Outside the Box

American Gridlock

John Mauldin

January 31, 2012

How do we resolve the current political gridlock over healthcare, the economy, and a myriad of other problems? It is clear that there are no easy solutions, and putting off making choices will just make the ultimate cost we pay that much more expensive.

This week for our Outside the Box we deal with just this question, in a piece from a master of logic and reasoning and one of my favorite writers. I absorb everything I can get my hands on from Dr. Woody Brock. He has written a new book, called American Gridlock: Why the Left and Right are Both Wrong" (www.amazon.com/gridlock). I am doing something very unusual and giving him two back-to-back editions of Outside the Box, this week and next, to outline his own book in his own words. He generously agreed to do so, as he (and I) are passionate about the topic of getting to a solution. If we do not solve this crisis in the making, it will impair our future generations for a long time, not to mention its effects on our own lives.

I should note to my non-US readers that the principles in this book extrapolate to situations outside our borders, and I suggest you too read this OTB carefully. Gridlock is not just an American phenomenon, but a result of the changing of the way we process information in the age of Big Data. From this piece:

"Regrettably, what has happened in recent years is that 'pure' inductive logic has been replaced by that bastardized form of data analysis all too familiar from today's Dialogue of the Deaf: As time goes on, each side cherry-picks ever more data to strengthen their prejudiced positions. Thus, positions become ever more shrill. Belief modification and dialectical progress are rarely achieved. In this sense, giving young research associates Excel spreadsheets plus the wealth of information accessible from the internet is proving very dangerous to informed debate. 'Factoids' are confused with serious logic, and young people are all but clueless about Hume's imperative: You cannot data-crunch your way to the Truth. Ever."

I know some of you will disagree with Woody on certain things, but your disagreement will probably be with his basic assumptions, not his reasoning thereafter. What he is talking about is akin to some things I studied way back in the day, but that have fallen from fashion – as Woody points out.

Coincidentally, Woody will be here in Dallas tomorrow night and Wednesday, and we will break bread (and other culinary delights) at Stephan Pyles' fabulous namesake establishment with Rich Yamarone, and then attend the CFA Forecast Dinner here in Dallas on Wednesday.

You can learn more about Woody and his economic services at www.SEDinc.com, as well as see some of his previous essays. Enjoy your week; I know I am going to enjoy mine.

Your thinking about First Principles analyst,

John Mauldin, Editor
Outside the Box

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American Gridlock

Why The "Left" And The "Right" Are Both Wrong

Commonsense 101 Solutions to the Economic Crises

Dr. Woody Brock

Pessimism is ubiquitous throughout the Western World as the pressing issues of massive debt, high unemployment, and anemic economic growth divide the populace into warring political camps. Right- and Left-wing ideologues talk past each other, with neither side admitting the other has any good ideas, and with no effort expended to…

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Michael Sojka

Jan. 31, 2012, 1:18 p.m.

With a couple exceptions, the comments on the article display the very gridlock gripping our country that the book attempts to find a way through. Are the entrenched thought patterns most people have so comfortable that trying something new on for just a few minutes becomes painful enough that they must lash out emotionally?

Personally, I found the discussion about inductive and deductive reasoning very interesting. After working 30+ years in manufacturing plants mostly at an engineering and management level, i saw the problems of using data to solve problems. Over and over, in lengthy meetings, people would show the data that supported their predetermined judgements. Alternative ideas and data were attacked in whatever way proved expedient and the truth was rarely the goal. Even 6 sigma principles were twisted to provide the conclusions already made before any study was undertaken.

Yes, the healthcare piece in the article was short on specifics and did not provide any kind of convincing case for how best to solve this dilemma. On the other hand, did I expect a complex issue such as this to be solved in a few hundred words? No.

I thought the discussion about terminating the dialogue of the deaf the best part. Hopefully this index will be brought to fruition and published regularly so we the voters have a tool to evaluate our representatives and encourage those who really want to solve problems to run for office.

Kurt Blank

Jan. 31, 2012, 12:29 p.m.

Nice Promo- teaser for the book but short on discussing any solutions, i was looking for a shorter and condensed summary that included a few specific examples of policy or maket changes that if enacted would solve problems, that said if they seemed encouraging and realistic it might cause me to read the book.  I have not seen that here by this author which does not substaniate me reading the book.
  This was a waste of my time to read as I was looking for some idea’s and solutions offered ( not all obviously) That would solidify that that autors additional information would be realistic solutions and worth reading.
John , please don’t allow teasers , I am looking for content !
Kurt Blank

Frederik Van Bragt

Jan. 31, 2012, 11:58 a.m.

here in the low-lands we have an instument called PPC (public-private coöperation) in which certain projects are financed both by the public an private sector together… I do think as well we should go forward on this sort of projects to finance infrastructure, both roads and more in more high tech industries… to me it’s clear as well that this will be our only path to help us get out of this mess…

the big trap however is that only projects must be financed who really are productive… usually it is the private sector who is more gifted in productive investments… that’s why I am particulary positive about those PPC projects since it requires the involvement of the private sector too before a project really can take a start…

I’m very charmed also about this dialogue of the deafs too, it really is unexplainable why macro-economics should be able to proceed only by a “statistic/quantative” approach without any further insights on what forces an economy is subject too
but apart from the macro-economical implications, I also do thing that a more “deductive” approach would help us in many other areas as well that requires communication and decision making….

