Let's keep this really, really simple. I know what happens when I get excited about money and investing. There's a... sedative effect on the audience. To counter this, I'm stripping out tons of neat stuff and just leaving the basics in. This means that I will be discussing aggressive, high-yield stock market investing, suitable for people who have a long (>10 year) period before retirement. I'll discuss money management, tax optimization and/or bond markets for another day. Or not.
What if I told you that I could tell you how to achieve the eightieth percentile of investment returns every year, GUARANTEED? In other words, if I randomly paired you with 100 other people, you'd do better than 80 and worse than 20. You'd never be the absolute best, but you'd always be right there, year after year.
You'd think I was trying to sell you something, right?
Fortunately, this is absolutely true and absolutely attainable for regular people. If there is a secret (and there really isn't), this is it:
Making money from investing is all about knowing what you can control and what you can't.
There are exactly four things you can control when you invest: (1) What you buy, (2) How much, (3) When you buy it, and (4) who you buy it with. In comparison, there are umpteen million things you can't. These include the price of oil, a dictator's heart condition, and a CEO sex scandal, among many others. Furthermore, as an individual investor, you are too small to meaningfully affect any large entity you invest in. You are, in effect, a twig that floats on ocean currents, subject to the whims of fortune.
Sounds daunting, eh? Maybe now you just want to buy a duplex or something?
Well, let's not hit the panic buttion yet. Even though the four factors you have control over seem very small and very simple, they have a lot bigger effect than you might imagine.
Investing In the Stock Market, Writ Simple
My strategy for dominating investing can be summed up in one phrase: Aspire to the average.
What is average for the stock market?
Over its hundred-plus year life, the S&P 500 (the 500 largest companies in the US*) has an average return of 10.47%. Thus, if I invested money on January first each year (and then lived an extremely long life), my average return would be 10.47% annually, assuming no other buying or selling. This is, in effect, the average return for this index. All you have to do is invest in the index regularly and hold it.
Wait a second - the average return on investment is WAY LESS than 10.47%! How does that jive?
While it's true that most people don't realize returns that match the market average, it's not the fault of the market. This is simple math. The truth is, most people manage to fuck this up on their own, primarily by not optimizing the four factors they can control.
Now that we know your major goal as an investor is to not fuck up a good thing, let's begin by learning how to use the four things we can control to get ourselves to the average:
Things You Control
(1) What you buy: In this case, we want to invest in the entire market (as opposed to individual companies). For this we can either buy Vanguard's S&P 500 index fund (ticker symbol: VFINX) or the "Spyder" ETFs (electronic traded funds), which are simply shares of the entire S&P 500 (S&P... SPyders... get it?). They're pretty much interchangeable; each one is a teeny tiny share of every company comprising the index. These are blue-chip stocks, like Coca-Cola and Apple. I prefer Spyders because the commission is slightly lower than purchasing mutual funds, but that's a tiny issue.
(2) How much: As much as you can afford to invest. I'm not going to bust your balls over saving rate (for now), but MINIMUM 10%, preferably 20% or more.
(3) When to buy: Regular intervals. It's obviously not feasible to split your contributions into daily investments (you pay each time you invest), but the more frequent your contributions, the more closely you'll track the market average. For real people, investing 3-4 times a year will get you close, especially over a number of years. Google "dollar cost averaging" if your curious about why.
(4) Who you buy from: This has two answers, who you physically purchase from (most likely the online brokerage platform you use) and who offers the financial product (Charles Schwab, JP Morgan, etc.). The answer to the first question is a low-cost brokerage like TD Ameritrade. The answer to the second is Vanguard, which is far and away the best, most efficient investment company on the planet. The only reason to not use Vanguard is if you have a 401k that doesn't offer their funds (fun detail: employers often take kickbacks from investment houses in exchange for running the employee 401k. These kickbacks are usually proportionate to the shittyness of the options they stock the 401k with).
Noah, you claimed I'd beat 80 out of 100 people with this strategy. Investing for the average means I should only beat 50 or so... right?
