Curt Doolittle

Form: Critique

  • Hayek, Kling, Austrians And Providing The Libertarian Solution

    From Arnold Kling, By way of the WSJ, By Peter Boettke:

    Mr. Hayek rightly warned of the dangers of central planning, Mr. Boettke says, but “he didn’t give a prescription for how to move from ‘serfdom’ back.”

    – Austrian Resurgence by Arnold Kling (Taken and expanded from my comments on EconLib.) Back From Serfdom? Hayek didn’t solve the problem of the social sciences. He gave us the right warning, but no meaningful prescription for government other than to rely upon what we already knew. Liberty is the desire of the minority. The minority participates in the market. The majority on the other hand lives off it, but does not participate in it. The majority is often frightened of the market. And if not frightened, they simply want to avoid the dirty reality of market participation: spending one’s life trying to understand and satisfy the wants of others, and risking one’s capital to test his or her judgement. We’d all rather be selfish. CALCULATION AND THE SOCIAL SCIENCES Mises, Hayek, Popper and Parsons all failed to solve the problem of the social sciences. The conservative sentiment remains a sentiment, and not an unarticulated rational philosophy. What structure it does have, remains allegorical and historical. This is why it cannot easily win a rational battle against the various forms of positivism aligned with marxist and collectivist sentiments.

    [callout]Austrian ‘Calculation’, Austrian incentives, the abstractions of Property and Opportunities, along with the properties of human memory and cognitive bias, are, when taken together, a necessary and sufficient system for economic and political order, and a rational means of articulating the conservative and libertarian sentiments. [/callout]

    Austrian ‘Calculation’, Austrian incentives, the abstractions of Property and Opportunities, along with the properties of human memory and cognitive bias, are, when taken together, a necessary and sufficient system for economic and political order, and a rational means of articulating the conservative and libertarian sentiments. This structure. This answer to our problem of the social sciences, is in Austrian Theory. It’s just incomplete. Our political system relies upon debate and rhetoric as means of resolution of PRIORITIES and METHODS among people with SIMILAR interests. Debate relies upon relevant knowledge of the content policicians are debating. But without data that is sufficiently complex, and formulae that are sufficiently PREDICTIVE, their debates must rely upon social class and cult preferences. And since the society is comprised of multiple classes and people with multiple interests, debate in the absence of rational data, and a rational social science, must descend into sentiments and rhetorical contrivance of people wth dissimilar material interests, rather than rely upon scientific Without additional complexity in our information systems, and without additional complexity in our political process the differences in our interests are too divergent to be solved by irrational discourse. It is a battle of who can win the greatest sentiments, rather than the determination of priorities among people with similar interests. We need data, and a system of applying that data that will allow us to move beyond the convenient contrivance of the DSEM model, and that will permit human beings to rationally make political decisions based upon something other than the tyranny of the majority won through the artifice of irrational sentimental political debate, unbounded by the practicality of hard money, and the difficulty of borrowing hard money. KLING’S RECALCULATION IS THE CORRECT MODEL Calculation and Incentives are the reason the Recalculation Story is the correct analogy. But without rational, causal, articulation, it remains an allegory, and is an insufficient argument relying on explanatory power, rather than causal definitions. There must be a way to combine knowledge of a nation’s market practitioners the way that the market does, and put it in the hands of politicians. We need politicians because if we are to pool our resources (if only to defend ourselves and our property from the barbarians and the proletariat) then there is a scarcity of resources to apply to infinite political choices. PAST FAILURES Past civilizations failed because law, rhetoric, bureaucracy and religion were insufficient means of coordinating a large division of knowledge and labor. They failed to create property definitions and calculating institutions sufficient for cooperatively managing their resources and for forecasting their use by combining the knowledge of the body of practitioners who were participating in the market. This is the reason all civilizations fail internally. It is a structural problem of complexity. Complexity does not have diminishing returns as some authors have suggested – just the opposite. But as complexity increases so must our cooperative technologies. And the tendency of governments to become corrupt, ritualistic, and calcified, combined with the lack of information systems and lack of conceptual models, and lack of institutions to use those models and data, leads to cooperative failure. HARD MONEY AND KNOWLEDGE VERSUS SOFT MONEY AND PROBABILISM Hard money and lending allow this cooperation between power and knowledge. Hard money requires borrowers to make a case to their debtors, and debtors can apply their knowledge of potential profit and loss. But hard money has given way to fiat money, in order to keep the supply of money needed for it’s uses available, while limiting inflation. Had government the inability so spend money itself, this process of inflation targeting would work. Fiat money is also a form of insurance. It makes government the insurer of last resort. It increases productivity by socializing risk. It will not prevent booms and busts. Instead, such easy credit encourages them. But human society has made the decision to tolerate this risk of credit distortion in exchange for the ability to provide each other with national insurance – the ability to borrow from everyone by printing money, and providing restitution of losses to those who have catastrophes. And as the Anglo-Rothschild-French alliance has proven, and the USA has taken to extremes, the most heady insurance a nation state can make use of, is the ability to print money as debt in order to wage war. And, as all developed nations have demonstrated, fiat money also permits governments to create social programs by borrowing against a future that is uncertain. In the absence of hard money – hard money that must be willingly lent – we can no longer rely upon the wisdom and knowledge of property holders we call lenders. Instead, we rely on mathematical prediction — which specifically does not contain the wisdom of property holders and their predictions of the future. Nor is our government debt actually comprehensible. It is simply too complex and vast, and speculative to understand. A SOLUTION THAT ALLOWS COOPERATION AND CALCULATION Thankfully, we already have the model of banking and credit. We’ve just allowed banking and credit to embrace precisely what we have warned politicians from embracing: the error of aggregation, called ‘pooling’ in fixed categories inherent in our current accounting technology, which is further enabled by an erroneous application of probabilism that violates the primary principle of property: it’s dependence upon knowledge of it’s dynamic utility. Hayek identified the problem but not the solution. We have a solution. We have the technology to implement it. It’s implementing it that’s now the problem. The fundamental problem for any civilization is increasing the granularity of economic calculation and keeping the temporal pace of their categories of measurement with the dynamism of their utility. In addition, if we are to have the self-insuring system of fiat money, then we must also have a means of capturing knowledge of lenders, and practitioners that was inherent in hard money. Then, possessed of that means, alter our form of government to take advantage of that knowledge. So Hayek was right. Kling is right. But they answer to WHY they are right has not yet been articulated. And the truth is, that since freedom is a minority sentiment, it is very difficult for such changes to be implemented in a polity. Even if it would satisfy the opposing side’s materialist desires. Because it would not satisfy their desires for status parity. Collectivism is largely an effort to attain status parity.

  • I’ll Counter Paul’s Prediction With One Of My Own

    Paul writes:

    Predictions I Wish Had Been Wrong Looking for some other stuff, I found this post from October 2008 in which I predicted a level of right-wing craziness about Obama similar to that facing Bill Clinton, but worse. I really, really wish I had been wrong about that.

