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Where From Comes The Collapse : The Schumpeterian Priesthood Profits From The Absence Of Calculability

Mark Thoma suggests that the government should both use Tax Cuts and Spending to improve an economy. Which is a pretty common sentiment among economists. Nothing new there. He is simply changing his mind on the value of Tax cuts because they help correct household balance sheets and therefore increase the likelihood of future spending.

In balance sheet recessions, tax cuts that are saved will help to end the recession sooner and hence should be part of the recovery package. The most important concern is still aggregate demand, and policies must be devoted to this problem first and foremost, but tax cuts have a role to play in the recovery process even when they are saved.

One of the posters commented (as leftists do, on his blog Economist’s View) that increasing Demand does not fix the problem. Which I then used as a springboard.

ken melvin said…
The implicit assumption that demand provides solution is not valid, hasn’t been since forever. The model is invalid, has been since forever. Yet, for lo these nearly 40 years. we pursue this model in the face of the ever mounting failure. The model, never really sacred, was built on forensics, and, more, to make the status quo work. From physics and bio-science, we’ve evidence that man is capable of divining forward. Now is the time for economists to ask ‘how should it be’?

But I think he misses the point.

[callout]Economists don’t have any idea how the world should be.[/callout]

Economists don’t have any idea how the world should be. The failures of the DSEM models are catastrophic. The problem of human memory (Mandelbrot-Taleb-Hume and to some degree Hayek) implies that humans are permanent victims to behavioral boiling-the-frog, and to the somewhere on the order of fifty cognitive biases.

We know, as you state, that demand does not work. We know that innovation is a supply-bias that generates demand. It appears that it is the only means of increasing velocity and volume in an economy.

We know that the state moved from saving-and-investment to consumptive redistribution and debt during the period of rapid industrialization and the act of selling off the american continent.

We know that we assumed we could use mathematics to control this by a number of levers we call monetary policy.

Vast Changes Give Our Ambitions Context

The world is going through a number of changes.
1) repricing due to the asian economies coming into capitalism and industrial production. (Just as the US did to europe in the mid 1800’s)
2) reorganization, as people must learn and move to new forms of production (jobs) without knowing what to move to.
3) the future-assumption-of-growth debt bubble bursting everywhere.
4) the movement of private debt failure to sovereign debt failure, destroying the ‘lender and insurer of last resort’.
5) the demographic shift to an older media age population that is lower production if not non-productive.
6) Increasing urbanization worldwide (urbanites and rural’s have different epistemological biases because of perceived opportunity density – different cognitive biases, but cites are increasingly becoming the home of the poor, and income disparity is largely an urban phenomenon)
7) Decline (as has been predicted since 1945) of american ability to police trade routes inherited from the English after the wars (military influence) and increasing destabilization of trade routes, power, and monetary systems that will come from that change in influence.
8) the permanent decline in the relative economic position of american middle classes that will result from this worldwide rebalancing.

The Failure Of The Democratic Republican Model Of Debate

It appears that the working class’s attempt to bankrupt the capitalist class, and the capitalist class’s attempt to bankrupt the state to defend itself, BOTH worked. States are very nearly bankrupt.

The republican model of debate between opposing forces for governmental decision-making under the unbounded system fiat money has failed. If we are going to have fiat money, we are going to have to find another way to debate the future. Fundamentally, our current republican form of government is government by non-productive people. By priests. It is quite the opposite of early republicanism under farmers, who specifically were productive. The classical liberal revolution failed to adequately define a government for the post-industrial era.

The republican model of debate between opposing forces for the purpose of governmental decision making has failed under fiat money. If we are going to have fiat money, we are going to have to find another way to debate the future.

[callout]The republican model of debate between opposing forces for the purpose of governmental decision making has failed under fiat money. If we are going to have fiat money, we are going to have to find another way to debate the future. [/callout]

And since we have a clear difference between class predictions of the future (entrepreneurs must take and absorb risks so they see the future as dangerous while independent laborers and craftsmen and small business people see a similar view, but white collar educated workers and government and union workers tend to see a stable future – because they are isolated from visible flows of capital and risk), then consensus from PERCEPTIONS ALONE (*that’s the issue right there*) between classes of people who are disproportionately distributed across geographies, cannot come to a consensus of PERCEPTIONS.

An emphasis on perceptions here: because a) the perceptions are vastly different, b) the data is insufficient and models are notoriously faulty in prediction c) our method of governance is not factual but PERCEPTUAL.

The most common perceptive difference between cultures and classes is time preference (in the austrian model this is a degree of willingness to wait for gratification.

