Curt Doolittle

Form: Critique

  • The Cult Of Silly People

    From FP Magazine:

    “How Did Obama Lose Karzai?” … “Karzai now appears mistrusting of the West’s long-term commitment to his country. He considers the Americans to be hopelessly fickle, represented by multiple military and civilian envoys who carry contradictory messages, work at cross-purposes, and wage their Washington turf battles in his drawing room, at his expense, while operating on short fuses and even shorter timetables.”

    We have a president, who is part of a philosophical wing, dominated by a left coalition, that believes ‘silly things’. Like jimmy carter, obama is a president who believes ‘silly things’. But what silling things? The left’s feminine assumption is that we can all agree – like women in a tribal cave. They assume that there is a consensus to reach. Or that such a consensus would persist. Or that such a consensus is advantagous.

    [callout]Only a fool thinks he can fly. But at least he is dangerous only to himself. It is the fool that thinks people can agree, who is dangerous to all of us.[/callout]

    Except that to do anything substantive at all, humans must take risks to cooperate in large numbers. Groups require a hierarchy in order to make decisions. People attach utility and status signals to their positions in those hierarchies. They have many investments, both personal and collective, and those investments are in both means and ends. Having taken those risks, people have ‘interests’. Each person has a set of interests. Each group one or more interests. These interests include both means and ends. Means conflict even if ends do not. Humans cannot agree in large numbers. Interests are always in conflict, because even if ends are not, the means and the organizations of humans needed to achieve those ends are not. THe difference between silly people and sane people is in this simple understanding of the limits of human cooperation. Our president, like all leftists, is a man raised on feminine rather than masculine virutues. He values the famlial model, not the political. Families can agree on ends and means. Political groups cannot agree on means, even if they can agree upon ends. And they rarely agree upon ends, because do to so would be to the advantage of some at the expense of others. Marginalism suggests that if we have sacks of flour in store for the winter, every sack we sell has a different value, whth the first having the least, and the last having the most. It explains why water has much use value but little trade value, and diamonds have little use value but high trade value. But marginalism applies to human sentiments as well: humans recalculate their preferences each step you take toward achieving them. Humans seek opportunity. THey seek ‘relishes’. Only a fool thinks he can fly. But at least he is dangerous only to himself. It is the fool that thinks people can agree, who is dangerous to all of us. Curt

  • Response To Posner On Guns

    (Note: I posted this as a comment on http://www.becker-posner-blog.com/ and am copying it here, as a I always do.) Guns are for more than hunting and self defense. They’re also a political symbol, and a political institution. Arms have uses. But the purpose of arms is to maintain the ability to overthrow an oppressive government, and to insure that members of a government take no actions that would sufficiently anger even a small percentage of the people, such that they might raise their arms and use them. Yes guns are cool. Yes they are a status symbol. Yes guns provide one with a sense of security. And yes, they are the material tools by which a people remain free. Even if remaining free is the sentiment of the minority of the population. One is not free if he must rely for his security upon the willingness of others. He is free because he chooses to preserve the existing social order, despite the fact that he has the physical power at his disposal to alter it if necessary.

    [callout]There are only three tools by which humans can coerce other human beings: violence, words and payment. Each social class has developed elites that master one of the three tools. And any attempt to deprive us of words, arms or property, is simply an attempt by the elites of one class to deprive members of another class of their political power, and to obtain additional power for their own at a discount. [/callout]

    Violence is a virtue: The more of it you have, the more free you are. The more free you make others by possessing it, but using it only to preserve that freedom. Restraint is the most powerful use of violence. If you no longer possess it, you cannot restrain it. It is most powerful if it is a potential. Actions which are not taken are often not measurable. Economists know this. It is the problem of the broken window fallacy, and the principle behind Opportunity Costs. As such, economists should be wary of applying infinite discounts to a property of human behavior, simply because of the difficulty of measuring the cost of that behavior. Property is an institution that is created by the threat of violence. The use of violence to create property, whether it be the several property of the individual or the shareholder property of the collective, is the most massive and constant application of violence that civilizations apply, from the very broadest group, down to each individual. Property is the highest cost institution. It is the hardest to develop. The Iron Law of Oligarchy and it’s manifestation in bureaucracies guarantees that all governments, of all forms, will be corrupt, and self serving. The only counter to the bureaucracy of the state is the promise of violence by it’s citizens. Under republican democracy and social democracy, the bureaucracy is demonstrably more self-serving than under other forms of government, and far less subject to democratic change. Tyrants can be killed. Bureaucracies cannot be. The vast efforts of the West for the past few centuries have been to create the institutions of property elsewhere. And our primary advances in human productivity and cooperation have been the result of the tools to account for, the legal systems to administer, the education to teach children how to use, and the new types of money and credit instruments, finance, banking, capital and markets to facilitate, the ordered use of property. And we have spread those instituions of property, almost always by the force of arms. This has occurred despite movement after movement by one class or another, from the base proletariat to the elitist public intellectual, to deprive us of that violence, so that they may use the violence of the state to remove from us our freedom, and to alter our definitions of property, and therefore appropriate the institutions, the property, or the results of our labors for the benefit of one group or another. Adherence to property definitions, and use of the tools and institutions to manipulate property, are the foundation of learning in every culture. The Justice that is used to resolve conflicts, and the government that is used to create and regulate markets, both sit upon the technology of violence. And governments, if they are over free men, are created and maintained by the fraternity of individuals who are wiling to forgo the institution of violence in order to preserve their definitions of property, their systems of justice, and their institutions of government. Guns, more than any type of arms in history, equalize our capacity for violence. They make us equal in age, health, strength and choice. Each of us possesses violence. It is a natural human potential. The more skilled we are, the more armed we are, the more we possess of it. The greater the store of it, the wealthier are our people. The more secure are our trade routes. The more respectful are our governors. The more free are our citizens. The more prosperous our people. The more choices for happiness are open to each of us. History does not favor the weak — whether as a nation, or as individuals. In the west, our social order, our history, derives from our unique development of cities, which was accomplished through the cooperation of a fraternity of warriors. We should understand that cities are synonymous with markets. Warriors built markets with the threat of violence, and it was done at high cost. Our trade system today is one of high cost. And common americans benefit from that high cost. Even if we are exporting debt and currency to pay for our military system, rather than simply taxing everyone else for our world trade routes. Our fraternity is what makes us unique among other civilizations. Its origin is in our weakness against the stronger, wealthier and more populous east. With smaller numbers, and better technology, our shareholders defended their markets against superior forces. And while in our lifetimes we have been majority for a brief flicker in time. We are a minority again. A minority who protects our markets, our trade, and our institutions and our freedom with a wealth of violence. By our actions-not-taken. Against the constant drum of talkers and scribblers who would take from us our violence and deprive us of our freedom. Today we use the word ‘shareholder’ instead of ‘citizen’ for our voluntary orders. We do so to obfuscate the cost of being a shareholder or a citizen. So that many people may become shareholders without first paying the cost of obtaining one’s share. By respecting the institutions of property, we gain admission to the market. To respect property is to refrain from violence and fraud. There are only three tools by which humans can coerce other human beings: violence, words and payment. Each social class has developed elites that master one of the three tools. And any attempt to deprive us of words, arms or property, is simply an attempt by the elites of one class to deprive members of another class of their political power, and to obtain additional power for their own at a discount. I hope that the meaning of that statement is not too subtle to be clear. Curt Doolittle

