to the point where you are spending three percent of your time in moderate exercise. It sounds too easy when I put it this way, and it is not necessarily as easy as it sounds, but it is essentially just this easy. There may be a great many overweight people in the United States, and it may be one of the biggest issues the country faces, but on an individual level, you don’t have to be part of it. Your weight is not determined by your age, and your weight does not automatically go up as you get older. You can take control of it. The illnesses that go with being overweight do not have to be part of your life. And the simplest way to take control is to decide that you’re going to move — and that you’re not going to wait for inspiration. And if enough people do this, then we won’t have to worry about what a country in which 75 percent of people are overweight will be like, because it will never happen.

Wednesday, July 11, 2007

The Food Pyramid Scheme

The U.S. government can’t give you good nutritional advice. If they did, it would go against their bigger responsibilities.

In a country such as the United States that has a commercial-oriented government, every government agency tends to align itself with the interests of the largest companies that work in its area of interest. If there were a Water Slide Commission, it would see itself as being responsible for promoting the benefits of water parks to the public. The Department of Running, if there was one, would work most diligently when it was doing things that would be financially beneficial to Nike and Adidas. There is no Department of Nutrition, but if there was one, it would likely be more interested in the financial success of the vitamin and diet industries than in giving honest nutritional advice to consumers.

It is the Department of Agriculture (USDA) that has the primary responsibility for nutritional information, so it’s no surprise that their nutritional schemes give special emphasis to the most expensive food categories. Meat. Milk. Cheese. Processed food. Because basically, the Food Pyramid and similar devices for telling you what to eat are advertisements for the big food companies. They promote expensive food because that is what the biggest, most powerful food companies like to sell.

In truth, there is no advantage whatsoever in eating expensive food, but you wouldn’t expect the U.S. government to tell you that. If you really want nutrition, the easiest way to get it is by eating some of the least expensive food in the supermarket: whole vegetables, whole fruit, and whole grains. These foods are so rich in nutrients that it almost doesn’t matter which ones you choose and what combinations you eat them in. If you ate mostly whole plant food, it would be virtually impossible for you to miss any nutrients. Yet if eat you what the USDA suggests, emphasizing meat, milk, and processed food, you will almost surely be deficient in more than a few nutrients.

One way the USDA tries to scare you into eating expensive food is by exaggerating the importance of protein. According to scientists, protein is a key nutrient only for people on starvation diets, usually with the idea of losing weight. If you are eating a normal diet, you are doing fine if you get 10 percent of food energy from protein. On a good day, it is enough to get 5 percent of food energy from protein. When I checked, it was hard to find anything that you would think of as food that had less protein than that. Apple juice and white grape juice often have almost no protein, but that is because the protein is removed when the juice is filtered. Apples and grapes, apple cider and unfiltered grape juice have significant amounts of protein. Butter is virtually free of protein, but it is made from milk, which has plenty of protein. Processed foods are made from purified ingredients like oil and sugar that contain no protein at all, yet even processed foods often contain protein-rich ingredients like flour, so most processed foods also have enough protein to live on. Eating the levels of protein suggested by the USDA puts an extra strain on the body and can actually cause disease. When you realize that the need for protein has been so greatly exaggerated, you could just cross the high-priced meat and milk off your food pyramid circus tent without really missing anything.

There is a reason why the 2005 edition of the Food Pyramid is presented as a circus-tent shape rather then the more conventional pie chart, and it’s not just that the Food Pie would sound silly. If you turned the Food Pyramid into the Food Pie, you might compare it to other pie charts and realize that it has more to do with revenue than with nutrition.

How else do you explain how milk got its own circus-tent fold on the Food Circus Tent? Milk is a fattening junk food, but the financially powerful dairy industry buys their marquee product some credibility by getting it endorsed by the U.S. government.

If you think the USDA has a conflict of interest, that’s a piece of cake compared to the agency primarily responsible for food labeling, the Food and Drug Administration (FDA). Their primary loyalty is to, you guessed it, big pharma, the huge companies who make billions of dollars by selling prescription drugs. These companies can’t make a profit unless you get sick, so what do you think the chance is that the FDA will prescribe food labeling that will help you stay healthy?

The FDA gives an amazing advantage to processed food by allowing them to list their nutrient information based on ingredients, without adjusting for the nutrients that may have been damaged during the processing of the food. The result is that processed foods can claim to have the same nutritional value as whole foods, even though, because of the way they are processed, the processed foods may have much less. You can think you’re getting a whole list of vitamins and minerals that aren’t really in the food by the time it gets to you.

