Politics as Usual?

If the attack ads between the Republican primary candidates seem negative now, we need only wait until the general election ramps up full court and speed to plunge to new depths of attacks on person and ideas. Our leadership and candidates for replacement seem bent on stressing the negative. Pessimism seems to trump optimism at every turn. Did you ever wonder why negative attacks are so effective, especially when we claim to prefer ideas, values, and optimism to characterize the public debate?

In their book Switch: How to Change Things When Change is Hard, Chip and Dan Heath spend a few pages examining our human tendency to dwell considerably more on the negative, the problems, more than on the solutions. As an illustration they took the first 24 words describing human emotions, in alphabetical order, from a “Learn English at Home” website. Judge for yourself:

ANGRY	ANNOYED	APPALLED	APPREHENSIVE
ASHAMED	BEWILDERED	BETRAYED	CONFUSED
CONFIDENT	CHEATED	CROSS	DEPRESSED
DELIGHTED	DISSAPOINTED	ECSTATIC	EXCITED
EMOTIONAL	ENVIOUS	EMBARRASSED	FURIOUS
FRIGHTENED	GREAT	HAPPY	HORRIFIED

Did you notice that only SIX of the first 24 words describing human emotions are positive? Along the same lines, a psychologist who analyzed 558 words describing emotions in the English language found that two thirds of them were negative and only a third positive.

In another study cited by the Heaths a group of psychologists reviewed over 200 articles on various topics and found that bad has a considerably stronger pull over us than good. “People were shown photos of bad and good events spend longer viewing the bad ones. People pay closer attention to the bad stuff, reflect on it more, remember and weigh it more heavily in assessing a person overall. The pattern is so robust that researchers . . . have a label for it: positive-negative asymmetry.”

Still another researcher reviewed seventeen studies about how people across multiple domains and ages interpret and explain events in their lives. He found that “people were more likely to spontaneously bring up (and attempt to explain) negative events than positive ones.” Here were the researcher’s final words on his study. “When we began this review we anticipated finding some exceptions that would demarcate the limits of the phenomenon . . . but we were unable to locate any significant spheres in which good was consistently stronger than bad” (emphasis added).

Politicians and dictators have used our tendency toward the negative to advance their interests for centuries. They continue to do so today, without shame causing untold waste of human talent and economy. A nation is made strong by is its people and the economy collectively produced by them. Effective leaders and managers understand that the productive and innovative spirits of people are far better focused and amplified through inspiration and challenge than they ever are by frightening them or stirring their pessimistic natures.

We are blessed to live in the greatest country on earth; whether measured by her natural resources, her human resources, or her capital resources. But the American experience is about far more than simply her wealth of resources. Since its founding, this country has demonstrated a spirit of independent thought that has shaped our institutions for the people, not over the people. The inseparable combination of statesmanlike leadership, a constitution founded upon Judeo-Christian principles, and free-enterprise capitalism together created a nation of people and wealth unparalleled in human history.

Pessimism did not inspire the first seagoing explorers to leave the safety of their known world behind in quest of the ‘Shining New World.’ It did not hold the early European colonists in bondage to their Old World poverty. Instead they risked everything to be able to freely invest their talents and energies in their own futures, instead of into the treasuries of the lords and masters they served.

Pessimism did not prevent 56 brave colonial representatives from affixing their signatures to the Declaration of Independence, an act of treason punishable by death at any moment until that day eight years later when Great Britain would sign the Treaty of Paris which recognized America as a sovereign nation and those brave leaders as Founding Fathers.

Pessimism still did not hold the pioneers of this raw new nation safely in their eastern homes and towns. Some with hopes of striking it rich and others simply yearning for wide open spaces and opportunities struck out for the western frontier to face harsh challenges and risks far more daunting than any they had faced in Europe.

