Author: Curt Doolittle

Bartlett annoys me. I’m not sure why he annoys me so much. Perhaps it’s the political hack in him that I find offensive. Perhaps the pomposity? Perhaps the fact that he insults the suffering of the common man? Perhaps both. In this posting he states:

I’m rather astounded at all the ill-informed commentary I have read today in normally responsible places such as the Financial Times to the effect that the National Bureau of Economic Research is not sure that the recession is over. That is not at all the case. I am 100% certain that every member of the Business Cycle Dating Committee knows perfectly well that the recession ended some time ago. What the committee is unsure about is precisely when the recession ended.

Of course, according to the definition, it simply means that we are no longer falling. However, imbalances remain, and on a global scale. And unemployment will persist for a long time. In general, the period of contraction only constitutes one third to one quarter of the time span needed for recovery of employment. Unemployment will persist for four or more years. And global contractions are still possible in for multiple reasons in multiple areas. So early claims of recovery are cheerful only for speculative investors and political hacks. The common people have no reason to celebrate.

What’s the difference between money laundering, general accounting principles as they are currently practiced, the process of taxation, the use of fiat money to create general liquidity, the practice of monthly financial reporting, and the process of electing government officials as proxies for sovereign actions? Nothing. These are all examples of pooling. Pooling information so that causality is removed from that information. They are distortions of the human system of cooperation and coordination. They are an act of money laundering so that the causes and origins of that money can be attributed to mythical causes, rather than identified or deduced to the actual, rational ones. Truth is causality. We can have redistributive government. We can have safe monetary policy. We can disempower the governments ability to generate and foster class and group conflict. We just have to create a form of government that prevents pooling. Pooling is laundering. Laundering is the primary tool of those who commit fraud. Sound incomprehensible to you? It isn’t. It’s actionable. It’s not expensive. It will transform humanity as much as has industrialization. It will radically increase the rate at which humans solve problems together. It will concentrate capital for productive ends, and deliver the results to the populace. We developed libertarianism to stop state theft, and state dissolution of society, and the state’s empowerment of luddite systems of metaphysics like Marxism and Socialism. But in our ambition to do so we lost the purpose of property and trade. We lost our sense of community. Of the general costs of running society that are paid by all men. Of our need to cooperate in groups with others around the world. Libertarianism is a defensive posture. Like conservatism, we need an offensive posture. We need something to promise people in order to maintain our freedom to be the creative class, and to create a competitive society. The answer was laying there since Weber. We were so busy defending ourselves that we didn’t see that answer. Great minds like Hayek and Mises failed. Keynes failed and achieved the opposite of his intent. They were too enamored of the Civic Republican tradition and too optimistic about government. I know that answer. That answer is a program. It will empower conservatives with a message. It will retain a meritocratic society and the propensitiy for hard work, innovation, competitiveness, and retain the most important feature of any culture, it’s symbols of STATUS as those that are founded in the heroic tradition’s self sacrifice and competition for the common good. We can restructure government. We can do it in the USA with amendments. We can rid ourselves of the IRS and the specious justification of government interference in our lives. We can redistribute what is justly the wealth belonging to the people in need. We can. Capitalism 3.0. The Credit Society.

This is a response to an article posted on An Entrepreneurial Mind. In that post the author, Dr Cornwall recommneds writeing a business plan. And the steps for doing so. And I’m of the opinion that that’s just silly. A plan is a tool for managing weak leaders. A plan is what oyu write when you have given control to investors. A plan is what you write so that a leader who lacks knowelgde, understanding and vision can give his consent. A plan is the myth that teachers instill in students as a substitute for the act of critical analysis. I write a plan every six months. It’s detailed deep and critical. From it I extract goals, an ignore the plan. Goals are just longer term opportunities that we work to exploit. They are rarely and end unto themselves. There is no end of history. And there is no end of business.

