A Beer Standard of Exchange

In 1950 a beer cost about the same (about 25 cents in U.S. dollars at the time) in Pounds Sterling, French Francs, German Marks, Japanese Yen and many other local currencies that hinged on those bigger countries. But for Americans traveling abroad at that time, the local cost converted back into US Dollars was about 10 cents. Wow! The good old days!

Since then a lot has changed in the world of currencies. The U.S. dollar is no longer the only reserve currency of significance. There is the Euro for most of Europe, the Yen for Japan and the Renminbi of China and the effect of different and fluctuating exchange rates on balances of trade, flows of capital and movements of tourists, etc. is sometimes downright as amazing as a 25 cent beer for 10 cents.

Today the question from the point of view of an American tourist is no longer how strong or weak the dollar is but also how strong or weak the local currency is where that tourist is buying his beer. For example in Switzerland, which still uses the Swiss Franc, they say the Franc is too strong, not that the dollar is weak. But whichever way it is, beer can tell an average person what is really going on. Today in Switzerland a beer is 4 Francs, which the local people find perfectly reasonable. But when an American pays 4 Swiss Francs that beer costs him 6 U.S. dollars, which is pretty outrageous by American standards.

So what should that simple real fact mean to an average Swiss and American?

For the Swiss person it should mean that he should plan a trip to finally see New York, or to convert his retirement savings into American investments, or to order his children’s school clothing from Amazon.

For the American it should mean that he should take his next trip to the Grand Canyon, make sure his long-term investments are in American companies and have hand-me-downs make do for his growing children. And, if the American is adventurous, he may want take a suitcase full of popular toys, mini cameras, etc., when he goes to Europe and become a sometime peddler to help pay for his trip.

But, should the American who may be financially clever sell Swiss Francs short since he is already long dollars in his savings account? The short simple answer is NO.

Just because the U.S. dollar may be cheap and the Swiss Franc expensive no longer means it will quickly and easily readjust to what is called purchasing power parity. The world of exchange rates has gotten much too complicated to make that bet except for the most sophisticated financiers. The dollar may have to become a lot cheaper before it gets stronger and the Swiss Franc may get even stronger because of problems in Greece and with the Euro.

Still, it may help average Americans plan their short-term daily lives if they can see a schedule in their local news giving the price of a beer in many different places priced in dollars at that moment. The currently published exchange rate schedules may be useful to some, but a beer standard would be helpful to everyone.


Dratted Deadlines Demand Desperation

Why, oh why, do we let ourselves get in these pickles where we begin to seriously worry that our leaders will take us over the cliff into an abyss of horror, fear and calamity?

Only a few times in our history have we as a nation acted stupidly and irrationally when a large proportion of our population knew perfectly well what was going to happen. One of those times was in 1931 when our Congress took the bit in its teeth and charged forward with the now infamous Smoot Hawley Tariff Act, which ended up with literally hundreds of specific amendments “protecting” from foreign competition many different products that were suffering from the after effects of the crash of 1929. As that bill was being debated, thousands of economists and business leaders from all over the country signed newspaper advertisements that basically said “Do Not Do It – it will be the death of the economy!” Boy, were they right. But the bill passed; President Hoover signed it; and within 18 months the volume of world trade had declined by one third. The¬†depression¬†then set in for good in a big way. The rest of that long story is well known history.

Today we are poised at the brink of something quite similar. The wisdom of the knowledgeable is not seen in newspaper ads, but it is all over television and the news that allowing a default in debt payments surely will bring down the wrath of the gods and send us into another real depression. It appears that the public “gets it” and does not like it. Yet a few of the negotiators in the Congress persist in thinking they know better and seem willing to risk everything to score their points and get their way.

It seems like we have gotten into a syndrome of “deadline-itis,” whereby massively important public issues can only be resolved at the brink. How did that happen? Perhaps it is explainable by the intense amplification of big news in an age of instant exposure, to the point that the players of the moment become larger than life in their own eyes and think that at the end they may emerge as saviors of some sort. They appear to have lost perspective and in the process the national interest disappears and is replaced by a game of putative political winners and losers, wherein the real stakeholders — the public — get completely lost in the shuffle.

The only real hope left is to cling to the belief that rational leaders do not act irrationally. And, we do have a president who begins to show a talent for knowing how to rescue a problem from the jaws of a deadline by staying cool, in charge, on top of the narrative and ready to pounce on a compromise at the last possible moment. He did it last December when he emerged with a grand compromise of elements of key taxes which were about to expire or explode. We must hope and believe he can and will do it again now.

