When I build a house, or have one built for me – I don’t have the time, energy or money to learn and master all the skills necessary to build a house and still keep the job that will pay for building the house – I don’t expect to have to be constantly monitoring the foundations for cracks, the walls for squareness, the rafters for support, the duct work for leaks, the basic integrity of the house. There are some basic expectations that someone has about the initial state of a house. A lot of these expectations are defined in building codes. The foundations are deep enough that the house doesn’t immediately start shifting. Rafters are strong enough to support the weight loads. Septic lines are sealed to prevent gasses from escaping within the house. Electrical outlets are properly wired to prevent fires and electrocutions. There are basic expectations that society has learned over time and codified, so that I don’t have to learn the same lessons all over again.
Expectations are lessons learned from the past. Why don’t I grab an iron frying pan handle that’s on the stove before checking to see if it is hot? because past lessons learned have taught me that iron retains heat for a while and it is worthwhile to see if it is still hot before grabbing. But a frying pan on a fire is rather simple compared to the overall complexity of a house. Even individual systems in a house can be relatively simple – the water system is just a bunch of pipes and faucets tied together. The electrical system is just a bunch of wires running from a fuse box the outlets (actually let’s simplify it further and get rid of the fuse box and just run the wires straight the to pole in the street.) The structural walls, floors and ceilings are just wood boards nailed together. But putting those three systems: water, electrical and structural, creates a very complex system. You probably don’t want an electrical outlet in a bathtub – my expectation is that it wouldn’t be healthy – and where one system can or can’t go dictates where other systems can or can’t go. You probably want the walls to be where the electrical outlets are but not where the toilet is (by the wall, on the floor – yes. wall running through it – no.) Putting a bathtub in the middle of a bedroom floor might look really neat (especially if it is one of those clawfoot Victorian tubs, colored with a dark red enamel and with gold trim and fixtures) but there are some practical problems with having a tub in a bedroom. The problems are left to the reader’s expectations.
I do expect to monitor the condition of my house periodically, maybe every few years. Foundations will shift over time and corrections can be made before the damage becomes too great, if caught in time. Pipes and seals will degrade over time and will need to be replaced. The one that I have to stay on top of at my place is to stain the exterior siding every two years because we have strong UV year round that will break down the cedar siding rather quickly if it is unprotected. Materials degrade in time, gravity is unrelenting, the laws of physics are unrelenting. I need to monitor the changes and effects on my abode periodically – not constantly, because I have some basic expectations of how things work.
We learn through life what our expectations should be. It seems that some expectations we learn are not realistic. I mean,if you run off a cliff you will start falling right away, you won’t stay up in the air and not fall until you realize there is no ground under your feet. (I think that image has warped some folks expectations of how gravity works, but it is a learned expectation.) A lot of expectations I have are not personally learned but have been transmitted from the society around me, via osmosis, to me.
What brought on this rant of houses and expectations? I was thinking about the current financial mess on Wall Street, our euphemism for the financial industry, and what my expectations are. I don’t have the knowledge or expertise to comprehend and manage my assets across the width and breadth of the financial system. So, I have to entrust the care a feeding of my assets to strangers and to trust in the kindness of strangers – because I have some expectations.
I expect the financial system to be built on a solid foundation with interlocking fail-safes to prevent a collapse of the overall structure. Why did I have this expectation? Because the American economy has ridden through several financial storms before and has almost sunk before and we learned some lessons along the way and codified them. And then 50-60 years later, after things have been relatively stable, we removed those codes based on lessons learned and the almost immediately the system collapsed.
Going back to my house analogy, you are supposed to go around periodically and review the state of infrastructure, fix and patch what may be leaking, maybe shell out some big bucks to replace the roof that has been pounded by 10-20 years of hailstorms, in general do what is needed to maintain the function of the house. You don’t go around saying ‘this wall is in our way, let’s take it down’ without considering it is a load-bearing wall.
My expectations on the financial markets are that I should be able to:
invest in the growth of the economy,
have a long-term retirement fund,
plan to have growth in the long-term fund.
have knowledgeable functionaries to run the fund,
know that properly managed securities are a known entity,
assume that the functionaries know what they are doing,
assume that assets invested in will still exist after a period of years,
assume that I am not being invested in securities that will disappear into a bankrupt pit,
expect that funds will fluctuate over the short term but will grow over the long term,
expect the Republicans will do everything in their power to undermine my long-term security.
Overall, I know that investing in securities is fraught with peril and risk. But, I expect that the fund managers I am using will be doing their fiduciary duty to minimize the risk. And that fiduciary duty includes wandering around the house and looking for cracks in the foundation and leaks in the pipes and the roof. And moving my stuff away from the leaks and the cracks until the repairs are made. The SEC is the repair group to fix the leaks and cracks. If the cracks are being caused by a shifting foundation then they will need to jack up the rafters and shore up the foundation to keep the stability. Expensive project. Or they can let the foundation collapse, clear it and everything that fell with it away, and rebuild the damaged section on a new foundation. Probably an even more expensive project.
Am I being naive in my expectations? Are they realistic? or are they the cartoony “I am still safe until I look down and see that I am standing on thin air.”?