Book Review: THE UP SIDE OF DOWN

THE UP SIDE OF DOWN: WHY FAILING WELL IS THE KEY TO SUCCESS, by Megan McArdle

NY: Viking, 2014

(On sale February 11, 2014)

Hardcover $27.95

When teaching philosophy, I used to tell my students that getting a concept wrong, being confused, misunderstanding or misstating an idea or position were all positive signs. “It means you’re thinking, not just memorizing and regurgitating.” This is a lot of the message of Megan McArdle’s new book: failure can lead to learning, which can lead to growth and success.

One thing you should know, however, is that this is not a self-help book. You and your problems and issues (or me and mine) are not McArdle’s focus. Her canvas is much broader. And that broader vision is both the book’s strength and its weakness.

The big picture approach helps to situate personal experience and individual concerns in a broadly psychological and social context that allows the author to commend or criticize government and corporate policies and programs, as well as the aims and strategies of individuals. On the other hand, it is a weakness when examples drawn from disparate realms are tossed in with insufficient discussion (“punish” puppies to house-train them? How? “spank ... immediately” to discipline children? For what range of offenses, one instantly wonders with some alarm) or when huge global issues such as poverty are brought in for a brief paragraph, acknowledged with a nod, and then left by the side of the road.

Those are my caveats. Having issued them, I want to assure my readers that this book is well worth their attention, for as many reasons as the topics it addresses.

McArdle presents fascinating information from diverse disciplines and draws from it her own conclusions. She writes engagingly not only when recounting very personal experiences (the kind that don't usually make it into books on economics) but also because she brings an open mind to national debates, debates often rigidly polarized in American society at large and treated superficially in familiar sound bytes. The publisher identifies her as “an outspoken Libertarian,” yet time and time again McArdle acknowledges an active role for government, and never does she seem to be hewing to a party line –conservative, liberal, or libertarian. More than once her even-handed discussion reminded me of Aristotle: no one person or group is wrong (or right!) about everything, and she gives every position its due issuing her critique. Then, too, her criticism is based on empirical evidence, not personal opinion or blind ideology. Very refreshing!

What we need, this book implies, is more information, more experiments, and even more gadflies and whistle-blowers. Will that eliminate or even reduce failure?

In your dreams! 

Despite the most thorough market research, scientific research, psychological research -- at the end of the day the market is still made up of human beings, and human beings are and always will be unpredictable.

So why bother? 

Because we can do better. Because we can prevent failure from turning into disaster.

To manage failure and learn fast enough to stay clear of disaster, we must be aware of common errors in the way we process information. Because of the normalcy bias, it’s hard for us to see a crisis if everyone around us is acting as if things are all hunky-dory. (I think of this as the “Emperor’s New Clothes” bias, but really, someone does need to blow the whistle there, wouldn’t you agree?) Then, once we’re all convinced we’re going down the right road, the confirmation bias kicks in to reassure us and will even “bend the map” in order to discount information that would otherwise clue us in to the fact that we are lost. The lesson here, as we used to say to each other in grad school philosophy classes, reading one philosopher after another who started out with what he considered self-evident propositions, “It isn’t always what’s obvious.” Too often we just see what we look for. And then there’s risk aversion, or what I always think of as the why-we-are-in-Vietnam syndrome: We’ve put too much into this! We can’t get out now! Throwing good money after bad makes for disastrous gambling, with ever-mounting losses. Excuse all my Memory Lane quotations today, but it’s true that “You gotta know when to hold ‘em, know when to fold ‘em, know when to walk away, know when to run.”

