Losers must die in full view

U.S. Treasury Secretary Timothy Geithner is about to get some advice from an unexpected quarter... Sudhir Venkatesh's retired gangsta friends from Chicago:

Mr. Secretary, let’s face it: you need real experts, those who have felt the consequences associated with moral hazards, those who have found out that mistakes in markets mean no skin in the game (or no skin at all, for that matter).

[...]

[The Thugz] have agreed to return to the couch and channel their wisdom for the benefit of the country. By the way, you should know that they are big fans of your work at the New York Fed. Most of them fared nicely in the late 1990’s by catering to the growing white-collar workforce who demanded cocaine, escorts, sexual services, etc. Of course, since most of these customers worked in the financial services industry, my boys feel like they owe you a solid.

[...]

The unanimous opinion among The Thugz was that you must base your work around a time-tested law of ghetto capitalism: losers must die in full view. What? This doesn’t make sense. O.K., well, let me explain. Your first mistake (more accurately, your predecessor’s error) was to mix the bad apples (banks) with the good (banks). By doing so, you forgot what makes capitalism so much fun: winners win at the losers’ expense, and everyone gets to watch and laugh. Sort of like public hangings, except reported on the financial pages. Otherwise, why read The Wall Street Journal?

The moral is: don’t ever take the joy of death away from the public. Because if you don’t see losers in pain, you begin to think the game is rigged. And we all know the game is fair, open, and transparent … yes?

A Letter from the Thugz (Sudhir Venkatesh, writing at the Freakonomics Blog)

Worst case scenario: Suddenly homeless and broke

The cheerful econogeeks at Freakonomics Blog are dabbling in worst-case scenarios, and commenters are getting in on the act, too:

Imagine you just lost all your possessions and money, and you were suddenly living in the streets.

1. What’s the first move you would make?

2. What’s the first organization you would turn to?

3. What would your extended plan look like?

My answers:

(1) The Campbells travel as a family, so I hope I'd have my wife with me, even in those dire circumstances. The thought of being separated from her while living in luxury is much more disturbing than the thought of being together in abject poverty.

Assuming that I was in full possession of my faculties (big assumption) I would start at the bottom of Maslow's hierarchy of needs (food and water, clothing, shelter, personal safety) and start clawing my way up from zero: priority one is find a job, any job, ideally one that paid cash but I'd work for food cheerfully at first. I would do whatever was necessary to not be *living* on the street.

If I had friends or family that I could reach--and hadn't alienated in the process of losing all my money and possessions, such as with a drug habit or highly offensive behavior caused by the sudden onset of severe mental illness--I am confident that enough members of my social network would step up to give me some kind of boost.

(2) First organization I'd reach out to: A church (synagogue, mosque, Hare Krishna temple, etc.) I don't think my religious beliefs (Deist/New Mysterian with heavy Judeo-Christian traditional overtones) would qualify me as a believer under anyone's system, but just because I don't believe in their concept of God, doesn't mean I don't believe in the goodness of some *people who believe in God.* Close second would be to throw myself to the mercy of whatever social welfare programs I could locate.

(3) Extended plan: Leverage my network, if any remains (see #1 above) and work hard on extending it. Get the job that will get me the job that will get me the job that I want. Work like a bastard for long hours at whatever pay I can get. Take every opportunity to learn, and teach, and contribute however I can.

The Commitment Device

Steven Levitt, one of the authors of Freakonomics, is a recreational poker player who occasionally plays in tournaments. Last weekend, he found himself sitting at a table with a middling pile of chips, with the required departure time for McCarran Airport drawing ever closer... and so he adopted a strategy of going "all in" on every single hand from there on out, so as to either win or lose quickly enough to make his plane.

Excerpt:

I was in Las Vegas yesterday celebrating my 10 year anniversary with my wife Jeannette, who loves me but not nearly as much as she loves poker. So even though this blog is about my anniversary and about commitment, it is not about the sort of commitment you might suspect.

Rather it is about what economists call a “commitment device,” which is when someone locks himself/herself into a course he/she wouldn’t otherwise want to have to follow, but as a result the person benefits.

The idea of a commitment device is counter-intuitive. How can it make you better off to lock yourself in so that you have fewer options to choose from? Aren’t more choices always better than fewer? If there is no strategic interaction, more is always better, but when you are competing against someone else, limiting your options can be helpful. A classic example is an attacking army burning the bridges behind them so that they have no easy way to retreat. It commits the army to fight harder and might lead the opponent to retreat, avoiding a battle altogether...

Read on for a fascinating tale of how this worked out.

As for Levitt's meditations on his anniversary, yesterday was my eighth wedding anniversary, actually...

Our commitment device is working just fine, thanks.

Love you, Carrie.