Good question! Hypothetically, average returns should be, well, average, but we're living in the real world. By carefully selecting the four factors we can control, we're going to do much better than the average retail investor. The reason is (are?) expenses, which are the main way the typical investor screws themself over.
Investing the wrong way will tear you apart.
Investing isn't free. In fact, you pay money three times on your investments (four if you count taxes on profits, but let's ignore that for now): The transaction fee (e.g., the fee Ameritrade charges you to make a purchase), the internal expenses of the fund (more on that in a second) and fees your investment advisor tacks on. Fortunately, these are all factors we can control.
To illustrate the importance of controlling investment expenses, let's go through the expenses associated with investing a modest amount (say $5,000) into Spyders versus investing the same amount into a typical investment option over a period of ten years.
Noah's way: Buy-it-yourself S&P 500 index shares:
As I mentioned earlier, the S&P average lifetime return is 10.47%. The expense ratio for Spyders is a paltry 0.09% (it doesn't cost much to invest using a computer formula), reducing my actual return to 10.38%. Since I'm doing this myself, there are no advisor fees and I paid Ameritrade 8 bucks to execute the trade after setting up an online brokerage. After ten years, we have $13,424. A nice, tidy profit. Simple. Average**.
Sadly, here's how most people do it:
They give their financial advisor five grand and tell them to invest it. Assuming he's not the next Bernie Madoff, your guy/girl invests the cash for you in an actively managed fund ("actively managed" generally means it's run by men in suits who actively try to beat the market average). For an investment outfit, I selected American Funds, which I previously mentioned are very popular with financial advisors due to their lucrative kickbacks. You'll also be charged $50 to purchase the shares.
For this example, I've used a "target date" fund. These are very popular of late. You simply select the year you want to retire; the fund is more aggressive as you're younger, then shifts to a more conservative investment allocation as you approach retirement. I'll be 65 in 2045, so I picked that as the target date.
As you can see from the chart, we immediately see several worrisome things: First, the 2045 retirement fund's rate of return is lower than the S&P index. You may be thinking I picked an underperforming fund deliberately to fudge the numbers in support my arguement. In fact, 22 of the 57 funds offered by American perform at this level or worse (count them yourself if you like), suggesting this rate of return is somewhat typical.
You also see that the expense ratio of the fund is 0.75%. This doesn't sound like a lot, but it's more than eight times that of my index fund. Remember - how much you pay in investment expenses is one of the only things you can control as an investor. Remember also that your annual expenses are really 1.75% (you're also paying your financial advisor 1% for the privilege of underperforming the stock market). This erodes your expected annual return to 2.28%, which may or may not keep up with inflation.
You can really see effect of high fees on the low rate of return after ten years. Instead of nearly tripling, your $5,000 investment is only worth $6,500 or so. Terrible.
Now let's say you notice you're getting fucked over and decide to cash out in search of greener pastures. You call your advisor and tell him you want to sell this terrible investment.
"Sure thing," they reply. But before you do that, it's time to pay one more bullshit fee: American Funds charges something called a back-end load. In easier to understand terms, a back-end load is essentially a cover charge you pay to leave the bar. American levies a whopping 5.75% for all their target date retirement funds. Your meager return is further eroded by another $374, a final kick in the nuts on the way out the door.
Let's assume you skimmed the previous paragraphs and have no idea what you just read. In the simplest possible terms: When you invest in a way that incurs high expenses, your investments have to do quite a bit better than average just to break even with the guaranteed return of investing in the entire market.
Remember the beginning of this post where I said I could guarantee returns that beat 80% of all investors? This is how it's done. By keeping expenses to a minimum, your relative performance improves by virtue of those around you being dragged down by higher fees. In reality, your net returns (what you actually get) moves from the fiftieth percentile to the eightieth. Thirty percent improvement each and every year - that's how powerful disciplined, low-cost investing can be.
But Noah, there are millions of people with trillions of dollars invested this way. Doesn't that prove that financial advisors do better than the market?