You can’t engineer your company any longer. The reasons are complex, but they have a lot to do with the availability of capital. There is more of it. Raising money today, even in this environment, is very different from the 1980’s. Because of this, no one writes a business plan any longer. At least, It’s a sign of naivety in the business community. They are an artifact of the era of post war engineering. A myth held by the young and inexperienced. A device used to provide false confidence to failing management. A plan is what you write when you think you know something but don’t, and often cant. The truth is, that the reason young people don’t like to write business plans is because they don’t have the knowledge to. A business plan is a contract among participants, and it is the wrong type of contract for the wrong type of processes and goals. And entrepreneur who authors a contract does so in order to hand over his sovereignty to someone else. Or he uses it because he lacks the sovereignty to act as an entrepreneur. As such, a business plan is a sign of weakness. Of immaturity. Of lack of sovereignty. It is a contract for a false good. When instead, he should have a list of MBO’s, and a financial model – a set of tools that maintain his sovereignty – his ability to adapt to circumstances. The problem isn’t a plan it’s the research. It’s the knowledge. The problem with planning is that it does not reflect business, and hasn’t in half a century. Napoleon didn’t plan. Napoleon mastered his environment. He read everything he could. He hired spies. Read shipping records. Red mail. Read ship manifests. Read intercepted letters. He collected just about all the information that he could. Then he mobilized his forces to take advantage of opportunities that presented themselves. This is a very different way of looking at business strategy. (See Duggan and Keegan) Collect the information that you need to run your business. all of it. Take advantage of every opportunity. Build an INTELLIGENCE NETWORK first. Intelligence networks allow you to identify and exploit opportunities. How do you build your intelligence network? How will information get to you? What kind of non-quantitative intelligence can you and your people gather. The best sales teams meet weekly and review what they have LEARNED about their target accounts. THis process teaches everyone. The CEO should collect that information. But this is also true of marketing, of vendors, of distributors of partners, of the government. It is a vast information problem. I tend to ignore what competitors are doing except when directly competing with them. It is far easier for your staff to pay attention to competitors than it is for them to pay attention to consumers. But systematically collecting customer and consumer information is priceless. The best opportunities are those where someone larger than you are needs something that they cannot achieve for bureaucratic reasons. In those cases you build a company to sell to someone larger. I always start a company with a list of companies I would like to sell it to. The next best opportunities are those where the existing people in an industry are enamored of their value chain, and you can innovate and take their business because of it. THe next best opportunities are those where you can collect either better talent, or better capital than competitors. In most cases, it is easier to steal talent from a bigger and stronger competitor if you have ‘seats at the table’ in your company available. The next best opportunities are those where you have a technological innovation that you can put to practice and patent. This is far harder than it would seem. The next best is where you arbitrage rather than create value: where you have lower costs. This is almost always a bridge strategy. Lower costs are not a sustainable market position. They simply assist in some other market position. Many people are trapped in being small because their only advantage is low cost. Low cost usually means low talent, and talent is what makes your business competitive. It is better to look for increased value and higher cost that people are willing to pay for. Write short definition of a one-year success criteria. If you made these things happen your first year, then would you be successful? Do this every year. I do mine every six months. I hang them on the wall behind my office door. Plans that are longer than that are questionable. Goals may be valuable. Plans are not. Largely, size, number of employees, number of customers, amount of revenue is all good. The rest is just self aggrandizement. Write a one page description of your product, products, or services. If you cannot sell it in one page, then you cannot sell it. Get market research on every competitor, large and small. Take greater interest in why people failed than in why people succeeded in your industry. Most of the time it’s simply tactical. Make a list of all your customers that you can think of. try to understand why they make a purchasing decision. It is very often not intuitive. It is often counter to the reasons you think your product or service has value. One man tried to sell a software system to a bank. But it would have eliminated the department. The VP would ave no one to manage. He poisoned the sale. People in bureaucracies are not entrepreneurs. You have to create a value proposition that appeals to them. Map our your supply chain. Who will you need things from? Why will they give you attention? What will it cost to maintain them? Map out your distribution chain. Who will you distribute your goods and services through? will you rely on yourself alone? a large sales org? channel partners? Alliances are almost universally meaningless. they are a waste of time. Create a very complex, detailed operational spreadsheet. It should be as close to an accurate version of your chart of accounts, balance sheet, income statement, and all costs and cash flows as is possible. Be paranoid and conservative. Mine are usually good enough to run the business on, and I mandate that accounting systems and management reports mimic them. Usually 10-15 pages of spreadsheets. Create a list of the people you know of or think that you can recruit into your organization who will put extraordinary effort into the business. I have started eight companies and I care more about my people than I do about any other factor. good people make a business. Start recruiting them. If you cannot interest them, then you are not going to interest a customer, banker or investor. It takes nine months to do anything. Make a baby. Forget a bad memory. Lose confidence in a market. Develop new relationships where trust is involved. Work for 9 months testing your theory and trying to prove out your ideas. To do that you need nine months of money. During this time take advantage of every opportunity that you can as long as it either gives you cash to fund your business, or it advances your relationships, customers and employees. Write a ‘Book’, for investors on how you expect to use your business to make them money. They do not care about your idea. They care wether you sound like you know what you’re talking about, whether you and your team have experience, and whether you have any ‘advantages’ that they can understand. WHile investors claim knowledge, most of them are in their jobs not because of business experience but because of relationships and luck. Your job is to make them feel comfortable that you are going to make them money. Emphasize that you have an ‘in’, like a major customer, a larger company that you provide a service for or an off-book-r&D effort you’re going to speculate on. And be willing to fail. It is far harder to be an entrepreneur than to work for someone else. You work far harder for less money but more joy and more control over your life. Entrepreneurship is a lottery. You can win. But you have to understand that luck is a very important factor in your success, because you cannot know enough going in to be sure you will succeed. In general, plans are silly. Goals and models are not. Make a model. Revise it constantly based on new knowledge. Stick to nothing. The purpose of goals is simply to provide yourself with decision making criteria when there are many decisions to be made and most of them seem ambiguous. A plan commits you to something and forces you to organize your business rigidly. A business does not execute a plan. It is a large number of people who identify create and exploit opportunities. Your job is to fund an intelligence network that will give you the largest number of opportunities that you can continuously reorganize your company to exploit. And continuous reorganization is far harder than most people think. but it is far more durable. GIve your people six month MBO’s. Even quarterly. Yearly for very top people. Realize that you must learn and that the only way to know anything is by experience. Entrepreneurship cannot be taught. It can only be learned. Because you must learn to run a business in real time. Education can simply give you the tools. But you can sit and ponder things during your education that must be made at risk and peril in real life. If you are craftsman, you ply your trade. You seek opportunities. You learn your skill well enough to compete. If you get to be an entrepreneur, you will have sacrificed all your time, all your thoughts, and devoted more of your life than common people to your job and will become effectively a machine that takes in information compares it against a model and decides if it can be used to achieve goals. The more information you have, the earlier, the more opportunity you can wring for your business. If successful, at some point you will hand over this duty to someone else, who will, not as well as you, do the same opportunity sifting. You will instead, move to longer term opportunities, like relationship and capital management. This is when you get to take your rewards. Whether you get there or not depends on whether you are enough of a mentor and teacher so that your job can be done well enough by others while still paying you well enough that you can afford to compensate someone talented enough. There are a lot of hard working ceo’s that can’t grow their companies. The reason is that they are not paternal enough. They are working a job rather than raising a family. They try to add value by doing something themselves – which is a convenient distraction from building your business. Execution is a staff function, not an entrepreneurial one. Instead, if you’re doing hard work, you should only do it long enough to understand it well enough so that you can intelligently hire someone to do that job, so that you can move onto the next opportunity that needs creating or exploiting. Working hard is good as long as you’re working on the right things. People need different kinds of fitness. Physical fitness is obvious. Scientific fitness is something else. Oratory fitness something else again. An entrepreneur’s fitness is his ability to create an organization that identifies and exploits opportunities. It’s a knowledge problem. FItness is your ability to process information. To judge people. To make decisions in real time. To make them faster and better than your competitors. Evolve your company. Don’t plan it. Parent and Grow it. Don’t engineer it. If what you mean by planning is modeling then that’s a useful tool that gives you understanding. But if planning is the act of mandating self ignorance so that you do not invest in the act of building an intelligence network that you can exploit for opportunities, then planning is just an excuse to bury your head in the sand, or an admission that you lack the intellect to process the information needed to act as an entrepreneur. Very little than men produce today other than biological research is complex. Almost all business problems are not those of production, but those of opportunity identification and exploitation given the fact that resources and production, like technology itself, a temporary and limited advantage. An entrepreneur is a maker, identifier, calculator and exploiter of opportunities. Everyone else is just a clerk. Curt

