At the Edge: Survival Tips for Baby Boomers

For the remainder of the typical Baby Boomer’s life the United States will likely be in decline, which will put Boomers – much more than others – in a very precarious position.  But, that does not mean one cannot survive and prosper, although it may require re-defining your life and a whole lot of work.

            Following the Federal debt debacle, the subsequent market sell-off, and the downgrade of U.S Treasuries by Standard & Poor’s, I received a Friday evening email from a financial consultant (to “Our Valued Clients”) that implored their valued ones to avoid panic.  They (all much younger than I) wrote: “We urge clients to take a deep breath, relax, and not react emotionally to what we are seeing in the market.”  While I was nowhere near panicking – perhaps because I have come to accept devaluation due to systemic risk (and because I’ve already changed my own investment strategy) – it struck me that if they were concerned enough to send out such an email after-hours on a Friday in August, then maybe I should panic. 

            The markets after all, like Mother Nature, are incapable of emotional irrationality.  They are the final arbiter of value and instantaneous purveyor of consequence.  They are the highest expression of our collective expectations.  They reveal the (stubborn) truth that is (finally) piercing the veil of denial embedded in the advisor’s call for calm. Panic may actually be a rational choice for a Boomer who is facing this truth.  After all, the timeframe for capitulation and recovery may exceed the Boomer’s lifespan.  Indeed, the market meltdown that followed on Monday suggests panic may be the new norm.  Of course, many financial analysts and pundits immediately rolled out their feel-better rhetoric claiming what we had seen was an aberration or ‘disconnect’, which is their unwitting acknowledgment that they have no idea what is happening.  One thing is certain, however:  leaving your money in their hands is in their best interest.

            The truth the markets have expressed can be summed up as follows: while most of us know what the right thing to do is (setting aside those addled by ideology, misplaced faith, or engaged in modern-day piracy), we lack the will to do it.  This is and has always been the case for Americans. As Winston Churchill once observed, “The Americans will always do the right thing... after they've exhausted all the alternatives.”  The most glaring historical example is slavery.  The Founding Fathers – evidenced by their own writings – knew that slavery was inherently wrong, yet they did nothing about it (notwithstanding presidential aspirant Michelle Bachman’s twisted historical interpretation).  It took nearly one hundred years to breach the legal threshold and emancipate slaves, then another hundred to leap the moral threshold and get rid of the racist work-arounds like the Jim Crow laws. 

            What is required to clean up the financial and political mess in the United States is relatively easy to identify, but impossible to execute.  There are four things that must be done.  We must make at least $4 trillion in expenditure cuts including restructuring Medicare and Social Security, endure increased taxes in the near term, overhaul/simplify the tax code, and redesign Congress (starting with term limits).  Failure to do all of these things will accelerate the precipitous decline of the United States as the wealthiest and most powerful state in the global system, but none of these things will be accomplished – at least not as a matter of will.  The consequences of this are dire and probably worth panicking about.

            Today’s obvious and unbelievable stupidity displayed by our elected representatives is no different than the stubbornness that protected slavery and segregation, except this time we all – not just slaves – will suffer.[1]  It would be ahistorical and irrational to believe we will act better or more quickly in dealing with our financial woes than we did when committing prior sins or facing crises.  While democracies are arguably inherently good, they are not designed to exalt morality or pre-empt crises. Our lesser selves do not assure better governance via aggregation.  In open systems, the best one can hope for is that crises will produce creative destruction, which is what is happening now. There is, however, an alternative for Boomers to limit their exposure and preserve their long-term well-being.

            Boomers must re-imagine and restructure their lives.  Succeeding generations have less baggage to shed and are (sigh) more attractive to employers.  The winning strategy since World War II has been to align one’s self with big companies, big governments with big militaries, and big markets.  Get a job with a large enterprise – public or private – and climb the ladder.  Invest in big money-center financial markets and count on a 7% after-tax return.  Expect the government to provide healthcare and a financial safety net beginning at age sixty-five.  That strategy is not only dead; it has become dangerous because of its exposure to systemic risk.  Now is the time to simplify, disconnect, and sustain.

