One more from French Economy and Finance Minister Christine Lagarde's interview on Morning Joe. Her comments stand in stark contrast with the shameless remarks of Goldman Sachs bigwigs before the Senate.
Asked about the French perspective on the American approach to the financial crisis, she advanced two operating principles: clarity and accountability. A couple of days ago, we heard her on clarity. Today, we hear what she said about accountability—particularly when taxpayer's money is, as she says, "engaged." Watch this, and pay special attention to her attitude.
"Those who make mistakes should pay for it," she said. Thank you, Mme. Lagarde.
French banks that received taxpayer engagement must pay back the money with interest. And bank executives who received "bonuses in excess of certain amounts," or "excessive compensation," must pay an extra tax (a 50% tax on any discretionary bonus above $39,000 in American money, according to the NYT).
What was special about Mme. Lagarde's attitude? Well, ... nothing. And that's what made it special. While speaking of a 50% tax on executive bonuses, she was perfectly relaxed—one could even say mundane. No defensiveness. No dilemma. No ducking. Just a simple, unremarkable two-pronged qualification, hedging against regarding the tax as "trivial" (perhaps a response to German Chancellor Angela Merkel's dismissing the idea as "charming") or "interventionist" (almost certainly referencing American anti-tax indignation).
Mme. Lagarde could say all this with no dilemma because she isn't an American. In particular, she isn't an American who embraces the "materialistic vision" (see my post "Why we Americans argue the way we do" for a fuller explanation of that phrase).
People who embrace the materialistic vision of the American Dream narrative believe in personal responsibility. They believe in accountability. But they also feel a visceral revulsion for taxes, especially those that they regard as punishing individual achievement that leads to financial success. In the context of the recent financial crisis, these two impulses are at odds.
For 30 years, the Reagan version of the materialistic vision dominated the American landscape. But it ran out of gas to account for and solve the problems of our era. It can't embrace real accountability with heart all in. That would require full-throated regulation of Wall Street's acquisitional impulse. That would prohibit the moral hazard of allowing arrogant traders to load their wallets with taxpayer-engaged largesse.
I like Mme. Lagarde's principles of clarity and accountability. And I like how easily accountability lives in her world without hand-wringing qualification or nauseating obfuscation. President Obama and the Congress would do well, it seems to me, to contrast Mme. Lagarde's principled accountability with Goldman's moral solipsism as they address financial reform.
Rings true to me. And you?
Apr 26, 2010
Clarity trumps transparency.
This morning, Morning Joe featured French Economy and Finance Minister Christine Lagarde discussing the financial situation in Greece and the EU’s response. Toward the end of the conversation, she was asked to comment on the American financial "reset." Here’s how it went:
Lagard: “It all rotates around key issues and principles. And to me, anything that supports clarity, things being over the counter for real …”
Joe and Mika: “Yeah, transparency …”
Lagard: “I’m not sure that transparency is the right thing. [With] transparency, you can have so much information that you’re lost in it. So I'm much more in favor of clarity with what really matters.”
Ms. Lagard's distinction between clarity and transparency is right on. The difference is point of view. It’s a difference that matters.
Transparency considers only the message giver—in this case, financial institutions. Transparency requires publication and nothing more. Once all is published, all is transparent, whether or not the audience gets lost.
But clarity as a communication concept includes the message receiver. A message is clear only if the audience understands it. Clarity implies interplay among parties in a communication transaction that successfully transfers intended meaning. In that sense, clarity is a stricter standard than transparency. To demand clarity is to require financial institutions to communicate so that reasonable people will actually understand what the institutions are doing and what the risks are. To bring things over the counter, for real.
All too often, institutions use transparency to obfuscate, not to clarify. Messages about the details of a car lease displayed on a TV screen in 4 point type and spoken at lightning speed are transparent; they’re not clear. Pages and pages of legalese on credit card applications are transparent; they’re not clear.
Words—in the context of sentences, paragraphs, and stories—shape and reflect the ways we think, act, and value. Mme. Lagard is right. We need clarity about what really matters. That ought to be one of the standards against which any financial reform legislation is measured.
Rings true to me. And you?