  • Every philosophy is a little bit right and a whole lot wrong

    The left is wrong on it’s face, because of the problems of incentives and economic calculation. The left is wrong on it’s perceptions: the pie isn’t fixed and people are not even closely equal in ability. The left is wrong on it’s sentiments: they are universalist and familial rather than group and political. They are wrong in their anti-sentiments: Care and Fair are only possible if first there is Order, and Group Persistence. The left is wrong on it’s logic: value is subjective, value is marginal, value is not determined by labor in, but by value out – and factor prices are determined by market prices of the end good. THe left is wrong on very purpose of society: it is a market first, and a society second. A society is it’s market and it’s market principles – everything else is an artifact of that market. THe left is wrong on diversity: people are demonstrably more charitable in the absence of diversity. The left is wrong in everything but it’s ambition – individual happiness in the absence of stress for the purpose of a happy family, rather than individual success for the purpose of group competition. The left is right that people at the bottom most likely have a claim on some amount of the profits of the market in which they participate, and that declining prices and increasing standard of living, and public services, and freedom from consumption taxes are to some degree justifiable.

    [callout:More Right Than Wrong]Everyone is a little bit right.Everyone is a whole lot wrong. But libertarians are more right and less wrong than everyone else — assuming that is, that we seek prosperity, safety, health and choice for the maximum number of people at the minimum cost, at the lowest risk.[/callout]

    But the right is wrong on rhetorical debate – the republican model breaks at scale – instead we would need economic democracy. It is wrong on monetary policy. The right is right on all of those things that the left is wrong on. Most importantly it’s right on group persistence, obligatory group identity. They are right on military dominance of the seas and trade, and the trade system, and of the expansion of a monetary empire. They are right on intolerance of extra-market orders. They are right on meritocratic rotation of the elites through market or military acts. The libertarians (the middle) are wrong on many of their principles. They are wrong on immigration. Immigration of an underclass that speaks a different language, and observes a different cult is demonstrably detrimental to a civilization. THey are wrong on free trade. They are wrong on intellectual property. They are wrong on the origins of society and market. They are wrong on forgone opportunity costs. They are wrong on equality – libertarianism is as beneficial to the intelligent, and totalitarianism is to the strong, and communism is to the weak. They are wrong on redistribution – precisely because they are wrong on the origin of markets. THey are wrong on empire and military. They are wrong on private courts. THey are wrong on private police. But the libertarians are right on monetary policy, on economic calculation and incentives, on rule of law, on small government, on privatization, on economic democracy. Everyone is a little bit right. Everyone is a whole lot wrong. But libertarians are more right and less wrong than everyone else — assuming that is, that we seek prosperity, safety, health and choice for the maximum number of people at the minimum cost, at the lowest risk.

  • A Response to Gene Callahan: Scientism In The Way Of Science

    From Thinkmarkets: Scientism in the way of science by Gene Callahan. Gene takes critics of economics to task. I misunderstand it at first, (as does Ebeling), and the ensuing commentary is worth reading. (Originally posted there. Posted here for documentary purposes. -A nod to the few sites like Econlib that seem to think documenting one’s work this way is bad for some reason.)

    I repeatedly find attacks on positions in the social sciences made based on extremely limited and, frankly, antiquated views of how the physical sciences proceed. I will give one example from a rightist criticism of a leftist view, and one that is a leftist criticism of a rightist view, to illustrate that my point has nothing to do with ideology — or perhaps, that it has to do with the way ideology can lead one to embrace flimsy criticisms of other’s positions. The first excerpt is from Hunter Lewis’s book, Where Keynes Went Wrong: “In chapter 15, we saw how Keynes wrote N = F(D), which means that employment, denoted N, is a function of demand. Demand however is defined as expected sales, not actual sales. We noted that expectations are not a measurable quantity and thus do not belong in an equation.” Well, one way to measure these expectations would be to walk around and ask the entrepreneurs “How much do you expect to sell this year?” then total up those amounts. Why in the world this would not be a fine measurable quantity is unclear. But perhaps even worse is Lewis’s contention that only a “measurable quantity” belongs in a mathematical equation. So, let us strike pi from all of our equations, and e, and, most certainly, i! All complex numbers must be banished, and negative numbers are fairly suspect as well. Furthermore, most of the entities dealt with by modern physics are not directly measurable. Instead, what we measure is a dial reading or a trail on a photographic plate, things which require a great deal of theory to connect them to entities like electrical fields or positrons. As the philosopher Susanne Langer wrote:

    The sense-data on which the propositions of modern science rest are, for the most part, little photographic spots and blurs, or inky curved lines on paper. These data are empirical enough, but of course they are not themselves the phenomena in question; the actual phenomena stand behind them as their supposed causes… we see only the fluctuations of a tiny arrow, the trailing path of a stylus, or the appearance of a speck of light, and calculate to the “facts” of our science. What is directly observable is only a sign of the “physical fact”; it requires interpretation to yield scientific propositions… and [realizing this,] all at once, the edifice of human knowledge stands before us, not as a vast collection of sense reports, but as a structure of facts that are symbols and laws that are their meanings.

    (Philosophy in a New Key) And surely this was what Keynes thought: aggregate demand may not be directly observable, but we can formulate laws by which itseffects are observable, for instance, in a recession. Now, whether he was correct or not is not my topic, but there is certainly nothing unscientific about his hypothesis. The second excerpt is from a history of marginalism at The New School for Social Research: “However, [marginalism’s] Achilles’ heel was the very notion of ‘marginal utility’. Marginal utility, let us be frank, is hardly a scientific concept: unobservable, unmeasurable and untestable, marginal utility is a notion with very dubious scientific standing.” Unobservable, unmeasurable and untestable — like, say, infinitesimals in calculus! (And people like Berkeley directed just such criticism at infinitesimals and other mathematical notions.) Once again, we have some unfounded belief that scientific entities must be directly observable, rather than observed by their hypothesized effects. (And certainly the theory of marginal utility predicts many observable phenomena, such as the lack of a price for air in normal circumstances.)

