Maverick Philosopher

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

[. . .]

In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.

Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”

I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities.

I have but one quibble. Mr. Buffett tells us that cash equivalents are "certain" to depreciate in value. How can he be so cocksure about that? Is he certain that deflation is not in our future? If he cannot predict the markets, as he says, then he can't predict interest rates either. Nevertheless, although one cannot be certain that deflation is not in the offing, it is more likely that continuing inflation is.

I came to my views in the aftermath of the October 19, 1987 Black Monday crash. I was in my 30s in the '80s, and a few years before the crash of '87, I had decided that it was time to seriously apply myself to setting aside some loot for the geezer I hoped to turn into. Being a fiscal conservative, and thus very cautious, I put only a small amount of money into stock mutual funds. I was pleased with the return I was getting, but on Black Monday I panicked due to inexperience and excessive caution and I did something stupid: I liquidated my shares in a very good growth fund and retreated to a cash position.

That was a mistake because once on the sidelines it is very difficult to know when to get back into the game. Long story short, I missed out on a lot of the '90s gains. Here are some of the conclusions I came to, quickly stated, and no doubt in need of refinement, revision and amplification.

Some Principles of a Financial Conservative

1. One must decide on an asset allocation that fits one's psychology and is appropriate to one's age. By my count there are five main asset classes: stocks, bonds, cash and cash equivalents, real estate, and precious metals. There are fancier instruments, but never invest in what you don't understand. If you invest in four or five of the main asset classes you should do well in the long run. If you are conservative like me, you will want to limit your exposure to stocks to say, no more than 30% of your net worth. But of course it depends on how risk-averse you are and your age.

2. Should a person over 55 be in equities at all? Well, how long can you reasonably expect to live? 90 is not an unreasonable expectation for people nowadays. So if you are 60, then you might have 30 years left. Given that fact, I would say it would be foolish not to have some of your money in equities. But as you get older you should shift your asset allocation away from stocks (equities).

Suppose you are 80 and single. Then perhaps you should not be in stocks at all or only to the the tune of 10% of net worth. But suppose you are married to a woman who is 65 and dependent on you for support. Since she might live another 30 years, you might be well advised to be 20-30% in stocks. Or you might have children to whom you want to leave a legacy.

3. Stocks are a long term investment. If you don't think and plan long term, stay away from them. Money that you will need within the next five years should never be put into the stock market, not even when it is in a bull phase. Everyone should have a cash reserve and that money should never be invested in the stock market. Park it in passbook accounts, certificates of deposit (CDs), and money market accounts. Bear in mind that money market accounts are not FDIC insured, and that the standard $1 share value is not guaranteed. But a Treasury money market fund will be very safe for obvious reasons.

4. Of course, no investing for the long term until you (a) have a cash reserve sufficient to get you through two years (not six months as the financial planners often recommend!) of unemployment, and (b) have eliminated all credit card and other non-mortgage debt. If you run credit card debt you will never get anywhere financially speaking. Use credit cards like I do: for the float, the substantial rebates, the record-keeping, and the convenience, but NEVER pay even one cent of interest. I never pay interest, I never pay for the use of the cards, but the CC companies pay me $300-400 per annum in rebates. Not a bad deal. Never buy what you can't afford to pay cash for right now. There is only one good exception to this rule and that is real estate, in particular the house you live in. Cars are not a good exception except perhaps when you are starting out.

To get anywhere financially you must consistently, month by month, year by year, live below your means. Not at your means, below them. Consistently. Very few people do this, but then most people make messes of their lives financially and otherwise.