Absolutely not. The financial services industry has brainwashed the public into believing that investing is complicated and that they've somehow figured it all out. This is why financial services companies and banks barrage us with abstract television commercials of whales breaching every time we watch tennis. You can read every terrible thing about the 2045 Target Date fund I used as an example right there on the company's own website, but people either don't know or don't care; this fund alone has 2.33 BILLION dollars invested in it ($7 per American).
What about Warren Buffett? He makes bank.
Buffett is an anomaly that has become a self-fulfilling prophecy; he's a trendsetter in investment circles who's immediately emulated when he makes a major move. This subsequent flood of interest pumps up his investment and makes him look like more of a genius.
If investment managers really are so adept at investing, why don't they agree to work on commission and take a largish percentage of the gains they achieve for you (fun note: most hedge funds actually DO take 20% of the profits, although they don't absorb any of the losses)? Not even Buffett does that (to the best of my knowledge). Back to American Funds: only 8 of their 57 fund offerings beat the S&P 500 average. And that's before they charge you a dime in expenses.
This post covers investing in the stock market. There are other options, of course, but this is historically the best for achieving the highest returns over time. I won't go into detail about the basics here (don't invest money you need soon, no guarantee of profits every year/be ready for volatility, etc.). However, I should mention the most important rule for investing (other than "always do it yourself" and "shoot for the average"): Never buy and sell based on panic. Timing the market is a fool's game.
Ironically, the steady-eddy approach negates the risk of market peaks and valleys. By investing a regular intervals (shown in chart), you'll eventually hit a roughly equal number of investments where the market is relatively cheap or expensive. This makes you hit the - wait for it - average over the long term.
And average is awesome.
Last thing: Ego. Terrible enemy of any investor. So many poor, irrational investment strategies are based on ego. Entire industries are based on separating fools from their money. It's true; somewhere in Tulsa, there's a guy in a cube farm who honestly believes he can predict the flow of global currencies. Why else would retail ForEx (foreign currency exchange, which is basically gambling) exist?
You have no idea what the market is going to do. You cannot pick stocks. Your advisor cannot pick stocks. Men on Wall Street in fancy suits cannot pick stocks. Equities markets are irrational beasts. To logically predict the action of an illogical entity is impossible. Anyone who tells you they can is trying to sell you something.
I, on the other hand, lack the sophistication to post an affiliate link to Ameritrade.
Yeah, so I'm not the first person to write about this stuff. Unfortunately, there are so many sharks out there it's sometimes hard to tell chicken salad from chicken shit. For further reading, I recommend this post by Jim Collins, who more or less follows the same line of thinking I do. He is wise.
*I use the term "stock market" and "S&P 500" interchangeably in this article. Astute readers will note that there are many stock markets, of which the S&P 500 is one. You can use any large market (Dow Jones and/or total stock market (ticker VTSAX) if you prefer, so long as it essentially reflects the entirety of the US economy.
**Technically 0.09% less than average, but close enough.
I'm regularly asked about money and investing, often by people who know little about it. Since I like to run my mouth, I've decided to write a bit about creating and maintaining wealth.
I usually answer them by asking another question: How do you think you get rich? Usually, their answer involves making a lot of money. While making money no doubt helps, it's only half of the equation. Moreover, it's the more difficult part: Contrary to what others would have you believe, there are few easy ways to make money quickly and the "regular" ways of getting ahead (promotions, degrees, etc.) are usually time-consuming, laborious and highly contested.
Instead of focusing on these mined-out areas, I focus on the other side of the earn/spend battle by encouraging people to focus on improving personal economy (i.e., how much and/or on what you spend).
In case you're worried I'm about to spew a bunch of shit about canceling cable and not eating out, let me assure you that I am not the kind of person who compromises their quality of life by scrimping. Last year I took two international trips (real ones - Japan and Scandanavia) while supporting expensive photography and running habits. I eat out far more than is healthy and live in a big inefficient condo with both cable AND netflix. The difference between me and most people is that I did all these things while spending a shade less than $28K for the entire year.