In simple terms, people from different social classes have different views of time. Higher classes longer, lower classes shorter. There is some evidence that this is simply an expression of having means or not, or one of what a class teaches its children by implication and habit rather than intent, but that is counteracted by research showing that all classes have both short and long term thinking members. That would indicate that austrian model is correct, that the issue is the underlying drive for stimulation. In either case, these perceptions are material determinants of the differences in perceptions.

All mathematical formule are improvements on our perceptions. If they prove true in forecasting outcomes they are extension of our senses. Or better said, they alter our perceptions of the world by improving our perceptions in limited domains. But data must come from categories of actions that we can measure. We cannot measure many dimensions. In particular cannot measure the alternative worlds that people to NOT choose (as we can forecast in physics using alternate world hypotheses). And we tend to measure commodities and ‘flatness’ best, and outside of those who worlds can barely forecast anything at all.

How Do We Make Choices?

SO in this ‘fact-less’ world, how should we know what to do, and how should we CHOOSE what to do, and what mechanism for CHOOSING what to do will work to produce outcomes that are beneficial enough, that productivity increases sufficiently to allow for redistribution, so that status-envy and status-achivement-for-mating-purposes are both satisfied?

(And I am not ruling out that due to status envy a large part of any population will happily encourage the diminution of an economy. There are too many records of this effect in history.)

We have the wrong form of government. We lack shared perceptions of the world – for structural reasons. We lack the tools and formulae to scientifically prove one set of perceptions or another, in order to come to agreement.

How Should We Reform Government?

So, how should we organize society, and what research should economists pursue, so that we can calculate, estimate, judge, plan or whatever, a future that we can agree upon in a democratic society? Or should we simply try to come up with another set of ridiculous religious concepts even if they are metaphysical (marx and Smith) or positivist (keynes and Friedman)?

Or is there yet another way? Is there a way to look not at mysteries (religions and metaphysics and morality tales) or to look at false sciences (formula and application of the constant physical world principles to the heuristic world), as means by which to FORCE AGREEMENT BY FALSITY under the assumption that the world is either externally created, or naturally bound, or scientifically predictable? All of which we know are FALSE.

Or instead, is there a way to cooperatively EXPERIMENT and DISCOVER that world and SHARE COOPERATIVELY in it’s RESULTS?

In other words, is there a way to create a government of DISCOVERY that rewards all citizens for their participation?

And more importantly, is there a way to create the correct SENSATIONS that are PERCEPTIBLE to both the entrepreneurial and the craft and the labor classes, such that the CAUSE and EFFECT of one’s actions allow the productive classes to coordinate and profit, without the systemic bureaucratic pilferage for the purpose of profiting from class warfare? Or better stated, how can we create a system of information post-agrarian, post-industrialization, that stops the priesthood, whichever form of mysticism that they practice, whether it be Monotheism, Traditionalism, or Progressive (Socialist) Democratic Secular Humanism? The rational man asks, how do we kill off religions, and that means all of them, including positivism?

We are asking the wrong question

So, I think both left and right are asking the wrong question.

And if they are not asking the wrong question, then they are simply a band of fraudulent thieves.

The problem is not one of solving economic science, so that we can justify one position or another, using what we claim is science.

The problem is the very nature of our process of government.

The Republican Model Of Debate Is Insufficient For Political Action, because men and women in government are incapable of possessing the information necessary to make the level of decisions with which they are tasked. We know that socialism fails because of a failure of ‘calculation’ and of ‘incentives’. We know the political model of republicanism fails above a certain very small population for the same reason that socialism fails outside of a family: that calculation becomes impossible, and incentives fail to encourage and reward productive behavior.

[callout]The problem is the very nature of our process of government. … Religion and Law and the republican model are artifacts of the agrarian world which we left behind a century ago.[/callout]

Sensation, Perception and Complexity

We live in an advanced industrial society with tens of millions of products and hundreds of millions of people, calculating a complex future in a vast division of knowledge and labor, using metaphysical and inherited systems of perception under a government that was designed for a minority of wealthy farmers to coordinate decisions for a large number of farmers and subsistence farmers. WE use religion, and law, and now false application of science (which is simply a process of organized discovery of an existing system) to make our choices. But our choices fail. THey fail here in America. They fail in the more socialist world of europe. They failed in the most socialist and communal world of the east. They fail everywhere. Religion and Law and the republican model are artifacts of the agrarian world which we left behind a century ago.

The Answer Is In Front Of Us

So what is it that we need to do instead?

The answer sits in front of us. It’s our religious cultural fantasies that create the mythos that prevents us from seeing it. It doesn’t matter if that silly religion is christianity (military mysticism), judaism (minority mysticism), or “democratic secular socialist humanism” (positivism: mathematical mysticism).