5. Every form of saving and investing involves risk. You are being one-sided if you point to the risks of the stock market while ignoring the risks of other vehicles. Stuff greenbacks under your mattress and they might get stolen or consumed in a fire. Money in passbook accounts and CDs won't generate enough return to offset inflation. Banks and S & Ls have been known to fail. (And if enough fail at once, that much-vaunted FDIC and FSLIC insurance won't save your bacon!) No doubt it is the return of your money that is more important than the return on it, but if the return does not offset inflation, then, although the money returned to you may be nominally equal to or greater than the money invested, it will really be less: it will be less in terms of buying power, which is all that matters, since money is for spending. And of course the taxes you pay on passbook, money market and CD returns is also a factor to consider.

You think bonds are safe? A bond is a debt instrument. In essence, you loan money to some entity which promises to repay the money at a certain future date with a certain interest. If the entity goes out of business you lose. Since no vehicle of saving or investment is perfectly safe you must:

6. Diversify! Diversification will dilute your return over the long haul but it will reduce overall risk. You should consider diversifying across every economic parameter. Remember the Enron fools? They put their money into one stock, the stock of the company they worked for. So when Enron went down, they were doubly screwed: they lost their 401k accumulations and their income. Everyone knows that one must never put all one's eggs in one basket. So why did these people do something so abysmally stupid? They let their greed suborn their intellects. It was at bottom a moral failure. This is a recurrent theme of mine: the subornation of the intellect by the vices. That is the fundamental reason why we are in the mess we are in right now. There has been a wholesale collapse of morality and common sense both in the population at large and in the elites: the legislators, the academicians, and the business types.

Stock diversification is easily achieved by investing in mutual funds. Choose no-load (no front end or back end sales charge) mutual funds that also feature a low expense ratio. Since the actively managed funds will cost you more and may not deliver more, consider investing in index funds. There are even balanced index funds that provide instant diversification across the entire U.S. stock and bond markets.

7. The stock market is now in free fall, and no one knows where the bottom is. Many will panic, cash out, and lock in their losses. I plan to stay the course. That is, I plan to stay invested and continue buying at the rate I decided was appropriate. I plan to follow the course that I arrived at after due deliberation, and not second-guess myself or let the emotions of the moment throw me off a course judged right in calmer moments. And above all, I will not allow myself to be unduly influenced by what other people are doing or saying. Tune out the noise, trust your judgment (assuming it has proven to be sound in the past), and stay the course.

What are my reasons for staying the course? First, my asset allocation is very conservative and reasonable, fits my psychology (I have no trouble sleeping at night), and my time-horizon allows for recovery. Second, this is an outstanding buying opportunity. Everyone knows that you are supposed to buy low and sell high. But this maxim is very hard to implement because of greed, fear, and conformism. So people almost always do the opposite: they buy high in bullish markets and sell low when the bears come out. They follow the crowd, becoming irrationally exuberant when the markets are rising (no matter what the market, stocks, real estate, precious metals) and irrationally depressed when the markets are in decline. By staying the course and continuing to invest, I buy low.

"But why not cash out, wait for the bottom, and then get back in? That way, you get the benefits of buying low but without losing the value of what you have already accumulated. Why ride it down to the bottom?"

This reasoning is superficially plausible but it presupposes something that is false, namely, that one can know when the bottom has been reached. One cannot predict where the market is going or how it will move. The market cannot be timed or predicted. And it can turn around very quickly. If the DOW can drop 700 points in a day it can also gain 700 points in a day, and you cannot make money in a market unless you are in the market. You must be in the market on the days when it moves up. If you miss those days you will lose out. This from Barron's:

Consider that $1 invested in stocks from February 1966 through May 2007 would have grown to $16.58 in that period. That's a 7% annual return. By contrast, investors who were out of the market in the five best days each year during that span were left with only 11 cents. That's a pretty good case for the buy and hold philosophy, or, if you're out of the market, for getting back in soon.

A third reason for staying the course is that if I bail now, I lock in losses. But holding as I am for the long term, my losses are paper losses as opposed to real losses.

"But a paper loss is a real loss because your net worth is less than what it was before the decline."