If you believe the nutritional labels and eat mostly processed foods, you probably will get sick, and then the FDA will have a reason to work on its primary mission of regulating prescription drugs.

The truth is that good nutrition is not nearly so complicated as the U.S. government and the big multinational food companies would have you believe. If you can divide food between real food and junk food, you can then proceed to eat virtually any combination of real food you like, and you’ll do okay. But if you build your menu plans around junk food, there is no magic combination of real food that will save you.

All you really need to know is not to rely on junk food for any food value. Junk food provides a toxic load on the body that is greater than any nutrition it provides. You might eat junk food because it makes you feel good or because it makes your recipe work, just don’t imagine that you are taking care of your body by eating junk. Just to give you an idea, for those who haven’t been paying attention to the research on food, these are examples of junk food:

  • sugar and sweeteners
  • heavily processed food, including basically anything that comes frozen or canned
  • almost anything that lists more than 20 ingredients
  • smoke and anything made with smoke
  • meat, poultry, fish, lard, and anything made from an animal
  • milk
  • anything fried in boiling fat
  • all those artificial food ingredients, like partially hydrogenated oils, high fructose corn syrup, coal tar dye, and glutamates
  • beer, wine, spirits, and alcoholic beverages of every kind
  • corn starch, white flour, and other dried, pulverized forms of plants
  • white bread, and commercial “whole wheat” bread too

It’s simple. If it’s junk, don’t think of it as food. If you know that much, you’ll do better than most people.

Tuesday, July 10, 2007

The Significance of Live Earth

The Live Earth concerts on 7/7/07 were more than just the biggest media event in history, a step toward retrieving the cause of the global environment from the marketers and extremists, and an excuse for a new Madonna single. They also show that the traditional corporate interests that created the climate crisis are running scared — scared that the control they have exercised over everything that happens in the world is starting to slip away.

The concerts were such a huge success that it is easy to overlook the way they were put on almost entirely outside the traditional corporate structure. True, Live Earth had its share of corporate sponsors, and they were necessary to make the event what it was, but as far as controlling the event or the message it put out to everyone who participated, they were on the outside looking in. Live Earth did not even have its own internal corporate-like way of doing things. There was no single person nor any tightly woven hierarchy running the show. Instead, there was Al Gore, who went around publicizing the event in the corporate media and appeared on stage for only a few minutes, and Kevin Wall, the highly skilled event coordinator who, though he was nominally running everything, nevertheless acted more like a coordinator than a CEO as he pulled the event together, and who never seemed to be in the spotlight even when he was. Some of the concert power was actually off-grid — generated right there on the site instead of being purchased from the electric utilities. As events go, Live Earth clearly put the emphasis on the individual rather than the business corporation.

And that tells you why the big corporate media have tried so hard to ignore Live Earth. Only a small part of the live event was on broadcast television at all, and television news gave the event only two sentences — a way of saying, “Yeah, we know it happened, but we don’t think the biggest media event ever is much of a story.” The news headlines on Live Earth were mostly negative, with stories downplaying and criticizing the event and the musicians who participated in it. Even MSNBC, who broadcast a small part of the event, felt the need to minimize its political significance, saying that it’s hard to see what the event was supposed to accomplish.

The corporate media did not turn their backs on the Live 8 concerts two years ago, but the world has changed. Live 8, recall, was an attempt to pressure the world’s most powerful heads of state as they held a summit meeting in Scotland. In 2007, it is hard to make the case that any big change in the world could start with prime ministers and presidents. Live Earth pointedly did not aim its message at governments, but at the possibility of individual action. On stage, there was more discussion of bicycles and buses than of treaties and regulations, and for good reason. The top-down, centrally controlled part of the economy obviously does not have the leverage to solve the climate problem — they are absorbed in problems of their own. Yet the 2 billion people who participated in Live Earth could solve the climate problem in the end. And if the ordinary people of the world, acting outside the corporate structure, can put on the biggest media event ever, and then think they can solve the world’s biggest environmental issue ever, what else might they be able to do? It’s this question that has the people in the upper floors of the office towers working to hard to try to persuade you that nothing really happened at Live Earth. Because if you believe you did something at Live Earth, then you might believe you can do something else for the world. And if even a few million people were to start thinking that way, then where would the corporate fat cats be?