            Simplify.  Get small and remain flexible.  Reduce your footprint and keep your running shoes nearby.  Eliminate stuff; sell it or give it away.  Invest in yourself first, especially your mind and body.  Get things right in your head and heart: smart and content.  Next, invest in things you control.  Then, invest in companies that play at the edges – that rely on their own balance sheet to fund their future and which are highly adaptive.  Leverage wisdom.  Avoid the whiz-bang dreamers.  Boring companies make more money, longer.  But remember: it’s not about wealth; it’s about well-being.  Take time to appreciate nature, art, music, and literature.  From simplicity comes peace-of-mind and well-being.

            Disconnect.  Minimize your exposure to systemic risk.  Focus on the quality of your connections and relationships, not the quantity.  Size and scale are no longer de facto advantages.  De-leverage your own balance sheet as much as possible.  If able, move to a town that has a history of self-reliance; where services are few but the basic stuff works, and Boomers are still employable.  If you must live in a large city, form small communities (actual or virtual) within the city or within your neighborhood, but do not be constrained by geography or borders. Whenever possible, leverage technology to create your own reliable world.  Alliances are still important, but choose your cohorts carefully.  Large collectives will be unable to avoid systemic risk.  Again, think small to evade collateral damage.

            Sustain.  Within means and with respect.  Channel your inner hippie.  Feed your soul.  Embrace an ethos of sustainability.  Ask yourself when making large and small decisions: is this option sustainable?  Am I using resources in a manner that respects their origin?  The so-called “permaculture movement” is worth exploring to identify ways to support sustainable agriculture and urban food gardening.  “The ethic of permaculture is the movement’s Nicene Creed ... care of the earth; care of the people, and a return of surplus time, energy, and money, to the cause of bettering the earth and its people.”[2]  This may sound a bit squishy until you realize sustainability is essentially what our grandparents called self-reliance.

            The foreseeable future in the United States is grim.  We lack the will to do the right thing.  Our system of collective action is broken.  But, we can always act on our own to re-imagine our lives, form new alliances, and make a new future for ourselves.

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[1] While many deplore Congress but like their own representative, I am not among them.  My Congressman, Michael Burgess, stood with the Tea Party before he bowed to Boehner, and his most recent claim to fame is authoring an amendment to legislation to preserve the production and sale of 100-watt incandescent light bulbs.  I’m sure the electric company and both employees of Light Bulb World are thrilled.

[2] Michael Tortorello, “The Permaculture Movement Grows From the Underground,” The New York Times (July 27, 2011).

The Next Americans

I love the American story.  I admire tales told by old-timers, especially about hardship, redemption, and survival.  I am inspired by listening to young people express their dreams of how they intend to leave their mark, especially when I reflect on the fact that in many places in the world their peers are still unable to have many dreams, let alone express them.  The Next Americans, which I will loosely suggest are the under thirty-five crowd, are today forging a new identity that will change America forever.  My generation (Baby Boomers), ambitious and rapacious as we can be, is largely irrelevant in defining what it means to be a Next American.  I accept this reality with a gulp of humility, a slice of regret, and a pinch of sadness.  Yet, I believe in the Next Americans the same way my peers and I received the confidence of our predecessors: with a transcendent sense of hope.

            The Next Americans have an unusual opportunity.  While American identity constantly evolves and stalwart values like freedom, individualism, and self-reliance are often squeezed in the vice of circumstance, and at other times manipulated to the point of obscurity, periods of crisis offer the greatest opportunity to redefine the American story – to establish a new identity. For Next Americans, crisis is good.  Every eighty years or so America comes full circle and is faced with a crisis.  The American Revolution, Civil War and Reconstruction, and the Great Depression and World War II comprise the first three. I have posited that in the interregnum between crises America follows a dispositional progression starting with objectivism where unity, reason, inclusion, pragmatism, tolerance, and self-reliance mark discourse and behavior.  Then, slowly, we move into a period of radicalism when we begin to reject the status quo and are attracted to narratives of liberalism, activism, inspiration, and intuition.  We reject standardization in favor of differentiation while we accept, if not expect, our government to play a larger role in society.  This is followed by a period of über-idealism that establishes a dialectic synthesis of objective method and “settled” radical ideas and values.  Hyper-exceptionalism is projected on an unwilling populace, both domestic and foreign.  Grandeur reigns.  Conspicuous consumption, speculation, deregulation, class inequalities and high religiosity are normative.  The timber of humanity that Immanuel Kant suggested was ever crooked is at its gnarly apex during this period.  Then, as if the laws of physics hold a bias for self-correction, crisis returns, generally characterized by both severe economic stress and war.  Notwithstanding the requisite humility of an historian – that history is at best an imperfect predictor of the future – it seems more than plausible that we have entered another period of crisis, more or less on schedule.  It may be several more years – accompanied by even greater peril – before we move into the next period of objectivism.  Meanwhile, American identity is once again up for grabs. 

