Curt Doolittle

Theme: Productivity

  • Correcting Our Uses Of Taxes, Law, Money And Credit

    There is a natural conflict between the need to avoid a scarcity of cash and credit, such that all opportunities for increases in productivity within the economy can be exploited, and the fact that fiat money and fiat credit tend to mask, obscure and distort the information that would come from climbing interest rates. The general strategy has been to monitor the interest rate. However, the interest rate alone is not a sufficient barometer because a) people ‘flock’ or ‘school’ to over exploit opportunities — and b) unfortunately, (and this is becoming a topic of interest by the serious mathematicians in the field due to the plethora of data collected from the boom) it appears the entire economy is becoming governed, not by opportunities and not by productivity, but by nothing more than *responses to the discount rate.* Which means, (as the austrians have said for a century), the distortion caused by fiat money is cumulatively, and recursively the source of booms and busts. Of course, the fact that those of us say it is logically obvious is countered by the short term quants who fall into the ludic fallacy of probabilism.

    [callout]There is a natural conflict between the need to avoid a scarcity of cash and credit, such that all opportunities for increases in productivity within the economy can be exploited, and the fact that fiat money and fiat credit tend to mask, obscure and distort the information that would come from climbing interest rates.[/callout]

    There is a way out of this problem. But we would need a long and deep discussion about the nature of government to fix it. We are using a system of lawmaking and taxation that was invented for an agrarian era when the unit of work was at best a season, but accounts were settled annually. We live today in a world where the month is a meaningless topic, and only weeks and quarters are of informational value. Instead, by the combination of pooling accounts (the error of aggregation of plastic categories under quantitative analysis), taxes (which are disconnected from the causal actions that produce profits), and fiat money and fiat credit (which obscure information signals) we effectively launder causality from the pricing system which is the entire purpose of HAVING a pricing system. If we issued loans rather than collected taxes, this problem would right itself quite quickly, and both our political rhetoric, and abuses by the government would be much more rational and tangible if we did. Or rather we taxed what we should (income against an averaged three year balance sheet) and we gave loans rather than provided general liquidity, we would allow private money to pursue it’s ends and public money it’s ends.

    [callout]There is a way out of this problem. But we would need a long and deep discussion about the nature of government to fix it. [/callout]

    Furthermore, tagging all financial transactions, then treating the internet, and the financial network as a utility that can tolerate failure through multiple layers of redundancy wouldn’t hurt either. There is nothing magic about this series of prescriptions. They simply prevent the laundering of causal information from the pricing system by the error of aggregation. In the simplest terms, tax pooling and general funds are money laundering. Loans are causally transparent. Taxes are causally opaque. We cannot have a RATIONAL government if the data that they rely upon is by DEFINITION, IRRATIONAL, null, and void of rational content. THE DISCOUNT RATE IS, FOR ALL INTENTS AND PURPOSES, AN ERROR OF AGGREGATION. THIS ERROR THEN “FINACIAL-IZES” THE ECONOMY OUT OF THE PURSUIT OF PRODUCTIVITY. (Of course, under that scenario the profits of the big banks would be captured by the public sector.)

  • Fiat And Private Money From Both Sides Of The Coin

    The first reason that the USA wanted it’s own money is so that it did not export profits to England or France in the form of currency appreciation. The second reason was to reduce trade friction between the colonies. The third was because private money is a riskier proposition, and trade was artificially limited by the instability and problems that came from runs and scares. The reasons that the USA developed the banking system and fiat money was because there was a shortage of money to lend in order to finance the westward expansion of the country.