Actually, the big corporations are losing their control over people’s lives more rapidly than they would like to admit. YouTube is now bigger than television, because all the video that all the television studios can put together is no match for all the video the world can make. Two years ago it might have seemed cute the way the Huffington Post sort of sounds like the Washington Post. No one in the traditional news media is laughing now that the Huffington Post has surpassed the Washington Post in terms of content and may shortly do so in terms of readership. Cellular phone carriers have for years squeezed money out of their customers by charging for every single event that happens on the phone — a dollar to download a photo, six dollars to change the ring tone. Now that the Apple iPhone is out, that business model may be going down the tubes. This summer, restaurant chains are having a new difficulty hiring and retaining workers — workers today have more options than before, in part because the corporate-led drive to swamp the United States with millions of new foreign workers fell apart in Washington.

The huge profits that big corporations make depend on their ability to determine what goes on in the world around them. As employees and customers have more to say about what goes on in their own lives, corporations have less leverage to use to create profits for themselves. So you’ll have to excuse them if they feel a little grouchy when they look at Live Earth. To them, it’s just another sign of the impending end of the corporate era.

Thursday, June 28, 2007

The Surprises in Sicko

When audiences nationwide go to see Michael Moore’s new movie Sicko tomorrow, quite a few things in the movie are likely to surprise people.

The movie shows where the United States ranks in the world of medical care. Many Americans have come to think of the United States as having a sort of unassailable superiority in medicine and medical science. Perhaps it did at one time, but no one ever rushed forward to tell the American public that things had changed. To see a Cuban hospital that is more clean, modern, and efficient than most American hospitals, or to learn that the United States ranks alongside Costa Rica in a key measure of medical performance, may come as a shock. After the U.S. news media’s portrayal of the Canadian health care system, Americans must be forgiven if they are surprised to see Canadians having such an easy time going to see their doctors compared to what Americans go through.

I would hope everyone knows that the United States has the most expensive medical care in the world, but people may still be astonished to see how much Americans pay.

The single-payer system that the rest of the western world uses for medicine, and that Michael Moore advocates in Sicko, might be politically unavailable in the United States at this point, but we could still find ways to move closer to the efficiency of that approach by closing up some of the bigger loopholes in the current system. The biggest gap in health insurance in the United States is caused by insurance companies trying to evade the whole concept of insurance by deciding after the fact what their insurance policies cover and don’t cover. A good way to start would be to revoke the insurance licenses of health insurance companies that show a pattern of declining legitimate claims by policyholders — and perhaps prosecuting the executives for fraud in some of the more egregious cases. No new laws would be needed for this course of action. All it would take is for state insurance regulators and attorney generals to start taking seriously the laws that already govern the insurance industry.

To make sure that we aren’t giving insurance companies any discretion when it comes to living up to their contractual commitments, I think it makes sense to take away insurance companies’ legal ability to create documents. There is no need for insurance companies to write insurance policies, claim forms, and the other documents they use. If insurers were forced to use standardized government-mandated policy documents in which they could merely check off the things that were covered and those that were not covered by an insurance policy, they would not have the wiggle room they currently use to lead customers to think they’re covered, then tell them later that they’re not.

Another issue Sicko raises is only tangentially related to medical treatment, but it may be just as important. Compared to some European countries, the United States loads an enormous economic burden on its youngest adult workers, while providing equally enormous economic benefits to those who are a generation or two older. It almost doesn’t seem fair that a 50-year-old with a near-average income can live a life of luxury in the United States, while a 22-year-old with the same income may be living in poverty and on the edge of bankruptcy — never mind the fact that as a rule, at least among college graduates, 22-year-olds earn much less than 50-year-olds. The country, you think, could do a little more to help people get started in life, perhaps by making education a little less expensive or by making sure that every town has housing that doesn’t cost a fortune.

In the end, these are all political issues. What would happen if the ordinary person could be healthy, out of debt, and facing a multitude of choices in life? Politics is divided between those who would like to see the day when this happens and those who want to make sure that day never comes.

Wednesday, June 20, 2007

What Happens When Money Disappears

In London, people are fretting over $2 billion a defense contractor paid to a senior official of a foreign government. Were these payments bribes, or just a very strange kind of commission, as the contractor insists — and just as important, what became of the money? There are also questions about what happened to an estimated $80 billion in alleged overpayments in connection with the same contract. In Washington, people are looking into even larger sums of money. Money was dedicated to the cleanup from Hurricane Katrina, but it is hard to prove that more than a tiny fraction of it was really spent on that. Similar questions are being asked about spending on the war and the supposed reconstruction in Iraq.

Money disappears. One day, you see it. It is being spent or paid from one person to another. Weeks later, it is nowhere to be seen. No one can tell you exactly where the money is or what happened to it. The money went from being visible to being invisible, from being boasted about to being hushed up. The suspicion always is that the silence is covering up something dishonest or incompetent, but whether that is true or not, something is lost when sums of money, which ordinarily should be a matter of pride, turn into a matter of shame that no one involved wants to talk about.