Rafe Champion on The Austrian/Keynesian Marriage from The Coordination Problem.

…the problem of regime uncertainty which the Keynesians address by saying you will get all the certainty you need from our helpful interventions. But we have long ago reached the point where most of the interventions are the problem, not the solution. Uncertainty is a fact of life and maybe the role of good policy is to provide political and legal stability – not certainty but a reasonably stable institional framework where people can plan for the future with some expectation that they will not be shafted by the next political or administrative decision. If the institional framework is badly broken it need to be fixed but as Roger likes to remind us, that can only be done by piecemeal, experimental steps to handle unintended consequences.

(Note “Regime Uncertainty” is a term meaning “uncertainty created by fear of government intervention”.) Pietro Follows

#1: monetary policy is a cost-socializing technology which reduces the costs and risks of investment, causes bubbles and pushes for a type of overconsumption called “equity extraction”: consumption out of unreal wealth, i.e., capital consumption (Machlup described the same process). #2: moral hazard makes irresponsibility and recklessness privately rational, and the bubble economy is the result. This is the transmission mechanism in its most abstract form: cost socialization begets coordination problems in terms of bad incentives and false information. #3: at the certain moment either (3a) the monetary drug is no longer available or insufficient, maybe because of inflationary fears (exogenous credit crunch), (3b) the financial structure is no longer capable of transmitting monetary stimuli because it is broke (endogenous credit crunch, which, as the famous rapper Freddie H sang “That credit crunch ain’t a liquidity trap, just a broke banking system”), or (3c) the economic structure is no longer capable of sustaining overconsumption (real resource crunch, whose result is normally a scarcity of circulating capital, like raw materials, that in fact have skyrocketed the first 12 months of the recession, and are rising now that someone ventures to talk of a recovery). In ABCT there is (3a) (the Fed takes away the punch bowl) and (3c) (the economy collapses because of capital structure problems), but there is no explicit analysis of (3b), i.e., systemic risk. I think that a breakdown of the financial system due to an unsustainable financial structure, such as excessive leverage, monetary multipliers, reliance on foreign credit, reliance on liquidity, maturity mismatch (30y mortgages vs 3m commercial paper!) is a more apt description of the recent crisis than problems in the capital structure. … An unsustainable financial structure is not an aggregate demand problem: it’s the legacy of a past moral hazard problem which causes a dearth of capital and a crisis. There is no path to a new equilibrium which does not pass through a credit crunch, the repayment of debts, massive deleveraging, exposure to maturity mismatch, and thus a reduction in investment levels.

The question then, becomes one of quantity. How do we know how much social insurance and risk reduction is maximal? The moral hazard then exceeds risk taking on the part of individuals, and in turn becomes risk-mandating, when all participants in the bubble economy must not only forgo opportunity for gain, but instead, will be driven out of business if they fail to participate in the risk. This is what happened to bankers who need to keep clients, and employees, buliders who need to keep banking relationships, and subcontractors, business owners who see competitors using low priced capital to compete rather than superior products, services and prices, and the general public who fears missing an opportunity for gain, and losing both status material opportunity. That is the definition of a bubble: the point at which social-insured capital is being consumed as a defense against opportunity loss, rather than as an offense for the purpose of increasing production, increasing choice, and reducing prices. The problem for economists and policy makers is either knowing when this inflection point happens. Or knowing when it must occur. This knowledge cannot be achieved by monetary policy – it is a WEAK LEVER for managing an economy. That weakness is well known, and well understood. Our desired ends can only be achieved by LENDING, not monetary policy. The difference is the knowledge one has of MONEY IN THE AGGREGATE , which is zero, and the knowledge one has of his LOANS, which by is greater than zero. While it may not approach ONE, it is far greater than zero. Instead, we print money at public expense and give the proceeds (interest) to the people who do the WORK of the state: large capital firms, and they determine it’s use. The state should make loans to private industry and the state should collect the interest as earnings by the citizens for the purposes of redistribution. The government needs to become a bank that makes loans into an economy for the purposes of increasing production, competitiveness and therefore employment, not a re-distributor in the economy for the purposes of increasing consumption and achieving full employment by MANDATING the LOSS of competitive production. Fundamentally, we must transform elements of the physical world for human consumption. Fundamentally, money is a store of human effort. Borrowed money, or printed money, is a borrowing against future human effort. And future effort is lower if we invested in production increases. This is sensible borrowing. And future effort is higher if we increase consumption by borrowing against the future, but do not increase production by the act of borrowing. That is NOT sensible borrowing, it is simply self deception and over consumption. Property is an institutional tool for divinding up the labor of human interacdtion with the physical world into digestible and managable pieces by our limited and somewhat frail human minds. Loans are a type of property. They help us break up the world into estimable bits and pieces. Property solves a KNOWLEDGE PROBLEM. Property makes things CALCULABLE. Money is a means of making PROPERTY commensurable. (Money is a unit of measure, a method of account) But money is a PROXY for property. You cannot measure money itself in a meaningful way. YOu can only measure the objects that it represents. By putting unmeasured, chaotic money, into an economy, you have no control over whether that money goes to consumption (negative redistribution) or production (positive redistribution). The confusion over the nature and purpose of government’s monetary dictatorship is a KNOWLEDGE PROBLEM. Loans are a way of atomizing borrowing against the future so that the results are knowable, or at least estimable and calculable. Instead of investing in nuclear power plants, a new power grid, and perhaps electric vehicles, or new roads, all of which would produce vast wealth, we invested in speculations and gambling on the tech boom, then in houses, then in commercial real estate, all without increasing production (houses are consumption not production because external groups cannot compete to produce them) or decreasing prices (we increased prices). Without increased production we cannot increase redistribution. The goal of policy should be productivity increases, not employment. We can have our cake and eat it too. But we have to get away from the myth of democratic and socialist government, and the tools of law and monetary policy. And instead we need to move most of government into the banking sector, and treat our government as the bank that we wish it to be, using the technology of bankers and insurance companies, not the technology of ancient tyrants, who were, to the letter, to a man, tyrants because they used law and tax, because that is the only technology available to them We do not need laws and taxes. We need loans, credit and interest. There is only one law, and that is property. We can have our redistribution and we can measure it. We just need to deprive our government of the ability to issue laws and levy taxes, and print irresponsible money, and instead, constrain it to the use of money EARNED by investment on behalf of the citizenry in productive increases. All of which would be calculable. All of which would enable and encourage freedom. And all of which would help social classes work together rather than at odds. What I cannot understand is why so few people have come to this conclusion in human history. Why the great economists were so enamored of the state and the republican tradition, why some others so enamored of individual rebellion against the state that they failed to see it. Why a few people during the Great Depression managed to figure it out, but failed to compete against the socialists. We need to replace our system of government so that it embraces the use of fiat money for the purposes of insurance, governance, social order, and redistribution. We live in the credit society, not the law society. Now we need a government of the credit society.

