Hannah Arendt Center for Politics and Humanities
8Apr/130

Amor Mundi 4/7/13

Arendtamormundi

Hannah Arendt considered calling her magnum opus Amor Mundi: Love of the World. Instead, she settled upon The Human Condition. What is most difficult, Arendt writes, is to love the world as it is, with all the evil and suffering in it. And yet she came to do just that. Loving the world means neither uncritical acceptance nor contemptuous rejection. Above all it means the unwavering facing up to and comprehension of that which is.

Every Sunday, The Hannah Arendt Center Amor Mundi Weekly Newsletter will offer our favorite essays and blog posts from around the web. These essays will help you comprehend the world. And learn to love it.

"My Republican Friends Ask if I've Gone Crazy."

frumminiA favorite exemplar of American intellectual is the reformed proselytizer, which in part explains the celebrity of David Frum. A lifelong Republican and official in the George W. Bush administration, Frum was part of the neo-conservative movement. For the last few years, however, Frum has positioned himself as a centrist, the thinking man's Republican. In 2011 he published a manifesto of sorts, breaking with the extremes of his party: "I've been a Republican all my adult life. I have worked on the editorial page of The Wall Street Journal, at Forbes magazine, at the Manhattan and American Enterprise Institutes, as a speechwriter in the George W. Bush administration. I believe in free markets, low taxes, reasonable regulation, and limited government. I voted for John McCain in 2008, and I have strongly criticized the major policy decisions of the Obama administration. But as I contemplate my party and my movement in 2011, I see things I simply cannot support." The full essay is well worth reading today. So is Frum's blog, one of the best. Take a look, and then come hear Roger Berkowitz and Walter Russell Mead talk with Frum in NYC on Tuesday, April 9th, as part of the Hannah Arendt Center's series, "Blogging and the New Public Intellectual." More information here.

What is Poetry For?

poetIn honor of National Poetry Month, The Big Think asked Robert Pinsky, the 39th Poet Laureate of the United States, about The Favorite Poem Project, which he founded in 1997. In the course of the interview, Pinsky speaks about teaching poetry: The best thing I know of about teaching art is in William Butler Yeats' great poem, "Sailing to Byzantium." He says-in the first draft he said, "There is no singing school, but studying monuments of its own magnificence." He doesn't say there's no singing school but going to an MFA program or to Julliard or to Conservatory. He says the way, indeed the only way, you learn singing or any other art is to study, not just sample or be exposed to, but to study. Not just things that are pretty good or not bad or that are in fashion this year, but monuments of the arts magnificence. And that's how you learn something.

Saxifrage

saxIn William Carlos Williams' poem, the Saxifrage is the flower of insight and invention, the flower that "splits the rocks." For Tim Cook (not that Tim Cook for you Apple fans), the Saxifrage School is the two-year old effort to re-imagine college education. The school has no buildings and few permanent staff. "Saxifrage is woven into the bustle of three East Pittsburgh neighborhoods. A graphic-design course is taught in a coffee shop. A course on organic agriculture uses the boiler room in an abandoned city pool house for its seed-starting workshop. Other offerings are computer programming and carpentry & design. The courses are taught by working professionals and craftsmen, and the plan is to hire adjuncts and Ph.D students from traditional colleges to teach humanities classes as they are added." The advantage is low cost and high flexibility. And it is part of a growing trend of alternatives to traditional college education.

The Burden of Fees

hatsMarian Wang points to one of the reasons that college is so much more expensive than it appears to be: fees. Fees amount to a "second tuition" that often means that students end up paying far more than the sticker price for an education. Driven by decreased state support, colleges and universities are using these extra charges as a way to close the funding gap. Wang uses Massachusetts as a particularly egregious example: "At state schools in Massachusetts, where the state board of higher education has held tuition flat for more than a decade, "mandatory fees" wind up far outstripping the price of tuition. At the University of Massachusetts Amherst, the flagship of the UMass system, mandatory fees are more than six times the cost of in-state tuition."

Religion for Atheists

atheiLate last month, The New Statesman asked several thinkers about what purpose religion might serve for an atheist. Among the most popular answers is Karen Armstrong's: "Throughout history, however, many people have been content with a personalized deity, yet not because they "believed" in it but because they learned to behave - ritually and ethically - in a way that made it a reality. Religion is a form of practical knowledge, like driving or dancing. You cannot learn to drive by reading the car manual or the Highway Code; you have to get into the vehicle and learn to manipulate the brakes."

Featured Upcoming NYC Event

frumminiBlogging and the New Public Intellectual

An Ongoing Series of discussions moderated by Roger Berkowitz and Walter Russell Mead.

April 9, 2013 at Bard Graduate Center

 

David Frum, blogger for The Daily Beast & The Huffington Post.

David Frum is back. And he's jockeying to be the front and center of the post-Romney American conservative movement".  - Eddy Moretti

Learn more here.