We create a lot of social habits without really understanding them. We invent behaviors and technologies by accident and define them later on when we finally understand them. We label them and then claim to understand them, as if we invented rather than stumbled upon them by trial and error.

The answer isn’t any form of ‘ism — It’s just to work at it. The question is, how do we get everyone to voluntarily work at it? What institutions do we need to make it work? How do we change government so that these institutions succeed? THe libertarians have been right about a lot of these institutional problems. They have been wrong on selfishness and money. Christian protestants have been right about cultural discipline and production, but wrong about separation of church, state, and banking. Keynesians and Friedmanites have been wrong about free trade and monetary policy. Everyone is just a little bit right.

[callout]Or do we, like all other urbanized civilizations in history fall prey to the real reason for Collapse : the failure of law and religion .. due to permanent [urban and market] anonymity that breaks the prisoner’s dilemma of social cooperation…?[/callout]

Collapse

Or do we, like all other urbanized civilizations in history fall prey to the real reason for Collapse (Diamond was wrong) : the failure of law and religion (punishment and ostracization) in an urban society due to permanent anonymity that breaks the prisoner’s dilemma of social cooperation in families, friends, tribes and among farmers and craftsmen, who are dependent on themselves for their production?

Schumpeterian Intellectuals

Since we created the market, people have increasingly chosen to enter it. First by making excess production in order to get money to buy scarce goods that they could not produce on their own. Second, by entering the market, by producing ALL goods for the market and relying entirely upon the market for sustenance. They stepped into a world of risk without the comforting cushion of their farms. Then, once dependent upon the market, they started seeking jobs in the market-bureaucracy where they were isolated from the market risk. (this is the purpose of going to college today – to exit the market). And this is the entire issue for our civilization: so many white collar people have exited the market by joining the private sector market-bureaucracy, and are compensated highly for it (as were priests in pre-secular society), that they ‘sense’ that the market doesn’t exist. So we have a productive class (people who speculate with capital whether) we have a dependent class, and we have a bureaucratic class (the state, and the private sector white collar and union workers). The dependent class cannot function in the market. The bureaucratic class lives off other people in the market but are exited from it – living in the best of both worlds, and the capital-risking class is the minority of the market taking all the risk.

The market is a process of discovery. The question is how do we build a democratic society for a world of discovery without having the white collar market-exiters (Schupeterian intellectuals) destroy the market? Or rather, how to we reward the productive classes, whether they are laborers, craftsmen, entrepreneurs or capitalists, and deprive the priesthood who lives off them?

Because all Priesthoods. All bureaucracies. Are predatory. And our Bureaucracy, our priesthood, has simply extended into the private sector.Today’s economists are no different. They are, in large part, part of the positivist priesthood.

That’s the reason for Collapse: Schumpeterian collapse: The dependent and bureaucratic classes cause the collapse of the productive entrepreneurial class, who, like Atlas can no longer carry them, or is no longer willing to.

The solution is to create a government that does not pool information and thereby launder it. But that informs everyone accurately of their contribution, or dependence, upon the cooperative endeavor, the joint stock company that administers the market that we call ‘the state’.

Uncategorized

The Euro. What Will Happen?

Germany Moves East

Germany and Russia are now more politically aligned because they are now economically aligned.

Europe will have:
1) the German-Russian block, which will reclaim the eastern block countries.
2) the France and PIGS block (latins – portugal, spain, italy and greece over whom it can feel superior)
3) The UK trying to figure out if it’s part of the Anglo-american, French or German block, and becoming irrelevant unless it simply becomes the world version of switzerland -weak but trustworthy with your money.

The European left-coast lost.

And the USA can’t protect anyone any longer.

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Russia And Germany Instead Of France And Germany? One Can Only Hope

Stratfor has released an article today that suggests that German and Russia have more to offer each other than does the rest of Europe. Russia has intelligent labor, and resources, but it has a terrible capital structure and little technology.  Germany has technology, a terrific capital structure, but needs resources and labor.  Better yet, the labor can stay where it is: in Russia, rather than immigrating into Germany and further burdening its infrastructure and creating additional civil unrest.

France will have little chance but to follow germany into the relationship, because it is not powerful enough on its own to unify the Club-Med states (Portugal, Italy, Greece and Spain (the Pigs).

What I find most humorous about this pairing, especially given the pro-german position I’ve taken in the Anglo-German European civil war, is that despite being defeated by the Anglo coalition, Germany once again has proven that it is a more prosperous and hard-working and innovative culture than its local competitors.  It has risen from the ashes so to speak.   And left England in the distance.

I can’t think of anything I find more attractive: a unified germany and russia.  After all, the south and west have contained Germany for two and a half millennia. The world wars were only the most recent instance of german containment.