I'm going to show you how to do this too, by focusing on only the best form of frugality: changes that make absolutely no difference in your day-to-day life.
There are a few of these, and I'll get to them in time, but I'd like to begin with the questionable utility of financial advisors.
No, that's not worded strongly enough. Let's try it this way: I would rather have an open postule on my testicle (right on the spot that always gets chafed by running shorts, no less) which oozes a glowing green substance that doctors can't identify than have a financial advisor.
Whenever I enumerate the quantitative disadvantages to advisors, people generally nod thoughtfully and then ignore my advice. So I'm going to try something new. Here are a few stories of my direct and observed interactions with these sharks.
I'm twelve years old and I want to invest some money I'd saved. I have maybe $2,000 and, having recently been alerted to the existence of the stock market, am interested in buying some shares of stock. It's the early nineties and the internet effectively did not exist to offer guidance in this arena. In those days, we called up my parents' financial advisor, asked his advice, and then made an order. None of us were exactly sure how he made money off us, but he worked for Charles Schwab so we figured he must be above-board.
At the time I was EXTREMELY unsophisticated when it came to investment strategy. My plan was to invest in Checkers (the hamburger chain, not the board game). My reasoning was (1) I liked the food and (2) it was trading around $3.87 a share and I wanted to buy the largest quantity of shares possible. Not great reasons, but I barely had hair on my balls.
My father took my idea to our financial advisor, who promptly poo-poo'ed the idea. He confidently predicted that Checkers was close to bankruptcy and was poised to fall. Instead, he recommended I split my money into four mutual funds in something called the American Funds offered by the Capital Group. What are American Funds? This website explains it pretty well: In short, their funds usually track major indices but charge much higher fees, guaranteeing that they'll underperform benchmark averages. Part of these fees are kicked back to the advisor as compensation for steering idiots like us into such a shitty investment. In effect, it's collusion to enact a shitty scam on the unsuspecting.
The extra commission from steering a twelve-year-old into a ripoff investment wasn't enough for our financial advisor, however: Rather than selecting a single American Fund, he split my entire fortune (two whole grand!) into FOUR diversified mutual funds. Why? Four times the commission, that's why! (Note: Four separate mutual fund purchases is actually TWENTY-FIVE times more expensive as purchasing a single stock on Ameritrade's platform)
I'm ashamed to say I allowed this poor investment to go on for well over a decade before finally selling and transferring the money to a low cost index fund (run by Vanguard, which is the only company you should ever work with). As for Checkers declaring bankruptcy, it never happened. I drove by one of their over 800 locations yesterday. It was acquired by a private equity group several years ago.
My parents wanted help planning how to pay for the cost of college for me (so nice of them, right?). They again went to their financial guy to help them formulate a plan. What did he come up with? He suggested they buy four zero-coupon bonds that would mature at the beginning of each academic year.
Normally this would not be a bad approach: Unlike now, the early nineties were an OK time to buy government bonds (about an 8% return on ten-year goernment debt, guaranteed). While this did trail the annualized stock market return by about 13%, a conservative approach could be easily forgiven under these circumstances. However, my parents were steered into ZERO-COUPON bonds (the coupon is the part of the bond that generates interest; in effect, my parents were robbed of a decent guaranteed return in exchange for a modest discount on the purchase price of the bond). This fact, combined with the general illiquidity of the investment, made the whole affair a total facepalm (at least in retrospect).
I'll give you one guess who gets a huge kickback for selling zero coupon bonds in a high-interest environment.
A totally different advisory group was somehow introduced to the mental health practice my father co-owned. They attempted to convince the business partners that it was a good idea to put a whole life policy on themselves and their family members, including their children. Insuring your healthy teenager is such an asinine idea that advisors should be ashamed to even bring it up, but these guys weren't bothered by inconsequential details like that.
As I mentioned earlier, kickback fees to advisors are generally proportional to the shittiness of the investment (really think about that for a moment: the worse investment they can steer you into, the more they profit). I later learned that placing a client into a whole life insurance policy is one of the most lucrative scores in the financial service industry, a fact I found wholly unsurprising given the behavior I'd witnessed.