I really do hope this way of approach will gain ground in many different areas of society… even up to the micro-level of private discussions between friends and family, cause any political change will be induced by the way people are discussing matters at home and on their workplace… sadly I think this will only be made possible through a new and different approach in education of which the results can anly be expected in the very very long run….

Jerry Bannon

Jan. 31, 2012, 11:33 a.m.

So far I have only skimmed the article, but I totally agree with the deductive approach in contrast to induction. Let me offer a Red Herring that has been left out of this kettle of fish. We could inductively argue whether the United States is or is not a Christian nation, but deductively I think we could agree that compared to other nations on this earth, Christianity plays a significant role the way the country works. The American religion is basically the creation of a “Shining City on a Hill.”

The problem is inductively you can either live in the “right” one or the “wrong” one, or more commonly deductive “religious” contrasted with “secular.” We can of course trace this discourse easily back to Augustine, but in the twentieth and twenty-first century context, American evangelicalism has basically taught everyone the Bible though “Inductive Bible Study.” There is at least one “Inductive Study Bible.” I know of no “Deductive Study Bible.” 

To my point in early 2007 in early 2007 I posted on the Wonder Springs website a “1, 2, 3, - D; Deductive Bible Study: http://www.wondersprings.org/Downloads/files/123Dparadigm.pdf. I find it interesting that it is still one of the most popular “Resource” downloads, along with some leadership, natural and nuclear disaster materials.

My deductive conclusion is that this discussion must include the Christian component if it is to be successful and we all need to work together to avoid a “normalcy of deviance” event, which puts the whole world back to a place none of us want to be, and some of us are too old to start over from truly “scratch.” It is also a wilderness about as far from any shining city as you can possibly get.

Jerry Bannon

Ernst Theobald

Jan. 31, 2012, 11:18 a.m.

Yes!Good investments?
Productive deficit spending?
Marshall plan?
Energy grid?
Water resources?
Space program?

We had all that too:  German Democratic Republik

It took a complet 1 GDP of some 3 trillion $ to clear up that socialist pigsty

Those 3 trillion are now our “German national debts”

As a return we now have a Kanzlerin that was well trained in communist UDSSR.

Well, we have a saing (Bert Brecht): Nur die allerdümmsten Kälber, wählen ihre
Metzger selber!

Do you like us so mutch, that you want to join?

Joe Gilio

Jan. 31, 2012, 10:23 a.m.

Reading your intro to Dr. Brock’s column was very encouraging.  I have been hopeful that someone with commonsense would prevail, but alas, reading his essay left me completely disappointed.
He starts well dealing with ideas of logic and information but his “First Principles” are anything but and he spirals downhill from there. 

He has already superceded the concept of limited government, the power of government, and the capability of government to manage a people, economy, and morality.  Even his illustration of supply/demand has glaring inconsistency—he equates $4T in spending (Country A) for the same services as $3T in spending (Country B) with not a comment about who doesn’t get the extra $1T that he allocates to “certifyably productive” investment.  Oh, yet another government entity that will be free of politics?

His “fully general” underlying logic may be fully laid out in the appendix of his book but it seems to ignore the contrary evidence of compaitive health care costs in countries (or even counties) with disparate access.  He may be a really smart guy but he needs to seek some critical analysis of his thinking.

Joe in Dallas

Nelson Swanberg

Jan. 31, 2012, 4:48 a.m.

On social security investments verse the return being unequal across the generations well hey everybody knew going in that the first people drawing from the system were going to get the best deal and future generations would not do as well but that is why it is called social security. You could not start the tax and say in 30 years people will start drawing benefits. It is to help the less fortunate. I could have done better keeping my money and investing it but then I understand it is too help others as well.

It is not a Ponzi scheme yet but it is going to be. The solution is far simpler than the author offers. When the trust fund runs dry social security must convert from a system of invested entitlements to one of shared income distributions with a 5% tax on all income - personal and corporate whether it is dividend income, interest income or capital gains - to be distributed among the social security recipients.

Some years you get more, most of the years you get less but at the least we have an ongoing safety net that will not bankrupt the nation.

The concept of health care demand outlined is all wrong. If benefits are unlimited whether through insurance or government largess you will want as much health care as there is available in order to cheat death to the last minute. I am part of the baby boom generation and I know health care will have to be rationed. The sooner we draw up the hard guidelines the better off we will be or health care costs will bankrupt us.

Robert mcKee

Jan. 31, 2012, 4:15 a.m.

Let me get this right.  If supply grows faster than demand, then we can have more things or services at a lower price.  Well I never!

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