From the Hannah Arendt Center Blog

This week on the blog, Jennie Han considers how Arendt's idea of critical thinking was influenced by Kant's idea of a "world citizen." Jeff Champlin discusses Seyla Benhabib's essay, "Hannah Arendt and the Redemptive Power of Narrative." And Roger Berkowitz thinks about the line between human and animal consciousness.

8Aug/120

The Fecundity of the Unexpected

Readers of the Hannah Arendt Center blog are well acquainted with the pension train wreck that is heading our way.  It is not only public union pensions but also those corporate pensions that still guarantee defined benefits that are radically underfunded. And what hides the immensity of the problem is continued unrealistic assumptions about long-term future returns.

As was reported recently, Maryland—to take just one example—continues to assume a 7.75% annual return on its public pensions, which is even higher than the 6.6% 100 year historical average on stock returns.

While there is blame to go around—including feckless politicians and Wall Street hucksterism—the root of the problem may be a general unwillingness on all sides to realize that the last 100 years may have been an aberration. This is the argument that legendary investor Bill Gross makes in a report he sent to PIMCO clients this week.

Gross takes aim at the oft-repeated "truth" that over time stocks will return a real return of 6.6%. He argues that the returns over the last century were predicated on a Ponzi scheme, giving extra returns to shareholders at the expense of laborers (declining real wages) and government (declining real taxes). As those trends reach their limits, it is inevitable, Gross writes, that real returns must decline as well:

The legitimate question that market analysts, government forecasters and pension consultants should answer is how that 6.6% real return can possibly be duplicated in the future given today’s initial conditions which historically have never been more favorable for corporate profits. If labor and indeed government must demand some recompense for the four decade’s long downward tilting teeter-totter of wealth creation, and if GDP growth itself is slowing significantly due to deleveraging in a New Normal economy, then how can stocks appreciate at 6.6% real? They cannot, absent a productivity miracle that resembles Apple’s wizardry.

And it is not only stocks that will suffer. With treasuries yielding 2.55% (less than inflation), it is increasingly unlikely that long term bonds will provide meaningful returns.  The sad result:

Together then, a presumed 2% return for bonds and an historically low percentage nominal return for stocks – call it 4%, when combined in a diversified portfolio produce a nominal return of 3% and an expected inflation adjusted return near zero. The Siegel constant of 6.6% real appreciation, therefore, is an historical freak, a mutation likely never to be seen again as far as we mortals are concerned.

The consequence of these reduced expectations for public and private pension funds (and also for retirees with 401k plans that assume healthy investment returns) are dire. Simply put, throughout society, we are living beyond our means. We are in denial and continuing to make unrealistic investment assumptions. Gross draws the inevitable lesson for pension plans:

Private pension funds, government budgets and household savings balances have in many cases been predicated and justified on the basis of 7–8% minimum asset appreciation annually. One of the country’s largest state pension funds for instance recently assumed that its diversified portfolio would appreciate at a real rate of 4.75%. Assuming a goodly portion of that is in bonds yielding at 1–2% real, then stocks must do some very heavy lifting at 7–8% after adjusting for inflation. That is unlikely. If/when that does not happen, then the economy’s wheels start spinning like a two-wheel-drive sedan on a sandy beach. Instead of thrusting forward, spending patterns flatline or reverse; instead of thriving, a growing number of households and corporations experience a haircut of wealth and/or default; instead of returning to old norms, economies begin to resemble the lost decades of Japan.

We should applaud Gross for saying what many of us suspect: that the efforts of technocrats who populate pension plans to predict future returns is unpredictable at best and more likely subject to rosy biases. And yet even Gross then goes on to assume the tone of an all-knowing sage, something that seems de rigueur for public commentators today. We will solve the problem, Gross assures us, by turning to inflation.

Maybe Gross is right. But whatever the future holds, we must first confront the fact that as things now stand, we face a collective reduction in our wealth. How we respond to the reality of that threat will define the United States in coming generations. Either we can continue to insist that we are a wealthy nation and go on spending and living as if nothing had changed, or we can adjust our expectations downward.

Or we can somehow seek to unleash new forces of wealth creation that would generate the kind of economic growth and social and economic change that will lead to unexpected transformations in who we are.

We should neither take Bill Gross' prognostications as prophecy nor deny the reality he describes. Gross offers merely a hypothesis about the future, something far different from a fact. We do not have an adequate understanding of human nature and human economy to predict the GDP for this year, let alone for 2030. Human spontaneity, chance, and freedom mean that predictions of the future are simply calculations based upon the assumption that such and such will happen if men act rationally and nothing unexpected happens. In such cases it is helpful to recall Pierre-Joseph Proudhon's remark (loved by Hannah Arendt) that "the fecundity of the unexpected far exceeds the statesman's prudence."

Read more from Bill Gross here. You can also read more on Pensions as Ponzi schemes here and here.

-RB

*This post originally appeared yesterday on Via Media.