    [callout]Since only the government, which consists of citizens who spend their time on geographic protection, protects the geographic territory, and since the citizens are shareholders in the government, then to expect the government to conduct territorial wars, yet to allow private profiteering of the windfall opportunity of geographic expansion because the state is unable to create money to provide the credit, is for individuals to PRIVATIZE WINS AND SOCIALIZE LOSSES. [/callout]

    Credit money is useful to all societies and it DOES cause inflation, because there is no way for people to KNOW when and when not to lend. As long as there is credit money there will be booms and busts. Paper money is necessary for the same reasons – there are artificial limits to competitive productivity without paper money, and without fiat money. Furthermore, as we have seen in the PIGS countries, fiat money tends to decrease corruption. Early in US history, when they tried a multiplicity of monies it created financial instability and trade friction. It was only after taking the dollar off the gold standard that we saw the abuse of it. The question is, if there is a geographic opportunity, should private investors profit from that or should the government profit from it? That is not the same type of investment as the use of private personal knowledge for the purpose of increasing production. Since only the government, which consists of citizens who spend their time on geographic protection, protects the geographic territory, and since the citizens are shareholders in the government, then to expect the government to conduct territorial wars, yet to allow private profiteering of the windfall opportunity of geographic expansion because the state is unable to create money to provide the credit, is for individuals to PRIVATIZE WINS AND SOCIALIZE LOSSES. This may take a few readings to understand. But this is the entire point. Christian Classical liberalism and it’s restatement as Hayekian libertarianism differs from jewish anarchism and it’s restatement as Hothbardian libertarianism almost entirely because christians are philosophically fraternal land holders, and their metaphysics assumes the necessity of land holding, while jews assume land is magically held by someone else because they are metaphysically nomadic and have been diasporic since being conquered by Rome. These assumptions have been part of both groups’ tribal sentiments, philosophy and cultural ethics for thousands of years. Judaism is an arrested civilization. Christianity is an overextended civilization. But you will have a hard time pointing to the success of non-landed civilizations. So, in the end, private money is as often a means of privatizing wins and socializing losses as is fiat money a means of destroying productivity and socializing profits that were made by individuals taking personal risks. The problem with money is that it serves to coordinate diverse and dispersed and fragmentary human KNOWLEDGE, and that gold, or hard money, or private money, because it is scarce, serves better to make use of that dispersed knowledge by capturing willingness to put it behind any initiative or investment that might be poorly considered. While soft money helps to solve the problem that occurs when people have a willingness because they agree on an opportunity for investment, yet they cannot obtain the scarce money to do so. Our problem is not necessarily fiat money. It is that the state can use ‘pooling’ of funds to mask transfers. That is a deeper conversation. But hopefully I have given you some food for thought.

  • articles about our government and money. #1 “Financial-izing” the Economy out of

    http://www.capitalismv3.com/?p=2558Three articles about our government and money. #1 “Financial-izing” the Economy out of productivity.

    Source date (UTC): 2011-04-18 11:40:00 UTC

  • If You Want To Celebrate, Join A Church – A Wet Blanket On The World Bank’s Sentimental Talk.

    (Copied here for documentation purposes.) Over on The World Bank OTAVIANO CANUTO solves for happiness by actively working against it.

    We economists tend to see well-being, and poverty in particular, as a matter of finances and income. But fortunately, at least in the Bank, we have come a long way from that simplistic view. Reducing poverty is not only about increasing productivity and income. It is about enabling people to have a broad sense of well-being and opportunities to express and make choices about their lives.

    [callout]If you want to be a priest, join a church. If you want to move people run for office. If you want to celebrate, join a club. If you want to be a scientist, and to better mankind, stick with pragmatic improvement of the material well being of individuals by consciously upgrading their cooperative institutions so that they are ‘calculable’ and rational rather than political and sentimental. In other words, don’t make the problem worse by celebrating the ends, rather than the means.[/callout]

    But, the road to economic Hades is paved with good intentions:

      If you want to be a priest, join a church. If you want to move people run for office. If you want to celebrate, join a club. If you want to be a scientist, and to better mankind, stick with pragmatic improvement of the material well being of individuals by consciously upgrading their cooperative institutions so that they are ‘calculable’ and rational rather than political and sentimental. In other words, don’t make the problem worse by celebrating the ends, rather than the means. The happiness of man has been achieved by increases in the institutional ability for people to break up the world into little objects and apply increasingly fragmentary knowledge to the satisfaction of the wants of others outside of his or her social circle, and independent of his or her cultural memes, by using the information provided by the pricing system, and by the predictability created by institutional protections for his or her risk taking. Sentimental talk in economics and in politics is destructive and always has been. It is evidence of the failure of the political system utilized by the group making the statements. People on the ascent make arguments to productive group action – they ask us to pay opportunity costs for a collective end, for the purpose of increasing potential productive security. By contrast, all moral arguments are by definition false. And that’s the reality of it. Our job is to be the one academic discipline, and the one social science, that isn’t solving for the satisfaction of humanity’s tribal sentiments despite their natural conflict with a division of knowledge and labor and the pricing system, but that solves for the truth of what makes people actually happy by giving them choices. Humans want a discount. Always. So when you’re trying to determine if your arguing for conviction or convenience, make sure you’re not just looking for the discount that comes from embracing convenience. If you want to celebrate. Celebrate both the means – institutions of calculation and cooperation, and their happy ends. (Now that I’ve been a wet blanket I’m going to go celebrate the day with family.)

    • Yes, It Would Be Nice If We Could Withdraw The Empire And It’s Costs – In Exchange For Reduced Standard Of Living

      Having created, by accident, the empire, and having done so for the purpose of exporting our market system, and its trade routes, we are stuck with the very real consequences of creating power vacuums if we withdraw our military power, and create opportunity for the greater cost of NOT acting as we are acting. We have, after all, made a nice profit out of bringing the Hindu and Sinic cultures into the modern era. We have, and continue, to make a profit bringing the Islamic cultures into the modern era – by exporting debt (that we may questionably have to pay for) rather than by collecting tariffs or taxes for having done so. These efforts have been made under the rubric of political democracy for the purpose of popular opinion, but are actually for the institutional purpose of creating an economically incentivized and politically enfranchised middle class that is invested in perpetuating the world market system. I do not think that there is disagreement among political economists that we would be better off without having to support the empire. But when faced with the very real, and very negative impact that a withdrawal would have on the average (pampered) american, and on the average (schumpeterian) public intellectual, practical heads prevail.

      [callout] Property rights are indeed the basis for prosperity. However, property rights are an institution that is created by the application of organized institutional violence. This fact is usually lost of ideological libertarians. [/callout]

      As I understand it, the general thinking among the strategic thinkers (those who study military, political, and economic relationships, rather than just political, financial and social relationships) is that if we bear the burden long enough, the world will evolve into a sufficiently middle class economy (a synonym for democratic) that the purpose of the empire will decline at a rate equal to the relative importance of the american economy, allowing us to withdraw without creating shocks to the international system. A failure to understand military history is what separates ideological political economy from practicable political economy. Property rights are indeed the basis for prosperity. However, property rights are an institution that is created by the application of organized institutional violence. This fact is usually lost of ideological libertarians.

    • You Can’t Define Away ‘Structural Unemployment’

      The term “Structural unemployment” has a technical definition and a colloquial definition. And authors frequently criticize the colloquial as not matching the technical, rather than the premise put forth by the colloquial. However, the colloquial definition is correct. That is, that there are people trained and experienced in skills that will not return to the economy, and that there are few if any sectors of expansion available to absorb them in any potential recovery, and if unemployed long term, they may be permanently ostracized from the work force. As an aside, it is unlikely that the USA will return to a consumer-debt economy. We will not be ABLE to. Not unless we play tariff and protectionist games, and deprive other geographies of their ability to arbitrage prices. The high current level of liquidity is limited to the financial sector, and even there, to a narrow band of the financial sector. There are no savings going on anywhere, and instead there is debt reduction going on everywhere.. The country is operating at higher efficiency out of fear and necessity — a combination which cannot persist indefinitely. So, the colloquial concept of Structural Unemployment is accurate in it’s usage.