There is something particularly terrible about the people’s money being spent with nothing to show for it, yet much larger sums of money disappear in private business and in our private lives, and the economic effects are the same.

The big pharmaceutical companies are proud of their armies of research scientists, but they do not want you to think about the armies of models they hire as marketing representatives to promote their prescription drugs to physicians and other medical decision-makers. Marketing is so critical to the success of a drug maker that they may spend more than half of their “research” budget on marketing, but they would rather not talk about that. Nor do they want you to hear about the billions of dollars they have paid to compensate victims of drugs that they failed to notice were not safe to release to the public — perhaps the result of the marketing function having too much influence on the research function. At the end of the day, a pharmaceutical company budget is so distorted that they would rather not talk about the budget at all, which means all the money that goes through their hands effectively disappears.

The same thing can happen in an individual life when a person’s spending is distorted by something they are ashamed of, whether it is an alcohol addiction, banking costs caused by irresponsible spending, an illicit love affair, or just the cost of repairing the damage from a stupid mistake. No one in this situation wants anyone to add up all their money, because anyone who did so would see that something was wrong.

Add it all up across the economy, and huge sums of money disappear every day — money spent not with a feeling of pride and an air of sincerity, but in shame and silence, or accompanied by the rehearsal of the talking points of a cover story. And the money that disappears is a huge economic problem. The spirit that surrounds the money we spend has a great deal to do with its effectiveness. Money spent in shame has only a tiny amount of power compared to money that is held and spent with pride, or even compared to money that is spent without any emotion at all. When money disappears, its effectiveness can disappear too.

Lawyers see this routinely in litigation. A defendant may pay two or three times as much money to settle a case in order to get the plaintiff to promise not to discuss the terms of the settlement. That kind of silence is costly. Returning to the pharmaceutical budget example, marketing can be disguised as research only by hiring lots of extra people at considerable expense, reducing the efficiency of all the spending. Looking next at one especially ironic case, Enron spent billions of dollars for the services of investment bankers and others to create dummy companies just so it could disguise the fact that it was losing money! Shame can be just as devastating to an individual’s spending. People who are disgusted with themselves because of their bad habits and bad decisions tend to make one bad spending decision after another and end up getting very little for their money. The pattern cannot be changed very much as long as the shame is present when the spending decisions are being made. Money spent in shame or in secret does not have the same power behind it that you normally expect money to have.

If you were keeping economic statistics, you would want to exclude money when it disappears from being counted in measures of well-being such as gross domestic product (GDP), because this spending provides precious little well-being. It is similar to the way, if you were counting the workers in a company, you would not necessarily want to count those employees who were on the payroll but who were not actually doing any work. Yet most such money is counted, and the result is that measures of economic well-being are dramatically inflated. For example, economists count the Katrina cleanup money as if it were actually spent on Katrina cleanup, yet residents of that area do not receive the economic benefit because the cleanup, for the most part, was not actually done. In a similar way, economists count the money spent on addictive drugs whenever they can, even though no one ever actually benefits from feeding an addiction.

If we want to improve the economy, it is important to reduce the amount of money that disappears. We want to spend money that has spiritual power behind it so that we get the benefit we should be getting from it.

If money disappears because of shame, deception, and secrecy, then keeping money from disappearing starts with integrity. On a personal level, you know you have to keep track of your money, but it is just as important to keep track of your priorities. If you fully know your priorities and are prepared to explain and defend them to anyone you might discuss your life or your money with, then you are prepared to spend money with power, and not much of your money will disappear.

Looking at it another way, your money disappears because of discrepancies between your word and your spending. If the way you spend your money does not match what you say you want for yourself, then there is something wrong with the way you are spending or what you are saying, or probably both. Eliminate these discrepancies and you will find yourself getting more for your money.

On a larger scale, when you look at money that disappears in the operations of a business or government, it happens mostly because of trust that is misplaced. People who are entrusted to work toward a particular shared priority can never embody that priority perfectly, but it is important to see that they are at least held accountable for taking their assigned priorities seriously. Thousands must have known that Enron as a company was only making a show of conducting business, and the White House stated publicly that it would be rejecting qualified contractors for Iraq-related work in order to send the contracts to “friends,” but where was the accountability? Part of the problem is that many people see integrity as a luxury that we cannot afford. But when you see that integrity is the source of the power in all the money we spend, you realize that integrity is a necessity that we cannot afford to do without.