Looking for the Logos of Lucre II: Bloodsucking Capitalists

Makers and Takers: How Wall Street Destroyed Main Street by Rana Foroohar. Crown Business. New York. 2016.

IMAGE: JP Morgan

Thomas Picketty’s Capital in the Twenty-first Century, depicts the rise of economic inequality in the developed world since the 1970s and warns of the increased political and economic instability this may cause. Rana Froohar’s account of the rise of finance in the United States during the same period shows in more detail how that instability has come about.

The book is billed as being written for the ordinary citizen, not the economically sophisticated, but you will find plenty of terms that are not explicitly defined, especially the bewildering variety of financial instruments – futures, swaps, etc. With that caveat, this is a quite readable book, with plenty of examples and sources to back up her points.    What follows are some of the things I took away from my reading. They are not in the order she presents things, but instead in a rough chronology.

To begin with, the slowdown in economic growth and rise in inflation, beginning in the late sixties, set off a search for higher-return investments. Higher returns, though, come with higher risks. Savings and Loan institutions, for instance, had to pay higher rates to attract deposits, but that meant also investing those deposits in less secure assets than home mortgages and car loans. The result was a Savings and Loan crisis (1980-1996) that required a taxpayer bailout of over a hundred billion dollars.

Starting in about the 1980s, tax laws have encouraged borrowing and favored capital gains over earned income. Cuts in top rates also let the upper percentiles of the population accumulate more wealth. Furthermore, economic ideology shifted towards the view that corporations exist only to increase the value of stockholders’ shares as rapidly as possible. “Markets know best” became the stock answer to all questions of economic policy.

Bill Clinton and his Wall Street insider Treasury Secretaries succeeded in changing banking laws to remove the prohibition on commercial banks selling securities as well as making loans. Banks got bigger: some, “too big to fail.” From 1995-2000, the dot com bubble was a further indication of the greater instability in the financial system.

The rapid growth of mortgages on existing houses and the complicated, high risk securities that were based on them led to a still worse crash in 2008. Rather than reining in that kind of speculation, lawmakers and regulators did little to change the incentives that lay behind the debacle or punish those responsible, even when fraud may have occurred.

Our current situation is easy credit, lax regulation and an ideology that favors shareholders over all others in deciding how publicly traded companies are run. Rather than serving as a means to channel money towards productive investments, the financial system is creating more and more debt based on existing assets. Corporate buyouts, often involving huge amounts of borrowing, are one example.

 Successful companies like Apple have lots of cash, but it is hoarded, especially in offshore banks, or plowed into financial investments like credit card lending, rather than into new plants, research and development or improving the condition of the workforce by raising wages and benefits. Boards of directors spend trillions on stock buybacks that help mainly wealthy shareholders, and the top executives, who are paid mostly with stock options.

The financial sector of the economy now receives almost a third of all corporate profits, triple its share as of the early 1990s. In return it delivers slow economic growth, flat wages and great risk of another crash. Most people have little or no retirement savings. What they do have is often in insecure, high fee investment funds that enrich their managers at the expense of their clients.

Thus, as Froohar explains, the financial sector, whose function was to enable money to flow into the hands of the productive in exchange for reasonable interest or dividends, has become an end in itself, growing larger at the expense of everyone else’s security and prosperity. The mutually beneficial fiduciary (trust based) relationship between society and bankers has been replaced by almost unrestricted exploitation of the economy and society by bankers. The popular discontent this leads to is evident all around us.

It seems to me, as an ecologist, rather than an economist, that the situation is like a beneficial symbiont mutating into a virulent parasite of its host. By taking more of the host’s resources and giving back less, the parasite can replicate faster, driving out the beneficial variety, but in the long run, the host population will become unstable and decline or even go extinct. That is unless the host evolves to resist the parasite.

