Bracket Racket

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Good news! You can win a billion dollars just by figuring out who’s going to win a bunch of basketball games in the upcoming March Madness tourney. That’s $1,000,000,000. A lot of zeroes.

A lot of bunk too. One way you can be sure is the fact that Warren Buffett, the sage of Omaha, is insuring the guy running the contest against the remote possibility somebody will actually win.

One of the wiliest investors in history doesn’t make stupid bets and this isn’t one of them . Insurance constitutes a bit over a third of Buffett’s Berkshire Hathaway, includes 70 companies and produced $6 billion in operating income last year and $2 billion in profits.

The odds of somebody picking the brackets perfectly has been calculated at one in 9.2 quintillion. So don’t lose any sleep about Buffett being on the wrong side of this deal. Especially since the number of entrants is limited to the first 15 million to go online and sign up. Sounds like a lot, but the odds still vastly favor the house or Buffett wouldn’t be risking even one fifty-eighth of his fortune.

With a characteristic twinkle in his eye and tongue in cheek Buffett said if anyone is perfect at the time of the final game he can sit with him to watch the finale (and the crushing of his dreams, of course). “But I will not be cheering for him or her to win. I may even give them a little investment advice.”

Optimists will interpret that to mean Buffett will tell them how to invest their billion, but it is more likely Buffett will teach them his two rules of investing. Rule One: Never lose money. Rule Two: Never forget Rule One. Don’t those rules suggest Warren is pretty sure he’s on the winning side?

This is clearly all in good fun for Buffett and Dan Gilbert of QuickenLoans, the actual sponsor of this promotional stunt. Quicken is actually on the hook for prizes to the top 20 imperfect brackets, each of which will win $100,000 for a total of $2 million. But that’s peanuts and is less than it would cost to advertise during the tournament. The immense publicity has already paid off. And the gimmick promises to be even more valuable.

How? To sign up to play you give the QuickenLoans personal information and answer a questionnaire about home ownership. You can then look forward to a future without a billion dollars in the bank but with an endless stream of spam and other pitches for on-line mortgages.

In short, QuickenLoans is prospecting for loan customers from a pool likely to be rich in the kind of people who a) need money and b) think they can solve their financial problems by winning the lottery or picking basketball winners.

That’s a trifle sleazy if you think about it, perhaps even predatory since shooting the weakest members of the herd is hardly sporting. We all remember what happened the last time the gullible fell for fabulous deals on mortgages. And isn’t this a tad beneath the dignity of Buffett? But, hey, this is America. Let the Hunger Games begin.

State of Nature or Nanny State

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It looks like the oversight-resistant CIA went a little rogue. What’s new? The agency has repeatedly been found to have exceeded its legally permitted bounds, in part becausesecret agents are good at keeping their actions secret. Hoover’s FBI, the NSA.

But this is a law of nature. Small children, teenagers, spooks and hedge funds will try anything, push the limits to the limit — especially if there aren’t any limits in the first place. Obviously parents have to lay down the law because without any rules “chaos is come again.”

It isn’t just the young of the species and secret agencies that tend to run off the rails. All human nature aspires to total freedom, no restraints, let ‘er rip. Americans may be especially resistant to restraint because of the myths of our pioneer history. We habitually deemphasize how cooperative an endeavor building this country was. Instead we have been brought up with a fictionalized, exaggerated, forgetful version of that history in which rugged individualists made their way alone and unafraid. In this vision, a lack of restraints is an unambiguously good thing. But it isn’t. Lawless, predatory ranchers crushing their sodbuster neighbors weren’t a myth, but they weren’t restrained by the lone, noble man of nature with a gun, the Shane or The Man with No Name, but by the rule of law.

The robber barons of yesteryear and today’s contemporary version want all power in their hands and no cop on the beat — except to protect their rights at the expense of everyone else’s. But after enough strikers were shot down and shirtwaist factories burned, the Progressive Era was ushered in to redress the balance, a development libertarians still regard as the beginning of the end of Eden, but the rest of us have reason to be grateful for.

Similarly, those who mock the nanny state and want to live free and die seem to forget what the world looks like without any rules of the road, though there are plenty of examples historically or around the globe at present. Consider what a child looks like without a nanny or a mother or father. It looks and acts feral.

Government haters are right, of course, that government too must have limits or you get Mao, Pol Pot, Putin, or a theocracy of the Ayatollahs and Taliban. The trick is enough regulation to keep the strong from preying on the weak and not so much that rights are stifled. But those are two sides of the same coin. Some person, faction, religion, class, regulator is always trying to get the upper hand and make all others dance to its tune.