Lagard: “It all rotates around key issues and principles. And to me, anything that supports clarity, things being over the counter for real …”
Joe and Mika: “Yeah, transparency …”
Lagard: “I’m not sure that transparency is the right thing. [With] transparency, you can have so much information that you’re lost in it. So I'm much more in favor of clarity with what really matters.”
Ms. Lagard's distinction between clarity and transparency is right on. The difference is point of view. It’s a difference that matters.
Transparency considers only the message giver—in this case, financial institutions. Transparency requires publication and nothing more. Once all is published, all is transparent, whether or not the audience gets lost.
But clarity as a communication concept includes the message receiver. A message is clear only if the audience understands it. Clarity implies interplay among parties in a communication transaction that successfully transfers intended meaning. In that sense, clarity is a stricter standard than transparency. To demand clarity is to require financial institutions to communicate so that reasonable people will actually understand what the institutions are doing and what the risks are. To bring things over the counter, for real.
All too often, institutions use transparency to obfuscate, not to clarify. Messages about the details of a car lease displayed on a TV screen in 4 point type and spoken at lightning speed are transparent; they’re not clear. Pages and pages of legalese on credit card applications are transparent; they’re not clear.
Words—in the context of sentences, paragraphs, and stories—shape and reflect the ways we think, act, and value. Mme. Lagard is right. We need clarity about what really matters. That ought to be one of the standards against which any financial reform legislation is measured.
Rings true to me. And you?
Apr 20, 2010
Why we Americans argue the way we do.
In the 1980s, USC professor Walter Fisher proposed the narrative paradigm, a sweeping theory of human communication. He said that the human race was, in its essence, homo narrans—man the storyteller. In all situations, we think, talk and choose within the context of a web of stories rooted in our experiences and supplying our value systems.
We reason not through a neutral rationality divorced from values but through a narrative rationality comprising reasons we value as good—a “logic of good reasons” in Fisher’s parlance. When an argument satisfies my logic of good reasons, it “rings true” to me. Hence the name of my blog.
The narrative paradigm might sound like ivory tower philosophical stuff. But it has very practical implications for the way we talk to each other about our country.
Fisher argued that Americans’ most powerful and enduring narrative is The American Dream. When most of us hear that phrase, we think about buying a house and giving our children a better life. But Fisher meant something bigger than that.
The American Dream comprises two linked and balancing sub-narratives: the free-enterprise storyline and the fair-play storyline. (Fisher called them “the materialistic myth" and "moralistic myth"; I’ve chosen free-enterprise storyline and fair-play storyline to avoid the language of academia and connoting what he didn’t mean: false fables.) Both are rooted in foundational American documents, history and values. Understanding the relationship between these two visions within particular moments in American history is helpful in understanding the logics of good reasons we bring to public policy debates.
The free-enterprise storyline tells a tale of individual effort, potency and success. Left unfettered by draconian laws, State-sponsored gods, or inherited class limitations, the hard-working individual can succeed at building a better life as measured in achievements and acquisitions—new car, new house, college for the kids, comfortable retirement.
The free-enterprise storyline’s freedom is a freedom to do as one pleases. The self-made individual—or in modern parlance, the entrepreneur—is its most enduring hero. Competition is the process by which the hero does well. Ultimately, the measure of success is an individual’s net worth, which has no necessary ceiling.
Society is a contractual arrangement agreed upon by individuals and existing solely for individuals’ good. The government that governs least governs best, for excessive government regulations only inhibit the freedom and ability of potent individuals to pursue and achieve the American Dream.
The fair-play storyline tells a story of human rights. All people are created equal; all have the right to life, liberty and the pursuit of happiness; governments derive their powers by the consent of the governed and therefore must govern of the people, by the people and for the people according to the better angels of their nature.
The fair-play storyline’s freedom is a freedom to be as one conceives oneself. The public servant—whether statesman, teacher, philanthropist, or nurse—is its most enduring hero. Self-sacrifice for the benefit of others is the process by which the hero does good. Ultimately, the measure of accomplishment is the degree to which others are uplifted.
Society arises as a natural community to protect and elevate those rights for all. A strong government ensures that the rights of all are secured so that all can pursue the American Dream.
Throughout American history, from the revolutionary period to today, public debates have been steeped in language, values, sentiments and policy prescriptions rooted in both of these narratives.