On Environmental Economics, the authors take note that Krugman appears to be reading their blog. They then state that the market will fail to protect the environment. Not that the government literally, by reserving powers to itself, FORCES the failure to protect the environment. As soon as something that is useful becomes a scarcity, it needs market PROTECTION. Not market consumption, but market PROTECTION. What does that mean? Lets start with their erroneous complaint:

But what if a deal between consenting adults imposes costs on people who are not part of the exchange? What if you manufacture a widget and I buy it, to our mutual benefit, but the process of producing that widget involves dumping toxic sludge into other people’s drinking water? When there are “negative externalities” — costs that economic actors impose on others without paying a price for their actions — any presumption that the market economy, left to its own devices, will do the right thing goes out the window.

This is only because we allow the violation of property rights. If rivers, oceans and air were ‘owned’ then we could . Ownership need not include infinite rights to use. We do not have infinite rights to use flammable things, nor even infinite rights to play music or engage in speech. So it is possible to regulate the use of rivers, oceans, forests and air, as well as endangered species, so that people have the incentive for responsible protection of resources. It is the enforced-ignorance that the state places upon men by denying them the ownership of resources and with it the construct and protections of property. Ownership is a necessary part of the division of knowledge and labor. The state mandates knowledge-incompetence by reserving to itself administration of the ‘property’ we call commons, instead of defining the limits on the use of that property and putting it in private hands, so that individuals have the knowledge and incentive to protect it. Privatize stewardship of air, water, nature. The market will correctly distribute costs of doing so. And the owners of these resources will vehemently protect their ‘interests’ while protecting ours. Otherwise, there will continue to be the ongoing illusion that political forces who compete for government attention are the same as commercial forces who seek to avoid it, and our bureaucracy will continue to be a self-aggrandizing waste of the efforts of the citizens, while our resources continue to be ruined. While the market has weaknesses: in particular, it cannot CREATE property without state intervention (as in determining the rules by which property is used), and it cannot PRESERVE objects without state intervention (as in determining the conditions by which the property is transferred, or the limits on it’s use), the market is far superior at protecting those interests and making use of scarce monetary resources to do so without the waste of government. Since government employees can have special consideration because they are outside the market, they gain special rights that the market would not endow them with. In particular, protection against risks that we call unemployment (the drop in demand for our skills and labor). As such, this is the driving factor behind all political organizations. Whereas, the market would protect the long term resource over the short term desires of government employees. In other words, failing to make ‘public goods’ or ‘commons’ into ‘property’ is simply the willful and mandated theft and redistribution of those goods and the redistribution of those goods to government employees. The commons is the theft of resources by the state so that individuals may profit by the use of ‘commons’ to fund their political advocates. The tragedy of the commons is that ownership leads to over-consumption. But there is another tragedy of the commons, and that is the state-ownership tragedy of the commons, wherein the state uses it’s assets to reward or create advocates. Instead we should avoid the over-consumption tragedy of the commons as well as the bureaucratic tragedy of the commons, and eliminate the commons as a form of property and stewardship, and instead, make it a market matter of the regulated use of and transfer of property, thus enabling individuals and organizations to protect and use it without the participation of the state except as an enforcer. Sell off the air, seas, rivers, lakes, forests, preserves. Directly redistribute money to these ‘owners’ in order to subsidize any ‘common use’. But leave protection of the resource to the owners, who will, universally, do better than the state at doing so. Regulate the use of those ‘goods’. The division of labor, knowledge and incentive is humanity’s greatest accomplishment, because it is the method and means by which we break the universe up into knowable entities. The market is the means by which we allocate the use of those resources. And the state is the organization that creates the ENVIRONMENT that is the market, as well as the means of resolution of differences in property. The state is CREATING THE WRONG ENVIRONMENT when it manages something, rather than when it defines the rules for something, and leaves it to the market to actually do the labor. And thinking otherwise, is to attribute to human beings, knowledge and incentive that they cannot have in a division of knowledge and labor of any degree of complexity. And therefore a fools errand.