    [callout] … probabilism in the social sciences as we understand it … is unscientific. Not simply beause the methods are logically false and because the predictive capacity of our methods are false, but because NOT USING THEM appears to produce better results than using them.[/callout]

    Update:

    I think that  Gene’s argument is a bit clearer now that I have read comments by others.   And perhaps I’m adding additional vectors of inquiry rather than debating his position. Gene’s argument is that people from the physical sciences argue that economics is not a science and counters the grounds on which their criticisms are based.  I interpreted his posting that people from the psychological school were forming the criticism against positivism in economics.  Gene’s criticisms are correct, in that mathematics relies upon incomplete approximations that are convenient contrivances, and that economic science relies upon similar assumptions, so he is attacking the physical sciences on their methods – saying their criticisms of social sciences are hypocritical. I would argue that since the velocity of the transfer and transformation of energy in time and space is knowable, and that the same velocity of knowledge is not yet knowable, that probabilism in the social sciences as we understand it – and as I have stated below,  is unscientific. Not simply beause the methods are logically false, and because the predictive capacity of our methods are false, but because NOT USING THEM appears to produce better results than using them. And that while results in the physical sciences have neutral consequences (or perhaps do not have moral consequences – those that affect others without their consent) that consequences of failure necessary for testing in the physical sciences creates negative externalities, as well as being simply counter-productive in the social sciences. (I believe I understand how to discover the formula for that velocity, and how to know it, but not what it is, and that someone more intelligent, and most likely younger than I am will be required to solve it. But at least google is accumulating the data needed to determine it.)

    Original Reply:

    Gene, Well, I think the argument against the use of models is different from that which you’re stating.  There are three or four major lines of argument in your posting all making assumptions about ‘science’ and the scientific method. Marginal utility is an expression of the relativity and subjectivity of value, and the plasticity of utility, and the dynamic variability of value in real time.  This creates a set of variables that lead to the effective uniqueness of each object in time for many (if not all) objects, which in turn leads to the categorical error of aggregation when applied to quantities, each of which includes necessary errors due to aggregation.  And this error of aggregation is the reason for non-prediction. And therefore non-prediction is caused by the very reasons austrians stated.  That in the aggregate much of this can be modeled, is true, at least for many commodities. Objects in physical space have a prior course.  So do human events.  We can measure the delta in the course of physical events, but CANNOT measure the delta in the course of social events. That is the simplest statement of the problem.  It is that social events CANNOT be measured because they are temporally unique. And further, Marginal utility is absolutely testable (and has been.) So I don’t understand, or rather, you could be making any number of points, and its unclear which. Marginal utility is a categorical description of a visible, measurable process, whenever that process results in an exchange (at least.)  True, we cannot know the opportunity costs paid by individuals, but we can measure whenever they do act to exchange goods or services. Instead, the criticism of models is not on grounds of material measurement of transactions, but that :

    a) empirical models in the social sciences are not predictive and are even inversely predictive in relation to their utility in time.

    b) that they are consistently not predictive (although they are descriptive of the past) and therefore false, and

    c) that as demonstrably false, they are unscientific.  That due to subjectivity and innovation, plasticity of utility, and the resulting heterogeneity of capital, and asymmetry of information, shocks and the vicissitudes of time, they are logically destined to be false. (ie: it is not the use of measurement, it is the use of measurement to determine causality – not correlation but causality – that is scientific.)

    d) that the use of false, non-predictive, arguments are used to justify implementing dangerous risk-accelerating unscientific policy.

    e) that we cannot  model what might have been, had we not used false models to enact policy, and therefore calculate the real cost of policy. (ie: we cannot compare what might have been with what has come to pass, and sum our costs plus our profits.)

    f) that by implementing such policies we expose ourselves to  and indeed, encourage greater risk. Ie: the austrian business cycle of booms and busts.

    g) that it appears, that in history, whenever the commercial sector grows faster than the state can regulate it or redistribute the capital from it, and form a predatory bureaucracy upon it, the results for the entire society, at least narratively if not certainly empirically, seem to be better than those where state intervention has occurred. Meaning that the Austrian criticism is that the use of the calculus of measurement in heuristic social processes will result in non-prediction and exacerbation of risk — or at least, such models will be limited to prediction based on the asymmetry of information discovered by the act of building the model, but not of the asymmetry of information yet to be developed by innovation or shocks, and therefore undiscoverable by the process of building a model. I would argue that Keynes covered these problems in A.T.O.P. Although I am not a scholar of his work.  And that austrians agreed with him on many of those positions.  But the PRACTICAL matter is that the profession is heavily invested in a technology that demonstrably does not work, yet is relied upon for policy decisions every day. Models are a superior means of describing causal processes where language and human limits to conception fail. However, tehy rely upon a mathematics derived from the much more simplistic physical sciences.  And until we can measure the ‘natural forces’ of men’s mental capacity, which are largely the properties of memory in time when in the presence of vast information, we have no formulae by which we can call our efforts sufficiently scientific rather than simply a convenient means of toying with economies against the will of those struggling with knowledge and capital to avoid and circumvent all that toying. So either I don’t understand, or I do not think your criticism is founded. The people that criticize empiricism may not be using a substantive foundation either, and may justify sentiments and intuitions with false appeals to reason that they do not fully understand. But I do not see how your criticism is logical in the context. Looking forward, solving the problem of induction instead of relying on (false) equilibria relies that we understand, and develop a formulae what might best be called ‘velocity’, which is the rate of innovation given the limited ability of the human mind to make ‘jumps’.  Therein is a formula of greater importance than E=mC^2.  And because that velocity can be known, probabilism will have a rational boundary, rather than the irrational boundary we have conveniently constructed out of historicist necessity. I hope I have been sufficiently cogent on a subject of complexity that has admittedly exhausted many of our best minds.  And apologize in advance for my failures. Cheers.