            Who we are as Americans is the common denominator of every major issue we face today.  The role of government, immigration, fiscal and monetary policy, foreign policy, social services, healthcare reform, education reform, the role of unions, taxes, and deficit reduction battles, all contribute to the debate of what it means to be an American.  During every crisis we wrestle between diversity and inclusion on one hand, and the impulse toward uniformity and exclusion on the other. We decide who is worthy and who is not, often based on bigoted parochialism.  We engage in incendiary discourse and watch old assumptions collapse under the weight of new realities.  Adversaries and advocates both conjure (often) bizarre interpretations of what the Founding Fathers must have meant when they scribed our original documents.  Those who feel threatened by dispossession from their historical position in social order become a danger to all, most of all to themselves.  But, out of the chaos, ugliness, and pain, a new American story is born.  Old threadbare myths gain new fiber from the churn of discontent, like a recovering addict with a new hymn in his heart, we form new narratives that stagger forward toward the future.

            Many suggest that our problems are strictly economic.  President Clinton’s campaign strategist, James Carville, is famous for his admonition, “It’s the economy, stupid!”  I agree with Carville, if your job is to manipulate a political outcome in the favor of your candidate, but I would argue this is otherwise a false premise.  The economy and the danger of current and future Federal deficits are indeed deeply concerning.  As a former student of economics I give them their due respect and, like many who view the facts in a sober and clear fashion, I see no immediate solutions that avoid extraordinary pain.  However, I also recognize that our economic consequences are an effect rather than a cause; there are more substantive objectives we must pursue if we are to assure the future of this great nation.  I offer three. 

            First, we must strengthen what I call our operational code.  What we have lost during the last several years is our capacity to reliably predict the behavior of leaders who we have come to rely on, whether they are political, business, judicial, or religious leaders.  Ethics have traveled beyond situational to vaporous.  What some call our “rule of law” has been twisted to such a degree that we are now unable to form reasonable expectations. We behave at home and abroad as if the rules only apply to those who are subject to our power.  The result is a collective social dissonance that may even slip toward civil insanity.  We must fight to re-establish a clear operational code and force, as necessary, compliance therewith.  Leaders must be accountable to their respective constituents, shareholders, employees, laws, and faithful.  If we do not, chaos, while tolerable and even beneficial in small doses, may become endemic.

            Second, we must commit to the development and application of creative intelligence.  Teachers are a treasure, not a burden or a scapegoat.  They should be paid as if we treasure them to assure the best Next Americans train brighter and more creative American minds.  Furthermore, basic research and development must be the focus of rebuilding a prosperous and resilient nation.  For example, big and ambitious public projects must be undertaken immediately to invent/innovate how we produce, distribute, and consume energy.  Our security, health, and wealth depend on it.  Second-rate creative intelligence will assure us of becoming a second-rate nation.

            Finally, humanity matters. We must, again, take responsibility for each other and ourselves. We must reject the ethos that suggests a government or other institution is responsible for our welfare.  The health of our relationships by and between members of families, communities, generations, races, ethnicities, and religions must honor differences first (to establish empathy) and second, identify common interests to produce mutual benefits.  For millennia we have formed collectives to assure security and prosperity.  In the last several years, however, we Americans have grown selfish and jingoistic. We cannot afford to face globalism with the insular and bellicose chauvinism that has become the clarion call of phony patriots.  If we continue to allow this to be part of our story we will lose.

            I am pleased to know many people who are the Next Americans.  They prefer diversity and inclusion.  They realize that zero-sum orthodoxy is more often wrong than right.  They reject rational choice constructs that are an artifact of twentieth century scientific prejudice.  Ideas and relationships matter beyond the calculus and confinement of worn methodologies.  For them, cooperation carries as much gravitas as competition.  Well-being trumps wealth as the primary ambition.  They see the world as a complex matrix of interdependencies and reject the exclusionary and judgmental simplicity of the Manichean imperative that condemns those who embrace unfamiliar traditions or worship a different God as agents of evil.  The Next Americans will do as we all have: they will fail their way to success.  In the process they will define a new America.  They will determine our new identity.  I am grateful they will be the next to call this great country their own.

Happy Independence Day.