My father fortunately declined the offer, but remembers other partners taking them up on the proposition.
Not a scam per se, but an example of massive incompetence and/or negligence. A family member was coached (by a presumably different financial advisor) into taking a MASSIVE position (about $40K) in Worldcom/MCI. Buying single stocks is a risky game of musical chairs, which this relative learned when the company went his entire investment went up in smoke when the company subsequently declared bankruptcy (as happens relatively regularly with utilities, see Nortel and Enron). While there should be a degree of personal responsibility in any investment, ignoring basic concepts like diversification immediately disqualifies and advisor from any pretense of intelligence and/or common sense.
Occurred fairly recently. A different relative mentioned that they still use a financial advisor, whom they claimed managed to achieve a greater return than they could have achieved on their own. Knowing what I do now, I issued her a simple challenge to determine the real value of their advisor: I implored her to ask them for a record of their annual returns for the past ten years (after the advisor's 1% management fee was taken out) and compare them to the average market return over the same period.
Guess who failed the test? When I saw the response, I knew the result before even seeing the numbers. The cover letter was long and full of equivocations as to why their results lagged. It was as if the simple, direct question (Why am I paying you?) had cut a swath through all the normal bullshit.
And I'm Spent
I'm sure there are other examples, but I'm getting tired of angry typing. I've never worked with an advisor as an adult, but I get calls and emails from them frequently. Whenever one calls, they get the same offer (one I picked up from the excellent book The Millionaire Next Door) I give anyone seeking to manage my money: Send me your last ten years of tax returns and show me that you've beaten the average market return every year. If you have, my money's yours to run. I've made the offer maybe thirty times and no one's taken me up on it.
If there's any interest, I can write a post on simple DIY investing that minimizes expenses (partly by eliminating human parasites from your account expense line).
I'm not bragging when I say I know a thing or two about running in ice and snow. Amidst the other, mostly-useless knowledge in my brain is a chart of exactly how to titrate my clothing as the temperature falls past freezing. This is, coincidentally, the only time I pay any attention whatsoever to fashion.
To further this goal, I also own a number of articles of clothing that have no apparent purpose other than keeping you alive during a jog in -10F while the wind howls off Lake Michigan like a scorned god. One of those pieces of gear is the balaclava, known colloquially as ninja- or bank-robber mask (see right).
I actually own two balaclavas, a main and an emergency backup balaclava. Having two means I can alternate them on days when I run twice (The importance of dry headwear in subzero temperatures was revealed to me long ago when a damp hat literally froze to my hair).
To the narrative: This weekend, I decided to go for a second run. With my primary balaclava still drying in the bathroom, I grab the backup and force it over my head. It doesn't fit. I spin it around and try again, to no avail. After a full minute of gamely struggling to properly seat the garment on my giant noggin, I give up and pull the balaclava off to reposition it. It is at this point I learn that I am not holding my reserve balaclava, but rather a pair of Susan's Eleve dance shorts, size medium.
Saying thanks to the fact that no one else was home to witness me attempting to force women's clothing onto my head, I began an earnest search for my reserve balaclava, which has gone missing. Five minutes later, I'm still having no luck. I consider using my primary balaclava, but I don't exactly fancy wrapping my head in what is essentially a still-soppy microfiber burrito. The search continues.
Puzzling over the matter, I quickly ruled out the maid, the cats and deliberate sabotage by Susan. As I stroke my chin, it occurred to me that this thing was likely the closest I'd ever get to a full-blown mystery. The Case of the Missing Balaclava.
How would Sherlock Holmes solve this? Not by aimlessly prancing around looking under the bed. He'd use his brain and so would I. No pressure.
The clothes hamper, perhaps? The last refuge of the stray and discarded textile?
Before I'd even searched it, it became apparent that no answers would be found in that wicker basket. No, the solution to this case lay in the simple fact that that I'd attempted to put the shorts on my head.
They were hanging in the bathroom. I mistook them for my headwear. Honest.
But why? Think Noah!