  • Myths That Are Realities: Donald Trump vs CATO and Don Boudreaux

    On Cafe Hayek, Don Boudreaux references a CATO posting which in turn references a Wall Street Journal article, that criticizes Donald Trump for stating that we need more manufacturing jobs. The libertarian sentiments held by my friends at CATO and Cafe Hayek, inform them that productivity gains show that we produce just plenty of manufacturing – thank you very much. Wherein Don supports the Cato position that we do not need more manufacturing, and that any perception that we do, is a myth. (Articles are linked below.) But they are mistaken. A polity desires not productivity, but employment, and not simply employment, but competitive, status-enriching employment — and the lower classes in particular find their social enfranchisement in producing these ‘collective goods’ we call competitive production. They cannot achieve status through individualism, so they seek to find it in collective membership: They want to ‘do good.’ For example, a friend of mine in the advertising business, says that all agency guys want to produce ads that lots of people see, so that if they go into a bar or club or social gathering that they can talk about it and ‘get laid’. They use the term doing “Get Laid Ads”.  To some degree, this is kind of ‘fame’ or social status. The mechanic who produces a fine vehicle, or trendy bit of electronics feels the same. The janitorial staff at an elegant landmark feels the same way as long as they are invested in that cultural value system. Human beings flock to opportunities. Economics does not measure opportunities. It measures results. If we could measure opportunities, we would solve the problem of induction in economic theory instead of having to rely upon equilibria for our calculations. But we cannot read men’s minds. So we cannot measure opportunities. Yes, we can measure imbalances.  We can measure asymmetry. But not innovation. Not creativity. That said, whether we can measure it or not, human beings flock behind opportunities until they are exhausted. This is the reason for the boom and bust cycle: People flock to opportunities, and the flocks accumulate people in vast complex networks in order to exploit those opportunities.  The problem with fiat money and current monetary policy is that our attempts at keeping interests rates low block the information system that interest rates provide us with, and allow people to ‘flock’ well past when others who know better see the opportunity as having exhausted itself. This is the problem with monetary policy, rather that simple lending.  We should not provide unbridled liquidity tot he market. We should provide loans with terms, including terms of use. But, back to the topic of status-enhancing work, these cooperative bits of social membership through work are the processes that create social bonds in the post-religious world. They are more effective than services, redistribution and transfer payments at creating a polity .  And in case I haven’t made it clear, we need a cohesive polity in order for people to trust government, and to enable government to act on their behalf. So:

      IE: TRUMP IS RIGHT. Productivity gains explain the data, but they do not solve the problem of unemployment and underemployment. It is perfectly possible for us to compete with Chinese skilled labor in manufacturing high quality electronics, because they are relying upon labor not mechanization. It may require tax incentives. It may require loans. And it will most definitely require design and development of machines that are faster and better than human hands at manufacturing.  But that task as well, will create manufacturing jobs. Personally, I’m in the business solving for something else: maintaining the wealth created by the US ownership of the system of international trade, and maintaining western technological leadership.  Because,as a minority, only technology can maintain our institutions, our system of defense, and relative economic status. That’s the lesson of western civilization – rate of adoption of technology. Western civilization is a minority strategy for competitiveness: invest in skill, knowledge and technology and you will keep the east at bay despite our inferior numbers. DEFINITIONS:

      1. Productivity: the increase in sales revenue per hour worked.
      2. Employment/Unemployment: The percentage of the population employed.
      3. Unrealized Employment Productivity : The potential productivity gains that could be realized by allocating capital to unemployed resources. The error of mixing short-term return on capital versus long-term return on capital that is achievable through the competitive advantage obtained by accumulated built capital, accumulated knowledge (tacit knowledge), and accumulated skills (explicit knowledge).

      THE MYTHS

      1. The first myth is that capital is, or should be, fluid, and that more fluid capital will seek the greatest returns, rather than the maximum shortest returns. It takes a lot of money to create factories, and machinery and returns take longer than profits on consumer speculation.
      2. The second myth is that human incentives are monetary, rather than status driven. They are status driven first, and monetary second.
      3. The third myth is that economies can ENTIRELY specialize in agrarian, transportation, industrial, service, or research sectors, given the distribution of ability (IQ) in their populations. When instead, they must simply keep as many people employed as productively as possible. While we can attempt to keep the majority of the population living a middle class lifestyle (ie: consuming) we must understand that social classes are largely a function of ability, and that we must not fool ourselves that we must create status enhancing job opportunities for everyone in the spectrum if we want our political enfranchisement to mean anything at all.

      References:

      From CATO http://www.cato-at-liberty.org/a-wall-street-journal-column-understates-the-size-of-u-s-manufacturing/ A Wall Street Journal Column Understates the Size of U.S. Manufacturing by Alan Reynolds “…the manufacturing share of GDP declined markedly over this period as measured in current dollar value of output.” “In 1950, the manufacturing share of the U.S. economy amounted to 27% of nominal GDP, but by 2007 it had fallen to 12.1%. How did a sector that experienced growth at a faster pace than the overall economy become a smaller part of the overall economy? The answer again is productivity growth.” “Those who imagine “we don’t make anything anymore,” as Donald Trump claims, don’t grasp the magnitude of America’s industrial productivity gains.”

      FROM Cafe Hayek Trumped-Up Fiction by DON BOUDREAUX on DECEMBER 2, 2010

      Trumped-Up Fiction
      “If myths could be buried, this item would be yet another nail in the coffin of the data-less myth that Americans “don’t make things any more.” Alas, one can neither reason nor empirically demonstrate people out of positions that they reached without reason or empirical support.”

    • Tyler Re-Reads Road To Serfdom And Misses The Point

      I don’t particularly like criticizing Tyler Cowen, but this is a bit ridiculous, and I”m going to have to chalk it up to excess holiday tryptophan. Last time I read Road To Serfdom was this fall, driving cross country. Actually, I listened to it on tape. And I cautiously pulled aside whenever I needed to take notes. I took ten pages of notes. But that’s OK. It helped with fatigue. Tyler recently re-read Road To Serfdom. Here are his comments.

      Rereading *The Road to Serfdom* Given all the recent fuss, I picked it up again and found: 1. It was more boring and less analytic on matters of public choice than I had been expecting. 2. Although some of Hayek’s major predictions have been proven wrong, they are more defensible than I had been expecting. 3. The most important sentence in the book is “This book, written in my spare time from 1940 to 1943…”  In those years, how many decent democracies were in the world?  How clear was it that the Western powers, even if they won the war, would dismantle wartime economic planning?  How many other peoples’ predictions from those years have panned out?  At that time, Hayek’s worries were perfectly justified. 4. If current trends do turn out very badly, this is not the best guide for understanding exactly why. It’s fine to downgrade the book, relative to some of the claims made on its behalf, but the book doesn’t give us reason to downgrade Hayek.