The difference between conservatives and socialists, is that conservatives believe that the government was constructed so that the legislature makes laws, and the court overturns those that are unconstitutional. That is the purpose of the court: to guarantee that the laws that are made adhere to the constitution, and to guarantee that the adjudication of conflict is according both to the laws and to the constitution. But the constitution can be changed. There are methods of change in our constitution. These methods are the right to call a constitutional convention, which requires a majority, and legislation, which requires a majority. There are no methods of change that require a minority. That is not democracy. That is the abuse of our system, circumvention of the constitution. There are no methods of change that do not require legislative change. And legislative change must be obtained by the consent of the majority. Judicial activism on the other hand, is circumvention of our democracy. And judicial activism has been the means by which most of our constitution has been abridged. The general approach has been to tolerate judicial activism because a constitutional convention would expose the nation to too much risk. However, it does not state that judicial activism poses the nation to the risk of civil war, rather than constitutional convention. A constitutional convention would, almost certainly, return rights to the states and to individuals. The constitution is the set of rules that limits what a government can do. They are not the rules by which liberals agree to play. The county is, and always has been, center-right. The left does not want this constitution to prevail. It wants no limits on government. It wants to have an upheaval, a constitutional convention held by fiat – against the very document that gives them political power: the constitution. It wants to change the public hearts and minds to favor ‘compassion’ and democracy over the rules by which the nation was established. The constitution is the rules by which conservatives agree to play. By allowing the left to change the dialog to one of injustice rather than rules, we do not force them to use the rules by which our democracy operates. if however, the rules of the interchange are ‘whatever we can get away with’, or the rules are whetever rules one side chooses to adhere to, then we are not playing by the rules. if we don’t play by the rules then there are no rules, there is no constitution, and there is no need to refrain from violence, because the very premise of our non-violence is the principle of peaceful competition according to those rules. Since the constitution is being circumvented by the left, and by conspiring with an activist judiciary that acknowledges that the constitution is now unworthy of respect,and must be circumvented, then we cannot hope to call a constitutional convention. Since the left ignores the constitution, and the right respects it, we are no longer agreeing to play by the rules that we agreed to. We are simply fools clinging to a fantasy while our opposition abuses the document and processes by which we constrain ourselves to peaceful democratic politics.. We cannot restore our civilization. We can enumerate the changes we wish to make to our country, or we can break it into pieces. Given the size of our country, and the vast different cultures that inhabit the new england, the south, Texarcana, the great lakes, the River and Plains, the pacific northwest the mexican southwest, it may be best to come up with a new federal government in each of those different cultures, and substantially weaken the federal government so that it cannot oppress us. It may instead be better to simply update the constitution with greater protections. It may be better to simply return all power to the states. But this trend toward totalitarianism cannot continue. Freedom is the restraint of individual violence in return for property rights. There is no other form of democracy that is not Bonepartism. (Bonepartism means that the masses elect a totalitarian and are volunatarily made unfree.) I am advocating violence. I am going to continue to advocate violence. At first it must be civil disobedience. But it must grow to upheaval. Because if we do not play by the rules, then I no longer need to restrain my violence. Conservatives no longer need to constrain their violence. It is time for violence. Some men are capable of petty interpersonal physical violence. Some are capable of rabblery and protest. Some of us are capable of revolution and civil war. We are threatened by the myth of the general strike. We are threatened by the idea of revolution by the left, we are threatened with personal violence in order to institute change, by the left. We believe that these malcontents will simply learn. They will conform. That we are safe in our patience. We tolerate this abuse because we are confident in our system. But that system has failed. We must understand that we cannot hold onto pacifism and restraint. And that if we do we are not acting on conviction but convenience. We don’t need half the population to create change. We don’t need a quarter of it. We don’t need a tenth of it. We need one man in one thousand to be willing to take action in an organized manner, and we can restore our freedom. Under the rules of the civic republican tradition, a tradition you may not even be able to articulate, or even understand, except as habits and emotions, you agreed to restrain your violence as men, for the common good, in an effort to create a meritocratic society, as long as the rules were adhered to by everyone. Instead you find that you are sacrificing, that you may have to live in poverty in old age, that your civilization will become another Bonapartist state, so that the left can immigrate us out of power under the rubric of compassion and democracy. So stop confusing your complacency with conviction. You pay for government by forgoing opportunity to use your violence. YOu could, if you wanted, use that violence, use fraud, use deception, break the rules, for your own benefit. Each time you dont you pay the cost of building a society. You pay for whatever society you get. So you are paying for this one. EAch deposit you make pays for this society. Each time you forgo and opportunity. Each tax you pay. Each abuse of your freedoms you tolerate, pays for this society. Prepare to withdraw your deposit. You have been saving violence into a bank for most of your life. It’s time to withdraw it. To spend it. It’s a hefty sum. And with that violence you can buy your civilization back.

From Reuters, regarding today’s CITI testimony before congress:

Prince’s infamous comment that his bank was “still dancing” even as the subprime crisis worsened came back to haunt him at the commission hearing where he was asked about it. His explanation seemed to boil down to this: it was a race to keep up with competitors who kept loosening lending standards and Citi couldn’t afford to drop out.