    But this is followed by interesting comments. All from liberals. Like these:

    Palin makes and breaks candidates in the GOP now — she’s far and away the most powerful person in the party. Fox News is #1, and they’re basically a beacon of disinformation. When a paper like the WSJ joins in, it makes a lot of people think that what’s being said is legitimate. I try to challenge this stuff each and every time I encounter it, but the truth is that I’m never able to persuade anyone who believes it that they’re wrong. It’s as if the whole country has gone insane, and no one is ashamed to lie or hate people any more.

    and

    You certainly weren’t Professor Krugman. If they gain enough credibility to have a substantial influence on the electorate, then the whole country is in peril.

    And this:

    The Right has to act crazy, for one thing they are; for another, the Right knows that if the Left takes control of the government, hunting will be outlawed. The Spanish must have their barbaric, anachronistic bullfight/torture ceremony and the gun-lovers must be allowed to shoot Bambi throught the heart. This is a culture war plain and simple. It is not a civil war, but a highly dangerous and uncivil one. I hope the Right loses, but they have the guns, so I’m doubtful. (Un)civil wars are usually costly in terms of lives lost and sheer destructiveness. I can refer you to the Spanish Civil war to give you an idea. Remember, the Fascists won that one, after something like a million people died.

    And this:

    There was something about Obama’s can’t-we-all-get-along rhetoric, and then confirmed by a first year of making nice with a bunch of thugs who’d as soon lynch him as have lunch with him (with no result, I must add), that showed this is a man who cannot wield power.

    Interesting comments. I think they miss the point though. The country is demographically center-right. Liberals, comprising no more that 1/5 of the population are a minority compared to independents and conservatives. People seek status more than they seek money. Cultural dominance in each class determines status signals. People will surrender money unto Caesar, but they will never surrender their social position willingly. As Paul has stated before, the left and right are committed. The independents are the only people who determine elections. They are don’t play the great game except at election time, are disinterested, pragmatic, and swayed by whatever emerges as deciding key issues and the personalities of the candidates. The purpose of both parties is to establish simple sentimental memes that can help frame the candidates currently up for election. Amidst a long term downturn, and faced with a government that passes a law that affects their health care, over the will of the majority, and the country’s only remaining competitive technology, deprived of their cultural status, it’s only rational that they rebel. White guilt was easy to sway when they were an entrenched majority, and especially when suffrage, then feminism, both the result of mechanization of the household tasks, could be brought against the christian sentiments of the dominant male fraternity. But as a minority that is embattled and demonized, as a cult of family and freedom, they see their status under direct threat, their values and way of life under threat, and they are beginning to act like a minority whose status and way of life is threatened. They no longer see room for compromise. They no longer feel guilt. They are angry. It certainly looks like in the long term, the cyclic historians are right, and that the political system no longer works as designed – which is the assumed binding mythology of our country. Despite having certain cooperative and organizational technologies unavailable to the ancients, our government no longer works because it is a system of empire over people with dissimilar cultural-status-political and economic-financial-organizational ambitions. And both the domestic and foreign nations are beginning to revolt – because they can sense that both domestically and internationally, the government is no longer legitimate. A government over people with dissimilar interests must of necessity oppress all. The current political status holders will not easily surrender their positions. The bureaucracy is enormous, in government, unions, academia, education, the vast white collar clerical system, the media and the arts – all the people who do not participate in the market process, but are intentionally insulated from it as intentionally protected classes. The decline of the centralized media has been instrumental in assisting in the change, and major media will continue to decline, as each subsector of society increasingly seeks confirmation bias for its fantasies, and each race, culture and class will seek confirmation of its underlying assumptions leading to increasing fictionalization. This election cycle, and this economy, is simply part of this broader change in the distribution of world economic and political power, and the decline of the international attractiveness of, and personal ambitions of, the western secular humanists — a class whose only strategic option now is to ally with the numeric superiority of Islam as a replacement for Marxism, in order to maintain their control and isolation from market participation. That is my prediction to equal Paul’s. Without cultural cohesion permitted by the wealth generated by selling off the north american continent to immigrants, the unnatural dominance of the dollar, and military control of world trade routes, trade and money, the coalition of DC (violence), NY (Money) and LA (Propaganda) cannot hold. And as Paul senses, and as most synthetic historians have stated for a century or more, a long term economic stagnation or decline will accentuate inter-group differences, as people rely on intra-group status symbols and traditional alliances for support. Egalitarianism is a convenience of a debtor economy.

  • Paul Krugman Says “No” To Responses To Critics. I Explain The Consequences

    Would I Please Respond? I get a lot of comments along the lines of “Would you please respond to the criticism of your work in ______?” Um, no. Do you have any idea how many articles there are out there attacking me? I literally don’t have the time to respond to them all, or even to differentiate between the usual sliming and actually interesting critiques. Just saying.

    Paul, You know, it might not hurt to have some grad student compile the top five criticisms and respond to them. (You would certainly have plenty of volunteers.) Most of the time, I disagree with the preferences implicit in your goals, not your analysis. These differences aren’t arguments over some form of absolute truth but disputes founded in preferences, demographics, social order, culture, class and in race warfare. Your egalitarianism is mathematically accurate in application. But your failure to incorporate into your rhetoric that these differences are meaningful to people, and these differences bear material costs to those who you impose your egalitarianism upon — including costs to monetary, cultural, status, and political capital. Each of these costs affects their consequential opportunity costs. Taking people’s money is one thing. Taking their culture, their political power, and their social status is another. Taking it and funding things they absolutely disagree with vehemently is something else (foreign wars, or immigration). Imposing a permanent social cost structure upon a people who have a very uncertain view of the future, or one that is far more pessimistic than you do is not a matter of scientific argument. It’s one of fantastic and deceptive narrative. Unless you address these issues, both you and your critics will continue to wrestle with scientific but inapplicable, and possibly deceptive arguments on your end, and sentimental and inarticulate arguments on the conservative end. Both of you are struggling for power, the power to implement your ideas. Power is not obtained by honest debate. It is obtained by pragmatism. And whether you understand it or not, you’re talking past them just as much as they past you. But if you do address these issues, you will bring into the open the basic problem: the USA is a domestic as well as international empire with significant tensions both internally and externally. The loss of our ability to issue debt is simply ending our ability to mask these differences with consumer credit. And the underlying duress is emerging with the economic circumstances. Under duress people revert to tribalism. They do so because it is smart for them to do so. Conservatism has led to stability for centuries. It doesn’t have to be right. It just has to increase the cost of change enough that the most stable, least dangerous model evolves. Pick on the neocons for seizing their opportunity for Roman glory. That’s rational. They failed. Pick on conservatives for fighting socialism and communism, and rejecting redistribution of status, cultural dominance, and political power, and you’re simply wrong. Conservatism is a sentiment. That does not mean the sentiment is founded on irrational principles. It means the principles are either un-articulated, unable to be articulated, or people are unwilling to articulate them. And at least since Burke, if not since the English civil war, conservative sentiments have been very helpful for Anglo civilization. Perhaps even the cause of it. Perhaps the honest answer is to lead by addressing the real issue. Not circumventing it. It is rhetorically and politically convenient for both sides to avoid the real issues. But if we discussed the real issue there might be room for compromise.