This objection ignores the fact that stocks are a long term investment. Since the wise investor never puts money that will be needed in the near term into a long term investment (whether stocks or real estate), he is not fixated upon his actual net worth at any given time. Such an investor accepts fluctuations in net worth as long as there is a reasonable expectation of long term gain. (And if the asset allocation is very conservative, the fluctuation may affect only the rate of growth of a steadily growing net worth.) So, although it is true that the value of one's stock holdings if liquidated during a sharp decline or 'crash' as we are now experiencing will be much less than if liquidated before the decline, this does not bother the long term investor since he has no need and no intention of liquidating his shares. This, I take it, is what is meant by 'It's only a paper loss.'

You can live in a house but not in a stock mutual fund. That being understood, there is an analogy worth drawing. It doesn't matter whether the market value of my house increases or decreases in the near term since I like where I live and I have no intention of selling.

The crucial point, again, is that stocks are a long term investment. If you don't think long term, or if you think the long run won't be your run, or if you think we are on the eve of economic destruction, then stay away from the stock market.

Suppose I told you that I got a 100% return on an investment. You'd be impressed. But when you found out that I had turned $100 into $200 you would laugh. A huge return on a small investment is nothing to crow about. So should we speak of 'meltdown' and 'crisis' if foreclosures are up by 53%? No more than we should speak of making a 'killing' if we turn a paltry one hundred dollars into two.

Reading further in the LAT article, I note that in Modesto, California, 1 in 86 households received a foreclosure filing, where this includes notices of default. I presume that this means that in 1 out of 86 households holding mortgages, a document was received that states either that that the mortgage-holder is in default and in proximate danger of losing the house, or else in imminent danger.

Now if you divide 86 into 1 you get 1.16. So 1.16% of Modesto mortage-holders face foreclosure. Does this justify talk of a 'meltdown'? Not as far as this linguistic conservative can see. Compare the following headlines

Foreclosures up by 53%!

1.16% of households receive foreclosure notices.

The first sounds dire and sell newspapers while the second doesn't. My point is that statistics are meaningless unless and until interpreted and contextualized. And that's something you will have to do for yourself. The article cited makes no mention of my simple point.

Similarly with budgeting. To budget is to approach your personal finances negatively when a positive approach is superior. Instead of setting limits to spending in various categories, specify target savings and investing amounts, and aim high. The Wealthy Barber has a chapter entitled "The Ten Percent Solution." As I recall, the author recommends investing 10% of gross income for long-term growth. That's chickenfeed to my conservative mind. We save and invest far more than this, in some months as much as 50% of gross. The best way to do this, of course, is by automatic payroll deduction. You arrange for your employer to direct depost some percentage of your income into the account of your choice. You then live on what is left over.

Why do you need a budget? If you are self-disciplined you will naturally watch your spending, and of course you will never ever use a credit card for its credit feature. You will use it only for its float, record-keeping, rebate, and convenience features. Allow me to brag so as to make a point that is very important for everyone. I have never paid a cent of credit card interest in my life, and in the last several years, each year I have received $300 dollars cash in rebates for the use of a certain card which charges me no fee for its use. The credit line is huge but I go nowhere near it, and the interest rate I could not care less about. Not only that, but the 'float' makes me even more money. Let's say I have the use of $2,000 for six weeks. During that period the goods are in my possession but the money is in a cash reserve account earning 5%. This comes to $11.53 in interest that is being paid to me on money I have already spent. What a deal!

Suppose you are a leftie who hates 'corporate America.' What better way to stick it to the credit card companies than by becoming a free-rider?

So I ask again, why do you need a budget? If you are self-disciplined you will naturally watch your spending, and if you are not self-disciplined then you will lack the discipline to adhere to your budget.

When I was a graduate student, 'back in the day,' I lived on 2-3 K per annum. And then I got a job whch paid for starters the princely sum of 12 K per annum. I said to myself: "Surely, I can save and invest half of that!" But attitude is everthing. Attitude and will and good judgment. For example, if you are inclined to become financially independent, then you would be a fool to marry someone whose idea of Nirvana is a wallet full of charge cards with unlimited credit lines.