Because... because the shorts were the same size, material and color as my balaclava.
And if I could make that mistake... couldn't someone else as well?
In a flash, I knew I had all the information I needed to find my missing garment. I stomped into our bedroom and headed directly for Susan's dance bag, where I found my reserve balaclava... packed and ready to go for her ballet class later that afternoon.
What are the chances that two different people mistake two very different articles of clothing for their own at virtually the same time? I'd guess not so good. Nevertheless, if one rules out all other solutions, the only remaining solution, however improbable, must be correct.
Deftly, I plucked my chapeau from the bag and replaced it ever-so-carefully with the shorts. My sub rosa substitution complete, I donned my seemly headdress and slipped quietly into the wintry hell of Chicago.
Last night, the NPR program Marketplace did a story on Building a More Diverse Faculty. Same old story: A small fraction of new doctorates are awarded to minorities and a slightly smaller fraction of them reach faculty status; we need to increase our efforts to recruit minority faculty members.
Really? This again?
First things first: In this context, "minorities" most often means African-American. Sometimes hispanics make it into the discussion, but it's decidedly less common. There are a metric fuckton (technical term there) of people traditionally regarded as minorities in science. Because the majority of these folks are usually Asian/Indian, no one gives a shit.
I'll tell you a story about how badly Chinese people are discriminated against in grad school admissions from my days as a student on the admissions committee: Each year, my grad school received approximately 500 applications from China for a strict cap of 5 or so slots. Applications with less-than-perfect grades and test scores were immediately tossed without further consideration, narrowing the pile by roughly half. A Chinese faculty member (who got tenure while I was there, by the way) would then go through the remaining applications and select candidates from schools he deemed decent. These were the people who made it to phone interviews by the larger admission committee.
The shoddy treatment of applications from overseas wasn't a secret. Neither was the fact that Asian applicants (who are ineligible for financial aid) are used as cash cows for Universities to pad their budgets. Later, many of these same individuals are utilized by research departments as cheap labor, forever threatened with the prospect of having their H1B visas pulled.
On the opposite end of the spectrum, black PhD candidates in the sciences are like gold. In grad school, we had (I think) four black PhD candidates out of about 200 total students that went through the program. There was a big effort to recruit more but there just weren't that many out there. The black candidates we did get were pretty much average as far as career trajectories. Ten years out, I'd put one in the top quarter, one in the second quarter, and so on.
My (very subjective) conclusion from these limited observations is this: Skin color made little difference. And yet we hear constantly about the pressing need to cram more minorities into grad programs, not by fostering more interest, but by changing admission standards to let more students in.
We do this without considering any possibility other than discrimination and/or bias. If race is too polarizing, let's think about disparity using gender. Everyone knows the old chestnut about women making only 79 cents on the dollar compared to male colleagues. This fact (if it is true - I'm not sure) is almost always immediately followed by an argument to equalize pay (even socialist god Bernie Sanders blathered on about this the other day).
So women are only paid 79% of what men make. By this logic, John Q BusinessOwner can save 21% on payroll costs by firing all the men and replacing them with women. Everyone with a dong would find themselves out on the sidewalk so fast if this were indeed true. Fact is, simple economics quashes any contribution to the wage gap resulting from gender discrimination. (Again, this isn't to deny it exists: Maybe women are shittier negotiators or lose seniority after having kids, but those are largely personal decisions that don't warrant much sympathy.)
Moving on. I hear a lot about minorities being trampled upon, but very little about why too much help is a good thing. And there are some VERY good reasons helping minorities is not such a good thing.
Creepy Feel-Good Exploitation
A company I worked for had two black scientists in a group of about 25 people. I have no idea whether they were recruited/hired because they were black, but the company seemed to do everything it could to suggest that was the case: Every time we had a PR firm came in to shoot some science/laboratory footage for television commercials and whatnot, one of the two was inevitably selected as a subject. It was awkward, a little heavy-handed and (in my opinion) insulting to the two ladies.
"S/he's only a [insert profession] because of affirmative action."