  • It’s Not A Privacy Issue: The Economics Of Tracking : Correcting The WSJ’s Sale Of Fear Uncertainty And Doubt:

    From the WSJ:

    The Wall Street Journal conducted a comprehensive study that assesses and analyzes the broad array of cookies and other surveillance technology that companies are deploying on Internet users. It reveals that the tracking of consumers has grown both far more pervasive and far more intrusive than is realized by all but a handful of people in the vanguard of the industry. The study found that the nation’s 50 top websites on average installed 64 pieces of tracking technology onto the computers of visitors, usually with no warning. A dozen sites each installed more than a hundred.

    In this survey, the vast majority of people were concerned about ‘privacy’.

    [callout] It’s not like Coca Cola, Nike and IBM want to be associated with cheap european amateur adult videos, snippets of skateboarders doing face-plants, or some silly little group of bloggers fomenting rebellion on some little personal political agenda.[/callout]

    To which I respond: Tracking is not a privacy issue. It’s actually good for you, and good for society. (Really.) Tracking = Legitimate Companies. Privacy Invaders = Illegitimate Organizations. It’s not like these tracking-companies are doing anything novel, invasive, or even risky. They aren’t capturing your credit card number, or your home address, or the contents of your romantic emails. They are capturing the kind of things you’re interested in seeing online, so that advertisers can promote goods and services that you’re interested in, rather than spamming you with stuff that completely annoys you. The advertising industry knows perfectly well that people want privacy. Brand owners know perfectly well that if they mistreat your private information, that their brand, their products and their stock price, will pay a very high cost for that abuse. There are plenty of sites that will install malware and viruses. Tracking sites and cookies don’t do that. It’s not in their interest. It would put them out of business if they did install viruses or malware. Advertisers avoid anything negative. It’s too dangerous. Spammers don’t. That’s why spam and certain web sites, or petty criminal web sites (downloading or free entertainment) are the sources of malware and viruses. So, it’s not your absurd searching that will generally get you in trouble. ***It’s trying to get something for free.*** Spammers, Malware and Viruses are delivered by disreputable organizations doing disreputable things on disreputable sites. But advertisers aren’t. Advertisers use TRACKING cookies, and avoid malware, spam and viruses. Nobody Cares. You Aren’t Special But lets also look at it another way: Nobody cares if you surf adult sites, read about absurd human behavior at 11pm, or watch silly animal or kung-fu videos, delve into subcultures you would never interact with in real life, and generally prove that you are surfing under safe conditions for novel, absurd, silly , or radical experiences from the safety of your laptop – which is the best way to explore them.

    [callout]Why? Because you aren’t special. You aren’t interesting. You aren’t rare. In fact, you’re so average that if you saw your surfing behavior graphed next to everyone else’s you’d be horrified and how much you had in common with people form all walks of life. We revel in the absurd. We like to learn from a safe distance. We like to understand the very limits of human behavior. We like to fantasize about what we could never really do. And there isn’t any harm in it. In fact, all things considered, it seems that just the opposite is true: it turns out that it’s a vent, a safe exploration, and it’s good for you, and society.[/callout]

    But that said, no one cares. Why? Because you aren’t special. You aren’t interesting. You aren’t rare. In fact, you’re so average that if you saw your surfing behavior graphed next to everyone else’s you’d be horrified and how much you had in common with people form all walks of life. We revel in the absurd. We like to learn from a safe distance. We like to understand the very limits of human behavior. We like to fantasize about what we could never really do. And there isn’t any harm in it. In fact, all things considered, it seems that just the opposite is true: it turns out that it’s a vent, a safe exploration, and it’s good for you, and society. The private world of browsing is indeed private. It’s like using the bathroom. Everyone does it. We just don’t talk about it in public. That’s because it’s not risky to browse such things. By contrast, it’s very risky to DO those things in real life. That’s why we keep risky behavior safe, private and on the web. A relationship between you and your browser. The Self Interest Of Advertisers But your eccentric surfing behavior isn’t helpful to an advertiser. There isn’t anything really useful to advertise next to those oddities that isn’t already being advertised there. It’s not like Coca Cola, Nike and IBM want to be associated with cheap european amateur adult videos, snippets of skateboarders doing face-plants, or some silly little group of bloggers fomenting rebellion on some little personal political agenda. Or to be gender-balanced, your favorite little gossip site, compromising celebrity photos, rants about how awful men are for being interested in something other than living to fulfill a woman’s every whim, insecurity, status impairment, and nesting urge, and the fact that you shop for clothes that are too young and fitted for your weight, figure and age group. Your sense of individuality – the one that makes you want to protect your privacy – is a self imposed delusion. A delusion we embrace because our self image is part of our sense of social status. We guard that self illusion like we guard our property. If that realization seems unpleasant to your self esteem, then you know why advertisers are good at their jobs: they know this simple fact about you. They know you aren’t special, but you need to think that you are. Brands Only Want To Advertise In Places You Aren’t Ashamed Of Visiting Because of that, they only care about those places where reputable brands can advertise on the web. Not those things where they can’t. And more importantly, even if you were special, it’s not valuable to big brands to associate with perceived absurdities. Brands are public entities. They have public personas. Mixing those brands with anything that would not be done in public would be damaging to them. In fact, if a tracking organization captures enough data that could associate a group of consumer behavior that was aberrant, with a well known brand, (say associating domestic violence with a brand of alcohol) and if that data was released, it would be extremely damaging to the brand. ie: tracking companies don’t want to know, or capture, you’re extraordinary activities. Even having the data in their possession is dangerous to them. It presents them with a liability. Advertisers don’t want them even to collect it. For exactly that reason. Advertisers See The World As Groups Not Individuals Advertisers do not care about you as an individual, or your personal information. They are statisticians. They care about groups. They care about aggregates. About large groups of people doing similar things. They care that of all the people who hit MSN.com, or the NYT or Conde Nast, which kind of things are most of them interested in hearing about? They care about measuring the effect of their ads. They care that if you saw one ad in one place, where else can they show it to you to reinforce it? Because the more targeted the advertisement, the more interested you are, the more times they can show it to you in the hope of making an impression, then the cheaper it is, the more effective it is, and the less chance they will alienate someone by showing them something that they don’t like, while paying dearly for the opportunity to offend someone. They do care about your email. Because if they have your email, they can advertise directly to you. But they know that if they don’t ask permission, you will literally hate them for invading your privacy, and that will hurt their brand. Email crosses the line into privacy for most people, because you can’t shut out advertising that you don’t want. Email is personal. But traffic measurement isn’t stealing your time, or filling your inbox. It’s invisible. The current level of cluelessness among advertisers and marketers on how to use this traditional data and traditional advertising strategy on the web, is not clear to the public. Advertisers have not figured out exactly what to do about the decline in traditional media, and the kind of advertising that has been successful in the past, They don’t know how to advertise to you on the internet. They aren’t sure if it’s good money or bad. They know you want content that helps you make buying decisions. But they aren’t sure how to make you aware of new products and services. Or even if they need to make you aware of them. Tracking Is A Social Good? So to some degree, you’re doing yourself, and society in general a favor. Society needs advertising not only to help fuel the economy, but to simply help us be aware of our choices. If these people collect enough ‘traffic data’ (data about what you view, not about you yourself) then they will build enough information so that they can tell you about what you want to know, not what you don’t want to know. Personally, I would love it, if all the advertising I saw, was about those things I really want to know, but miss out on because there is no way to advertise them to me. For example, a small italian suit designer, or an interesting watch maker, or a small b&b in the Lake District, or a new local Porsche mechanic, or even Proctor and Gamble’s new products, or Crest White Strips, or the WSJ, or Precor Fitness Equipment, or Starbucks to reach me with a sincere sounding and useful message using existing mass market channels. It would simply be too expensive. and it’s not that I don’t want to know about all those things. I do. I just never, ever want to hear about weight loss, or, feminine protection, or a new pharmaceutical, or local football jerseys or sales at Sears, or discounts at Target, or any of the other things that are very relevant to other people and completely annoying wastes of time to me. Advertising is only bad when you don’t want it. And unless you help advertisers understand what you want, you’re going to continue getting what you don’t: stuff that’s irrelevant, and sometimes offensive to your sensibilities. Tracking your behavior lets advertisers target you with the right kinds of ads, and to keep up with your changing tastes and interests. So, tracking isn’t a privacy issue. It’s a public good. (Really.) – An Advertising Agency CEO. (We don’t do tracking. We just don’t think it’s useful to mislead people about tracking either.)