Prince is too defensive. The correct response was that the government was madly printing money in an attempt to recover from the tech bubble’s crash. In this environment of cheap cash, Bankers must lend or be forced out of business by the actions of the government. The risk was compounded by the governments failure to regulate new financial instruments. And the government failed to regulate them because academic economists has proposed models and equations that promised risk, and many financial luminaries, of which Greenspan was a member, believed that these instruments had indeed reduced risk. THe problem is this: by printing money the government created a moral hazard, and the government is responsible for the outcome. A banker, with understanding or not, should not be forced into being uncompetitive or into insolvency because the state dumps the commodity we call money on the market. Bankers just protected their organizations from the government’s interference in business. Sure they profited from it. Because the only other choice was to go out of business. If capitalism fails, it fails because of government interference. Markets cannot solve all problems, in particular, they cannot concentrate a large volume of capital on long term projects such as infrastructure. But failures of capitalism are almost universally failures of government to refrain from those acts which cause long term harm for short term good. We are two years into this crisis and still the blame is on the wrong parties. Bankers are normal people, and few of them have all but the vaguest understanding of the economy. They are largely clerical workers and accountants who move the commodity money around our civilization. For all there terminology, graphs and formulae, for all their statistics and reports, the vast majority have little understanding of the impact of their decisions, the outcomes of their actions, or the limits of our conceptual technology in forecasting such things as risk. If the greatest minds in history have had trouble with such consensus, then why should we think bankers should? Furthermore, why do we think government is capable of doing any better than bankers? It’s hubris on the part of government. Practicality on the part of bankers. And foolishness all around. But the people who CAUSED this problem, are the people who have, at least since FDR, but likely since the start of the federal reserve, conspired to destroy our money, and with our money, our cautious behaviors, and with our behaviors our nation.

Prior to an important meeting of prominent advocates of freedom, Mises stated roughly, that:

1) Laissez-faire means ‘let the consumer decide’, it does not mean chaos prevails.

I translate this more clearly and accurately as ‘a responsible parent forces her child to make decisions’ so that inter-temporal decision making becomes one of the child’s most adept skills. The civic republican tradition states that if a man is successful in life his duty is to help parent, ie: manage and govern, the society, thus spreading his wisdom to others in the community. This is quite contrary to the democratic religion of secular humanism that states that all men have equal merit in political actions.

2) Hayek’s plan relies upon the support of that segment of the population that is comfortable as they are, but not willing to muster the political effort to preserve the freedom that gives them that comfort.

I state this fact more simply: ‘Freedom is, has been, and will be, the desire of the creative minority.’

Civilizations are ruled by minorities willing to use violence or fraud to maintain their positions. Since fraud is expressly what the creative minority seeks to avoid, because trade without recourse to violence requires refraining from fraud, the creative minority can retain it’s freedom only by force, or be constrained by the force or fraud of others.

It is because violence is both meritocratic and epistemologically fruitful when combined with the need to enfranchise sufficient numbers of the minority to maintain rule. That is why the creative, competitive, and military class built western society. Secular humanism is simply a system of fraud that seeks to transform those costs for maintaining social order into a system of fraud or financial coercion. Violence that is used to defend the system of voluntary trade we call Laissez-Faire, is the most honest of human actions. Pacifism and monotheistic religion are simply a cost reduction effort on the part of the ruling class so that fraud can be supplanted for violence.

The purpose of the creative class then is to maintain sufficient capacity for violence that it can maintain sufficient capacity to rule, and as rulers, preserve their freedom.

The use of violence is necessary in order to create the freedom needed to unleash the societies’ creative forces while oppressing its tendency to corruption. Corruption is the normal human response to lower risk and labor in an effort to circumvent the market economy while forcing others to participate in the market economy.

Violence applied to preserve freedom, that is, voluntary trade and property, is not only honest, it is constructive, and it is the optimum method for human prosperity and cooperation.

One need not force all men to be free. One need only have sufficient force that he is free.