The moral side of the economic problem is paramount to a conservative like me. Those who can deny themselves and defer gratification can become financially well-off in a stable political and economic environment such as we enjoy in these United States. But of course people will not deny themselves and defer gratification. So they must suffer the consequences. The problem is akrasia, weakness of the will. The fundamental problem is not predatory credit card companies, subprime mortgage scammers, and the payday loan sharks. For if you are self-disciplined, cautious, and diligent, they will not be able to get a handle on you.

Scottsdale Phil, a fellow denizen of the Valle del Sol, brought my attention to the first of the Horace quotations, and I know for a fact that he has meditated hard and long on it, and in a thoroughly 'existential' way. The second, which may 'contradict' the first, I found on my own.

Quaerenda pecunia primum est; virtus post nummos. (Horace, Epistles I, 1, 53) Money is to be sought first of all; virtue after wealth. Or, loosely translated, cash before conscience.

Vilius argentum est auro virtutibus aurum. (Horace, Epistles I, 1, 52). Silver is less valuable than gold, gold less valuable than virtue.

The next morning, Tom put on his best suit, a freshly cleaned and pressed gray flannel. On his way to work he stopped in Grand Central Station to buy a clean white handkerchief and to have his shoes shined. During his luncheon hour he set out to visit the United Broadcasting Corporation. As he walked across Rockefeller Plaza, he thought wryly of the days when he and Betsy had assured each other that money didn't matter. They had told each other that when they were married, before the war, and during the war they had repeated it in long letters. "The important thing is to find a kind of work you really like, and something that is useful," Betsy had written him. "The money doesn't matter."

The hell with that, he thought. The real trouble is that up to now we've been kidding ourselves. We might as well admit that what we want is a big house and a new car and trips to Florida in the winter, and plenty of life insurance. When you come right down to it, a man with three children has no damn right to say that money doesn't matter. (The Man in the Gray Flannel Suit, Simon and Shuster, 1955, pp. 9-10)

2. Tip on the nominal amount of the bill, not the amount less a discount. You got the discount, skinflint coupon-clipper, don't be so cheap as to demand a discount on the tip as well.

3. Tip no less than 15%. But when in Rome, do as the Romans do. In Turkey, 5% suffices and more might be perceived as ostentatious. And in some places, a tip is an insult.

4. Do not hesitate to leave no tip or a measly tip to punish poor service. The whole point of tipping is to reward good service and to encourage good service in the future. If I have to beg for a second cup of coffee at a breakfast joint, or am reduced to swiping silverware from adjoining tables, then I am not inclined to leave much of a tip.

5. Tip on the entire bill, including alcoholic beverages, unlike a cheapskate I once knew who tipped only on prandials but never on potables.

6. At buffets, smorgasbords, and other self-service establishments, one should also leave a tip depending on the services rendered. In such places I tip less than 15%.

7. What about tipping on a take-out order in a sit-down restaurant? My inclination is not to tip there any more than I would tip in a fast food joint.

8. Tip the bartender, but if he complains about the size of the tip, tell him to go to hell.

9. I always travel light and carry my own luggage. This obviates the tipping of bellboys and other baggage schleppers. But a hard-working maid who has just done up my room may garner a few bucks.

10. Tip the barber whose floor is now littered with your long hair. My barber charges $12 just recently up from $10. I give him $2 or $3 tip. I exercise my frugality by having my hair cut only three or four times per year. I've been known to go to barber colleges for cheap haircuts. There I can play the bigshot and leave a 100% tip. If you are ever in Mesa, Arizona, check out Earl's Academy of Beauty. You can get a shampoo and a decent cut for $8, less if you are a senior.

11. Suppose you have just dropped $6 for some frou-frou coffee drink at Starbuck's, a Frappacino Mocha Venti, say. Do you leave a tip? I probably should, but I usually don't.