Would you want a heart surgeon who only got through medical school as a result of affirmative action? Do you think you can tell which doctors did and didn't? Care to bet your life on that?
Helping minorities (any minority) has a nasty backlash when it comes to public perception and decisions members of society make when dealing with them. When you bend over backwards (i.e., change rules) to admit people who are less qualified, you inadvertently apply this label to everyone in the group, regardless of whether they were qualified in the first place. Again, this stigma is attached to every member of that group, regardless of how qualified they are. Policy makers are, in effect, guaranteeing that a large number of people will be screwed in order to maybe help a smaller subset of that same group.
The Phenomenon of Quiet Racists
Jim Watson (the guy who, along with Francis Crick, took the data of Roslind Franklin and determined the structure of DNA) was an extremely powerful scientist. He headed up a massive research facility on Long Island called Cold Spring Harbor for the latter part of the twentieth century. However, his tenure ended rather abruptly in 2007 after he made some comments on Africans and intelligence that were deemed politically incorrect. Whether they were or not falls outside the scope of this post, but it was certainly debated heavily. What I'd like to draw everyone's attention to were the repurcussions - the administrators came down on Watson like a ton of bricks and he was essentially put to pasture for voicing his personal opinion.
Imagine for a moment that you are a raging racist of a professor and you see a famous titan of science like Watson go down in flames for comments that you personally consider mild. What does this change? Are you still a racist? Yes, maybe even more so if you believe Watson's been mistreated. However, even racists understand cause and effect just fine. To that end, the Watson incident mainly teaches the value of keeping their views private.
This loss of transparency on personal views of race relations can have devastating consequences. A minority who works for a closet racist will never be promoted, never be given opportunities for advancement, never receive anything more than a paycheck and the most clinical of professional interactions. How many months or years would such a person waste before realizing that they have no professional future in this hypothetical place? Now answer this: Would you prefer to know that said professor was openly racist (albeit a tolerated one) or would you rather run the risk of stumbling blindly into this situation?
As odd as it may sound, I say "let racists be racist." There's far less collateral damage.
Open communication on race is essential to all of this, but it's honestly a joke in its current form. A big reason for this is that white people fear being arbitrarily labeled as a racist when they say (for example), "I worry about hiring black workers because I'm concerned they'll sue me if I have to fire them." Such reservations prevent the natural pushback against progressive, pro-minority action (see above if you've forgotten why that's necessary) that settles things into a reasonable, dynamic balance.
This is getting long-winded so I'm wrapping it up. Tl:dr: People are inflexible. Darwinian systems favoring efficiency eventually win out over personal bigotry. Pretending we can legislate away prejudice is absurd.
At the Sundance Film Festival last week, Susan and I attended a new documentary entitled "Unlocking the Cage." In it, a group of lawyers calling themselves the Nonhuman Rights Project introduce the concept that certain species (namely apes, cetaceans and elephants) be considered as more than animals and, accordingly, be afforded some basic rights. The main agenda of these activists seems to be preventing/intervening in situations of involuntary confinement for the proposed animal classes.
In the documentary, the group successively petitions multiple courts on behalf of several apes who were selected based on their less-than-ideal housing conditions. When a number of these early efforts fail (either by legal refusals to consider the case or - as happened twice - by their "client" dying while the lawsuit was pending) the group targets two nonhuman primates living at SUNY Stonybrook who have been the subjects of ongoing medical/behavioral research.
It was... unconvincing. I went in with what I think is a normal amount of support for animals housed in shitty conditions. I came out thinking that attempting to obtain legal rights for animals was bizarre when legislative and public awareness approaches appeared far more viable. The audience, however, disagreed with me. I know this because the screening was followed by a Q&A with the film's producers and its star, lawyer Steven Wise. By and large, the other 500 people in attendance were moved by the plight of the animals and blindly threw their support behind the filmmakers and the Nonhuman Rights Project without carefully considering the ramifications.