  • Review: War by Sebastian Junger

    A work of personal experience by a reporter cohabitating with soldiers in Afghanistan. A work that states the patently obvious. At least, patently obvious to anyone with testosterone: That men fight for the men beside them. That the bond between soldiers is the greatest emotional bond that men can experience. That the platoon is approximately the same size as the maximum survivable hunter gatherer group. That this level of in-group altruism is particular to man. In that sense, the book is perhaps interesting to the common man. In the political sense, it is yet another silly book by silly people, for silly people.

    [callout]Or let me put it this way: there isn’t anything in that part of the world that’s more interesting to do than go hunt and kill people. It’s status enhancing. It’s entertaining. And it’s simply more interesting than the absolutely fruitless and boring alternatives.[/callout]

    I explain to people often, universally at their amazement, why it’s so hard to convert people in that part of the world to something on the order of advanced civilization. It’s not a complicated reason. It’s that in a world where farming is so fruitless, the land so barren, and the civilization so lacking in infrastructure, that the comfort, thrill, joy, and sense of success that men can possess as raiders is impossible to replicate elsewhere. Or let me put it this way: there isn’t anything in that part of the world that’s more interesting to do than go hunt and kill people. It’s status enhancing. It’s entertaining. And it’s simply more interesting than the absolutely fruitless and boring alternatives. Our boys are captured in prisons we call classrooms. Forbidden to move. Forbidden to compete. Forbidden to display dominance. Forbidden in fact, to be male. Forbidden to interact with the world except with words, like girls. These boys disassociate from society because of these deprivations. They play video games. They play sports. They wear clothing that represents abandonment. They don’t enter college. They just simply give up on society. They don’t ‘own’ responsibility for society any longer. THey don’t want it. And in many respects, they can’t handle it. Because they have been so sensory-deprived that they have no capacity, nor any learned method of how to do so. How many of these boys, when deprived of modern entertainment and food surpluses, when given the chance, would happily carry around rifles and grenades, and with joy, enthusiasm, and wonder, attack an entrenched enemy sequestered in small numbers, in fixed positions, on the defensive?

    [callout]How many of (our) boys, when deprived of modern entertainment and food surpluses, when given the chance, would happily carry around rifles and grenades, and with joy, enthusiasm, and wonder, attack an entrenched enemy sequestered in small numbers, in fixed positions, on the defensive?[/callout]

    How many of our current soldiers, if told ‘select your team, select your weapons and ammunition, take your time, and kill everyone on the other side you can, while taking the fewest casualties of your own’ would not happily join up in record numbers? It’s not a small number. It’s just surprising that Junger, or anyone for that matter, would fail to understand these basic human traits. That is, unless you’re a member of the church of secular humanism. Where you live an abstracted view of christianity. Where you think that submission and safety are the same as competition, winning and experience. It’s also surprising that any military historian, any military strategist, would fail to understand Kegan’s Thesis: that ‘winning’ is a cultural, and perhaps, civilization-defining construct that has been inherited and reinforced for millennia. And that the western concept of winning is pointless in central asia. Indeed, pointless among any of the Raiding-Cultures. And that in turn, how one could fail to understand just how endemic the ‘Raiding’ concept is to central asian and arab thinking. And how they cannot conceive of any other, just as how westerners can rarely conceive of any other. And once that Tribal-Raider-versus-Heroic-Army is understood, it becomes obvious that islam is a Raider’s Political Strategy rather than a western heroic army strategy, or western ‘religion’ in any sense of the word. Or more strategically, the raider sits and waits until you’re vunlerable to strike, and the heroic army seeks the defining clash. Therefore: 1) We cannot win a war fighting it on our terms. We can only win the war fighting it on their terms. 2) It is enjoyable, and even preferable for many men to live in combat, versus the tedious and boring farming or industrial life. It is only when the benefits of capitalism and trade are sufficient to be vaguely fascinating, and the freedoms are sufficiently broad, competitive and entertaining, that men will, on occasion, for some period of time, find peace all that interesting.

    [callout]… each civilization embodies the behaviors of it’s early military traditions. Bushmen and simple herders. Plain and desert raiders. Western individualist river and forest farmers, boatmen and horsemen. Eastern hierarchical farmers. And the jews, hindus and buddhists who abandoned all political pursuit (land holding) for submission and mysticism.[/callout]

    Every historian who studies the vastness of human history, for the purpose of learning what is there, rather than projecting upon it what he desires to find in it, will eventually come to the conclusion that each civilization embodies the behaviors of it’s early military traditions. Bushmen and simple herders. Plain and desert raiders. Western individualist river and forest farmers, boatmen and horsemen. Eastern hierarchical farmers. And the jews, hindus and buddhists who abandoned all political pursuit (land holding) for submission and mysticism. If you don’t know this obvious bit of human cultural development, then its only because you weren’t given any history by the same cadre of pacifists that are destroying our boys minds one package of unexercised neurons at a time.

  • Angry Old White Men? Hardly.