Our young history is strewn with examples of optimism winning over pessimism, from slavery to freedom, inequality to equality, economic depression to the greatest economy on the face of the earth, to name but a few. America has never flinched to fight the war of good versus evil. While America’s greatness lies with her people, leaders and government have played a significant role in inspiring greatness. WWII served as an unparalleled example of what American capitalism could accomplish when aligned with the impassioned will of her people to defeat the evil of Nazi Germany and Imperial Japan. The industrial might and productivity released by the combination of government, capitalism, and motivated workforce is unique in human history.

The space race with the Russians serves as a shining example of what is possible when government aligns with free market capitalism to do far greater things than either can accomplish alone. America’s space program was just emerging from infancy when Russia announced it put a satellite into low space orbit. Worried that the Russians would gain an unchallenged strategic military foothold in space John Kennedy threw down the gauntlet for the government agency NASA and American industry to not only catch up, but to beat the Russians at this brand new race. Through dogged persistence and painful instruction from countless failures, America ultimately achieved her goal of putting men on the moon well before the Russians, achieving an important victory for national pride and a powerful statement of technological superiority.

Today we find ourselves buried in monumental problems of debt, deficit spending, growing government entitlements, growing strength among those nations that would harm us, slowing economies among our major trading partners, Europe and Asia, and all compounded by political and ideological gridlock in Washington. In their book, Chip and Dan Heath observe that big problems are rarely solved with commensurately big solutions. Rather, they are most often solved by a sequence of small solutions.

President Kennedy inspired a nation to put a man on the moon and the space industry went about the monumental task, not by immediately building a rocket to go to the moon, but by sequentially solving problems with relatively small solutions. The wealth of knowledge from those ‘relatively small’ solutions spawned a host of new innovations including the LEDs, shoe inserts, cordless tools, scratch-less lenses, water filters, long-distance telecommunications, and satellite TV to name a few. Click here for more. The exodus of scientists and problem solvers from the space program after the moon mission likely substantially seeded and fueled what would later become known as the Information Age or the ‘Tech Bubble.’ NASA accomplished its outsized mission without becoming an ever-growing organism sapping more and more taxpayer support. In fact it now struggles for survival.

There is no shortage of grand visions and challenges to rally our country around. Energy independence, sustainability over resource destruction, obesity and poverty, education, healthcare are but a few areas to coordinate government resources and private sector competition and innovation. America’s greatest victories have been led by inspired men and women with enough courage to risk personal loss for the greater good.

We as a country face huge economic and security challenges. In November we will once again collectively vote our leaders into office. Will we base our votes on the ‘lesser of two evils’ or will we have a solutions-focus? Are we destined for another four years of status quo politics as usual, or will we get real change we can believe in?

Next week I’ll get back to the economic grind. For now, suffice it to say that the weak recovery continues as supported by the numbers, but slowing global economies and ending stimulus cast doubt on sustainability.

The Year Ahead

As we begin a new year we naturally hope for a better one than the last. In fact, much of the economic news released this week supports our hopes. Today the government announced that the unemployment rate fell from 8.6% to 8.5% with the addition of 200,000 more jobs. The results were all the stronger given that the labor pool (those seeking work) did not shrink has it has in previous months. There was also strengthening indicated in manufacturing, factory orders, and the construction industry. These are promising trends, but will they endure? 

It could be argued that fiscal and monetary stimuli have created the recent economic improvement and that the fundamentals of the economy are not sufficiently strong to maintain the momentum once the stimulus runs its course in the coming months. What does not go away under the best of circumstances is the huge weight and drag of an unprecedented run-up of debt incurred by decades indulgence and more recently and recklessly in the name of stimulus. It is also a fact that there is neither political appetite nor practical ability to add further stimulus.   

The engine of our economy is largely (70%) consumption based, that engine is aging, quite literally beyond its ability to snap back as quickly as in previous recessions. During my thirty years in this business I have ignored the influence of the Baby Boom generation as the major driver of the American economy at my peril. The 76 million babies born between 1946 and 1964 have been the big spenders in the American economy for years, shaping America in dramatic and significant ways. As a group they have been studied and specifically marketed to every day since the first ones were launched by Dr. Spock. Their cultural and economic impact has been remarkable every step of the way. It may well be that they, having passed their spending peak years will become more of a drag on the economy than ever before.