The difference between the two scenarios is that while mutation and environmental changes are beyond the control of the players in the evolutionary game, the ethical, social and legal environment of business is subject to democratic process. The question is whether the majority can somehow prevent the wealthy from writing the rules to suit themselves. Donald Trump exploited popular discontent in his successful campaign against a candidate strongly identified with Wall Street. In office, however, his actions have been much more favorable to the extremely rich.

Could a leader like Bernie Sanders or Elizabeth Warren, with new legislators committed to change, begin to turn things around? Will it have to wait for schools of business and economics to begin teaching about fiduciary responsibility to society as a whole, not just stockholders? Like a host lucky enough to mutate so as to resist its new parasite, our society might once again, as in the New Deal era, fight off this disease before depression, violent revolution or fascism set in.

Looking for the Logos of Life VIII: Organism and Superorganism

I Contain Multitudes: The Microbes within us and a Grander View of Life by Ed Yong. Harper Collins. 2016.

IMAGE: Wolbachia inside an insect cell

Who are we really? A question with a thousand answers, one being that we metazoan animals are large collections of cells, descended from a single fertilized egg cell, and organized into tissues, organs and systems, forming an individual. But, like any other object that contains nutrients and and energy ( and we contain a lot of both) we are also a good habitat for other kinds of living things, especially small, unicellular ones. In fact, there are more cells in our body of other kinds, with different DNA and different ancestry, than there are human cells. Most of them live in our intestines, but there are lots in and on every surface exposed to the outside, from our scalp to our toes.

What are they doing? Until 1676, when van Leeuwenhoekdescribed seeing microbes for the first time, we knew nothing of these guests on and within us (nor our own cellular structure) Cell theory did not become a standard tenant of biology until the mid-nineteenth century, and the germ theory of disease followed decades later. For a considerable period after that, microbes enjoyed very bad press, but it gradually emerged that these organisms were in fact mostly benign and possibly even essential to our well being.

We are not alone, of course: microbes are everywhere on and in plants and animals, including in microbes themselves. This book nicely recounts what has been learned about the manifold, complex ways microbes, especially bacteria, are woven into the fabric of the biosphere.

From the way bacteria form the luminescent organs of squid to how the sugars and antibodies in mothers’ milk regulate development of human infants’ digestive and immune systems, nourishing some bacteria and discouraging others, Yong shows the many ways animals depend on symbionts.

With the development of fast and cheap genome sequencing techniques, we can now characterize the microbiome, as it is called, for many organisms in detail. What has emerged is what Darwin described in his famous image of the tangled bank: an intricate network of ever evolving relationships among multitudes of actors, all struggling to survive and replicate under varying circumstances. Since we also know that gene sequences are exchangeable, just like energy and nutrients, from one organism to another, it is not too surprising to read of frequent exchanges among the microbes and sometimes between them and their hosts.

We also know, thanks to Lynn Margulis, that we still carry the highly evolved symbionts that first came together to build our eukaryotic cells from prokaryotic bacterial cells, a billion and more years ago. Our energy transforming mitochondria are the best known example, along with plants’ chloroplasts.

Not all relationships are benign: apart from acute and chronic infections, some fatal, there are lots of suggestive associations between for example, gut microbes and obesity, autoimmune disease and cancer. But at least we aren’t insects or worms, who frequently have their tiny lives disrupted by the almost ubiquitous Wolbachia, a bacterial symbiont that can twist their sex and reproduction in bizarre ways, but in other cases provides essential nutrients the host can’t make or facilitates the bugs’ own parasitic relations to plant or animal victims.

All this has practical implications, of course. If we could understand the workings of our relationships to microbes, we might be able to control some of the pathologies mentioned above. We might be able to provide better alternative nutrition for infants whose mothers can’t or won’t nurse them. We might be able to modify other organisms or build artificial ones to better suit our needs (see the review of Underbug in Science) for chemicals, food, etc. Of course, a little knowledge can be a dangerous thing, as witness the current interest in “probiotics,” whose benefits are largely unproven, or the even grosser move to fecal transplants. I’m not sure we are ready to safely manipulate our own microbiomes yet.