    • that we need stimulus. Agreed that we can finance the debt.The question on the r

      http://krugman.blogs.nytimes.com/2011/03/25/deficits-and-the-printing-press-somewhat-wonkish/Agreed that we need stimulus. Agreed that we can finance the debt.The question on the right, is rather, “How can we insert that money into the economy without subsidizing the bureaucracy, and instead, creating a competitive advantage for our business community, which will then create profits from which we can extract taxes to pay for our borrowing?”So, unless your argument consists of BOTH the explanation of financin

      Source date (UTC): 2011-03-25 21:57:00 UTC

    • The Luddism Of Marxism And Anarcho Capitalism

      All human beings seek to game the market. The market system depends upon it. Without the desire to game the market and prices, we would have no innovation, no production increases, and no price decreases. In our market, innovation is the only ‘fair’ means by which we tolerate winning. Because winning in this market, means consumers reap the rewards of competition. Credit innovation is perhaps the most powerful advantage that the west has possessed. But all human beings seek to game the market. The market is a construct of man. As a construct it needs to be maintained. Not just from external forces, not jjust from governemnts, not just from cooperative organizations, but from individuals as well. Marxism is an effort to game the market. Anarchic libertarianism is an effort to game the market. Both seek to obtain the rewards of market activity at a discount. Both are luddite strategies. Both seek trade rather than market. Both are regressive strategies. The market, it’s incentives, it’s rules, and it’s communication system of prices are a construct of man. And like any other machine, it needs maintenance. It does not need direction – no human can provide the knowlege to guide it. Instead, It needs to protect against rust: the human propensity for corruption. The very propensity for curruption that guarantes that ihumans innovate to drive the market itself. And silly philosophies whether they be the marxist suppostion that people will not ‘cheat’ or the libertarian suppostiion that people will not act with corruption, are both no more than wishing that gravity did not exist, or that iron did not oxidize. Or, that there is a divine god who gives us scritpture and determines the course of our lives.

    • The Productivity of “Face” : Status Systems And Innovation

      [P]areto, in his study of society, and Haight in his study of emotions, and perhaps Axelrod as well in his study of human cooperation, do not attribute to Status Signaling the importance which it deserves. Haight is far too interested in the egalitarian assumption. Pareto, in his analysis of Sentiments, misses status signals almost entirely.

      Humans attempt to acquire and maintain status at all costs. We are acquisitive — in stimulation, experience and knowledge, in security and relationships, in opportunity, in mates and in Status. Because status increases the opportunity for mates, opportunities, security and relationships, stimulation, experience and knowledge.

      SOCIAL STATUS

      As acquisitive creatures, humans, like most animals with memories, sense ‘more’. More calories, more opportunities, more information: more anything. The human concept of Beauty is almost synonymous with “plenty bounded by symmetry”. Beauty is “more”. Symmetrical perhaps. But more none the less.

      Status is the human accounting system. We many need a vast number of conceptual and physical tools to delve into the sciences, and we need to evolve complex institutions in order to cooperate in large numbers. But every human being regardless of his intelligence is master accountant of the currency of status signals and their measurement. Without that talent we could not survive in society. People may differ in their ability to act on abstract knowledge in real time. however, they differ very little in their ability to detect and measure status signals.

      Status signals help us select mates. But, almost as importantly, without status signals we would not know whose behaviors to imitate. For learning creatures, status symbols are an necessary property of knowledge transfer within and across generations.

      If the human animal has any innate mastery whatsoever, it is in sensitivity to status signals.

      RULES

      “If the rule you followed brought you to this, of what use was the rule?”
      – Cormac McCarthy, “No Country For Old Men”.

      Of course, the answer is, that the rule has one or more uses, and one or more unintended consequences. In the west, the unintended consequences have been rapid change, an unhappy proletariat and class warfare that has led to the abandonment of our society by it’s upper classes, who, if unrewarded with status for their success, can find no reason to engage or acknowledge anyone in society. Therefore they have adopted the strategy that the purpose of attaining wealth is to exit participation in society and it’s market. Having elites abandon society is extremely detrimental for the propagation of knowledge and values. Elites, especially families that persist wealth over generations, are the most important people for the population to learn from in any society.