Now, this has broader implications for Byzantine civilization.  Germany and northern europe are protestant christian civilizations with a positive ethic.  Byzantine civilizations are nominally christian, but have a nihilistic ethic.    How will cooperation change either of these ethics?   How would europe change if the PIGS are left to their own devices?

Stratfor has suggested in the past that Turkey is in the likely heir to islamic power, but not byzantine power.  A German-Russian alliance that built byzantine power would be superior at keeping the mandatory-ignorance of Islam at bay, and might resurrect Byzantine civilization, and restore Russia to a leadership position.

This kind of talk would have been heresy during the cold war and the possibility of communism. But post-communism, in a world of universal capitalism,  it seems like a win for Germany, Russia, eastern Europe, the rest of Europe by consequence, and humanity by implication.

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Payback Time? But what’s the fee?

Entitled “Payback Time”, this NYT article by Steven Erlanger states that “Crisis Imperils Liberal Benefits Long Expected by Europeans

I’d like to clarify this argument a bit with the following points:

1) It will take somewhere between 3-5% of GDP to correct the retirement funding problem given the current ratio of prices and payments.

2) The problem with any policy is in determining the degree of uncertainty with regard to the future state of production (how much the productive people in any society will earn without the historical advantage that west has had in capitalist political and economic systems.) This means that the 3-5% number could be about the same, or it could be as much as twice that amount.

3) Most of the world, Europe in particular, will need to increase military expenses as the US loses it’s ability to project the power needed to police world trade routes, and it’s citizens lose the will to do so. We do not know what this cost will be. For european countries it will likely be on the order of 10% of GDP if history is any measure, that will mean roughly doubling the wealthier countries in europe, and quadrupling the spending of the eastern fringe countries.

[callout]The fact that this economic instability is going to be caused by demographic changes, much of which will be caused by immigration of non-integrating subcultures, will remain the unspoken elephant in the room for years to come.[/callout]

4) Most of the developed world will have to increase expenses on infrastructure due to aging populations. We do not know this number. Health care in particular will need to be rationed further as the cost of prolonging life continues to climb.

5) Cost of government is increasingly expensive and burdensome as productivity declines.

6) demographic changes underway, the increasing differences between american super-regions, and the lack of integration of immigrants, and the rising racial tensions, will lead to the increasing potential for political upheaval, somewhere in the 2015 – 2025 range, which would put extraordinary financial burdens on the world as regional power vacuums forced rapid reallocation of resources worldwide.

The conservative position would argue that the world system is much more fragile than we assume, and that it’s prudent to cautious in our expectations of the future.

The libertarian position would be to change from speculative policies that rely on growth and government, to calculable policies that rely upon saving and productivity, and in doing so, create both security and prosperity rather than worrying about the degree of risk we’re taking on.

The likely cost then, is somewhere between a low of 3% assuming stability, and a high of 15% of GDP over the next ten years.

The fact that this economic instability is going to be caused by demographic changes, much of which will be caused by immigration of non-integrating subcultures combined with aging dependent generations will remain the unspoken elephant in the room for years to come.

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The New York Times Is An Organized Crime Syndicate – And Misrepresenting Libertarianism Is Fraud And Theft.

THE NYT IS AN ORGANIZED CRIME SYNDICATE

Why is the NYT an Organized Crime Syndicate? Because the NYT has committed as much journalistic fraud, at a greater scale, as any of the most controlled of state run media in modern history, and has brought to market a defective and harmful product, and profited from the sale of that defective product. And that defective product has caused harm to both the long term material economy, and the institutions and habits of the citizenry, that have been dearly paid for.

We are repeatedly assailed by revelations that yet another corrupt New York Times journalist has stolen from society by creating artificial myths which they bring to the market of political discourse as fraudulently misrepresented products. We are confronted with editorial bias among most of the New York media, but systemically so by the NYT who not only editorializes, but conducts systemic hiring, encouragement of, and acceptance by those editors of authors who confirm the bias of those editors, rather than those who seek to falsify it. [callout] Falsification is the only scientific method we know of. If a news media wished to be engaged in rational and scientific discourse, each would list it’s editorial biases and ambitions and then seek to falsify them, rather than confirm them. But instead we use the MARKET for news to attempt to fix this problem, thereby subjecting the POPULATION to the problem of interpreting information that they are not equipped to qualify, and forcing them into the practical pursuit of confirmation biases rather than the pursuit of political truths simply by exhausting them.[/callout]

What is the difference between a corporation that brings such a drug to market for profit, and a firm that manufactures journalism and brings it to market? They are both selling defective and harmful products into the marketplace. So what is the difference? Nothing.