So let’s look ahead for a moment and ask — assuming we emerge intact from the current mess- – how can we avoid these problems from constantly recurring?

An answer in part may be that we need a joint Presidential/Congressional Commission to look at the structural/procedural process by which we as a nation address these kinds of situations and questions. We could not be doing it worse than we are doing it now. A quiet, serious discussion among experienced grey beard leaders may not reveal better substantive answers but can surely suggest better ways for today’s leaders to go about conducting the public’s business.

Our Human Anthill

I’ve been wondering a lot lately about how and why our fellow Americans are incapable of collectively making sense out of the nonsense that swirls around us, particularly in the gridlocked political arena.

The other day I was stuck in traffic at a busy corner in mid-Manhattan and watched what looked like thousands of diverse people trying to deal with heat, in various states of undress, going in every imaginable direction through crowded sidewalks and streets. I was struck by a childhood memory of a sand-filled glass box in my home in which an uncountable number of ants lived, worked and went about their seemingly endless lives.

Also in the last weeks, a brilliant Foreign Service officer, Larry Eagleburger, who became Secretary of State briefly at the end of his long, distinguished career, died. His well-deserved obituaries omitted one thing, which stands sharply in my memory of my experiences with him. He frequently said that in dealing with nation-states it is common that even the biggest experts can not foresee well or accurately how such states will act under stress and other difficult circumstances. And, he had a simple method to discern how they might behave. He transposed the states into children in his mind and asked himself how children would act and behave in similar circumstances. He was convinced that he got quite close to the right answers in most cases.

Despite his success with this method, it probably would not be safe for most people to try to employ it in their own lives because Larry was a supernaturally smart, insightful guy whose mind could penetrate knotty problems; he probably simply used the device to express how he reached his conclusions. That said, the tool can bring a useful perspective to assessments of large-scale human entanglements, even when substituting ants for children.

The mental pictures of the Manhattan intersection, the glass anthill and Eagleburger’s conception of nations behaving like children (read ants) merged in my admittedly strange mind and I began thinking about human ants and how and why they behave differently from ant ants.

We think sometimes that the roughly seven billion people that inhabit the earth today are a lot of people. They are, but I wonder how many ants there are on the globe today. Probably there are multiples more ants than human ants.

We know that every human ant is more or less created equal (in today’s world though not always in yesterday’s); they all have dreams, hopes, aspirations, fears and various degrees of talent.

We really do not know much about the individual mental processes of ants. But, we do know that ants collectively are not random creatures. They definitely respond to leadership and various forms of organizational structure. It appears that they have some concepts of space management and architectural design in utilizing the spaces they occupy. They also definitely have a life cycle and they recreate–which some say is the most important, exciting thing in their lives (and why not?) – and expand and populate the way human ants do. How they deal with conflict and confusion was opaque to me as a child. But, they always seemed to be optimistic and on the march toward what they evidently saw as a bright common future.

So what is relevant about the differences between human ant behavior and ant behavior? Perhaps it is ego? Where are you when we need you Dr. Freud? Ego surely has a lot to do with individual and collective human ant behavior. That said there does appear to be something like ego among the leadership behavior in the ant world as there is also with bees.

So what can explain why and how human ants these days seem to be bent and determined on various forms of self-destruction? I hate to think that ants are smarter than human ants and can foresee or sense danger in their mass behavior better than humans. Perhaps the distribution of ego, freedom, greed and self-determination in the ant world is rationed and apportioned in some amazing way that provides an instinctive sort of group self-protection.

What can we humans learn from our ant friends? Applying the Eagleburger test suggests that if ants can come to their senses and avoid self-generated destruction, that same natural phenomenon could occur among humans. I am not so sure, however, that we can count on that because perhaps our overdeveloped and widespread human thinking capacity causes various forms of denial and wish fulfillment to interfere with our senses of danger built in from our most primitive days.

Perhaps, if more of us stopped and reduced our thinking about the world around us, if only for reflection purposes, into terms as basic as is suggested by our ant friends, we all collectively might better see the real world and all the dangers it contains that truly threaten our very existence.

Maybe ants outnumber us by such large proportions, not just because they are smaller, but because they still can sense danger more acutely?