For the last year or so, my personal investment portfolio has been heavily, aggressively short US equities and the US dollar. It's not working out for me so far. Both the dollar and US stocks have done fairly well, and I have significant unrealized losses, and am struggling a bit to cover my positions. I find that being short is an ethically interesting and challenging position. I find troubling my awareness that to some degree, I have a financial interest in bad things happening. A terrorist attack in Saudi Arabia leads to a spike in oil prices? Ka-ching. A hurricane in the Gulf? GM declares bankruptct? Ka-ching, ka-ching, ka-ching.
That makes me feel nasty, like some evil Gargamel plotting misery and mayhem from his castle keep. Really, I'm not. Like most people, I'd like for everything to work out for everybody. So how is it that I've put myself in a position I stand to profit from other peoples' loss and misfortune? (And perhaps there is justice, the hand of God even, in the losses, rather than profits, I've made from the strategy.)
Just after graduating college more than a decade ago, I heard Michael Albert explain that some of the mayhem associated with demonstrations against the Vietnam War were part of an intentional strategy to "raise the cost of the war at home". In very dry terms, the idea was that feedback mechanisms were out of whack, that those bearing the costs of the war were far away and Asian, while those fundamentally perpetrating the war lived in American cities, and that in order for rational policy to prevail, Americans had to experience some of its costs. Since there wa no "natural" mechanism whereby costs to Asian villagers might be shared by Boston suburbanites, activists stepped into the breach and manufactured costs. There was something compelling to this reasoning, I couldn't reject it out of hand. And yet, there was something obviously dangerous, and dark about it. There ought to be better ways to encourage rational policy choices than by breaking shop windows. And as a very intuitive and wise college friend said about this line of reasoning, she was skeptical of any kind of politics that required the destruction of good things in order to do good things. Over the years, I've been more and more impressed by my friend's simple intuition and less persuaded Albert's impeccably reasoned argument.
As a short, I stand to profit from destruction of value, whether "creative destruction" or otherwise. I could claim that my investments are only a matter of sober prediction, and do not represent hope or advocacy. But, psychologically, it is very hard to resist "thinking ones book". Over the last year, I have come to believe that the US economy really ought to fail, badly, hard, and fast, that it would be better in the long term for both the US and the world if what I see as a pattern of unbalanced, debt-driven, currency-and-market destabilizing growth would end sooner rather than later, so that the eventual costs of setting things right are minimized and taken is as short a time-period as possible.
I claim to be optimist, especially about the US. I'm a great chauvinist about what I take to be the central ideas underlying the United States' politics, economics, and culture. I think that many of these ideas are fundamentally right, are universal and ought to be universally applied. I think the United States is the best thing ever, not as a particular nation-state, but as an exemplar of a framework for human affairs. But nevertheless, I think the US as a nation-state has erred perilously, that world capital markets have failed in their role of providing ongoing feedback to promote wise behavior, and that the US should take some serious lumps that it may find its way back to the path of righteousness. I do think that the US would do fine, in fact would do much better than fine, if its economy were set on a reasonable basis, after an "adjustment" as the economists like to say, after the revolution in the coinage of an older school. I want things to get worse in the US so that they can get better.
It's the Bolshevik old saw, "the worse, the better," not a point of view I'm flattered to associate myself with. It's like Michael Albert's argument all over again, which I thought I had discredited to myself. It's a set of ideas and beliefs that were nearly inchoate when I took my investment positions, that have evolved and crystallized in the context of my being a short. I feel like I have to treat these beliefs with some skepticism. So should you, dear reader. And yet, however I have arrived at them, they are my beliefs.
|Steve Randy Waldman — Sunday March 26, 2006 at 9:43am||permalink|