Organized Crime
Definitions of organized crime vary according to the Mission and Scope of the organizations seeking to prosecute it. In general, organized crime is a form of organizational conspiracy for the purpose of profiting from illegal activities. Illegal activities are those that profit from theft of property or service.

But there is another form of organized crime, that is within the mission and scope of another organization seeking to police and prosecute it: the citizenry. The citizenry must prevent systemic and organized theft of institutionally accumulated costs, paid for not with the currency of money, but with the currency of restraint: forgone opportunity costs. These crimes may be petty, such as those of manners, they may be material, such as those of ethics, and they are most commonly moral, as in those that undermine our institutions that assist us in saving and accumulating human capital.

Free Speech
Free speech is a product of the republican system of government, whereby debate is a proxy for violence. It is a means of resolving conflicts between peers. Its origins are among the strong and wealthy classes. The purpose of free speech is to create a political dialog for determining the optimum solution for the advancement of the polis among share-holding equals.

[callout] [ It is ] the citizenry who must prevent systemic and organized theft of institutionally accumulated costs, paid for not with the currency of money, but with the currency of restraint: forgone opportunity costs. These crimes may be petty, such as those of manners, they may be material, such as those of ethics, and they are most commonly moral, as in those that undermine our institutions that assist us in saving and accumulating human capital.[/callout]

Free speech universally degrades into the act of persuasion for pragmatic personal political and economic ends, whenever the cost of fraud becomes too low, and it becomes lowest when taken to it’s extreme under the principle of systemic non-violence. Free speech is only possible to employ without the subjective control of violence if there is a ‘science’ by which to constrain the debate. THe field of economic science is struggling to become that method of articulating moral, political action.

ie: Rational debate is a proxy for violence. irrational debate simply trades violence for deception and fraud. Violence is immediate and it is of all things, HONEST, instructive and decisive. Fraud is dishonest, prolonged, confusing and indecisive.

Over time we have developed a policy of tolerating errors in free speech because we assume that the truth will prevail. We assume that wise and honest men will honestly correct the course of debate. We assume that men desire the truth rather than simply victory by fraud, ad that when presented with the truth they will acquiesce. We model debate as if we are still peers in the house of lords, rather than disparate groups of common people promoting our elites to heroic status whereby they battle in public circles by allusions, deceptions, barbs and ridicule, rather than reason, logic, and facts.

We are further cautious of free speech in media because of the inequality it gives to an individual’s voice, an because it gives our group heroic elites a distorted but unchecked monopolistic voice in a system of politics developed for orators in a forum.

[callout]… conservatives desire to preserve their freedom, and keep down the cost of it, by creating institutions that meritocratically rotate the elites, and whose institutions are meritocratic and therefore privatized. Conservatives are not against change. They are against change that creates systemic corruption. [/callout]

Conservatives are particularly cautious of these elites because the conservative’s preferred method of action is individual, functional and one of material commercial action rather than the left’s preferred method of coercion by politics, media, and anarchic violence. Or more simply stated, that conservatives desire to preserve their freedom and the cost of it, by creating institutions that meritocratic-ally rotate the elites, and whose institutions are meritocratic and therefore privatized. Conservatives are not against change. They are against change that creates systemic corruption. Perhaps, they are also cognizant of, and desirous of building a society where one is rewarded for good, honest, hard working and kind social behavior, and bureaucrats whether inside the state, or inside industry, who are not subject to market conditions are not incentivized to conform to good civic behavior as was illustrated by Adam Smith.

Regardless of political spectrum, we are further skeptical of media, because media is a means for institutionalizing the act of profiteering from selling class and group conflict.

JOURNALISTIC FRAUD IS ORGANIZED CRIME

The Most Recent NYT Organized Crime Syndicate Initiative Is Against Libertarianism

It was only government power that ended slavery and abolished Jim Crow, neither of which would have been eliminated by a purely free market.

No, it was a set of LAWS called the “Jim Crow Laws” that the government instituted in order to create slavery, and maintain its persistence as a social and economic structure. The STATE created slavery. The state funded and protected THE SLAVE TRADE ROUTES. The state sanctioned, protected and taxed slave Markets. The state prosecuted and pursued escaped slaves. It was the STATE that created and built slavery.

In fact, in all of human history, it was the a defining property of STATEHOOD that allowed one class of people to enslave another. The Israelites returned from the desert and enslaved people. The Entire egyptian and babylonian societies were enslaved or virtually so. Hellenic and Roman civilizations were slave owning. European civilization was slave owning. Almost all civilizations in agrarian history are slave owning because farming is hard labor.