12. Having driven cab, on the mean streets of Boston no less, I always tip taxi drivers unless they are surly pricks in which case they get zilch. I once tipped a taciturn Jamaican two bucks on a twenty dollar fare and the guy had the chutzpah to complain. I told him to shove it. The most I ever tipped a cabbie was 20 semolians on a short airport run to McCarran in Lost Wages. He was an interesting character and his conversation was scintillating. I asked him to name his tip. He said 'twenty' so I gave it to him. It is worth remembering that there are people out there who actually work for a living.

Willie Hurt of Lansing, Mich., won $3.1 million in 1989. Two years later, he was broke and charged with murder. His lawyer says Hurt spent his fortune on a divorce and crack cocaine.

But even if the windfall does not lead to death or divorce or bankruptcy or prison, it will not make one happy or give one's life meaning. Happiness simply cannot be bought. At most, one buys the absence of misery. But for that a modicum suffices. For example, it is difficult to be happy in a bad neighborhood in which crackheads roam the streets and gunfire interrupts one's sleep. But to have the wherewithal to move from such a neighborhood one doesn't need to win the lottery. One needs to finish high school, get a job, keep one's nose clean, save and invest, and give oneself a course in personal finance.

The lottery player, therefore, overvalues money in that he thinks it will provide things it cannot possibly provide: happiness, satisfaction, meaning, love. But he also undervalues it in that he wastes it on lottery tickets! He doesn't understand the value of a buck and the additivity of small amounts of money.

Suppose you blow $5 per diem on lottery tickets. That comes to over $150 per month. If you apply that amount to your mortgage payment you may reduce your 30 year mortgage to a 20 year mortgage thereby saving thousands upon thousands of dollars in interest. If the interest rate is X%, the return is an immediate certain return of X%. An investment with no risk! So what does our innumerate fool do with his $150 per month? He throws it away on astronomically small chances of winning some huge amount, which, if he won it would make his disordered life even more disorderly.

And note that the very fact that the innumerate fellow is so foolish as to gamble away money in the first place in a game in which the odds are the worst possible shows that he is completely unequipped to deal with any money he wins.

There are many arguments against playing lotteries, and against state sponsorship of lotteries. More later. But for now, read this.

What is the underlying principle in play here? Perhaps something like the following:

Whenever market conditions favor any entity's making an 'inordinate' profit, the government has the right to take some of it.

If this is indeed the principle, would a reasonable person subscribe to it? Many of us have watched the values of our houses -- I don't say homes since only a realtor confuses a house with a home -- appreciate dramatically in value recently. My modest pad, for example, has doubled in value in a few years' time. So I've enjoyed a windfall, at least on paper. (Don't forget, what goes up can go down again, and in my conservative view of things, only a fool taps into his house equity except in dire circumstances.)

Should the government get a piece of my 'excess' profits were I to sell my house? If you say no, then how does the real estate example differ from the case of Big Oil?

The topic was debated on C-Span this morning, and the man who took the socialist side spoke of unfairness and gouging and ripoff, etc. in the oil case but not in the real estate case. But isn't it also unfair that a young person just starting out in the wonderful world of real estate must pay twice what I paid for my house? Why am I not a gouger and ripper-offer if I sell it at market value?

If it is acceptable for the government to take 'excess' profits from huge corporations, what principled reason could one have for saying that it is unacceptable for the government to take 'excess' profits from your average owner of the house he lives in?

A man stands on a street corner, Bible in hand, and preaches the gospel of Jesus Christ. Passersby regard him as of no account, as a loser, a bum, a fanatic. They give him a wide berth and would be embarrassed to be seen associating with him. But let the fellow clean himself up, get himself admitted to a divinity school, earn a degree and become an assistant pastor somewhere, and suddenly he has social status. For now his preaching is a livelihood, a means of attaining a comfortable living standard, and he is now a serious and productive member of society. He is now of account and is known to be such at the local bank. He amounts to something in the economic and social currency of the realm. As the Danish Socrates mnight have said, he has learned how to make a living from the fact that another man was crucified.

