NANTUCKET, Massachusetts — Hope and despair got a thorough airing in the second installment of The Nantucket Project last week. In the end, hope seems to have prevailed—but not before a rough slog through much of what’s wrong with the global economy and general human condition.
This being election season, let’s start with politics. The former Republican uber-lobbyist Jack Abramoff, fresh from 43 months in federal prison for conspiring to bribe public officials, asserted that influence peddling remains alive and well. “The crime is that 99% of what I did was legal,” said Abramoff who, naturally, has a book on the subject, Capitol Punishment: The Hard Truth About Corruption from America’s Most Notorious.
Abramoff, portrayed in the 2010 film Casino Jack, spoke of doling out $1.5 million a year in prime seats to sports events as one way to gain access. Now he says every citizen deserves the same entree to representatives that lobbyists enjoy. That of course is true—if only we could all afford the tickets.
Harvard law professor Larry Lessig piled on the institutional corruption theme, arguing that our general elections are a sham because the choice of candidates is decided by the 0.05% of the population that contribute to campaigns. He has said that fewer than 200 Americans have given more than 80% of the individual super-PAC money spent in the presidential election so far this year. In 2010, 42% of election funding came from 0.000015% of Americans. That’s just 47 people. These extremely small numbers of people are the ones who really pick our leaders.
Also heard was Peter Thiel, the billionaire hedge fund manager, who argues that innovation in America has stalled in so many key segments that our biggest question today is, “How can we redevelop the developed world?” In the last 40 years, Thiel says, the pace of change has slowed dramatically in areas like transportation, energy and medicine. “We’re not moving around any faster,” he said. Why? It costs too much. In fact, with the decommissioning of the Concorde in 2003 we are actually moving slower. This inability to innovate helps explain why living standards in the U.S. are slipping relative to the world.
But there was plenty of hope as well. In one captivating presentation, MIT professor Cynthia Breazeal, perhaps best known for her work and TED talk on personal robots, unveiled her newest research initiative: enabling kids to teach themselves to read. She disbursed tablet computers to young children in Ethiopia and with zero instruction—simply by playing with the learning games on the tablet—the kids learned the alphabet in a month and were forming sentences in eight months.
This stunning result would seem to have wide application. For example, students throughout the world get almost no formal education in personal finance, which is an increasingly important subject matter in a world without social safety nets. Maybe we should start giving them appropriate game-filled iPads in first grade. They can teach themselves.
In another presentation with personal financial implications, Yale psychologist Laura Santos showed that humans might be too trusting for their own good. In a study, chimps did a better job than children of identifying the unnecessary steps they were shown in their quest for a piece of candy. People seem to copy other people, for good or bad.
It’s easy to see how this penchant makes us susceptible to marketing claims and advice from bankers and sales people and other self-interested parties. “We tend to suck in information,” Santos said. “But is it the right information?”
In a similar vein, Cass Sunstein, University of Chicago law professor and former member of the Obama White House, demonstrated the “stickiness” of default options. “Default rules are all around us and they really matter,” said Sunstein. Faced with a tough decision, people tend to avoid action and go along with some predetermined course. This is why personal savings rates soar among employees at companies that make 401(k) plan enrollment automatic. Workers can opt out but usually do not.
On the broader economy, researcher entrepreneur Vivek Wadhwa said we should stop worrying about China’s economic might and massive store of U.S. debt. “China is toast,” said Wadhwa. Its advantage of low manufacturing costs will disappear as 3-D printing—basically, home manufacturing—takes off in coming years. It’s not easy to reconcile that view with the world of declining innovation that Thiel described. But it’s a lot more fun to believe.