Economists such as Harry Dent and Dan Arnold say that demographics offer the best leading macro-economic indicators. They argue that the spending habits of people are very predictable and that significant demographic shifts can exert highly predictable influencers on an economy. The term ‘spending wave’ refers to the economic effect of departing children from the home. When a society experiences a high level of such family change an economic decline follows from reduced spending overall.  

According to Dent in his book The Next Great Bubble Boom: How to Profit from the Greatest Boom in History, the stock-market decline of 2008 was a result of baby boomers aging past their peak spending years. This prediction was based on the observation that consumer spending peaks near age 50. As noted in Wikipedia, in 2002 Dan Arnold echoed this theory in his book The Great Bust Ahead, with the big spenders being 45-54 year olds, and their numbers peaking in 2011-2012. 

But in addition to the demographic factors holding back the recovery, there are other inescapable truths.  Consumers, which represent 70% of our economy do not spend as much when they are not confident of their future. Two things closest to their hearts are their jobs and their homes. Today’s jobs report was a breath of fresh air, but an unemployment rate more than twice historical levels still weighs heavily on confidence. Home values continue to decline and the inability to sell and move makes it difficult or impossible for job-relocation. Add the daily domestic political rancor at home and abroad, the continuing threat of European recession, and the growing possibility of a Chinese bust and one can find it hard to be optimistic about the coming year.  

If any of this sounds like prediction, please don’t take it as such. The future is just as uncertain and unpredictable as it ever was and getting it right is merely luck. But as the farmer tests the soil before planting, wise business investors and managers weigh the full range of risks against the possible scale or returns.

Those investing to meet life’s goals do well to ignore the gyrations of economies and stock markets. Stocks are driven by earnings and those earnings on average grow faster than inflation. If the expected returns of the capital markets are sufficient to confidently meet one’s savings needs, why would he increase uncertainty by trying to time or to better those returns?

 We are in the business of helping people not only confidently meet their life goals, but in revealing opportunities (when markets excel) to stretch or add to them. We also continually stress test their plans in difficult markets to ensure adequate confidence. Our advice, whether to take advantage of opportunity or to reduce threat, is based on priorities they have already shared with us and the statistical system behind it is as robust and dependable as any in the financial services industry. The difference: we use the power of the system to better our clients’ lives, not a selling institution’s.

Whether market averages end up higher or lower than today, we will not posit. The major problems of 2011 remain just as powerful today and promise to color the new year just as they did the last. For this reason, the year promises to be a bumpy one. We encourage you to help us ensure that your plan adequately represents your life goals and aspirations as well as the necessities. Aren’t our energies far better invested attending to what we can influence rather than fretting over what we cannot?

Ways We Bring in the New Year

While 2011 was not as bad as some recent years, it is fair to say that most will happily bid it farewell hoping for a better one in its place. And to help the ‘fates’ along many will be extra vigilant in observing some traditions and superstitions.  

Here in the South, the surest way to improve the year ahead is a hearty course of black-eyed peas. They have been a staple in this region for over 300 years. In the early days they provided feed for livestock (cowpeas) and food for the slaves. Peas were also used to replenish nitrogen in the soil. But the black-eyed pea would gain substantially more stature during the ‘War of Northern Aggression.’ One story of its rise from humility centers around the 40-day siege of Vicksburg. As supplies ran out in town, people suffered on the brink of starvation. Out of desperation they turned to black-eyed peas for sustenance.

Another story features the pea’s prominence as the only food crop left standing after General Sherman’s infamous “March to the Sea.” Burning his way through the Southern states, Sherman destroyed all cash and food crops in his path to bring the war to a faster conclusion. Not wanting to add more misery to the plight of the slaves or the livestock, he spared their feed crops. Thus, the lowly black-eyed pea became a valuable source of nutrition during the difficult times that would follow and southerners considered themselves fortunate to have them.

