The Writers Coin

Haven’t done one of these in a while, but I wanted to share some good stuff I’ve been reading from around the web. In today’s roundup we’ve got a scam, a horrible mistake, and a history lesson.

• How the Government Dealt with Recessions: A nifty chart from the New York Times with some interesting audio snippets on how the country has dealt with recessions in the past. Hindsight is always 20/20, but it’s important to remember that we aren’t in a unique situation right now. People always seem to forget that and panic. We’ve been here before and we’ll be here again some day. Learn about what’s already happened before you freak out!
• Is Monavie a Scam? LazyManandMoney was one of the very first people to help me out when I got started in the blogging world. He was always very helpful and gracious with his time. Now he’s being sued by MonAvie for some metatags in one of his posts. An employee of the company even called him a douche! You can read about all the drama in his post, but I always find these things so hilarious. When a company doesn’t understand that taking a certain action will only dig them deeper into a hole is just priceless. Keep fighting the good fight Lazy!
• Trial by Fire: This is why I stay subscribed to The New Yorker. This is a LONG piece about Todd Willingham, who was sentenced to death for a fire he claimed he never committed. It’s a really great story/read and highlights the biggest argument against the death penalty: you can’t take it back. It also makes me very nervous because if I were ever in that kind of situation I would always assume that somehow, at some point, someone would save me and fix everything. But sometimes it doesn’t happen and that’s very scary.

The health care debate has set off a huge debate about how this country should deal with the health care of its citizens. But don’t worry, I’m not about to get into the thick of that debate on a personal-finance blog. But I did read something interesting in James Surowiecki’s latest New Yorker article on the health care debate. He starts out the article talking about how people feel about change:

There are times when Americans’ attitude toward health-care reform seems a bit like St. Augustine’s take on chastity: Give it to us, Lord, but not yet. In theory, the public overwhelmingly supports reform—earlier this year, polls showed big majorities in favor of fundamental change. But, when it comes to actually making fundamental change, people go all wobbly. Just about half of all Americans now disapprove of the way the Obama Administration is handling health care.

What happened that caused people to change their minds so drastically and so quickly? Was it all those town-hall meetings that turned ugly? Maybe, but the flip flop in position is the perfect example of how hard it is to get people to change.

Surowiecki goes on:

…the public’s skittishness about overhauling the system also reflects something else: the deep-seated psychological biases that make people resistant to change.

He goes on to quote experiments from Dan Ariely (author of Predicably Irrational, a book I’ve discussed before) on how people value something that they have more than something they don’t have, regardless of whether or not it makes sense.

This can explain our reluctance to change lots of things in our lives: our jobs, our careers, our routines, etc. It even has a name: “the endowment effect.” The thinking is that, while the “current system” might not work very well, at least it works. And trying to change it might be a lot of work—not just to effect the change, but to adjust to the change.

Can you think of something in your life you’d hesitate (or have hesitated) to change because you’d rather keep the status-quo?

Image by Joe Shlabotnik

James Surowiecki has another great article in last week’s New Yorker where he compares the regulation of financial products (or lack thereof) to the way everyday products are regulated.

With consumer goods, there are reliable third-party watchdogs, like Underwriters Laboratories and Consumer Reports. In finance, third parties—like debt-management services and mortgage brokers—are often conflicted at best and corrupt at worst. And buying a house is far more complex, and confusing, than picking out a refrigerator.

Most of us are willing to do a ton of research when we buy a new appliance or tech gadget. We’ll learn a little bit about the megabytes and the megahertz. We’ll go to a few places to make sure we aren’t being had.

But when it comes to financial products, most of us seem to believe we aren’t smart enough to figure it out on our own. So we trust “experts” to handle it for us. These experts aren’t stupid, and they know you feel intimidated by this stuff. That’s how so many people ended up with mortgages they couldn’t afford.

That’s why so many people are getting screwed with their finances right now: they trusted instead of taking matters into their own hands.

I know this stuff is boring to most people—but when you buy a house you are making a HUGE commitment and you need to know what you’re getting into. Especially because there is no Consumer Reports for these kinds of things. Personal-finance blogs are the closest thing I can think of to a place where you can come and learn about banking, investing, saving, etc.

How sad is that?

Either way, it’s up to us to know what papers we sign and what commitments we make. We should know that taking out a mortgage that will cost you 50% of your gross income is a bad idea, regardless of how much you’d like to say to yourself, “Well, if they’re willing to loan me that much, I’ll take it!”

Is it our fault that the mortgage crisis happened and that it took the economy down with it? Not entirely. But our collective ignorance certainly didn’t help matters.

Image by respres

In case you didn’t know, there are at least two things that make up a great writer: read a lot and write a lot. There are other tips, but that’s not what today’s post is about.

Today is about some of the great stuff I’ve been reading recently. These are all great articles and some of them have to do with sports, which are a huge passion of mine, especially baseball.

Whether you enjoy sports or not, these are fantastic pieces of writing:

• How David Beats Goliath by Malcolm Gladwell: This is a great look at how average or mediocre teams can equalize the playing field. Specifically, Gladwell looks at basketball and why the full-court press isn’t used more in the sport. A fantastic read.
• Brain Games by John Colapinto: The full article isn’t available online, but see if you can find the technology issue of the New Yorker, because this long article is really a fantastic read. Maybe it’s just me, but I find visual cognition theory and neurology fascinating. This article profiles Vilayanur S. Ramachandran, who came up with mirror therapy as a way to help relieve phantom-limb pain. This reminded me of why I love reading Oliver Sacks so much, especially his The Man Who Mistook His Wife for a Hat. This may sound too scienc-y to some, but it’s a fantastic look at how our brain adapts to things like losing a limb.
  
• Bill Simmons and Malcolm Gladwell Have a Tete a Tete:A fun read that spans several topics. Enjoy reading two great writers talking shop about stuff they’re both passionate about. Oh and they even drop a mention of Michael Lewis. What a trifecta!
  
• Plate Discipline So Important Nowadays by Jerry Crasnick: As I’ve said before, I’m a huge fan of Moneyball and OBP as a measure of how productive a baseball player is. This article takes a closer look at what being patient at the plate actually means and what it’s like for a player like Jeff Francoeur, who is a born hacker. Especially since his teammate, Chipper Jones, is one of the best/most patient hitters in the game. If you loved Moneyball, you’ll enjoy this.