On a sounder footing, there are pilot studies of using Wolbachia to control the spread of dengue fever by mosquitos. Wolbachia prevents mosquitoes from carrying the virus, so releasing Wolbachia infected mosquitoes has been successful in reducing transmission of the disease. On the other hand, using antibiotics to kill symbiotic Wolbachia that enable filariasis worms to attack humans has resulted in the first successful treatment for elephantiasis.

The key thing, as my microbiologist father passed on to me from his idol, Theobald Smith, is to understand the ecology of the symbiotic relationship. In the Wolbachia-filaria relationship, there is a bit of love hate. Specifically, the worm has to have its own ways of stopping Wolbachia from becoming a parasite instead of a mutualist. If we could learn to manipulate those natural controls, we might have a way to trick the worm into eliminating Wolbachia and hence, ending its own ability to survive in its human host. Then even people who can’t take a long course of powerful antibiotics could be cured.

So much for the practical implications, of which these examples are just the tiniest hint. What does this new understanding tell us about the logos of life? Are there profound consequences for our self understanding in the realization that we contain multitudes?

I think that nothing here undermines the basic Darwinian conception of evolution by natural selection. Exponential growth (resulting in a struggle for existence) and genetic variation in populations lead to natural selection within these communities of organisms. The question seems to be what are the units on which selection acts? In the case of symbionts transmitted from parent to offspring and that can’t be expelled, it is likely, as is obvious with mitochondria, that the partnership as a whole must be what is acted on. Where the partners are acquired from the environment and can be lost and replaced, it seems to make more sense to think of coevolution, with each as a component of the environment of the other.

It’s reasonable to think that there must be a spectrum of such relations from purely casual and opportunistic to completely integrated. Is there a tendency for relationships to evolve towards complete integration? Lynn Margulis seemed to think so; she believed that such symbiogenesis was a more significant phenomenon than natural selection. I think that the logic of the process indicates otherwise. Self replication is the fundamental process; integration occurs when divergent lineages converge because of mutual advantage in the struggle for existence.

The accompanying loss of independence doesn’t matter. Very few organisms are totally independent of others. Research suggests that most animals are parasites, if we include plant parasitic herbivores, and so they require a host or hosts to survive. Even scavengers and plants rely extensively on fungi and bacteria to release nutrients. Many fungi, in turn, are dependent on symbiosis with plants. That’s probably the main lesson here: the biosphere is a web of interdependent organisms, and the best way to live is with as much help as possible. As Red Green says, “we’re all in this together.”

Note: Underbug: An Obsessive Tale of Termites and Technology by Lisa Margonelli, Scientific American/Farrar, Straus and Giroux, 2018, also deals with symbiosis and the lives of some of the most socially integrated of organisms, the termites. Termites provided some of the earliest studied examples of complex symbiotes: the amazing protists in their guts possess a whole array of bacterial symbiotes themselves that enable them, and hence the termites, to digest wood. The so called advanced termites have gone another route, letting gardens of fungi in their giant nests do the work of digestion, just like the equally remarkable leaf cutter ants.

This book deals mostly with the many lines of research inspired by termites, more so than the details of their ecology and evolution. Still, it is a fascinating story about how we humans are expanding our own possibilities by looking closely at complex organisms. For more, see the review in Science.

Discordant Visions

The Wizard and the Prophet : Two Remarkable Scientists and their Dueling Visions to Shape Tomorrow’s World by Charles C. Mann. New York : Alfred A. Knopf, 2018.

I listened to the Audible edition, which was read with a great effort to sound dramatic and to pronounce every foreign name or word with a perfect accent, both of which I found distracting.