    Claude Fischer is a sociologist at UC Berkeley who published a piece entitled “Angry Old White Men” in which he categorizes the Tea Party movement as a rural movement of old white men. Mark Thoma, a left-leaning economist picked up the article and posted it on his blog The Economist’s View, where he adds: “Rural America senses that he represents a major shift in the political landscape, one that will no longer put the white male farmer at the center of the American political landscape.” As if its a rural cause rather than a white cause. To which others add:

    “What we’ve got here is a real warning sign that something in our society just isn’t working. It’s not just hand-wringing liberals and right-wing Christians anymore; when your educated upper-middle classes start lashing out, you know the regime’s days are numbered.”

    and

    “The hate directed at “white men” by so many members of leftist establishment(s) borders on blood lust. At their deep core is a burning anger that they focus on the “white man” taking delight in belittling, marginalizing, and taunting that demographic. Perhaps the “delicious irony” is that many of these folks proudly flaunt their fake “tolerance” and calls for “peace” while obviously unable to control their desire to stoke division and strife.”

    and this:

    “Did these [old white guys, especially affluent, Protestant ones] give ground or was it an enlightened choice? … My guess is the shift had more to do with U.S. government based public education, by mostly female primary school teachers, which gave children a sense of respect for all. It still took many generations.

    The last of which is actually the structural answer: our schools teach democratic secular humanism in an effort to replace our traditions and cultures with a state religion. We do not have a separation of church and state. We have a state religion and we send most of our children to the theocracy for education. White Protestants lost political power, status and their culture due to “enlightened choice”. There was no material reason why they HAD to lose power. They chose to be ‘Christian’, which was the sentiment needed to unify a fragmented europe. They could just as easily have chosen to keep slavery, to keep control of government, to forbid immigrants political power, to maintain the requirement of protestantism. In other words, they could have done what most civilizations have done. What most civilizations still do. In fact, the entire purpose of nationalism was to give racial groups their own sovereignty after centuries of tribal distribution across monarchic europe. It Wasn’t Political Power, It Was Economic Power Starting with the industrial revolution, the dominance of the HOUSEHOLD lost importance, and there for the dominance of the MALE waned. The decline has been not just among white men, but among men in particular. Women’s entry into the work place has not hurt high performing men, but since women have taken all the lower risk clerical functions in society, and seem to largely be better suited for it, this has moved men toward the edges – into the riskier professions. They Gave Up Power Voluntarily These voluntary abdicators of male political power were Christians. They tried the experiment. It was a heady debate. We have just wrapped class, race and cultural preference in a deep cloak of secular language instead of religious language. But the underlying sentiments and logic are essentially the same. We have a religion of democratic, secular humanism rather than paternal christianity. The difference is that the political myth of the ‘white man’s burden’ of anglo exceptionalism in order to morally justify the empire, has become the myth of democratic secular humanism in order to justify the empire. The Experiment Failed What has happened is that these previously tolerant people believe that the experiment failed. That their conservative sentiments (the belief that humans have immutable behaviors), have returned to precedence over their liberal sentiments (people can aspire to utopian behavior in the right environment) have changed. White Men in particular tolerated man-hating feminism because they felt it was somewhat justified, but that society would ‘settle back’ because people have ‘natural tendencies’. White Men felt that because of slavery and WW2, that they were wrong in their fantasy of exceptionalism – that they had betrayed their christian sentiments, and so they tolerated criticism in the hope that society would settle down. White men today no longer believe those egalitarian myths. WHen you destroy a mythos you don’t destroy just the ‘bad parts’. You destroy the entire system of myths. They no longer believe in their guilt. They now feel equally wronged. The Levant Nassim Taleb in his book The Black Swan, describes how he and his fellow members of the levant thought that they had solved the problem of heterogeneity, and that they were more civilized than the rest of the world. But it was a myth. That small civilization is now dead and gone, and gone within his lifetime. People continue to murder each other in droves around the world. And while capitalism decreases costs and increases quality of life, and it because of the prosperity, decreases the incentive to devolve into violence, it is not a sufficient tool for altering the human perception of status, nor of the realities of cooperating in groups: tribes remain fixed in their cooperative networks even under capitalism. It’s just FRICTION that is less important because there is less scarcity of opportunity. What Happens Next The question becomes, a) whether white men will cease tolerating their denigration and become activists, – or b) whether they will do what men have in all other collapsed cultures, which is abandon the Fraternal Order, and become like byzantines, Mediterraneans, or africans, and simply pursue non-political localized self interest which will over time, simply erode the legitimacy of the state. There is another option c) which is violence. But that is always a minority position because it is so costly. And if history is a guide we will get all three of these factors. Western Protestant Culture Is An Anomaly The sentiments of white male culture are an anomaly. It is the product of the fraternal order of city-defending soldiers who treat the ‘market’ (which they don’t differentiate from ‘society’) as if they were shareholders. That sentiment is extremely rare. If that sentiment ceases, we will not get the civilization that utopians aspire to. We have a lot of historically similar situations. We might get something random. But history tells us what we will get will not likely be the ‘free society’ that we aspired to. Urbanization Affects Social Institutions By Increasing Anonymity And Decreasing Economic Conformity We are urbanizing, world wide. And we must. There are too many of us to return to farming. We no longer live where we are self sustaining yet produce excess in order to participate in the market for the purpose of getting money with which to buy what we cannot produce. Nearly all of us must participate in the market for our entire livelihood, trading our skills in manipulating someone else’s tools and materials for money so that we can buy ALL of our needs in the market. We live in a world of perceived risk, surrounded by plenty. But urbanization under market-centricity poses difficult problems. The problem of ‘social order’ (conformity to law or convention) occurs when any civilization sufficiently urbanizes. The human social tools of ostracization (economic exclusion) and fraternalism (economic inclusion) do not operate in dense populations where anonymity is common and therefore social ostracization alone cannot block people from opportunities. There is no evidence that these social tools operate in the dense urban environment. There is no evidence that Law or Religion can cause them to operate either. The Shift To A Racial Minority This is the last generation where white men will feel guilty about their position. They feel disempowered. They are soon to be a minority. They dislike being ridiculed and having their status trampled upon, and are rapidly considering it RACISM against them. (Which they believe will give them the right in turn, to be racist.) The question is what will they do. And if history is any indicator, most of them will do nothing but acquiesce. But like any racial group they will likely form a disenfranchised but radical minority who is activist. This is what is occurring today. If the minority gains traction it gains followers from those who perviously acquiesced – people follow a winning team. White men are also developing the sentiment of racial persecution, and with it, the egalitarian christian sentiments, and their historical guilt are waning. When a people are oppressed they revert to self serving behavior and abandon behaivors of social sacrifice. The Forgone Opportunity Economy Society is not paid for by taxes. We pay for bureaucrats and soldiers with taxes. Society, or social order, is paid for by refraining from seizing opportunities. We create property by not stealing. We create comfort and safety with manners. We create prosperity and frictionless trade by non-corruption and ethical behavior. We prevent ourselves from externalizing high costs to others, and often to ourselves by moral behavior. We take on the burden of truth-telling. We define the granularity of property, the rules of the market. Each of us does ten thousand things a day to pay the tax for social order. And that tax system of opportunity costs is what we call ‘culture’. it is the highest cost of human capital a group can invest in. Groups with different systems compete. They get angry with one another because they ‘sense’ theft or fraud, not of money, but of the sacrifices that they made for their group’s benefit. They get angry when their sacrifices (forgone opportunities) are wasted when another race or social class demeans them. In this way, human groups conduct forgone-opportunity-funded warfare, but they largely do it peacefully. This is the racial and cultural economy. Money, Status, Forgone Opportunity, Access to Opportunity, and Access To Mates. Money is the least of them. Political power is simply the means by which to control the economy. Not just the money economy. But the status, opportunity and mating economy. Institutions (self-perpetuating social habits) are the highest cost development for any civilization. The people in the civilization know the costs. They know the opportunities that they spent on building that cost. They know the taxes that they paid. THey know what property is theirs that they earned. And egalitarianism and charity are happily given as long as they are FRACTIONAL and do not allow one group to steal its institutional costs from another. People are not having a simple emotional reaction. They see usurpation of political power as THEFT. They are ACTING like they see it as theft. The Implications For everyone else who is not a white male, it becomes the question how a society can be managed, or how it will operate without those sentiments of fraternalism. We never get what we think we will. The French and Russian revolutions were horrific both in process and outcome. But most if not all civilizations simply decay once they urbanize, and their expansionist class of males surrenders to the sense of impotence, or the luxury of hedonism, by exporting the effort needed to maintain the social order to the bureaucracy. The general assumption is that the democratic process will solve this problem of social integration and power distribution. But there is no evidence in history that such a thing occurs but rarely, and almost exclusively in England. Politics is a market, and people will circumvent the market when it no longer serves them. No Longer A Nation But An Empire The USA, thanks to Teddy Roosevelt and his ilk, is an empire in imitation the european model. Empires consist of factions. Factions are geographic (trade routes), racial (genetic), cultural (normative), and religious (legal). But an empire over whom half the population feels oppressed and stolen from is simply fragile. We are no longer a country contentiously dealing with a problem of integration caused by our need for population to complete the westward expansion of the continent. Instead we are an empire over some number of smaller nations yearning to be free, and a disenfranchised geographic ex-majority that appears to be developing a new sentiment (acquiescence to failure), a political movement (tea party), and a radical movement (militias). At least, that is where this appears to be going, if history is any indicator. And men who no longer see the existing order as beneficial to them may not work to overthrow it, but they will not work to maintain it. And that may be worse. The Difference Between Methods The difference between conservatives and progressives lies in the different assumptions we have of human nature. Progressives are utopians that believe we are free to build whatever world we choose to – they err on the side of people ‘doing good’ which is why progressivism is a movement of the industrial period. Conservatives err on the side of people ‘pursuing self interest’ which is why conservatism is an ancient sentiment, although conservatism as a political movement is a reaction to the english and french revolutions and the rise of socialism and communism. It is a contemporary reaction to progressivism. And like all conservative movements it is a reaction to the perception of theft of one’s assets by political means (even if those assets were unjustly acquired as in mercantilism or predatory banking or slavery). Conservatives believe that human beings have innate sensibilities, biases and preferences that are immutable. And because they are immutable we should develop institutions that take these immutable differences into account. We should expect people to act with racial preferences because people almost always do act with racial preferences. They do so because intra-racial status is more beneficial for the majority than is extra-racial status. And status controls access to mates. Except at the extremes where status can be increased by breaking racial barriers, status determines access to mates, determines access to opportunities, access to networks, in general, access to a better life. The Economics Of Race And The Impact On Politics So the question is, what will happen in a world where we have a white minority whose traditions create the opportunity for democracy and rotation of the elites, and most people have racial preferences, where there is no method of organization urban conformity, but we have a political system that allows democratic rotation of elites? In general, at least in history, people tend to vote in what is called “Bonapartism” or a totalitarian who can forcibly resolve differences. Bonapartism is democratic totalitarianism. Our systemic answer to urbanization was credit. Credit is more useful than laws because with record keeping it produces both positive and negative incentives. We are likely going to continue to build the credit society instead of the religious and legal societies. In fact, law is so technical it is largely immaterial, and most people are both isolated from it and ignorant of it. We actually operate by credit and exchange instead of legal or religious conformity. We live in the credit society. But while credit solves the problem of anonymity and ostracization, it does not solve the problem of tribal and cultural sovereignty, which is a code-phrase for the system of status signals among people with racial and cultural similarities. In a world of economic plenty and cheap debt and fiat money there is an inflationary impact upon status perceptions that like a tide floats all boats and reduces class and race friction. But in a world of unemployment, which may be structural, permanent, and wherein opportunities are more scarce, and therefore racial status more advantageous, and in a society where there is a very large and disenfranchised minority that is government by an activist political system that they see as tyrannical and against their interest, it seems unlikely that people will support that government, that way of life, or even the assumption that the government and way of life are ‘goods’. Race matters. Race matters because ENOUGH people act with racial preferences, and MORE of them act with racial preferences under economic duress, because acting within racial preferences is economically rewarding for the majority of its members. It’s just simple economics.