      Straw man. Self serving at that. No direct criticisms. Obtuse criticisms are illogical. a) The book contributed to the current state of affairs. b) The book was written for the masses, and that is why it has been widely read., and why it contributed to the current state of affairs. (more so than Braudel – although no discredit to him – and others.) c) The book’s criticism of central planning is not the same as the current criticism of the welfare state. And I do not understand, nor does it appear others here do, why you grant particular grace to current democracies – the merit of which is still in play, until we observe how we fare now that the rest of the world has adopted capitalist instituions, and erased our prior advantage. It certainly appears, that instead of Democracy, the award goes to capitalist institutions, calculation and incentives. Democracy is irrelevant. Other than, under democracy, it appears, it is far more common to vote one’s self into tyranny, than is possible under parliamentary monarchy, or oligarchy. I believe the three points above refute all four of your observations. In fact, I’m having trouble understanding why you even view it through your empirical framework. It is a narrative pedagogical work. And as a narrative pedagogical work it will very likely be as durable as most innovative narrative works are, versus the very perishable empirical works of political economy that are fashionable flashes of the moment. AFWIW: Whether one lives under tyranny or not is a matter of perspective determined by one’s definition of property. Cheers

    • To Time Magazine on Taleb: Quantity and Probability.

      Mr. Galdel, of Time Magazine, asks readers what questions he should put before Nassim Taleb, author of The Black Swan, and implies, without understanding his own cognitive bias, that the liberal belief in our own wisdom and control of our own destiny is unquestionable. http://curiouscapitalist.blogs.time.com/2010/11/23/whats-wrong-with-bernanke-and-qe2-ask-nissam-taleb/

      Taleb has recently been bashing Bernanke saying he doesn’t know what he is doing because he didn’t see the financial crisis coming. But Taleb has also said that the financial crisis was a Black Swan. But isn’t the definition of a black swan something that people don’t see coming. Yes, we should be ready for unusual events. But don’t think you can criticize someone for not see(ing) something that by definition was unpredictable, or at least very, very unlikely. What say you Taleb?

      Mr. Gandel, “not see(ing) something that by definition was unpredictable, or at least very, very unlikely.” That’s the whole point. That statement expresses the entire difference between left and right political philosophies, and between quantitative economists, and the austrian school: namely, that the unforeseen is unpredictable because: 1) The foreseen is unquantifiable (this is the entire issue in economics) 2) the unquantifiable is unpredictable 3) the scale of the impact of unforeseen, unquantifiable, unpredictable events is likewise unquantifiable. Therefore risk is there for not probabilistically measurable by mathematical means. Therefore risk measurement, and quantitative probability as used in financial speculation is FRAUD if committed by those who understand these principles, and ERROR if used by those who do not. Since these ideas are hard to grasp, a few people commit fraud, and a very large number of people commit error. Taleb’s indictment of the Nobel Committee is the most serious because it was their awarding of prizes to econometricians that allowed those who wished to commit FRAUD, to convince a lot of people to commit error, and in doing so create this catastrophe. Taleb’s proposition is that we are applying the mathematics of closed, permutable systems (probability) to the open, innovative, dynamic system of human interaction. In effect this is the warning given by the Austrian school to all political economists: we know how to enable the greatest amount of creative innovation in a marketplace, and in doing so create the greatest competitive advantage and the lowest prices, for the benefit of all. But political systems must aim at enabling that process, not achieving any particular end, while assuming that that innovative process will tolerate infinite manipulation. Taleb’s recommendation in The Black Swan, is that we must build our nations such that we recognize the COMMON-NESS of disruptive, unforeseen events. Therefore we should seek stability, security, and safety, and not expose ourselves to risks. We should never have assumed that such a thing as complex derivatives would provide risk mitigation — regardless of corrupt rating companies and bankers. We should build policy that expects the unforeseen. We should avoid policy that invites fragility from the impact of the unforeseen. This is probably an anathema to Time’s editorial staff. Because Taleb’s premise is core of Conservative political philosophy: take small risks, work through the market, and do not empower politicians to expose us to risks: Maintain strength and capital, both human and material, so that we can survive the inevitable shocks to our system. Of course, if we just read Aesop’s Fables we can learn the single lesson that Aesop attempted to teach us: avoiding the error of hubris – overestimating our knowledge and understanding.

    • A Study On Corruption, Without A Definition Of Corruption. Is That In Itself Corruption?

      From http://dmarron.com/2010/10/31/how-corrupt-is-the-united-states/

      “According to a recent study, the United States has more public sector corruption than do many other developed economies.”

      “Perception” is only a measure of popularity. It is not a fact of relative corruption. The problem faced by the USA is that it is too large, and our political system is insufficient for a democratic republic of this size and complexity. The vast progress that has been made by human beings has largely been due to the invention of technologies, namely the scientific method, mathematics and in particular probability, but including laws, regulations, accounting, banking and interest – technologies that improve our fairly limited if not entirely incompetent perceptions. Our perceptions are notoriously faulty. So what instead are meaningful measures of corruption. Corruption defined as the privatization of public office for personal benefit? Most people confuse corruption with immorality or incompetence. And those three artifacts of human behavior each have different causes. The vast majority of the references that people actually refer to are the result of natural bureaucratic incompetence when bureaucrats are isolated from the market process of competition. The rest are either the natural side effect of the democratic process which all but requires deception, or the difference between an individual’s perception of the real world, and the actions that are possible under this form of government given the size and diversity of classes, races cultures and economic interests that exist in the polity. As such the rating is nonsensical. It is trivial for Denmark to have lower perceived corruption than the USA. However, it is in fact, far harder to to create lower perceived corruption in the vast bureaucracy of an international empire like the USA. Because perceptible corruption is largely the result of whether you agree or disagree with what you perceive. People in government are rarely evil. They are more likely lazy, ignorant, incompetent, or simply happy to profit from their isolation from the market process and their ability to dodge the delivery of customer service we experience in the rest of our lives.