The main fault with the approach, as I saw it, wasn't going after shitbag monkey owners doing low-end roadside attractions, but rather in eschewing them in favor of highly regulated research labs. I wasn't able to ask a question, but had I been able to do so, I would have asked Mr. Wise what his strategy was in targeting animals in a research facility. The documenterers (is that really a word?) used footage of Koko the signing ape, as well as footage of nonhuman primates flexing their mighty hippocampal spatial recognition as a means of establishing that their species are cognitively more "aware" than common animals. The filmmakers strongly suggest these examples were used in court, as evidence.
You could drive a beer truck through the hole in their thinking: What Mr. Wise and colleagues do not seem to realize (or choose to ignore) is that the experiments they cite were all done in controlled research environments. They have to be - good research often involves tightly controlling all variables, including things like social interaction and environmental fluctuations, none of which are possible in the setting proposed by the lawyers as ideal. What we're left with, then, is a situation where a group of lawyers is using scientific evidence and testimony by researchers to attack the same researchers... for using primates to generate some of the data... that the lawyers use to attack researchers...
Considering this, how long does Mr. Wise expect to have support from those scientists studying Koko in a lab setting? Obviously, the choice to target lab research animals is a poor choice, especially given the tenuous legal grounds on which the group's claims stand.
As far as animal use in research goes, I've been working with animals in research for almost twenty years now. I've seen medical research from the point of view of PETA-style activists (who would annually picket our building at the University of Florida) as well as from the inside of an animal colony. I'd like to share my thoughts on the subject I've built up over that time.
Obviously, I feel bad when I see an intelligent animal suffering in a cage. There had better be a damned good reason for it to be there (amusement is not really enough). I'm not a big fan of zoos that house animals that would otherwise be viable in the wild. Don't even get me started on Sea World.
That said, I'm not about to firebomb our animal colony. Nor am I disposed to purely emotional arguments. The reality is we need animal research to produce new medicines and therapies. Unless you're prepared to live like a caveman, you have to be OK with the idea that human utility comes over the individual rights of research animals. If you've taken any drug made in the last thirty years you've implicitly approved by voting with your pocketbook.
Generally this includes mice, rats, bugs and fish, but occasionally it does involve companion animals like cats (spinal cord research model), dogs, pigs (burn models) and nonhuman primates (drug safety testing, among other things). Yes, it's necessary. Don't believe me? I'll give you a mild example of a time when using a nonhuman primate was absolutely necessary: Our company was developing a prototype drug that was very promising in preclinical testing on mice and rats. It was doing exactly what we wanted it to do, performing perfectly and very promising so far. One of the last things we did before moving to clinical trials was testing the compound on a small number of monkeys. The FDA requires we do this to verify that our intended doses are reasonable and to see if there are side effects not apparent in rodents (among other reasons). So we administer the compound to the monkeys. I wasn't there, but later learned what happened next: A few minutes after receiving the drug, one of the monkeys projectile vomited and grabbed his head like he had the worst case of seasickness ever. Then another did the same thing. And then another. Long story short, the drug we were about to give to people caused severe nausea. Why didn't we pick this up earlier? Easy: Rodents are incapable of puking.
Lastly, if you don't believe the logical reasons, try this personal one: Working with animals sucks. I've been bitten, shat and pissed upon. The smell of animals is terrible; it gets into your clothes and never seems to come out. It's often technically difficult; imagine how painstaking and headache-inducing doing brain surgery on a mouse can be. From a data collection perspective, the work is slow and the results are much more variable than in vitro experiments. It's also expensive to house and maintain animals. Our colony has a dedicated veterinarian, a prescribed diet, dedicated husbandry staff. The paperwork is overwhelming - approval must be granted for each little experiment you wish to perform, even if it's a widely-used procedure.
With all these negatives, here's only one reason to use animals in research: Because we absolutely have to. PETA people are fond of saying "we have other options." If you really have a viable option on curing the complex psychiatric disorders I'm working on that doesn't involve animals, let me know and I promise we'll switch. Everyone will. Because working with animals sucks.
Noah's Inner Monologue
Scribblings of a man who can barely operate an idiotproof website.