  • We Won’t Stop Bloggers From Telling Us Otherwise. This Isn’t A Pursuit Of Truth.

    In an essay that has attracted some interest from the blogging community, Kartik Athreya of the Richmond Fed, correctly states that there are political hacks misusing economic arguments. But she misses the point.

    Economics is Hard. Don’t Let Bloggers Tell You Otherwise “In the wake of the recent financial crisis, bloggers seem unable to resist commentating routinely about economic events. It may always have been thus, but in recent times, the manifold dimensions of the financial crisis and associated recession have given fillip to something bigger than a cottage industry. Examples include Matt Yglesias, John Stossel, Robert Samuelson, and Robert Reich. In what follows I will argue that it is exceedingly unlikely that these authors have anything interesting to say about economic policy. This sounds mean-spirited, but it’s not meant to be, and I’ll explain why.”

    [callout] Bloggers then, like everyone else, are arguing against error with error. Against sentiment with sentiment. Against bias with bias. Against foolishness with foolishness.[/callout]

    “The question is: can they provide you, the reader, with an internally consistent analysis of a dynamic system subject to random shocks populated by thoughtful actors whose collective actions must be rendered feasible? For many questions, I and my colleagues can, and for those that the profession cannot, the blogging crowd probably can’t either.” “…just below the surface of all the chatter that appears in blogs and op-ed pages, there is a vibrant, highly competitive, and transparent scientific enterprise hard at work. At this point, the public remains largely unaware of this work. In part, it is because few of the economists engaged in serious science spend any of their time connecting to the outer world (Greg Mankiw and Steve Williamson are two counterexamples that essentially prove the rule), leaving that to a group almost defined by its willingness to make exaggerated claims about economics and overrepresent its ability to determine clear answers.”

