TOXIC ASSETS

In 1960, a psychologist by the name of Walter Mischel tested a group of four-year olds at Stanford University. The kids were each given a marshmallow. They were told they could eat the marshmallow right away if they wanted, or they could wait 20 minutes. If they ate it right away, that would be the end of it, but if they waited, they would get another marshmallow. As you’d expect, some of the kids ate the marshmallow right away, and some of the kids waited. The interesting thing is, the researchers followed both groups through high school. It turned out that the kids who waited to eat the marshmallows tended to be better adjusted and more dependable than the kids who ate them right away (as determined by surveys of parents and teachers). They also scored an average of 210 points higher on their Scholastic Aptitude Tests.

A baby cries when it’s hungry, fidgets when it’s uncomfortable, and urinates when pressure builds in the bladder. As it matures, it learns to control these responses. If it didn't, it would have a hard time functioning in the world. The ability to endure discomfort and delay gratification is essential for all productive endeavor – from baking a cake to buying a home to writing a book. It is a measure of our ability to exercise free will, plan for the future, act like adults. Or not.

Most who are reading this post no doubt believe in linear evolution: man has evolved in steady progression from ape to his present exalted, rational state. This belief is false – and it is a measure of our present limitations that we’re unable to realize it. According to our present belief, electricity was “discovered” 400 years ago and atomic energy only within the last century. But this belief ignores the fact that Thales of Miletus described electric phenomena 600 year before Christ, and an atomic theory far more profound than our own can be found in the Vedas thousand of years before that. A Golden Age is described in the mythology of every ancient culture. If we find no artifacts, it is because the people of that Age had no need to create them. After all, books are for those who cannot remember; computers are for those who cannot compute; roads, bridges and airports are for those who need to drag the body hither and yon.

What is true of mentality is also true of emotion. Sorry to say, in the present age, we are not emotionally mature. In fact, we are just now entering what I would call an Age of Adolescence. According to the Oxford English Dictionary, the word “teen-ager” didn’t even exist until 1941, and teenage culture didn’t really arrive until well after the end of the Second World War. In adolescence, we blithely disregard the wisdom of the ages, because we are convinced we can do things better on our own. We indulge ourselves because we can. And when the consequences of our indulgence come, we find a way to blame someone else.

Sound familiar?

Actually, as I said, the Age of Adolescence is still arriving. Some have entered it and some have not. Those who have not are still passing through an Age of Childhood. In childhood, we delay gratification not because we genuinely appreciate the benefits of self-control, but because an authority figure told us to. Unfortunately, whether the authority figure is a church, a parent, or someone else whose values we have internalized, those values are not truly our own. So we’re not really sure they’ll work for us. We’re not really sure there’s a gain in the pain; that delaying gratification will pay off. So when we see other people indulging themselves and seeming to “get away with it”, we become outraged. We want to run to Mommy and tell her, so they can be punished. We want them to suffer as we are suffering in proscriptive self-denial.

This is the source of the famous “culture wars”.

For the few who have escaped adolescence into adulthood (however tentative and precarious), the culture wars do not exist. From a personal perspective, they are content to let the adolescents do what they will because the adults are secure in their own values. Unfortunately for the adults, however, when a vast majority of the planetary inhabitants are adolescents, the world will suffer the consequences of adolescent actions, and the adults along with it.

The world functions according to laws, and that includes the laws of economics. There is a price to be paid for instant gratification. And we are now embarked upon the process of paying that price (though most of us don't yet know it).

The law is, that if we want something, we have to exert the energy and will to acquire it. In a money economy, this means we have to pay for it. Since we are unwilling to live according to this law, we have invented the institution of credit. If we want something now but can’t pay for it, we find somebody who can, and we sell ourselves into indentured servitude to get what we want. In return for the extension of credit, we agree to pay the lender not only the amount advanced, but a consideration of forbearance, called interest, which ultimately increases the amount of work we must do to get what we want.

The level of a debt in a country can be viewed as a measure of its citizens’ collective inability to delay their gratification. By that measure, we Americans have the lowest level of self-control in the world.

In 2005, the personal savings rate in the United States fell below zero. Since then, it’s been bumping along below 1%. In the first quarter of 2008, Americans earned a little under $12 trillion and spent pretty nearly every penny.

Given that America is a democracy, it should come as no surprise that the American government, as representative of its people, also lacks the will to curb its spending. According to the numbers commonly reported in the press, in the last half-dozen years, the government has been spending more than it takes in to the tune of several hundreds of billions a year. Unfortunately, the numbers reported in the press don’t tell the whole story.

Though most people don’t know it, the U.S. Treasury is required by law to publish annual financial statements prepared in accordance with generally accepted accounting principles (GAAP). These statements are prepared in exactly the same way publicly traded business corporations are required to prepare their statements by law. The numbers are hard to find, however, and never disclosed in press releases or other public reports.
The GAAP statements show that the federal government’s annual fiscal deficit is about TEN TIMES HIGHER than commonly reported – averaging $4.6 trillion (thousand billion) dollars each year for the six years through 2007. In fact, so out-of-control are governmental expenditures at this point, that were the government to raise taxes to 100% of all wages, salaries and corporate profits, it still wouldn’t be able to cover its expenditures on an accrual basis.

Yet somehow or other, all of this must -- and will -- be repaid.

The created universe may be conceived as a vast sphere comprised of an invisible etheric medium that radiates outward in all directions the magnetic waves of thought and action generated at each point within itself. As these waves of causation ripple from their points of origin, they necessarily encounter other waves, creating complex patterns of interference, changing their appearance and direction. Nevertheless, the sphere is a closed system. Therefore, each causative charge originating within it inevitably returns as effect to its point of origin.

In the created universe, there is no cause without effect and no effect without cause. The very notion of it is ridiculous because the cause contains the effect within it. Nevertheless, in the realm of men, we continuously think and act as though we can get away with something. We buy things on credit, then wonder why we feel stressed out. We drink and wonder why we feel hung over; we overeat and wonder why we have indigestion; we over indulge in sex and wonder why our nerves are on edge. We lie, cheat, steal, and injure our neighbors, then express outrage and amazement when the same sort of thing is done to us.

Since we don’t want to acknowledge the real cause of our problems, we take a pill and assign the whole bloody mess to subconsciousness. When the pill wears off or the side-effects kick in, we run to the doctor for a stronger pill, or perhaps we dive into another round of self-indulgence to ease the pain or temporarily forget. But as ingenious as we may be in our ignorance, we cannot fail to suffer the consequences of what we have done.

The older I get, the more I mistrust the intellect. It's not bad in itself, of course; it can be used for good or ill, like a knife. It can cut a prisoner’s bonds or it can cut his throat. In itself, the intellect has no judgment. It can be used to solve problems or sell condoms, to build bridges or prisons, to develop cures for disease or weapons that wipe out the human race. The intellect can do all of these with equal efficiency, duly noting the benefits and costs (and, in the economic realm, duly including them in Gross Domestic Product). The intellect is like a knife, and in this age, we have honed that knife to a sharp edge. Unfortunately, we have yet to develop the vision and self control to use it properly. Therefore, we will suffer.

There is a law of reciprocity embedded in the geometry of the universe. It cannot be avoided. It cannot be gamed. It cannot be spun. It cannot be danced around. Until we acknowledge the inevitability of that law, until we use our intellect in accordance with that law, our intellects are not just useless.

They’re toxic assets.