    • Review: The Secret Of The West

      I try to keep track of the ‘Grand Theories’. And I came across this one last week. I can’t find the book anywhere except online. I read what I could. And found this page by the author that summarizes his theory. Which is, quite simply, “stability and wealth provide the foundation for technological progress.” There doesn’t appear to be anything new here. His thesis is a well understood circumstance of geography, which applies both tho coasts and to rivers. Europe has both. He seems to dismiss culture as a factor. But western culture developed at the fringe of the bronze age and then iron age civilizations. And as a fringe order, especially a fringe order of metalworkers and warriors, they wanted to preserve their freedom from eastern mysticism, decadence and tyranny. It is this culture that led to vast enfranchisement. I don’t see how he explains chinese stagnation. China is primarily coastal. It matured early. It has vast rivers, wealth and bureaucracy. What is it about confucian society that left it stagnant? I could go on, but I don’t feel he has made enough of a case to allow me to draw any conclusions. Hopefully I’ll seek him out on one of my trips to europe. Here is his summary:

      Le Secret de l’Occident (“The Secret of the West”) unveils an economic and political theory about scientific & technological progress. The theory gives the reasons why the scientific and industrial revolutions originated in the West, and not in the Middle East, India or China. It succeeds in explaining the European “miracle” in the IInd millenium as well as the Greek “miracle” in Antiquity. It unravels the causes for the declines and rises of India, China and the Middle East across the centuries. 
That theory was brought together, like a jigsaw puzzle, from many pieces of the historical research previously unconnected. To my knowledge, it is the first united scheme able to explain the main booms and slowdowns observed in the scientific and technological evolutions of the main civilizations. Chapter 1 – Debunking Traditional Explanations 
The usual “internalist” explanations for the European originality – religion, culture, genetics, climate, third-world abuse, Greek heritage, pure hazard – are dismissed. None of these elements can pretend to shed light on the long-term European success. 
They basically fail at the two following stumbling blocks: Eastern Europe backwardness and leadership fluctuations among civilizations. 
– Eastern Europe is religiously, culturally, ethnically, climatically very similar to Western Europe. Nonetheless, it has always been lagging backward, for centuries if not more, painfully catching up with Western advances, but never leading the way. 
– During some periods of time, China, India or the Middle East led the way in science and technology. This does not fit well with the idea of an inherent (religious, cultural, ethnical, etc.) superiority of the West. If, on the other side, one admits important changes in those inherent abilities, these remain to explain. 
Greek heritage must be rejected because the Romans, the Muslims, the Indians too could benefit from it. Randomness is not an acceptable answer, it merely amounts to giving up looking for an answer. Chapter 2 – The Economic and Political Theory (European case, 11th to 18th century) 
Chap 2 discloses the theory. For science and technology to advance in a given civilization, two conditions are required: a thriving economy and a stable political division. That is, a rich and stable states system is needed. Western Europe enjoyed growing trade and manufacturing, and was divided between long-lasting competitive kingdoms, during the whole 2nd millenium; this is why it succeeded the way it did. – A wealthy economy fosters scientific and technical progresses in several ways: 
1) it generates a surplus which can be invested in non-immediately profitable activities, as science and arts. 
2) merchants, bankers and entrepreneurs have a strong bent towards accuracy, numbers, (ac-)counting, weighting, timeliness, measurement. When successful, they impose gradually this kind of science-friendly mentality upon their social environment. 
3) merchants, bankers and entrepreneurs have a vested interest in science and technology: they support development in mathematics (accounting arithmetic, higher-degree equations for interest rate calculations, statistics for stock exchange trading and insurances, etc.). In the Middle Ages, they supported the development of accurate clocks for measuring manufacturing and travelling times, of accurate maps for travelling, of astronomy for navigation, and of course of all sorts of new technical devices, since increasing manufacturing productivity and decreasing transport costs brings profit. The mercantile community, when successful, would financially support individuals active in those fields. – Stable political division helps science and technology in several ways: 
1) It generates freedom. No center has a monopoly of power, no government can control everything. Suppressed in a given country, a scientist or a technician can shelter into another one. Same for ideas and techniques. 
2) Competition between states generates a profitable stimulation. Every government want to do better (or at least not worse) than neighbouring countries. Hence governmental support for science academies. 
3) War exercices a continuous pressure towards modernization, it creates a strong government interest for new technical devices and for improving technical knowledge and education. War does not wreak too much havoc in the case of durable states, hence the need for a stable political division. In particular, the smart European scientific professional structure, the institutions that allowed scientists to make a living while doing research – universities, royal academies, private mathematical schools, etc. – could come to life and survive only thanks to the existence of the wealthy and stable Western European states system. In this context, the XVIth-XVIIth century Scientific revolution is interpreted as the outcome of the economic boom and military revolution that Western Europe underwent in the same period 1500-1700. The difference between the two parts of Europe becomes clear here. Western Europe had a favourable economic and political background during the whole 2nd millenium, that is, it enjoyed a rich and durable states system. Eastern Europe suffered from bad economic and political conditions. Eastern Europe’s states were unstable, they underwent fast boundary moves. Moreover, trade was weak, manufacturing rickety. Merchants never thrived half as well as their Western equivalents. Chapters 3, 4, 5 – The Economic and Political Theory (Middle East, India, China) 
Chap 3, 4, 5, demonstrate that the rich states system theory explains quite well the different stages of the scientific evolutions of the Middle-East, India and China. Each time prosperity and stable division are there, scientific knowledge flourishes. In all other cases (political unity, fast-changing boundaries and/or economical doldrums), science recedes. 
Each civilization is studied century after century, period after period, because they do not experience a constant economic and political situation. So, to get a clear picture, one must consider each period separately. 
The book devotes 110 pages to analyze the political and economical histories of the Middle East, India and China in relation to the evolution of science and technology. This is arguably the most original element in the book’s approach, since, generally, authors studying scientific history focus on the West, devoting only a few pages to other civilizations, without distinguishing between the (very) different periods. 
For example, the rich states system theory solves neatly the mysterious ups and downs in Chinese scientific history. The interval from 750 to 1280 was highly productive in scientific and technical progress because China enjoyed a rather stable division and a very dynamic trade and manufacturing. After 1280, political unity set in and science stopped. Chapter 6 – The Coastline Shape Hypothesis 
In chap 6, I find out why only Western Europe benefited from prosperity and stable division during such a long time: the main cause is the shape of its coastline. The Western part of the European continent is the only densely populated area in the Earth boasting as many peninsulas, gulfs, straits, inland seas, while still being for the most part an interconnected land. Such an articulated coastline enhances trade, because sea accessibility makes maritime transportation easier. The sea route is much better than river or land transportation. Before modern times, it was safer, quicker, freer and tremendously cheaper. Moreover, an articulated coastline defines naturally limited core areas within which polities can live their lives without being too much disturbed – Britain, Ireland, Spain, France, Denmark, Sweden, Italy are regions well delimited by the sea. The long-term stable political division stems from that advantage, as the sea is the best possible boundary for a state. 
In mathematical terms, the quality of a coastline is measured by Mandelbrot’s fractal dimension of the coastline. The higher the dimension, the better the shore articulation. I made some measurements on maps and obtained that Europe has a fractal dimension of 1.46, much higher than China (1.26), India (1.14) and the Middle East (1.13), which is significant because this figure can only take values between 1 and 2. 
Eastern Europe does not enjoy as good a shore profile as Western Europe: it is a mainly landlocked area. Vast surfaces are deprived of sea access: the seas are too far-away, they are often closed or ice-blocked seas. Hence, trade could not take off, and no natural boundary protected the regions’s states, which were brittle and short-lived. This is the reason why this region did not perform well in science and technology. Chapter 7 – The Greek Miracle Explained 
Chap 7 shows that the rich states system theory explains the ancient Greek miracle as well. The Greeks formed a lasting states system, enlivened by a brisk trade, both element thriving on the very indented and articulated coastline of the Aegean sea. Only the Southern part of Greece nurtured the miracle, because it had abundant access to the sea. The mostly landlocked Northern part of Greece stayed apart from the scientific adventure. So the Southern/Northern opposition in ancient Greece mirrored the Western/Eastern opposition in modern Europe. 
The miracle lasted until military technological progress overshot the possibilities of the Greek geographical platform. Then, the scene extended to the whole Eastern Mediterranean region, which the Greeks conquered. Huge states formed in Egypt, Mesopotamia, Asia minor, which could follow the competition, but only for a while: the new territories did not have an articulated coastline. The economy slumped down (this was compounded by demographic decline) and a more and more unstable division settled, ruining the Greek world and ending the “miracle”. Chapter 8 – Evolution of the West, 19th and 20th Centuries 
In chap 8, I apply the theory to the 19th and 20th centuries. The states system of Western Europe continued on its course, generating scientific progress at a fast pace, until the first part of the 20th century, when technological progress in the military domain (essentially tanks and airplanes) rendered the European continent too small. At this stage the states system destroyed itself (2nd world war). Greater states were required for the competition to continue. The USA and USSR, luckily, were there. They continued the battle until, again, the military technology (thermonuclear bombs and intercontinental missiles) exceeded the possibilities of the geographical platform. But this time, technology was so powerful that war simply became impossible on Earth between great powers, ushering the nuclear peace in which we live now. Chapter 9 – Present Situation and Near Future 
In chap 9, I develop several contemporary topics, like the Asian boom and the sharp drop of science in Russia. I show that, today as ever, only two forces prop up science: stable division and prosperity: governments, companies and donators are the funders of science. They can assume that role only if the necessary ressources are there, hence if the economy fares well. Also, only the freedom of a multicenter world allows research to go on unfettered (think of cloning, assisted fecundation, and so on). Furthermore, inter-state prestige or trade competitions are a crucial motivation behind that financing. 
As a consequence, one can take scientific progress for granted in the future as long as some region in the world will enjoy prosperity and stable division – this progress shall be a bit weaker, however, with the waning of the military pillar. Epilogue 
Finally, the epilogue generalizes the theory for the space age (that never came). Planet Earth has become too small to stand large conflicts between great powers, but wars with missiles and nuclear bombs could still be waged in the interplanetary medium. I briefly study the quality of our stellar system in that respect. In the same way as not all coastline profiles allow for long-lasting rich states systems, similarly, not all “planetographies” foster such lush combination at the space age level. The result of this investigation is that, unfortunately, our neighbouring planetary environment seems hopelessly forbidding. We are not going to experience in the future another full-fledged “miracle”, like the Greek and the European ones in the past. ========