    [callout]So while I laud your ambitions, it seems, that you have fallen into the same error that you accuse of others: to pretend to possess knowledge that you do not.[/callout]

    In a polity where we have traded traditional moral principles for the abstractions of economic theory as the means of resolving differences between the ambitions of our politicians, and where at the same time, economics is a nascent, and perhaps insufficient body of knowledge to adequately inform both our polity and its leaders, both sides of any debate are required to rely upon the accumulated erroneous judgements and confirmation biases inherent in their constituents. Bloggers then, like everyone else, are arguing against error with error. Against sentiment with sentiment. Against bias with bias. Against foolishness with foolishness. Your analysis assumes that economists can be of much help in the public debate. When in fact, there is also a body of economic philosophy that states that the entire DSEM, as well as equilibrium itself, and the descriptive, probabilistic, non-causal mathematics employed in it, are insufficient methods for representing and forecasting economic interactions. In fact, the great progress of economists over the past fifty years has largely been to supply quantitative proof that confirms the traditional descriptions of the consistency of human error, bias and information asymmetry — a set of errors which only needed exposition because of the false pronouncements of the theorists who created the idealistic models suitable for simplistic mathematical modeling.

    [callout]Economics as we know it is a process of describing the past. Politics is the process of inventing the future. The difference between description and invention is infinite.[/callout]

    In other words, politics has little to do with economics. And all economic science seems to have accomplished, is to trade one set of traditional wisdoms for another set of speculations. And while you refer to economics as ‘scientific’, the political use of economic theory has been anything but scientific. And to a large degree, the immature nature of economic theory combined with the foolishness of political rhetoric, has created as much harm as good. In the comfort and support it gave to communism and socialism alone, the record of economic theory is the record of bloodshed, fraud, deception and heady murder. So while I laud your ambitions, it seems, that you have fallen into the same error that you accuse of others: to pretend to possess knowledge that you do not. The greater economists who do much of the great work, often refrain from the political discourse, largely because they possess sufficient wisdom to know that it is a pointless exercise. Economics as we know it is a process of describing the past. Politics is the process of inventing the future. The difference between description and invention is infinite.

  • The Nonsense Alternative Called “Solidarity.” Throwing The Peasants A Bone.

    This bit of ridiculously regressive Luddism was posted on a left leaning blog. It touts “A Solidarity Economy”. Which is a nice name for voluntary organizations that circumvent the pricing system. Yet another example of enduring marxist silliness.

    There is no alternative to free-market capitalism, Margaret Thatcher used to say, and about this, like so many things, she was wrong. … What is the Solidarity Economy? It’s a movement that has brought hope to a world disillusioned by capitalism and too often unaware that economic activity can be conducted with respect for human decency and the planet on which we live. Its five key principles are solidarity, sustainability, equity in all dimensions, participatory democracy and pluralism. … The role of these initiatives is certainly up for debate. Consumer cooperatives are vulnerable to criticism as being somewhat exclusive. Some models of cooperative housing are not particularly sustainable. But the wide variety of Solidarity Economy practices ensures that successful models are emerging, with success based not just on economic viability, but on social and ecological responsibility. … The transformative power of the Solidarity Economy is that it can grow within the current economic system, eventually replacing it with a more human way of providing for society’s needs. …

    You can use meaningless terms yet conveniently rely on a lack of detail to gloss over yet another permutation of communal sentiments. But no matter how many times you rephrase the same tired fantasies, you will not alter the hard reality that will face any participants in this fanciful silly Marxist doctrine: 1) A lack of incentives. 2) a lack of competitiveness 3) human limits to consensus on means and methods 4) human tendency towards bureaucratic corruption 5) the natural slowness of the system. Essentially you would doom everyone involved to perpetual poverty.

    [callout]But make no mistake that such fantastic extra-market lifestyles are luxuries provided BY THE MARKET, not alternatives to it.[/callout]

    These are good models for knitting circles, volunteer organizations, the uncompetitive, and the dull and ignorant, for whom market signals in the form of prices are too abstract to synthesize, and who do not have to manage scarce resources. In other words they are good for small networks within a capitalist system for the purpose of organizing members of a permanent submissive underclass. Any system capable of the current productive diversity must be of necessity incomprehensible. The market exists to handle incomprehensibility. And it functions despite incomprehensibility, anonymity, compassion or care. Within the wealth that is generated by capitalism, it is certainly possible to carry vast numbers of people who consume the benefits of the market without participating in it. But make no mistake that such fantastic extra-market lifestyles are luxuries provided BY THE MARKET, not alternatives to it. But if you want to throw the poor kiddies a bone so that the can lie to themselves that they’re special and principled rather than impotent and subsidized i suppose amidst the political discourse its no more harmless or harmful than any other drivel.

  • Krugman Watch: Paul’s Beginning To Admit Failure And Here Is Why

    In a series of recent posts, Paul Krugman is starting to admit that he’s failing to be able to use his pulpit, position and his credibility to encourage government spending. What I find most interesting is that he argues that proletariat sentiments of inequality (injustice) are the driving social force, while failing to understand that middle and upper middle class sentiments of injustice (inequality) are an equally driving force. Paul:

    [callout]What I find most interesting is that he argues that proletariat sentiments of inequality (injustice) are the driving social force, while failing to understand that middle and upper middle class sentiments of injustice (inequality) are an equally driving force.[/callout]