Conservative propaganda notwithstanding, the risk in American history as more often been a Hobbesian state of nature, a war of all against all, than 1984. Those who reflexively oppose any attempt to make people color within the lines or live within legal plimits ought to recall what liberty unrestrained looks like. It looks like liberty for the powerful and oppression for the rest. A slave economy, the killing fields, the Inquisition, the Cultural Revolution, Social Darwinism, barons and serfs.

Law and restraint are the real conservative doctrine, and not law only for those who can afford to buy it. As Madison said: “If men were angels, no government would be necessary.” But they aren’t. Men are really smart, really selfish, really vicious animals who may not need to be caged but sure can’t be allowed to roam around without a leash.

Fees for All, or Join the Club

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My parents were young during the Depression and learned frugality thy hard way. Their monthly bills were paid – mortgage, car, phone, gas, electric, water and sewer. And that was about it. The rest of the money was kept in cash in budget envelopes. So much for food and other actual necessities, so much for a rainy day, and what was left – not much – for frivolities.

How times have changed. Affluence, even when you have to borrow to imitate it, requires an expanding universe of monthly payments. Every business is out to sell you add-ons and upgrades or better yet to get you to subscribe. You aren’t a onetime customer. You are a revenue stream in waiting.

Banks, while never a day at the beach, at least used to pay you a small interest rate for keeping some savings on deposit so they could charge gigantic interest rates for lending it back to you. Now, in a zero interest rate environment, that game doesn’t work. Instead, they charge you fees for everything under the sun – late payments, checks, safety deposit boxes, for initiating loans or paying them off, for transfers, travelers checks or using their ATM.

But banks are hopelessly backward in not offering you anything but varying degrees of pain. Elsewhere, the merchant is your pal until they bankrupt you. They begin by bribing you to come back often. This isn’t entirely new. The corner grocer used to have loyalty programs in the form of green stamps or a piece of dishware a week until you’d accumulated a set, but that was trivial compared to today’s clubs, platinum memberships, prime memberships.

Endless gimmicks seek to bind customers to the seller with “hoops of steel.’ Now you can’t even get in a Costco or Sam’s Club without joining the club and coughing up the annual fee. Just like the country club, without the golf, the 19th hole or the high net worth.

Often these programs promise you treasure that never materializes. How many zealously accumulated frequent flyer miles have crashed and burned when an expiration date in fine print arrived or the airline itself was consumed by another with no interest in honoring your loyalty with a bit of their own.

Or consider the internet. Like Radio and TV, it was briefly the home of free info and entertainment. But cable turned TV viewers into monthly cash cows. Now Sirius, Pandora, Spotify, Hulu, iTunes, Netflix and you-name it seek to get you to pay monthly, daily, on demand, per view, per song, streaming. Ka-ching!

The Internet is now a shooting gallery with you as the target in which monetizing every page view, click and relationship is the road to riches. Newspapers and magazines may be on the way to extinction, but the internet has adopted their subscription model with enthusiasm. It is said that Amazon’s Prime Subscription is the difference between their being in the red and in the black, and the annual fee just went up.

Microsoft, Quicken and their ilk began by selling you perfectly adequate software, seemingly a onetime purchase. Then they began to make it obsolete by issuing new versions with improvements that you didn’t want or that actually made life worse. Even if you didn’t want them, the company made the upgrade mandatory by phasing out the old. Or they make you pony up over and over to keep a function to which you’ve become addicted functioning. Want to use Quicken to download financial data? Once every few years you have to buy a new version. Buy a video game for big bucks? You aren’t done, there’s a quarterly fee to get on the internet and play with others.

Perhaps the greatest example of the utility that ate your wallet is the phone. It used to hang on the kitchen wall and occasionally Aunt Martha would call. Maybe once a year something would be sufficiently important to justify pricey long distance. Usually a death in the family. Now the device is welded to the ear, in terrifying use while driving, in bed, in your sleep. Not just to converse but to text, tweet, game, watch cat videos. And the meter is constantly running on your mega-giga voice and data plan. Today the average phone bill exceeds my parents’ mortgage payment. Money, money, money, money.

There’s no end to it. If I can’t motivate myself to walk around the block, I can join a gym and be a member. If I don’t want to bother, I can jump around in front of my TV by subscribing to streaming video trainers or monitor my vital functions by connecting them to the internet for a fee. The gas company offers to insure my gas line from leak for a monthly fee. I can join a wine of the month club, an olive oil club, subscribe to fruit from Harry and David.

I suppose there’s even a membership program for frequent bankrupts who can’t say no to any club, upgrade or add-on. But don’t join. Just say no. Consider adopting Socrates rather than the Unreal Housewives of Rodeo Drive as your role model.

One fine day, contemplating the good life, he looked around the bustling Agora of Athens, a kind of Hellenic Mall of America, and said in amazement a sentence we should all practice daily.

“So many things I don’t want.”