[callout]…The STATE created slavery. The state funded and protected THE SLAVE TRADE ROUTES. The state sanctioned, protected and taxed slave Markets. The state prosecuted and pursued escaped slaves. It was the STATE that created and built slavery.[/callout]

Secondly, it is the innovations in technology by the private sector that have made slavery unprofitable. And it is the insight of libertarian economists that slavery is simply LESS PROFITABLE than turning your former slaves into consumers. Because as consumers they simply have superior incentives to be productive in the market place.

No, it was not the state, it was individuals, largely Christian men, who promoted anti-slavery, because as christians they saw this as un-christian behavior. It was women who took advantage of this anti-slavery momentum as a political step in getting their own vote via the suffrage movement once the industrial revolution started to free them from home-drugery. And it was politicians in Washington and the north that promoted anti-slavery, and Lincoln in particular who promoted it as a means of forcing the north to war against the south for entirely political reasons.

But these people were not anti-slavery at the outset. They were agitated by the fact that the north and south produced different market products (southern raw cotton versus northern manufactured goods) and that the south was paying the federal taxes that they funded the state. The south was consuming overseas goods, and the north wanted to decrease competition from overseas for their goods, and so the north wanted to use the STATE to force the south to ‘buy american’, and needed to overtake power. Slavery was simply a rallying cry by which the state could get the Christian population to support a war.

Slavery was on it’s way out the world over because it is UNPRODUCTIVE under industrialization. Slavery was not conquered because it was immoral. It was for political and economic reasons. The anti-slavery movement only accelerated the natural process of abandonment of slavery under industrialization, for purely self-serving, economic and political motivations.

Slavery would have been eliminated by the free market. It was the state that interfered with the process by prolonging it. It was the state that took credit for the dissolution of slavery that was in reality, a dissolution created by the free market. This is what the DATA SHOWS. Regardless of the ridiculous public utterances and pamphleteering in the political arena, slavery was of declining productivity.

It was government that rescued the economy from the Depression and promoted safety and equality in the workplace.

No that’s not true. There is a vast body of work on this topic and it is still in dispute. So no, this is not settled science. We know that the governments created the problems that led to the great depression by creating fiat money and rapid immigration. We know that the war is what got the country out of depression. We know the post-war-era prosperity was largely due to the conversion of manufacturing and construction to war-materials (panel products). But we do not know that the government got the country out of depression and there is a substantive and arguably correct body of work that states that the government both caused the rapid decline, and by it’s policies prolonged it. Just as the policies enacted during the depressionary period are the cause of the systemic crash of western economies, which despite warnings from libertarians, are the result of converting society from “cultures of saving and increasing production to inter-generational redistribution and inflationary consumption” which thereby exposed the civilization to cumulative and irreparable risk.

Libertarians warned that progress was not eternal, could not be depended upon, and that our economic tools and theories could not provide us with the insights which we attributed to them. But to no avail.

“Under this philosophy, the punishment for a lunch counter that refuses to seat black customers would be public shunning, not a court order.”

What it means is that any group should be able to ostracize what they see as anti-social behavior. And they have the right to determine what they consider anti-social behavior to be. Libertarianism states that if you want to build a homophobic, racist little town somewhere, go ahead, because you will descend into poverty by doing so. It says, quite conversely, that if you want to create a homocentric pluralistic city, that you can do so, and that economically you will benefit by doing so. Libertarianism states that it is up to the individual to choose which of those cities to live in. And that neither fantasy has the right to oppress the other. Libertarianism CELEBRATES DIVERSITY of choice, not choice-less mandated diversity. And it does so because it advocates that markets reward and punish. (( To counter argue this position no matter what angle one took, simply would require that you argue white europeans, or some other ethnic group, are a superior race. ))

And any group that does engage in such economic ostracization such as refusing to seat customers of one race or another, would accomplish one of the following things:

1) go out of business by the loss of customers and the creation of competitors who serve the rejected customers
2) increase their business by the decrease in presence of anti-social behavior

In fact, this is what people DO, in reality. Except in the very RAREST of circumstances in the very largest cities, in the most wealthy shopping and business districts, people congregate with people who look, and act, and speak, as they do. While this observation is trivial to any person on the street, yet escapes the Schumpeterian (( Schumpeterian Intellectual: someone who profits from selling his services as a public intellectual by criticizing the traditions of the society that made his idleness and therefore his criticism possible, and by consequence, subsidizing the bureaucratic evolution of totalitarianism. )) intellectual class, despite the data and evidence that proves uncontrovertibly that people are racist, act racist and always will act racist, and that the will do so for rational reasons: they obtain more status in-group than out of group.

And business people are not motivated by social conformity. They are motivated by profitability. And RACISM IS UNPROFITABLE. Period.