To anyone familiar with the work of Nevsky and Kahnemann or Dan Ariely, news of the ways in which our reason is contaminated by irrationality is no news at all. The thing is, “knowing” as in “being able to choose the correct answer on a test asking about risk aversion facts or statistics" is not at all the same thing as knowing how to avoid the pitfalls, so any book that reminds us to double-check our thinking is probably a book we need to read. In one book I recently read but did not review, Alex Stone’s Fooling Houdini: Magicians, Mentalists, Math Geeks, and the Hidden Powers of the Mind, the author, who never believed in fortune-telling in the first place visits a fortune-teller, focuses on how she’s doing what she’s doing, sees clearly what’s going on – and yet

Later that day, I caught myself brooding over what Stephanie said – that is, until I remembered the source and pushed these thoughts aside. And yet, no matter how hard I tried to dislodge them, they had a stubborn way of creeping back into my consciousness....  

One of the scariest things about mentalism is that even after you understand how it works, it still feels believable.  

- Alex Stone, Fooling Houdini (2012)

How scary is that?

Okay, I said that The Up Side of Down isn’t a self-help book, but McArdle does have a few words of advice for unemployed job-seekers, most of them good. Her take on why the long-term unemployed slack off on the searching is that the longer they have to look, the more anxiety and unhappiness they experience and that discussions on unemployment benefits should take this into account, to reduce job-seekers’ anxiety and keep them moving – presumably to wherever there are jobs. This was basically a good discussion, as far as it went, but the number of jobs that have gone overseas is left unaddressed, and the advice to spend time with others in the same boat, other unemployed people, for “support” didn’t sound convince me. After all, you won’t get job leads hanging out with other people who are out of work, and you might just get more depressed and feel more hopeless. I wonder if McArdle has read Barbara Ehrenreich’s Bait and Switch. I’d love to see Ehrenreich and McArdle onstage together, not debating, per se, but conversing these important issues at a deep and meaningful level.

There’s much more in this book than what I’ve covered here. For instance, Chapter 8, “Blame,” begins with the way human brains work, brains looking for patterns, causes, and agency – brains jumping, therefore, from accident to intent, positing intention and design to what may be random events, assigning blame where there may not even be responsibility. Just as having control reduces stress, so believing we have control reduces stress. -- But if we’re all in control, designing events to conform to our intentions, isn’t someone always guilty? -- Not so fast!!! We may have only imagined the intention....

The following chapter, “Punishment,” may surprise many readers (and I know from teaching undergraduates that there will be strong resistance here), because in it the author lays out the well-supported claim that visiting vengeance on criminals (‘vengeance’ usually called in this context by the milder term ‘retribution’) is usually counterproductive. She does not argue against punishment in general but says that the consequences, to be both effective and cost-effective, must be immediate and inevitable. No letting small violations slide and then, unpredictably, crashing down with harsh verdicts. Actually, the harsher the verdicts, the more 3-strikes-you’re-out, “the higher the incarceration rate, the less it discourages....” The probation program she introduces to us mainlanders is from Hawaii, called HOPE, and the judge’s message to his probationers, people who have failed usually several times in many different ways, is that everyone wants them to succeed, that the focus from here on in will on the future, not the past.

Closely monitoring probationers costs less than keeping criminals in prison. Likewise, providing free housing to homeless people, even if they are alcoholics and/or drug addicts, is cheaper than the myriad costs to society of homelessness.

With bankruptcy, as with criminals and homelessness, this libertarian author takes a surprising position, namely that choosing bankruptcy can make much more sense than remaining under the crippling burden of debt year after year. Bankruptcy lets people start over. And since so many entrepreneurial endeavors fail, it’s important that people willing to take the risks of starting new businesses should have the opportunity to try again after failing.

In so many ways, in so many realms, forgiveness costs much less than punishment. This should be a wake-up call to individuals, voters, and government officials.

Realizing that McArdle's book originated as essentially ten separate magazine features (the author is a long-time blogger and a writer for Bloomberg View, The Atlantic, The Economist, and Newsweek) helped me make sense of the variety of topics brought together in a single book under one umbrella title. It isn’t the book I expected, but it brought together many intriguing issues, and I look forward to future books from Megan McArdle.