Through the years the peas have come to symbolize coins for prosperity. Some add a dime to the peas for an extra boost of luck. Collard greens were added to the menu as a symbol of folding money. Toss in a little cornbread for the gold and you have the ingredients for bringin’ in a daggoned prosperous New Year! An old saying goes, “Eat peas on New Year's Day to have plenty of everything the rest of the year.”

Food plays an important role in bringing in the New Year around the world. Cabbage is associated with wealth and prosperity. The word "cabbage" is also slang for money. In Germany, eating sauerkraut at New Year's is considered good luck. In China, long noodles represent long life and good health. Don't cut them, though. You need to have those noodles make it into your mouth in one piece if you want good luck. Spring rolls, too, are considered good luck.

In Italy, lentils are supposed to bring you good luck if eaten on New Year's. In some other parts of that country, eating risotto is considered to bring good fortune. In some countries, the circle is considered a symbol of good fortune. A circle always comes back to the beginning. In Holland, they eat doughnuts to bring good luck. In Spain (and other Latin countries), good luck is sure to come when you eat 12 grapes at the stroke of midnight on Dec. 31^st. That tradition dates back to 1909, when grape growers in the Alicante region of Spain initiated the practice to take care of a grape surplus. In Germany and Austria, eating pork is good luck. According to the theory, pigs root forward, symbolizing forward movement in the New Year.

If forward movement is good, then backing up is bad. Epicurious.com reminds us that lobster is a bad food choice to start the new year because they move backwards and could therefore lead to setbacks. Chicken is also discouraged because the bird scratches backwards, which could cause regret or dwelling on the past. Another theory warns against eating any winged fowl because good luck could fly away.

In Greece, New Year's Day coincides with the Festival of St. Basil, one of the founders of the Greek Orthodox Church. One of the traditional foods served is Vassilopitta, or St Basil's cake. A silver or gold coin is baked inside the cake. Whoever finds the coin in their piece of cake will be especially lucky during the coming year.

Many traditions go beyond food. In Japan, according to infoplease.com The New Year is the most important holiday. It is a symbol of renewal. In December, various Bonenkai or “forget-the-year parties” are held to bid farewell to the problems and concerns of the past year and prepare for a new beginning. Misunderstandings and grudges are forgiven and houses are scrubbed. At midnight on Dec. 31^st, Buddhist temples strike their gongs 108 times, in an effort to expel 108 types of human weakness. New Year's Day itself is a day of joy and no work is to be done. Children receive otoshidamas, small gifts with money inside. Sending New Year's cards is a popular tradition—if postmarked by a certain date, the Japanese post office guarantees delivery of all New Year's cards on Jan. 1^st.

Hogmanay (hog-mah-NAY) Scotland, the birthplace of “Auld Lang Syne,” is also the home of Hogmanay, the rousing Scottish New Year's celebration. One of the traditions is “first-footing.” Shortly after midnight on New Year's eve, neighbors pay visits to each other and impart New Year's wishes. Traditionally, First foots used to bring along a gift of coal for the fire, or shortbread. It is considered especially lucky if a tall, dark, and handsome man is the first to enter your house after the New Year is rung in. The Edinburgh Hogmanay celebration is the largest in the country, and consists of an all-night street party. infoplease.com

The most beloved song sung at the stroke of midnight is “Auld Lang Syne.” It was first published by poet Robert Burns in 1796. The name literally translates as “old long since” meaning times gone by. Should we forget old friends and times, we’ll ‘take a cup o' kindness’ still and drink them goodwill though we be separated by time or distance.

If Robert Burns penned, it, Guy Lombardo made it famous. As noted in infoplease.com, Lombardo first heard "Auld Lang Syne" in his hometown of London, Ontario, where it was sung by Scottish immigrants. When he and his brothers formed the famous dance band, Guy Lombardo and His Royal Canadians, the song became one of their standards. Lombardo played the song at midnight at a New Year's Eve party at the Roosevelt Hotel in New York City in 1929, and a tradition was born.