What is the right term for the series of issues that came to public attention in the last half of the 20th century? That is, those that involved the increasing human population, economic growth and intensive exploitation of the natural world, climate change, pollution, etc? Collectively, they can be characterized as “environmental,” but to say this was the era of environmentalism doesn’t exactly fit. Many of those involved would reject the label, “environmentalist,” seeing themselves as biologists, economists, social scientists, or ecologists in the narrow, scientific sense. The older label, “conservationist,” would fit some, but not all those involved. I don’t have an answer to the problem of saying in a word what this book is about.

Mann tries to sum up the tensions and perplexities of this broad historical phenomenon by following the lives and careers of William Vogt and Norman Borlaug. The first was a conservationist in the old sense, involved with groups like Audubon and author of an influential book in the late 1940s, Road to Survival, a neo-Malthusian polemic on population growth exceeding the carrying capacity of the Earth. He was a major influence on Rachael Carson’s Silent Spring, the book often cited as the major impetus behind Earth Day 1970. The second was a midwestern born and educated plant breeder who developed wheat resistant to stem rust and then added further improvements that greatly increased yields. First in Mexico, then in other developing countries, supported by the Rockefeller Foundation, this work became the basis of the green revolution, and Borlaug received a Nobel prize.

Mann treats these contrasting stories as exemplars of the familiar dilemma: can science and technology allow us to keep expanding human demand, or do we need to reduce demand, primarily by stopping population growth and cutting our per capita consumption? He considers this in relation to four domains that he labels earth, air, fire and water, that is, food and agriculture, climate change, energy generation and water supply. For each he describes the “wizard,” approach – Borlaug – and the “prophet,” approach – Vogt. He takes us through technological solutions being developed by modern day wizards, and then tells us the views of modern day prophets, who say these solutions won’t work and who propose “greener,” more “sustainable” solutions of their own. At the end, he attempts a synthesis, but it is not clear whether there is a way to reconcile such starkly contrasted views. What I found interesting was not so much the contrast as the similarity between their conceptions of the way through the difficulties, or even catastrophes, they envisioned. Both saw the critical decisions as coming from the top, through national or international governing bodies, staffed by experts, although the experts in the two cases would be applying very different principles.

The trouble with this is that such solutions quickly lose sight of human values like equity and freedom. The green revolution greatly increased food supplies, but also largely destroyed small farmers’ lives and led to the growth of the developing world’s mega cities, with their sprawling shanty towns. Attempts to rein in growth often seem to place the heaviest burdens on the poorest people, while protecting the lifestyles of the already well off. At best, affluent folk get a steady bombardment of guilt-inducing environmental propaganda, along with promotions for exotic ecotourism destinations.

Economic liberalism and the global market economy have no use for restraint, so if there are limits to growth, it’s hard to see how the free market society can avoid hitting up against them. If there aren’t any limits, as many still insist, at least in the immediate future, does that mean we should continue to allow things to develop? In an earlier post, Climate Change, Equity and Security, I considered how a sustainable future might be possible, if more attention were given to equity in development, through the imposition of clear and simple limits (on speed, on emissions, etc.) to restrain the growth of inequity and waste, while leaving room for individual freedom and innovation. Likewise, efforts to constrain the growth of economic inequality could also ease some of the current threats to the global environment. Poverty seems to me to be a major driver of population growth, because it delays the demographic transition that rich countries have gone through.

People certainly need the vision, knowledge and advice of scientists like Borlaug and Vogt, but I’m not sure that they alone can offer solutions to the complicated collection of problems that result from human flourishing on Earth. The economic miracle of the green revolution, coupled with humanity’s incredible endurance, has enabled us to escape the catastrophe that Vogt foresaw, but it seems very clear to me that sooner or later we will exhaust nature’s resilience and human patience. Whether it is grain, meat, cars or human souls, more can’t always be better. We need to think more deeply about what we really need from the Earth and how, as free people, we can sustain our life together.

Despite the limitations of his either/or framework, Mann makes the stories of these two men interesting enough for a good read. You can enjoy those parts of the book, and skip the earth, air, fire and water, if you like.