    I think you are failing in your effort as a public intellectual, that you are aware that you’re failing, and that twenty years from now, it’s going to be clearly evident that you failed to encourage borrowing (debt) and spending (investment) that WOULD have made a difference, and WOULD have assisted us in getting out of this long term stagnation. And you’re failing because you can’t envision HOW to put money to work in the economy, and you can’t do that because of your personal biases and fantasies. But I suspect that you will go to your grave holding desperately to your desperate convictions – convictions held by the fantastical beliefs of a frustrated minority. A minority that has not in two thousand years, been able to obtain and hold onto land, and as such fails to understand peoples that DO hold onto land, and why they are able to hold it. And in particular, why they are wiling to pay very high social costs, in order to hold it. But the social engineering you think that you can accomplish with economic policy runs too counter to human behavior to produce your desired ends. A heterogeneous people will NEVER act as you desire them to. A ‘CREATIVE CLASS’ will never work to produce your desired ends. Because a creative class must take RISKS, and they take risks with people with whom they TRUST. And they trust people with whom they can best how to trust. And they best understand people who are LIKE THEM. The diasporic english, armenian, chinese, hindu and jewish people are the most competitive and innovative, but aside from the english, the rest tend to work intra-race. Even within races, people cooperate within CLASSES. They may work or consume across lines but they do not RISK across lines, and RISK is what generates jobs, and jobs are what generate consumption. Government spending does NOT ‘inform’ risk takers. It actually makes them angry, because they see the state as a competitor that deprives them of opportunity, and a predator that deprives them of choice. More importantly, all productive creativity requires some sort of technological innovation. It is a product of material manipulation of the physical world. Creativity is not in the capitalist class but in the entrepreneurial middle class. Something must be invented before it can be profited from. So some groups are more effective at mobilizing their middle classes than others. The USA had prosperity to share because of external, not internal factors. Anglos had a new continent to sell off, the only form of government capable of distributing the work of it, (And after the Louisiana Purchase, a government invented specifically for it). Aggregate but temporary technological advantage over much of the world. The inexpensive acquisition of british sea ports. The ability to sell ‘dollars’ internationally because of adopting those ports and the ensuing projection of military power. The collapse of or absence of competitors – particularly those under communism. The conversion of vast numbers of laborers and farmers to suburbanites made possible by low cost of energy, energy distribution and manufacture. The use of print, television and radio advertising to stimulate class-advancement incentives in vast numbers of people by the accumulation of basic consumer goods many of which freed women from the need for dedication to household labor and allowed them to enter the work force and increase productivity. These external factors are MORE INFLUENTIAL than monetary policy. Demographic (distribution), Race, Culture and Class factors are MORE important than monetary policy in determining risk-taking, and risk-taking is what creates jobs. These cooperative frictions DECLINE under wealth because of less need for group persistence, and they INCREASE under duress. In fact, we are seeing a national moving pattern that is the ‘flight from diversity’. And we are witnessing the US adoption of the south american model of a defensive white urban elite, an increasingly minority poor suburban ring. And in those cities where this situation cannot form, flight. Because diversity is an economic disadvantage. Cheap labor may not be. Diversity is. And we have known for a very long time that tribes may integrate into the legal and property system, but they do not integrate into the political and cultural system. Any integration is an illusion of our winner-take-all two party system. Minorities and majorities demonstrate group-persistence strategies. They do so because status determines mate selection, access to opportunity as well as serves to provide people with feedback signals, and status is easier to obtain within group than without. This status-economy is MORE important than pricing signals EXCEPT under absurd conditions. The US interwar period is an ABSURD condition. The euro-atlantic expansion is an absurd condition. The western dalliance with integration of cultures is the product of ABSURD conditions.

    [callout]our government, has built an empire rather than a nation. … [Empires] only survive when a minority has political control over the empire, and where that minority allows economic freedom, but specifically prevents political freedom.[/callout]

    Under these conditions of absurdity, our government, has built an empire rather than a nation. Empires are not egalitarian, they simply consolidate trade routes and reduce the friction of trade while increasing the size of the market. They are anything but egalitarian. And they are only beneficent, and they only survive when a minority has political control over the empire, and where that minority allows economic freedom, but specifically prevents political freedom. You are not going to get what you fancy. You’re going to fail as a public intellectual. And you’re going to fail as a public intellectual because of your own class and cultural biases. It’s not that we don’t need spending. It’s that we must invest in production not consumption. And that your underlying desire is really redistribution, and fulfillment of your frustrated cultural and racial ambitions, not increases in production. And you will not get the body of people to borrow and invest unless you abandon those fantasies. But people never do. You won’t. And so you’ll fail. And all your efforts will be wasted.

  • Krugman Watch: Paul Thinks It’s Envy. (What is it with these people?)

    Paul Krugman argues that envy and inequality pop the bubble. He asks “Correlation or Coincidence?” To which I reply: …. or completely unrelated causality. I don’t think you’re making any argument and I think you’re inventing a correlation, and hoping it sticks via the contrivance of sentimental association rather than reason. The cause isn’t income difference. It’s distortion of pricing and demand by irrational access to, and consumption of credit. And no small part of it is the recursive distortion of credit once it enters the system. Then, when Mom and Dad’s seven-eleven clerk talks about real estate investment, the average person starts to see irrational feedback and develops cautious sentiments. This effect undermines confidence, and after enough feedback from their network, mom and dad start retrenching. Shocks, like the spring oil crisis, confirm their sentiments, and the process accelerates. How about another feedback loop: once enough credit has been available that individuals exhaust their inventory of readily comprehensible wants (as determined by their class and peers), they must stop acting to consume until they can identify new status consumables. Something which means expanding beyond the familiar. This is a marginal illustration but an important one. There is a lot of saturation of the middle class’s consumption. They know it. This provides additional feedback on top of the dissociative feedback of the gas-pumping proletariat investor. Instead of this rational behavior due to the presence of overwhelmingly obvious-to-the-consumer information, you are arguing that **envy** by the lowest classes has a greater impact on confidence than does uncertainty due to omnipresent, obvious, sometimes absurd, irrational feedback. And for the lower proletariat, that sentiment is undoubtably persistent, doctrinal, and inherited. But everyone is just demonstrating observation and rational behavior. Or are you arguing that we can tell that there is a distortion of pricing in the economy because the differences between class consumption simply indicate that credit is out of hand? The question is instead, how much of this distortion remains after the bubbles burst? (Some, but losses are disproportionately allocated to those with paper wealth, and unemployment disproportionately allocated to those in least productive industries.) And the problem is, that the proletariat now foots the bill, with long term interest, for the expansionary credit, unless it is recovered through inflation. This is the damning critique, not that of inequality. The cause is not disparity or inequality. It is not envy. It is simple feedback from observations of irrational information. And that feedback occurs because the state has used credit and fostered consumption in lieu of investment that obtains increases in productivity, and the differences in instability are between thse resulting consumer and producer economies, and the rapidity with which they react to shocks. (Consumption is NOT STICKY when compared to production.) Furthemore, your efforts seem to think that there is an endless supply of entrepreneurial innovation availalbe that can yield increases in production. And that isn’t true. It is clear that you wish to ignore the reality of inequality, the reality of the unwillingness for people to redistribute to others who they feel disagree with or undermine their value system, and the reality of social status as a permanent, and *epistemically necessary* component of the system of human cooperation and coordination. Let alone the mating ritual. Envy isn’t the problem. General liquidity used for consumption rather than productivity is the problem. People have cognitive biases. Plenty of them. But they also are not oblivious to social economic and status signals that are irrational, and tell them ‘something just isn’t right here’. The shift to Friedman was the only one available to the conservatives who wished to reverse what they saw (accurately) as a decline in their civilization due to prior policies. That Friedman was partly wrong, as was Keynes partly wrong, is immaterial. Our problem is that we do not know the answer. The philosophers of the thirties failed. And so has everyone else since then. And they have failed largely due to the myth of equality. People simply do not, and will not act that way in a heterogeneous society. They do the opposite. The status economy with its class status demands, and its racial status preferences, and its group persistence preferences will not permit the purely economic homogenous model you fancy. In fact, research shows that people will gladly undergo hardship in order to ‘fund’ their social preferences, and in particular to preserve their status. And so you will never create the levers that you seek to manipulate. We are instead headed toward the south american model of geographically separated classes, and likely races, forming permanent classes in rings around urban centers, and systemic corruption necessary to preserve group solidarity. This demographic movement is already suggested in moving patterns. Be careful what you ask for. (PS: I swear. Left-Jewish egoism is a cultural if not genetic cognitive bias. Unbelievable. Krugman is just as out there as his conservative mirror image Paul Gottfried. )