Ingredients of a Good Society

November 30, 2025

By Stephen Stofka

Seated around the table this Thanksgiving week were several generations, Boomers, GenX, Millennials and Zoomers. Here is a list of generational cohorts and the span of their birth years (Source). Some Boomers reminisced about rock groups and concerts they had been to in the 1960s, 70s and 80s. The names might have been vaguely familiar to the late Millennials and Zoomers. The younger folks talked about video games and music groups that were barely familiar to the old timers there. One younger person had repetitive motion syndrome, like an arthritis in their thumb from overuse of a game controller. The Boomers at the table had the arthritis of old age, unable to bend a thumb into a 90 degree angle.

The multi-generational gathering prompted me to look at the world through the lens of age, from the young to the old. As we grow up, we borrow money for a car, a vacation, higher education or a house. The source of those funds is the savings of older workers and retired people. As we reach middle age, we become keenly aware of our future financial security. Our social contract is an intergenerational compact, a churning of money between the generations. Money helps support our sense of security and I thought security would be a good second avenue of exploration.

We don’t get to choose our birth parents, our country or time of birth. All of us are fragile at birth, but some of us are born into fragile circumstances. Our country may be at war or suffering  political instability. Our community or home may be violent. Perhaps our parents are poor or homeless. One or both parents may have a mental illness or a drug addiction. We grow up in an environment of fear and anger, then absorb that into our personality, our soul. Or we may be born into a stable home and community where fear and anxiety is not the background music to our daily lives.

Professional athletes test the boundaries of their sense of security. They develop strength, stamina and skills by extending their comfort zone. By repeatedly taking chances, they learn to use their fear as a preparation for competition. When a top athlete starts fighting the fear instead of using it, they can’t compete at the highest levels. They are competing with their own fear instead of another athlete.

In his book Leviathan, the 17th century philosopher Thomas Hobbes (1588 – 1679) wrote that the instinct for survival was an essential characteristic of human temperament. Government was an artificial creature created by society as a means of security in an “every man for himself” world. For that security, we traded away some of our individual freedom, reaching a delicate compromise between security and freedom. In ancient Mesopotamian lore, the Leviathan was a sea serpent that attacked sailing ships (Source). I like to think that Hobbes chose that mythical creature to symbolize the danger inherent in a sovereign government. It is not a benign force in our lives, but the lesser evil.

This is in stark contrast to another 17th century philosopher John Locke (1632 – 1704), who saw government as the instantiation of a social contract. Government was a protector, a guarantor of natural rights. These two different perspectives of government shape the policy choices we favor. Libertarians think government should be a peacekeeper, a security broker between all the elements in society. It should be a keeper of the commons, the public institutions that connect us and guard both our internal and external security. It should facilitate the economic exchange between local regions, between people and companies as we provide for our daily needs. It should protect and enforce the sanctity of contract that supports that economic exchange.

Liberals favor a far more expansive role for government as the embodiment of the social contract. Even the word security has a broad meaning that encompasses far more than physical protection from harm. On his annual State of the Union speech on January 6, 1941, President Roosevelt articulated four freedoms, one of which was a freedom from want. As Roosevelt saw it, government had a responsibility to provide some economic and health security to its citizens. These two visions of the boundaries of a government’s responsibility underlie much of the Congressional combat we read about each day.

Hobbes was alive in 1648 when the Treaty of Westphalia ended the Thirty Years War and established state sovereignty within the Holy Roman Empire. To maintain its sovereignty, or self-governance within its territory, a state must manage the flow of people and goods across the borders of it territory. We do not choose our country of birth but we can choose to flee that country if political and economic circumstances threaten the security of ourselves or our family. Do immigrants have a natural right to live in a safe and flourishing environment wherever they choose? Immigrants can challenge a country’s management of its borders and in doing so, challenge its sovereignty and security.

A state cannot live by the same principles as people. In the Groundwork of the Metaphysics of Morals, the philosopher Immanuel Kant (1785) wrote that people were autonomous individuals with an intrinsic worth and in pursuit of their own purposes. Even though we interact with people in limited roles during the course of our daily exchange, we should respect their autonomy and dignity and not regard people merely as tools. In international relations, a liberal perspective wants states to abide by that Kantian principle.

States are not people, living in a society where a government provides some security. States live in the dog eat dog world that Hobbes imagined, a state of anarchy where each state must be on guard against threats from other states. That is the realist perspective in international relations. To protect their autonomy, sovereignty and capacity, they must occasionally act in a ruthless manner. During war, states draft men in their late teens and twenties, taking disproportionately from some families and not others. Is that fair? The key to survival is surviving, not fairness.

If their parents cannot bring them enough food, then eagle chicks will kill their siblings to increase their share of food. Is that fair? No. Is it moral? No. Without morality, there can be no dignity. Kant simply posited an inherent dignity to each individual, a fait accompli. Even though they lived at different times, I imagine that Hobbes would have been dubious of such a claim. Dignity is not inherent but ensured by a government that makes and enforces rules. I imagine that Locke would have countered Hobbes by arguing that governing by cooperation works better than intimidation. That requires a consensus among the individuals of society who recognize the benefits of the tradeoff between security and freedom. The debate is a constant tug of war between different visions and principles.