Hayek is somewhat famous for his essay “Why I am not a conservative.” In that essay, he states that conservatism has no solution to offer us. But Hayek, along with Popper, Mises, Parsons, and the more sociological Pareto, Burkheim and Weber, all failed to provide us with that solution. They all tried and failed. Pehaps Hayek and Popper made the most theoretically valuable attempts. Perhaps, Pareto, Burkheim and Weber made the most valuable observations. But the movement failed. It failed to provide a scientific solution, or even a rational one. It failed because it could not produce a set of actions by which people, particularly the political elites. could adapt to new economic and technological circumstances, which was the rising influence of the prior peasantry due to economic participation, and education. THey had no counter to the Marxian Luddite world view. Unfortuately, although Hayek and Popper both emphasized the knoweldge problem, they still operated in ineffective terms – ineffective causality. Hayek, who got very close to the solution, relied on his work, the sensory order, and thereby made the same mistakes as did Hume, Kant and Mill – failing to sufficiently understand the nature of the human mind in terms of what is NOT possible for it to understand, as well as how it understood. At least Keynes came up with an abstract mathematical principle that would allow politicians to work with tools at their disposal. Mises came closest, by picking up after Weber’s statement that most social advancement was to do with rules and tools for humans to make decisions, with the economic calculation argument. And while it’s insufficient on it’s own as they expressed it, the calculation argument, was closer to than answer than the various historical or psychological and the Misesian Logical, or the Hayekian sensory models. Conservatism is a Pareto-residue. A military class’ value system. It is a prescription against hubris. It acknowledges that we are most easily misled by our vanities and perceptions, and that political hubris is most often a political downfall, rather than an heroic political achievement. It says if we do not understand it we should tread lightly, becaus the costs of failure are dear. As such, it is a prescription of what NOT to do, in a world where we are increasingly empowered to take personal and political actions, yet because of prosperity, we are isolated in time from the outcome of those decisions, and as such, commit the act of hubris, beccause we confuse our abilty to sense an outcome with the fact that that outcome is simply slower to be detectable by our perceptoins. However, we must act. We must create political actions. Even if those actions are simply to prevent the hubris of others in our politiy from harming us by the results of their folly. And to act we must understand what is possible and impossible for people within a polity, or at least, beneficial and harmful to us and our fellows. And conservatism as it is constructed, uses a language of history and largely expresses a condemnation of the Greek concept of hubris. These prohibitions are not quite a religion, and not quite a science. They are a set of observations and limitations. They tell us what not to do, while we do what we know how to do. They warn us about using our pretense of knowledge. They are not a form of skepticism, but a warning against egoism. But, as a set of principles for an activist, participatory government, they are not sufficient to define what actions we may take as a polity. As limitations for Kings and Oligarchs, they are tribal wisdom. But as wisdom for activist democrats, they are both impossible and uninformative. In a democratic polity, and perhaps, even a republican polity, Conservatism must become a science in order to combat what are the normal human political preferences that are the outcome of each generation’s politicians, serving each generation’s young, by trying to apply the principles of the family, tribe and clan to the extended order of human cooperation that we call the market, but which is effectively a highly complex information system between people of varied ability, knowledge and desires. And the market is a tool that exists precisely because we cannot know as a group, what many individuals know as individuals. It is a tool mandated by our political ignorance. It is only science, or the force of scientific argument, that allows us to make decisive political movement in the face of the ignorance and error in the polity due to necessary human ignorance. All the great minds have failed to create a science of politics. Hayek failed. He called himself a liberal. Popper did as well. Most of these great thinkers were classical liberals or libertarians – which means a cautious, market oriented conservative. They attempted to discover a science by which to convince members of the polity, or at least their elites, what NOT to do. They were scientists searching for truth to employ in political coercion. They were members of a class that would not be disenfranchised, or diminished, or see their people harmed by the fashionability of democracy, and it’s simplistic view that prosperity could be generated by government, rather than encouraged and protected by government. In time, Mandelbrot came closer. The behavioral economists closer still. We have seen the recent demonstrated failure of mathematical idealism in economics, and therefore politics – economics being the argumentative scripture of modern politics. But even the behavioral economists are postiviists. THey measure without knowing what they measure, and all of their measurement simply confirms what is common sense, and disproves the ideal type that economists seek to express with their formulae. The science that the great thinkers of the last century attempted to discover is not a form of sentiment, or emotion, or cognitive bias, but calculation. Calculation in the broadest sense. Calculation in the sense of the tools human memory must make use of in order to compare possible outcomes. And that process, when understood is quantifiable. It is measurable. It can be tested. It can be proven by testing. It is enormously complicated. But we should not confuse the difficulty of obtaining the data with the value of possessing it. We codified laws. We wrote constitutions. We contrived philosophies. We conducted wars, and we built nations and complex governments. Surely we can solve the greatest problem of human conceptual history, politics, even to the extent of including Hume’s problem of induction. The properties of individual human memory are the fractal patterns of Mandelbrot’s observations. Society prospers or dies because it’s tools of calculation keep pace with it’s birth rate. A government’s purpose, if it has one, is to spread calculability. What it does instead is spread taxes, which distort calculability. We do not live in the law-and-tax world any longer. We live in the credit and calculability world. While there will always be laws, laws are only important for those who abandon market participation – what we define as criminals. Our problem is to insert as much calculative ability into society and therefore into politics. So that rational arguments can be made. So that irrational arguments can be exposed. So that instead of class warfare there is class migration and class cooperation. So that we can cease being a society of laws – prohibitions and punishments, and instead become a society of actions – ambitions and compensations. Conservatism currently simply assumes those ambitions and compensations without being able to articulate them, or understand their causes.. But it does not comprehend that there are ambitions and compensations that the market CANNOT create. And we cannot make political judgments among the myriad of possibilities, nor stay within the Pareto-Optimum of helping without hurting, without the tools by which to cooperate politically in large numbers while avoiding the problem of creating a self-interested corrupting bureaucracy which simply exploits producers for it’s own benefit, while arguing that exploitation is for the common good. We need to get government off the drug of secular humanism, the food of taxes, and the fantasy of laws. We need to build the calculative society. We need to get away from the religion of secular humanism, and the mystic luddite fantasy of socialism. WE can have our cake and eat it too , if we can measure the ingredients. We can have low taxes and redistribution. We can have small government and large public expenditure. We can cooperate between classes instead of foment class hatred. We can have it all, if we reward our risk takers and producers and redistribute to our laborers and consumers. We can avoid hubris. Hubris is simply the warning that we cannot perceive what we cannot measure, so do not interfere in that which cannot be measured. It is still hubris if you can’t sense or percieve it. It is still hubris if you cannot measure it. And in politics hubris is simply violence and theft. But it is not hubris if you can measure it, and calculate it. The great thinkers failed to give us the the calculative society. The philosophers failed. The economists failed. They had the answer in their grasp. We can have the calculative society. And that calculative society is a science of Conservatism.