      DIFFERENT INNOVATION INCENTIVES

      Each culture uses slightly different techniques of social management. The novelty of the west is that the fraternal model, and jealousy of one’s status and influence, led to the solution to the problem of politics: competition between opposing forces. Politics was not solved in other societies. I suspect that the Asian and Mystical model of hierarchy is the self-limiting barrier that those societies erected when they became large and centralized. And conversely, that the advantage of the western political system which at different times consists of debates, competing manors, feudal alliances, and the competition with the church, and the need to keep the east at bay, allowed the civilization that was actually youngest, to compete more effectively at producing and USING technical innovation to compete with other civilizations.

      The West: “Draw Them Up” (Minority, Fraternal, Technical)
      Organizing Principle: As a minority we need advanced technology to compete. Advanced technology is expensive. We need to enfranchise the best men and their money in order to compete.
      Minority: Westerners are a minority. They combat both eastern decadence and local barbarism.
      Fraternal: Men join together to form a fraternity who elects a general, president, king, or leader.
      Technical: It is an action-oriented, real world, and technocratic system of utilitarian thought.
      Value: It’s predicate is to ‘leave the world better for having altered it for the purpose of man’

      The East: “Keep Society Stable” (Majority, Paternal, Equilibrial)
      Organizing Principle:
      Majority:
      Paternal:
      Equilibrial:
      Value: It’s predicate is ‘stability and conflict avoidance’

      The Middle : “Keep Them Down” (Majority, Maternal, Magical)
      Majority:
      Maternal:
      Magical:
      It’s predicate is ‘

      In the middle east, Magian (mystical) society, what we currently call Islam, one of the precepts is that all men must be treated with dignity. They do not need to learn dignity. THey do not need to demonstrate achievement. They are simply due it. This is a social strategy for downward distribution of, and dtermination of the TERMS by which status is determined and transferred.

      CORRUPTION

      For any society to create prosperity, the human tendency toward corruption (privatization) must be suppressed and re-channeled into some other behavior. THe division of labor, division of knowledge, and the flucity of knowlege and capital that allow nations to compete on the world stage against other natinos, cannot function without supresssion of corruption.

      Property rights train societies in the habits and skills of anti-corruption. Property rights allow the brightest to make best use of resources for the purpose of increasing prodution, and decreasing prices. Property rights allow for the greatest fludity and adaptation. But the abuses of property rights which we call corrption, the abuse of oportunity costs which we also call corruption, and the abuse of foregone opportunity costs, which we faili to call corruption, and even certain social and moral principles which reallocate status without action, are a form of corruption.

      KEEPING THE DEMONS IN THE PIT
      A Romanian friend of mine tells a parable. In hell, there are demons guarding the pits. In each pit is a nation of people. They demons are standing around the jewish pit. A new demon walks over and says “why aren’t any of you guarding the Romanian pit?” To which the elder demon replies “If one jew gets out, he’ll help another, until very quickly they all escape the pit. If one Romanian tries to get out of the pit, all the others will drag him back down.”

      Urban Black culture, and to some degree Hispanic culture, has an aspect of “keeping others in the pit”.

      The purpose of islam is to keep everyone on earth in the pit.

      That is the unintended consequence of Islam’s concept of dignity.

    • Trump? A person of interest in an economic debate? Yes, a few economists erroneo

      http://www.capitalismv3.com/index.php/2010/12/another-on-the-myth-that-isnt-manufacturing-jobs/Donald Trump? A person of interest in an economic debate? Yes, a few economists erroneously take Trump to task for suggesting that we need more manufacturing jobs. They’re wrong. He’s right. I state why – economists are confused.

      Source date (UTC): 2010-12-05 17:55:00 UTC