A novelist sits in her garret and scribbles away day by day. Her relatives and acquaintances think her a failure despite two published novels. You see, they fell stillborn from the press and she barely covered the costs of writing them. When she explains that she lives for her art, some smile indulgently, others display demeanors that run from quizzical to scornful, but all mock her behind her back. For it is clear that she is wasting her time on a lot of nonsense. But let the novelist hit paydirt, and all changes. Now she is of account. Scorn turns to envy. She is on her way to becoming a person of substance in one of the more crass senses of this irridescent word. For now she has found a way to turn a buck from her writing, and that confers value upon it.

Suppose there were no way to make a living from philosophy, or that one’s chances of making a living from it were about as good as a chess player’s from chess. Suppose, in other words, that philosophy had no place in university curricula and that there were no teaching jobs. How much philosophy would be published? How many journals and presses would go under? How many introductory texts would see the light of day? What would become of the professional organizations, the conferences and congresses and the rest of all that philosophically marginal busy-ness? How many ‘philosophers’ would abandon philosophy and end up in real estate?

Would it be a bad thing if there were no way to live from philosophy? The answer is not obvious and indeed depends on one’s conception of philosophy. Consider a related question: Would it be a bad thing if no one were able to make living from religion? In thinking about these questions, you may want to consider the examples of Paul the tentmaker, Spinoza the lensegrinder, and Thoreau the surveyor.

What they lived for, and what they lived from, were kept distinct.

Consider this quartet of claims:

1. Money is the root of all evil.
2. Love of money is the root of all evil.
3. Inordinate love of money is the root of all evil.
4. Inordinate love of money is the root of some evil.

It is easy to see that each of (1)-(3) is false, and that (4) alone is true. Money is an abstract form of wealth and wealth is obviously good. How can something good be the root of all evil? It is not even the the root of some evil. It makes more sense to say that the love of money is the root of all evil. But this too is plainly mistaken. Since money is good, a certain ‘love’ or desire of it is both wise and morally legitimate. It is the inordinate love of money that bears some connection to evil. But to all evil? Surely some of the evil in the world derives from such other sources as the inordinate love of power, sex, and fame. Therefore, the most we can say with a show of plausibility is that the inordinate love of money is at the root of some evil.

An inordinate love is an excessive love, a love unhinged and unbalanced. One form of excess consists in taking for an end in itself what can only be viewed as a means. Thus the miser’s mistake is in taking money to be an end in itself when it can only be a means.

Generalizing the opening quartet yields:

A. X is the root of all evil.
B. Love of X is the root of all evil.
C. Inordinate love of X is the root of all evil.
D. Inordinate love of X is the root of some evil.

I claim that whatever one plugs in for ‘X’ – whether it be money, property, progeny, power, influence, sex, fame, knowledge – results in a pattern of three falsefoods and one truth. You may verify this for yourself.

One conclusion I draw is that evil has no one root. It has many roots corresponding to our many inordinate loves. Since there is no one root of all evil, the eradication of evil is no simple matter. Or if there is a single root, it lies in the disordered human heart. But I will leave the development of this thought to another post.

For some, alcohol is the devil in liquid form. They should avoid the stuff, and it is certainly within their power to do so. For most of us, however, alcohol is a delightful adjunct to a civilized life. What good is a hard run on a hot day that doesn’t eventuate in the downing of a couple of cold beers? To what end a plate of Mama Gucci’s rigatoni, if not accompanied by a glass of Dago Red? I am exaggerating of course, but to make a serious point: alcohol for most us is harmless. Indeed, it is positively good for healthy humans when taken in small doses (1-2 oz. per diem) as numerous studies have been showing for the last twenty years or so.