On the other hand bias against anti-social behavior IS PROFITABLE. And prevents the takeover via government sanction, by the act of denying businesses the right to choose customers, of the business by a market that is detrimental to the owners. Those same owners who risked their savings, retirement, homes and safety in order to buy, build, run and operate that business.

And further more, ostracization is the only means by which a group in an advanced society can enforce the INTEGRATION that makes IMMIGRATION both tolerable and economically possible. Societies never have immigration problems. They have IMMIGRATION problems, and ostracization is the most effective method of enforcing integration into the social system.

Limits Of The Market

Libertairanism has it’s limits, because the market has its limits. It does have limits. The market has become large, far larger than that envisioned by Classical Liberals (libertarians) and too large to solve those problems of infrastructure development at scale, where the body of citizens can be served by long term investment in nuclear power plants, roads, and the electrical power grid. Even at that scale, it is a problem of financing and competing with regulation, not of execution – the market will execute better than the sate..

Liability

Libertarianism would also indicate, that the use of media to make such misrepresentations, whether they be errors or deceptions for the purpose of concentrating political power, so that the violence of law and the state could be used to oppress people who seek liberty is a form of THEFT. Freedom of speech is not common to man. It is a sanction given by the nobility in a republic for the purpose of permitting exploration of the optimum set of ideas among a fraternal order of city-defending soldiers whose military tactics and military cost structure required enfranchisement of many men. But even among these people, free speech is not an unlimited right. It has it’s limits. And if we re-instituted liability laws so that one was required to be accurate in both political (fraudulent) and personal (libelous) speech, the NYT would be forced out of business, and the author of this piece, which is a cowardly and unsigned editorial, would be subject to prosecution. And it is that solution that many libertarians (like myself) would advocate.

The Fully Articulated Political Philosophy

Libertarianism is the MOST FULLY ARTICULATED CAUSALLY-COMPLETE POLITICAL PHILOSOPHY that has ever been created by human beings. (( It is arguable that Marxism produced a volume of literature under the erroneous tribal belief in familial bureaucracy, but it is a well understood dead political and economic philosophy, if a living moral philosophy. It can be argued that classical liberalism produced a body of literature under the principles of individualism and organized public debate. However, the contract model has proven non-durable in time against the bureaucracy’s circumvention of the constitution via the judiciary. )) Libertarianism is imperfect, because all political theory is imperfect. That’s because man continues to evolve into a greater and greater division of knowledge and labor — and as he evolves, he requires deeper understanding of what it is he does, so that he can better comprehend how to resolve the necessary conflicts that rise from the speculative but rewarding human interaction in the market.

LIke any fully articulated systemic advancements in human thought, libertarianism requires comprehension before criticism can be levied against it. Because as a SYSTEM, it cannot be debated piecemeal, just as any political system cannot be implemented or discussed piecemeal. Because it is a SYSTEM of interlocking processes of coordination and epistemology.

And any attempt to argue it outside of systemic comparisons rather than policy comparisons, is an attempt to compare apples and oranges, and as an attempt to compare apples and oranges it is a willful attempt at FRAUD, or a silly and vain error by the incompetent.

Incompetence is not something we should tolerate among those who we grant sanctions, and whom we grant the special permission of free speech in media.

Curt Doolittle

The NYT article is included here for reference.

Limits of Libertarianism

By denigrating several of the signal achievements of modern American society, including the Civil Rights Act of 1964 and the Fair Housing Act, Rand Paul has performed a useful service for voters who are angry at their elected officials. He has helped to illuminate the limits and the hazards of antigovernment sentiment.

Many Americans are sputtering mad, believing that government has let them down in abetting a ruinous recession, bailing out bankers and spending wildly. But is Rand Paul really the remedy they had in mind? His views and those of other Tea Party candidates are unintentional reminders of the importance of enlightened government.

In a handful of remarkably candid interviews since winning Kentucky’s Republican Senate primary this week, Mr. Paul made it clear that he does not understand the nature of racial progress in this country.

As a longtime libertarian, he espouses the view that personal freedom should supersede all government intervention. Neighborhood associations should be allowed to discriminate on the basis of race, he has written, and private businesses ought to be able to refuse service to anyone they wish. Under this philosophy, the punishment for a lunch counter that refuses to seat black customers would be public shunning, not a court order.

It is a theory of liberty with roots in America’s creation, but the succeeding centuries have shown how ineffective it was in promoting a civil society. The freedom of a few people to discriminate meant generations of less freedom for large groups of others.

It was only government power that ended slavery and abolished Jim Crow, neither of which would have been eliminated by a purely free market. It was government that rescued the economy from the Depression and promoted safety and equality in the workplace.