Timeplots posted an infographic on women’s participation in congress, which, all things being equal, has essentially remained flat. However, I take issue with the assumption that participation alone is a measure of somehting valuable, other than than as a vidication of the spread of the religion of secular humanism. Also: The Guardian posted an infographic on military spending, which implies that spending is some sort of jingoistic preference, rather than necessity. Together, these graphics illustrate something other than stated. THey represent a measure of the non-rational ambitions of secular humanism rather than the material expression of economic risk and necessity. The first is a misleading graphic, because it assumes that women would achieve some unstated GOOD by greater participation in political participation, rather than are a reflection of political sentiment. For example, another Infographic that’s misleading is the comparison of the US military’s expenditures, which is far larger than any other nation’s. But this ignores the underlying reason for having a military: protecting trade routes. After first, property rights, and second, corruption the third factor most important in prosperity is trade routes. And the civilization that polices trade routes is, in human history, the prosperous one. Another problem is that Chinese military’s size is overstated versus the US. The US uses vast numbers of contractors, as many or more of them than military personnel. The Chinese do not, but instead they perform these tasks within the military ranks. Another problem is that our military is one of technology not numbers, so cost per soldier is more important. Lastly, a very large portion of the military budget is for benefits and in particular, military benefits. The meaningful, and therefore accurate measure of comparison of military cost is the total dollars minus benefits, adjusted by national purchasing power, expressed as a percentage of GDP spent on the military, divided by the number of miles of air, water, rail and road transit that the nation operates. This would show that the USA is very close to dead last in military expenditure. Or rather, that the cost to its citizens is infinitesimal compared to that of other nations. The same analysis would be informative for viewing other nations. Russia for example has a horrific country to transport goods upon and police. It is vast, much of it is harsh to human life, it has a terrorist threat on it’s border, China at it’s south and east, very little in the way of connected waterways and little access to worthwhile seas. All miltary costs for russia will be higher. It must be a threat in order not to become a victim. (See Stratfor’s articles on Rivers and seas as well as on China’s security needs) The US is, fortunately, or unfortunately, the policeman of the seas, and took on that duty after the fall of the british empire. Our wealth is largely dependent, not upon democracy and all the other self-congratulating features we attribute to ourselves, but almost entirely to our control of the seas, because water transport is so much less expensive than any other. This military dominance makes our political values (secular humanism) and our currency, and our laws, the dominant structure on the planet, and is the reason why americans are prosperous. Early US growth was simply the result of applying european technology for the purposes of selling off and occupying a continent. The assumption made by advocates of decreased military expenditure is that there would be little material impact, or that we would not be impacted. Or that this impact would lead to greater equality at home. But that would nto be true. It would lead to vastly higher costs and a permanent upper class, and a vast reduction of the middle class to lower standards of living. Any argument to the contrary must rely upon an example of decreasing control over shipping that led to something other than widespread decline across a nation. In other words, advocacy of pacifism is an appeal to Ludditeism. The problem with women in politics in the US is related to the underlying political necessity of trade route protection. Since many people in the USA, rightly understand these necessary militaristic sentiments (Pareto would call them residues and derivations, and others would call them metaphysical preferences, others would call them biases, or jingoism) they are accurate representation of the problem at hand. Since our political structure is largely organized to maintain that policing and that trade, the population is more interested in maintaining a similar political sentiment. This tendency is generational, class based, and culturally influenced, and is becoming the minority sentiment (which is how civilizations age). But it is still the dominant sentiment among males. Even hispanic males. The reason other nations have higher percentages of women en-toto, is that trade route protection is not the problem faced by, or sentiment held by, people in weaker states. Redistribution is. The correct analysis of women in politicswould be visible if countries were ordered by their ability to expand trade routes. As such, you would see weak countries dominated by women, correctly expressing the social sentiment, and strong countries dominated by men. This is, another example, of the philosophy of Power and Weakness stated by Kagan. People develop philosophies that they CAN. Women have a preference for maternal redistributive duties, and men have a preference for conflict resolution and status enhancement. These charts, by contrast, are an example of a metaphysical bias toward the religious doctrine of secular humanism. (Which is the evolutionary result of christianity.) A pacifist doctrine that is only possible to maintain in the midst of prosperity – a prosperity generated by trade routes, and maintained by militaristic, expansionist, sentiments in a population. Both sentiments are necessary. But dominance of one sentiment is a function of the nation’s needs. So, in other words, if we look at the miles of transport that we police, we have a very, very cheap military. And women serve according to their preference, and societies preference for their sentiments. Women CAN serve in politics. Ability is not a question. Sentiment is a question. Because, in the presence of inadequate information to allow us to predict the future, we make decisions according to our sentiments. And politicians are of necessity both inadequately informed, and not in their positions because they are informed, but because they appeal to voter sentiments. So these charts do not illustrate what the authors mean them to: an illustration of the progress yet to be made in advancing the religion of secular humanism. They illustrate something else entirely: the resistance by the objective and material world of raeality to the religion of secular humanism, and the rationality of those existing judgements in the face of the irrationality of the ambitions of secular humanism. Men and women have different sentiments, and it is almost entirely biological in nature. And there is no evidence to the contrary. Yet our political discourse must, for secular humanist reasons of faith, deny that fact. Arguably from a man’s perspective, especially a divorced man, we have rendered unto women extraordinary privileges never available to men in human history. To the detriment of men’s quality of life, men’s occupational distribution (men take the high risk jobs and largely bear the brunt of unemployment), and medically, more money is diverted to research for women’s health than for mens. Certanly benefit systems are set up to give women an advantage. Especially when we consider that the world’s primary issue is overpopulation, not pollution, or health care. Overpopulation. We have implemented this shift from male dominated benefit, to women dominated benefit, by women’s participation in the voting structure, not by women’s participation in politics – a participation level which appears to have leveled out. The same is true for women’s participation in the work force. It has leveled out. The same appears to be occurring in the past two generations. Women under 30 are not as activist as they were in the post-war generations. The post war generations were largely an effort to demilitarize society that has been militarized in order to fight the world wars, and recently, because of labor saving devices (invented by men) that no longer made it necessary for women to spend the day in home labor. In other words, we attribute to our politics those causes which were actually effects. This overemphasis of politics is another example of the religion of secular humanism, which attributes to collective judgment that which is an artifact of economic conditions. And economic conditions which are an artifact of military sentiments. In the 19th and early 20th century, our trade routes were largely internal, as the Great Lakes region industrialized so that the west could be populated. In the 1980’s our trade routes moved from the atlantic to the pacific, along with the technology leadership, and increasingly are doing so. The same is true for financing. San Francisco is the primary source of investment capital for experimental ideas. At some future point, our trade routes will change again. When that happens, we will change our political participation to be more masculine, or more feminine, depending upon our nation’s position of power and weakness. Just as every other nation will.