The fact that many abuse alcohol is quite irrelevant. That is their free choice. Is it Sam Adam’s fault that you tank up on too much of his brew? No, it is your fault. This is such a simple point that I am almost embarrassed to make it; but I have to make it because so many liberals fail to grasp it. So read your prospectuses and be not troubled when you come across names like Seagrams.

I would also point out to the ‘socially conscious’ that if they enjoy an occasional drink, then they cannot, consistently with this fact, be opposed to the production of alcoholic beverages. You cannot drink alcohol unless alcohol is there to be drunk. Consistency demands of them complete abstention.

As for tobacco, suppose we begin by reflecting on this truth: Cigarettes don’t kill people, people kill people by smoking cigarettes, or, to be precise, they increase the probability of their contracting nasty diseases (lung cancer, emphysema, heart disease), diseases which are often but not always terminal, by smoking sufficiently many cigarettes over a sufficiently long period of time. If X raises the probability of Y to a degree <1, I don’t call that causation; I call that probability-raising. It should also be obvious that correlation does not prove causation. So I don’t want to hear about causation in this context. Nor do I want to hear about addiction.

To confuse psychological habituation with addiction is quite foolish. Addiction, if it means anything, has to involve (i) a physiological dependence (ii) on something harmful to the body (iii) removal of which would induce serious withdrawal symptoms. One cannot be addicted to nose-picking, to running, to breathing, or to caffeine. Furthermore, (iv) it is a misuse of language to call a substance addictive when only a relatively small number of its users develop — over a sufficient period of time with sufficient frequency of use — a physical craving for it that cannot be broken without severe withdrawal symptoms. Heroin is addictive; nicotine is not. To think otherwise is to use ‘addiction’ in an unconscionably loose way.

Liberals and leftists engage in this loose talk for at least two reasons. First, it aids them in their denial of individual responsibility. They would divest individuals of responsibility for their actions, displacing it onto factors, such as ‘addictive’ substances, external to the agent. Their motive is to grab more power for themselves by increasing the size and scope of government: the
less self-reliant and responsible individuals are, the more they need the nanny state and people like Hillary, who gives some evidence of aspiring to be Nanny-in-Chief. Second, loose talk of ‘addiction’ fits in nicely with what I call their misplaced moral enthusiasm. Incapable of appreciating a genuine issue such as partial-birth abortion, they invest their moral energy in pseudo-issues.

The main point is that tobacco products can be enjoyed in relatively harmless ways, just as alcoholic beverages can be enjoyed in relatively harmless ways. I have never met a cigarette yet that killed anybody. One has to smoke them, one has to smoke a lot of them over many years, and each time you light up it is a free decision.

Some people feel that smokers are irrational. This too is nonsense. Someone who smokes a pack of cigarettes per day is assuming a serious health risk. But it may well be that the pleasure and alertness the person receives from smoking is worth the risk within the person’s value scheme. Different people evaluate the present in its relation to the future in different ways. I tend to sacrifice the present for the future, thereby deferring gratification. Hence my enjoyment of the noble weed is abstemious indeed, consisting of an occasional load of pipe tobacco, or an occasional fine cigar. (I recommend the Arturo Fuente ‘Curly Head’ Maduro: cheap, but good.) But I would not think to impose my abstemiousness, or time-preference, on anyone else.

As for firearms, one can with a clear conscience invest in the stock of companies that manufacture them. One thereby supports companies that make it possible for the police and military to be armed. Think about it: without gun manufacturers, there would be no guns, and hence no effective police and military forces. And without gun manufacturers, decent citizens would be unable to defend themselves, their families, and their communities against the criminal element. The ‘socially conscious’ or ‘socially responsible’ want the protection afforded by the armed, but without getting their hands dirty. To be wholly consistent, they should go live somewhere where there is no police or military protection.

If the price of 'social consciousness' is logical unconsciousness, then I prefer to be socially unconscious.