      (more…)

    • China And Defining Freedom – Easterly VS National Review

      In William Easterly’s post “Why can’t leading conservative magazine understand freedom?” he refers to a National Review article “China Teaches US Lessons About Economic Freedom“. I replied in the comments: William, I’ve read this post four times, and it’s still not very clear what you’re arguing for and against. I think you’re reading far too much into a what are simple, broad analogies that express a sentiment not a formula. All he’s saying is that small increases in freedom produced a great impact on china. And he’s implying that small decreases in freedom here in the USA, will have as grand a set of effects. I think you’re both confused and you both overrate government, overrate individuals, and underrate demographic migration and change. Growth was easy for the USA during the 1800’s: buy half a continent from Napoleon and import millions of Europeans into it. Sell them all sorts of consumer goods so that they fill up the territory, and so that you can collect profit and create capitalist barons doing so. Use the cheap land and labor to produce commodity goods and sell them to europe. Cause a price catastrophe in europe. Let them have a horrendous civil war and inherit their intellectuals and england’s naval empire. Now, take a country like china, forcibly held back in ignorance and poverty by Mao who decided it was better to have everyone poor and suffering than a wealthy south and a poor north and west — fragmenting the chinese empire. Now, import vast amounts of western technology, western banking and accounting technology in particular, and use your inexpensive labor to produce goods based on that technology cheaply and sell back to the westerners. China’s growth is largely in the form of construction: moving people from hovels in the rural areas, to apartments in urban areas. The country is vastly poor. And it’s per-capita GDP is horrid. They used totalitarianism and capitalism to manage their expansion, we used republicanism and capitalism to do the same thing. There is nothing interesting about china. Nothing. There is nothing interesting about america, either, which is why you’re both confused. What’s interesting is how Europe in general, and England in particular, created so much innovation, how Americans capitalized on it, and how we can use that tradition and culture of innovation to compete in a world where we are no longer the one making money from a huge demographic change. Once cheap labor stops, and marginal differences in knowledge are exhausted, what remains is a nation’s ability to dynamically reorganize production in real time, and to competitively innovate in real time. The question is, whether Americans will maintain their innovative risk taking speculative culture without the military and economic dominance they possessed in the last century, and the resulting control over the international banking and trade system.

      William Easterly wrote: Curt and Sam, thanks for your comment. I was making a simple point: the article had a double standard for the Negative Changes in Economic Freedom in China and the US. And, 2nd, in giving so much general credit to Deng Xiao Ping vs. America’s leaders, it ignored Deng’s despicable actions against individual freedom in Tien An Men Square, and continued violence against and imprisonment of dissidents in China.

      William, thank you for replying. Let’s define Freedom. Because unless we define it, I’m not sure what you’re talking about. Let’s see: Freedom: absence of external constraint.