After that, Lombardo's version of the song was played every New Year's eve from the 1930s until 1976 at the Waldorf Astoria. In the first years it was broadcast on radio, and then on television. The song became such a New Year's tradition that “Life magazine wrote that if Lombardo failed to play ‘Auld Lang Syne,’ the American public would not believe that the New Year had really arrived.”

Should old acquaintance be forgot,
and never brought to mind ?
Should old acquaintance be forgot,
and old lang syne ?
CHORUS:
For auld lang syne, my dear,
for auld lang syne,
we'll take a cup of kindness yet,
for auld lang syne.
CHORUS

And surely you’ll buy your pint cup !
and surely I’ll buy mine !
And we'll take a cup o’ kindness yet,
for auld lang syne.
CHORUS

We two have run about the slopes,
and picked the daisies fine ;
But we’ve wandered many a weary foot,
since auld lang syne.

CHORUS

We two have paddled in the stream,
from morning sun till dine^† ;
But seas between us broad have roared
since auld lang syne.

CHORUS

And there’s a hand my trusty friend !
And give us a hand o’ thine !
And we’ll take a right good-will draught,
for auld lang syne.

CHORUS

The official beverage for celebrating New Year’s is of course Champagne. Ryan Newhouse tells us it was first discovered in 1531 by the Benedictine Monks in the Abbey of Saint Hilaire. The wine gets its sparking qualities by infusing sugars after primary fermentation in order to stimulate dormant yeast and create the wine’s carbonation. Forty years after its initial discovery, a monk name Dom Perignon was claimed to be the true inventor of Champagne, though that remains a myth. To be labeled Champagne, it must come from the Champagne region of France, adhere to certain aspects of viticulture and contain specific blends of grapes.

Ryan adds that “by 1850, demand for Champagne reached international markets and production grew to 20 million bottles a year. Around this time, a less-sweet Champagne was invented by Perrier-Jouët, who decided not to sweeten his 1846 vintage before transporting it to London. By 1876, Brut Champagne was created primarily for the British, who preferred the not-so-sweet version of Champagne.

If you want to get the most fizz from your ‘bubbly’ scientists say you should hold your glass at an angle rather than pouring it straight down. Livescience.com tells us that “the secret is in the bubbles, or more precisely, the dissolved carbon dioxide that creates them once the bottle is uncorked and poured into a glass. Unfortunately for champagne drinkers, much of the carbon dioxide escapes without creating bubbles. That study, published in 2010 in the Journal of Agricultural and Food Chemistry, showed that a beer-like pour creates less turbulence (when the drink hits the glass), and hence, allows less carbon dioxide to escape into the air.” Another study, at the expense of your tax dollars reported in the fall of 2009 in the journal Proceedings of the National Academy of Sciences, revealed that the 10 million or so bubbles that pop from a glass of the sparkling wine carry loads of aromatic molecules that ultimately spray into the air right under your nose.

If Guy Lombardo officially kicks-off the New Year then football is officially how the day should be enjoyed, according to most American males anyway. The traditional Rose Bowl football game was first played as a part of the Tournament of Roses in 1902. After a brief interruption with some Roman chariot races, the game returned in 1916 to remain the sports centerpiece of the festival.

But for all of our celebrations and superstitions, we all sense a yearning to refocus our energies and our talents on the opportunities the year ahead promises. We consider the day, perhaps more than any other, a day for looking ahead at what might be, for considering dreams and goals.

Dave Kohl, professor emeritus at Virginia Tech, has found that people who regularly write down their goals earn nine times as much over their lifetimes as people who don’t, and yet 80% of Americans say they don’t have goals. Sixteen percent do have goals, but they don’t write them down. Less than four percent write down their goals, and fewer than one percent actually review them regularly. We couldn’t agree more with Dr. Kohl. In fact our business is devoted to helping the 1% turn their dreams into goals, and goals confidently into reality.

No matter how you celebrate your New Year, we wish you a safe and happy one. When we next meet, we look forward to hearing what is it you can’t wait to do?

Happy New Year!