Young states are vulnerable to threats from more established states. Their political, military and bureaucratic systems are not fully developed and tested. The newborn United States was mindful of the threats posed by older European powers like England, France and Spain as well as the native Indians. In a major revision to the 1776 Articles of Confederation that bound the 13 colonies into a United States, the Constitution, drafted in 1787, gave the office of the President a lot of power to counter those threats. Many Presidents, including President Trump, have tested the boundaries of that power. Rarely have the other two branches of government offered so little resistance. All of the generations sitting at the Thanksgiving dinner table were worried about that.

Compromise is at the heart of the Chinese notion of the interaction between yin and yang. Freedom and security are like that, ever searching for a balance. Too much of one results in too little of the other. Each lifetime contains about four generations with different priorities. They must reach a political compromise but can never reach a satisfactory compromise that satisfies those different priorities. I hope everyone had a good holiday and I will see you next week.

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Photo by Jed Owen on Unsplash

Problems and Solutions

October 15, 2023

by Stephen Stofka

This week’s letter is about how we process information. I’ll cover everything from investing and FTX to Sesame Street so buckle in. This week’s topic was prompted with my exchange with two people at an online help desk. People who handle a lot of email probably skim the emails they receive without paying too much attention to the details. As a result they become less responsive to customer inquiries and problems. Tuck that word responsive into your pocket. It is a key feature of interpersonal relationships and how web pages are supposed to respond to our mouse clicks and keyboard strokes.

In a complex society, there are many principal-agent relationships. We rely on other people to intermediate a problem we are having. We do not have the knowledge or the capability to reach a solution by ourselves. Often these roles are formalized and licensed. The agent must have some training and testing. Examples include a doctor, electrician, an insurance agent, a real estate or securities broker. However, we often engage with people for which there is no standard of training or testing. People on a help desk – customer service reps – are examples of this type of agent. They may have received training by the company they work for but there is no formal standard. It is up to each company to decide how to spend its resources.

Two weeks ago I had a legal matter with a large bank and wanted to know if I needed a type of notarized affidavit or was there a simpler solution. The person I reached at customer service did not know the answer but repeated the gist of the problem back to me, indicating that they understood the nature of my problem. After thirty seconds of waiting she came back with an answer that was appropriate to the problem I stated, confirming that the person had listened and understood my problem. Within minutes the problem was resolved and I could see confirmation of the solution. This past week I had a technical problem with a computer program. The online customer service rep could neither help me resolve the problem nor respond appropriately to the problem I presented. A second service rep was also unresponsive. This company touts itself as a leader in responsive technology and design. A search within a customer forum suggested a solution which worked.

I have been a customer service rep and trained reps in the days before the widespread use of computers. We wrote out general classes of problems that customers had and the questions that needed to be asked to determine a path toward resolution. A rep might fail to recognize that a specific problem belonged to a general set of similar problems. They did not know enough about the company’s business to comprehend a suitable classification so that they could reference the correct question and present a way forward to the customer. Companies now have powerful search engines that can empower customer service reps. Are they deploying those tools and training reps properly? I fear not. We can do better.

Being able to classify events and data is a skill that we begin learning early. Those who watched Sesame Street may remember “One of these things is not like the other” drills. Presented with a picture of a dog, a horse, a cow and a bird, which one is not like the others? We learn to compare and contrast, to extract qualities from individual objects that are similar and different. Is the bird different because it has two feet, because it has a beak or because it is small compared to the others? Was the horse different because it had hooves and the others didn’t? Why is that not the best choice? We learn to reason.

As adults we learn to classify cancerous tumors from x-rays, to identify money-making schemes that are too good to be true, to assess the risk of recessions or asset bubbles. Despite extensive training and experience, these are all difficult to classify. A second radiographer reviews a mammogram to reduce diagnostic errors. Every day people fall for a swindle because they cannot see the similarity with other swindles. This week’s trial of FTX founder Sam Bankman-Fried is an example of our vulnerability in this area. Economists and financial advisors are often surprised by recessions and asset bubbles. The financial crisis in 2008 caught many economists off guard. Irving Fisher, a leading economist during the early part of the 20th century, expressed his confidence in the stock market and was fully invested when the stock market crashed in 1929. He lost all his savings and spent the rest of his life in poverty, beholden to some charitable benefactors for a place to live and a respite from debtor’s prison.

As individuals we are not good at processing the amount of information we encounter. In a complex society, the information can be disorienting so we rely on others to help us digest it. Our society and culture provides props that we use as shortcuts, or heuristics, to navigate the load of information. A foundational assumption of economics is that we want to maximize our sense of satisfaction. To do that, we must choose among the resources available to us. We may not know how to achieve the satisfaction we desire but we care about achieving it. Schemers and promoters take advantage of us because we care about our satisfaction. 

Because we rely on others to help us navigate toward greater satisfaction, we are vulnerable to get-rich schemes. We want to be more financially secure so we invest in FTX tokens or pay a monthly fee to get hot stock tips that will turn our meager savings into a comfortable cushion of cash. In our search to satisfy our wants, we don’t think to ask if this solution is easily accessible, why isn’t everyone financially secure? We are told that we are getting in early on an idea and when the idea becomes popular, we will reap the rewards of recognizing a golden opportunity. We may be reminded of Amazon or Microsoft and the astronomical gains of those who invested early and held on.

We must put up with customer service reps that don’t respond appropriately to our questions or problem. We must be on guard against those who promise solutions before we have even presented our problem. Our greatest challenge is that we are both agent and principal in many of our financial affairs. We may not become better informed agents and protect our savings and assets until have we have been hooked like a fish by some promoter.

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Photo by Jon Tyson on Unsplash

Keywords: utility, satisfaction, classification, diagnosis, swindle, security