        The only form of ‘freedom’ you can have, that is non-contradictory (you can equally grant it to others and they to you) is personal, individual freedom. And even then, the only form of political freedom you can have is to DENY others the right to their political freedom. And at that point you are stuck with the problem of either getting to the point where you can convert the barbarians into paying the opportunity cost of becoming property holders in the first place, (establishing the system of property definitions) and without that need for coercion, you’re stuck in poverty even if you want to change the established order. But the only freedom you can have is individual freedom – the freedom of constraint. We can grant it to others equally. The rest of the freedoms are not ‘freedom’. They’re rights to take from others. All political freedoms are rights to take from others. They are rights of coercion, oppression. But then one cannot have a division of labor, a complex society, economic calculation, and the incentive to participate in productive activities unless you apply the ‘coercion’ of private property – at least to some degree. Confucianism is a high-opporunity-cost social order. It is very conservative. It requires respect for hierarchy and authority (opportunity costs). It requires consensus (opportunity costs but with risk reduction). It is an almost entirely shareholder-property society with low rates of creativity, low risk, slow moving social and economic model. But if it is BIG enough that people cannot sense external competition from OTHER social orders then internal status symbols can be preserved by way of nationalism or culturalism and the social order can work. (it doesn’t: the south is a competitor with the north of china, which is their whole cultural problem – that’s what Mao did. He destroyed the country economically to keep the south from outpacing the north.) This is not necessarily ‘bad’ in Confucian society. It may bear understanding that Confucius failed to solve the political problem (it is somewhat evident that he understands this) and directed everyone to hierarchy and family. So the Confucian model is not republican at it’s base. It is not tribal. It is hierarchical, and familial. The entire nation operates as a family. This is not a bad strategy unless you are competing with a group of high-risk, highly-innovative, fast moving westerners, for whom individual heroism, innovation and achievement are viewed as ‘keeping the group strong’. Competition and individualism are a ‘group good’ in the west. They are not in the asian societies. we are free to copy the innovators, and in doing so, everyone has the opportunity to be ‘better’. The west is an innovation and adaptation society. Freedom as we understand it, is not possible, and probably not necessary under Confucianism. Economically speaking, a nation that does NOT participate in heavy research and development will eventually fall behind, and governments can concentrate more wealth than the private sector on Research and Development. (What would the impact be of 200 new nuclear power plants in the USA? We have people feeling good about not wasting energy but manufacturing is the greatest energy consumer, and we need more manufacturing. Economizing is a spiritual act, not a material one.) China is making productive investments. We are making redistributive expenses, and spending trillions defending oil and trade routes, and our primary export – the dollar. And we will not get anywhere thinking that some very small minority of a Confucian population, or our odd obsession with the religion of Universal Democratic Secular Humanism will have any long term effect on the Sinic culture. The rest of the world is clearly condemning it. There isn’t even any evidence yet that our UDSH values will persist in the west without the Militial and Commercial balance to it, that is the foundation of western civilization. The calculative institutions of capitalism, which provide incentives in the form of pricing, sensory information in the form of objects defined as property, expressed and manipulated quantitatively, and the technologies of intertemporal collaboration and coordination in the form of money, interest, banking, fiat money and the technologies of dispute resolution in the form of contract and law, have little or nothing to do with the technologies of redistribution, and the methods of capital concentration, as well as the ‘forgone opportunity costs’ which citizens pay for participation in society and market’. Political freedom is not economic freedom. Political freedom exists either to defend ones self against a predatory state, or to use the violence of the state to put extra-market pressure on competing groups with competing interests. The reason for the western matrix of freedoms is to promote innovation, competition and wealth, so that the nobility, the upper middle class, and therefore prosperity will be maintained, and management elites, will rotate keeping the society competitive. At least, that’s the implied theory: meritocratic rotation of the elites – a thematic value system inherited from western heroic competitive militarism. ie: it’s a knowledge production engine. China values stability and security, not change and innovation. It is a culture where conflict is a sin. Where the individual is subordinate to the state. Where virtue is not heroic excellence, but duty. (At least, until the middle class is large enough.) Conservatives are in large part, whether knowingly or not, subscribers to ‘natural law’ theory, which states that human behavior is what it is, always has been and always will be. They do not subscribe to the philosophy that all men would work happily for the common good, nor, if given the opportunity, that they would do some common good in political power, or even know what such a good would be, simply because of the number of trade offs and secondary causes. Nor, that we are capable of implementing any designed change in our social orders without horrific consequences. And under that view, they would say that you are making a moral equivalency where there is none. Moral statements are economic actions, and either economic payments or theft. Ethical statements are economic actions, and either economic payments or theft. Manners are economic demonstrations, contributions, and payments. But these payments are made against a vast, habitual, rather than written set of legal, cultural and class body of accounts – and vastly different concepts of property definition, and they exist largely to ‘pay for the social order’ by reducing opportunity for friction and conflict. In the west, we have a very different payment system. We are all trying to be noblemen or priests. In the east, they are all trying to be Confucian – to hold their place. More like the German model prior to ww1. Our anglo model, is very rare. And it may simply be the artifact of a thousand years of wealth generated by expansion under the reformation. So before I get too far into this (I already have gotten way too far into it) I think you are being literal with conservative (allegorical) language. Conservative language is allegorical because conservatives have failed (especially during the 1870’s and 1930’s) to articulate a causally sufficient social science. (Myself and two or three rather off the wall libertarians, excluded perhaps.) Where the social democratic method can rely on the coincidence and correlation between easily collected monetary transaction information the Dynamic Stochastic Equilibrium model, and christian egalitarian sentiments, and Jewish anti-western-militial sentiments. But that does not mean that conservatives sentiments, expressed in allegorical language are false. It means they are insufficiently articulated. (and worse -foolishly wrong as in the case of many libertarians.) It simply means that they don’t yet know how to do otherwise. I think furthermore, that a) China is simply importing knowledge at very low cost. It is not producing it. Wealth may make knowledge production possible. But we have seen the Asian model is great for incremental improvement and the western model is better for radical innovation. b) cultures do not change. There is a high cost of changing norms. And Sinic civilization is very resistant to change. It is highly racist and highly culturist. (And it has a huge chip on it’s shoulder.) c) Their entire obligation structure (morals, ethics, property rights, manners) is a set of established costs. Our values are antithetical to them. d) their identity ( the means by which they judge the world) and their status signals (the human natural intuitive economy of events and consequences) will continue to force them in their native direction. And lastly, (why am I just getting to this now?) all the conservative writer was saying is that ‘a little momentum made a big difference’, and that ‘even if we make a little momentum in the wrong direction it will make as big a difference’. He is not comparing statements, he is comparing trajectories in time. And that’s what it means to be conservative: taking the long view.