Doom, Gloom, and Great Coffee
Wednesday, January 23rd, 2008On the recession, real or imagined, chronic problems that beset the nation, and the celebration of taste and art in a great cup of coffee.
With all that’s been written about the current economic crisis, be it mountain or molehill, it’s been surprisingly (or perhaps unsurprisingly) difficult to get to the bottom of the situation. I can’t escape the impression that the economy moves according to forces too complex for anyone to fully or reliably understand. The wisdom of hindsight abounds, but those still willing to predict what comes next sound more like doom-mongers or soothsayers than thoughtful, commanding economic theorists and commentators.
The Times has a piece that hints at some concrete economic indicators: According to David Rosenberg, a Merrill Lynch economist, the stock market is overvalued by 10 percent relative to corporate earnings and interest rates. And, judging by historic norms (by comparison to salaries and rents,) house prices are overvalued by 30 percent across much of Florida, California and the Southwest and about 20 percent in the Northeast. More about the rationality of these indicators later.
Bob Herbert points to a more urgent matter than the economy, if we judge urgency by the degree of current and long term impact. Bob’s gloomy picture of the shameful state of schools in South Carolina stands as a sad example of the disparity between the haves and the have nots, and, because the poor conditions in South Carolina seem to relate to entrenched and systematic racism, the vast distance between the kind of country we want to believe we live in, and the kind of country we do live in. Talking about a school he happened upon, former South Carolina commerce secretary, Charles Way, says he couldn’t really believe his eyes. “It was the most deplorable building condition that I’ve ever seen in my life. How the hell somebody could teach in an environment like that is really just beyond me.” (Ben Tillman to the right, infamous racist, prominently honored at the SC statehouse.)
AÂ school text book had a volume with the title: “One day man will land on the moon.”
Another dispiriting story reveals that the United States ranks at the bottom of the Group of 8 industrialized nations and 39th among 149 countries for its environmental performance. The United States contributes a quarter of the new releases of greenhouse gas emissions globally.
And how do I reconcile the current economic woes, the chronic, unaddressed problems facing the nation’s poor and its minorities, and the environmental disaster underway with my glee at reading about a $20,000 coffee maker?
I love coffee. I buy premium roasted beans from small companies. I grind them right before I brew. And I take great care to try to get the brew just right. So, the story about the lengths to which coffee houses will go to brew a great cup of coffee drew me in. It made me want to go downtown to Cafe Grumpy’s so that I can try a cup of coffee from an $11,000 coffee maker…
Back to the economic indicators of stock value relative to corporate earnings and interest rates, and house values relative to salaries and rents. Even if we take the calculation on trust, can we agree that these constitue reliable, rational economic indicators? I think not. As the world changes so economic norms change.
Judging stock valuation by earnings and interest rates perhaps works reasonably well over a short time period, but can it be applied consistently, without modification, over a long time period? Here’s one example of why I’m dubious. Technological innovation and the surge in importance of the Internet gives more reason to expect future innovation and technological growth now than ten or fifteen years ago. Isn’t it then appropriate to value companies, in general, somewhat higher than we would have valued them ten to fifteen years ago, because we expect future earnings to be higher?
And the model for judging house values by comparison to salaries and rents must surely change over time, too. As more people squeeze into urban and suburban areas, the relative value of land and space may increase more rapidly than salaries (that are affected by things other than land and space). Also, raw materials for building houses have changed in relative cost, building regulations have changed the way houses are built and what they cost to build, and the skill-sets of the laborers have changed… How can the model work without modification from one period of time to the next?
I’m still ruminating on how I can be so thrilled about a great cup of coffee when the state of South Carolina, for one, discriminates against minorities by so woefully neglecting their education. From a philosophical perspective I understand that I’m not the master of my desires, and that when living in society we need to grapple with our own desires and needs as well of those of others. Ideally I know I should balance my own interests with those of people around me. Which doesn’t necessarily mean disavowing my love of coffee.
If we’re to try to get the balance right, we need more exposure to the problems in our society. The increased public attention given to global warming has finally begun to have an impact on the way we live and the choices we make. We need more exposure to the lingering problems of racism, too. I agree with Bob Herbert that our politicians should be addressing matters of racisim rather than dancing around them.
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Does art (any kind of art — painting, sculpture, literature, music…) serve a purpose? And if so, what is that purpose? Why do we create art? And must the judgment of art be entirely subjective?
I aim to post two kinds of content: That which is general and timeless, and that which is specific and of immediate interest. It seems to me that this captures the best of philosophy—to seek universal truth, and to try to use that truth to shed light on the the moment in which we live. When