Citizens whose personal interests, histories and temperaments are amenable to the free-enterprise storyline reason reasonably when they advocate for free enterprise, reduced government regulation, the primacy of markets and the superiority of private institutions.
Those whose personal interests, histories and temperaments are amenable to the fair-play storyline reason reasonably when they advocate for civil rights, universal healthcare, reducing income inequity and public education.
Neither of these narratives is more American than the other. Each represents one aspect of the “American Dream,” “what America is all about,” and “the American people”—phrases often employed by advocates in public debates with the implicit (and false) claim of exclusive conceptual ownership.
Perhaps our public-policy conversations would be more constructive if we saw these two storylines as competing but authentic strands of the American Dream. Perhaps there would be a greater willingness to listen constructively to others if we didn’t see ourselves and those like us as in exclusive possession of American identity and values.
That rings true to me. How about you?
We reason not through a neutral rationality divorced from values but through a narrative rationality comprising reasons we value as good—a “logic of good reasons” in Fisher’s parlance. When an argument satisfies my logic of good reasons, it “rings true” to me. Hence the name of my blog.
The narrative paradigm might sound like ivory tower philosophical stuff. But it has very practical implications for the way we talk to each other about our country.
Fisher argued that Americans’ most powerful and enduring narrative is The American Dream. When most of us hear that phrase, we think about buying a house and giving our children a better life. But Fisher meant something bigger than that.
The American Dream comprises two linked and balancing sub-narratives: the free-enterprise storyline and the fair-play storyline. (Fisher called them “the materialistic myth" and "moralistic myth"; I’ve chosen free-enterprise storyline and fair-play storyline to avoid the language of academia and connoting what he didn’t mean: false fables.) Both are rooted in foundational American documents, history and values. Understanding the relationship between these two visions within particular moments in American history is helpful in understanding the logics of good reasons we bring to public policy debates.
The free-enterprise storyline tells a tale of individual effort, potency and success. Left unfettered by draconian laws, State-sponsored gods, or inherited class limitations, the hard-working individual can succeed at building a better life as measured in achievements and acquisitions—new car, new house, college for the kids, comfortable retirement.
The free-enterprise storyline’s freedom is a freedom to do as one pleases. The self-made individual—or in modern parlance, the entrepreneur—is its most enduring hero. Competition is the process by which the hero does well. Ultimately, the measure of success is an individual’s net worth, which has no necessary ceiling.
Society is a contractual arrangement agreed upon by individuals and existing solely for individuals’ good. The government that governs least governs best, for excessive government regulations only inhibit the freedom and ability of potent individuals to pursue and achieve the American Dream.
The fair-play storyline tells a story of human rights. All people are created equal; all have the right to life, liberty and the pursuit of happiness; governments derive their powers by the consent of the governed and therefore must govern of the people, by the people and for the people according to the better angels of their nature.
The fair-play storyline’s freedom is a freedom to be as one conceives oneself. The public servant—whether statesman, teacher, philanthropist, or nurse—is its most enduring hero. Self-sacrifice for the benefit of others is the process by which the hero does good. Ultimately, the measure of accomplishment is the degree to which others are uplifted.
Society arises as a natural community to protect and elevate those rights for all. A strong government ensures that the rights of all are secured so that all can pursue the American Dream.
Throughout American history, from the revolutionary period to today, public debates have been steeped in language, values, sentiments and policy prescriptions rooted in both of these narratives.
Citizens whose personal interests, histories and temperaments are amenable to the free-enterprise storyline reason reasonably when they advocate for free enterprise, reduced government regulation, the primacy of markets and the superiority of private institutions.
Those whose personal interests, histories and temperaments are amenable to the fair-play storyline reason reasonably when they advocate for civil rights, universal healthcare, reducing income inequity and public education.
Neither of these narratives is more American than the other. Each represents one aspect of the “American Dream,” “what America is all about,” and “the American people”—phrases often employed by advocates in public debates with the implicit (and false) claim of exclusive conceptual ownership.
Perhaps our public-policy conversations would be more constructive if we saw these two storylines as competing but authentic strands of the American Dream. Perhaps there would be a greater willingness to listen constructively to others if we didn’t see ourselves and those like us as in exclusive possession of American identity and values.
That rings true to me. How about you?
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