Republicans in Washington have breathlessly distanced themselves from Mr. Paul’s remarks, afraid that voters might tar them with the same extremist brush. But as they continue to fight the new health care law and oppose greater financial regulation, claiming the federal government is overstepping its bounds, they should notice that the distance is closing.

Uncategorized

Krugmanism Of The Day: The Debt-Slaver Strikes Again.

Latvia is often cited as an example for Greece as it undergoes a brutal internal devaluation while keeping its currency pegged to the euro….. Yes, that’s right: the oh-so-virtuous Baltics have done worse than Iceland. … But their money is sound.

Well Paul, what do you recommend instead? If not unemployment, and social reorganization and price recalculation, then what? Destruction of what little concentrated capital that there is? Enslaving the population with debt in the false hope that these countries will be able to compete well enough on the world stage that they work their way out of it? Rapid redistribution rather than rapid reorganization?

The answer is undoubtably the loss of sovereignty in exchange for security, without acknowledging that people value status and sovereignty as much as they do security. That is, unless your ambition is debt slavery. Which it is, I’m sure: to replace violence and militarism with fraud and slavery. But then, to understand this, one would have to have an ancestry that could hold land, and a culture willing to die for it, as a means of maintaining freedom. Debt-totalitarianism is no different from force-totalitarianism.

Personally I find it simply the difference between the honesty of violence and the fraud of debt enslavement.

This is the underlying problem with all Krugmanism – totalitarianism under the guise of a false economic equality. Watch what future discipline the Baltics develop versus the Greeks. The most important institutions are those of cultural habits: behavioral institutions are paid for by the accumulation of forgone opportunities: ie: discipline.

Uncategorized

Understanding Greece And Germany In Terms Of The Economics Of Human Action Rather Than Moral Sentiments And Class Envy

Over on Economists View, where the left seems to hang on like dirty ruffians intent on downgrading the local bar, Mark Thoma posts a misleading article: “About That Mediterranean Work Ethic” Do Greeks work less than Germans?, which states that Greeks work a lot of hours, perhaps more than germans. Which is a pointless and false because it is intentionally misleading, because it assumes individuals are equally productive and the societies  are collectively equally productive, when in fact, the term ‘productive’ means ‘the market price of stuff produced per human hour’.

One of the people who leaves a comment sees through the veil and says: “These kind of statistics are not enough….”. Which is correct. They don’t tell us anything. Another who lives in Italy says “The problems here are political and cultural. It’s very frustrating to see…”. Which again is correct. Work is an individual expression. [callout] Productivity is an INSTITUTIONAL problem: people lack the institutions and habits by which to create productivity by forming capital alliances in GROUPS[/callout] Productivity is an INSTITUTIONAL problem: people lack the institutions and habits by which to create productivity by forming capital alliances in GROUPS. In Italy (like in southern california) business stay artificially small because of tax and benefit predation by the government, rather than encouraging competitive business, and taxing the very large corporations with whom the state must do business and support. Another says “Greece has crazy early retirement ages and a tax collection system that is pathetic?” Which is true. These are institutional problems. Largely political problems. But people in democracies CHOOSE their governments, now, don’t they.

And Another (by a leftist sycophant who goes by the pseudonym of Paine) attempts to avoid the cultural and institutional predicament, as well as the problem of the productivity of the greek people, as well as the culture of corruption, by saying it’s all a problem of insufficient TAXATION.

But WHAT KIND of taxation? Let’s look at this a bit.

Yes, the chart is misleading (and so are Paine’s arguments, and in so many dimensions, per usual, that refutation is the process of tedious swatting of gnats who by virtue of their simplistic reproductive capacity put a drain on one’s energy simply by their volume.)

First, the Greek problem is productivity not work hours: the market competitiveness of one’s goods and services in relation to one’s trading partners, divided by the number of human work hours necessary to produce the goods and services. The Greeks work longer hours to produce goods of lower value than that of their neighbors.

[callout]the Greek problem is productivity not work hours: the market competitiveness of one’s goods and services in relation to one’s trading partners, divided by the number of human work hours necessary to produce the goods and services. The Greeks work longer hours to produce goods of lower value than that of their neighbors.[/callout]

Second, the institutional reasons within the system that either encourage or enforce that behavior: lack of return on efforts due to a) silly cultural ideas, b) lack of education in productive information, c) lack of advanced institutions, d) private and political corruption and political impediment, e) political predation on the productivity is out of proportion to the marginal effort and risk needed to produce increases in productivity, f) cultural regression due to status impact of success on group cohesion (the urban african american versus the eastern orthodox ethos versus the jewish or protestant ethos.

Third, the cooperative and competitive relationship between groups of different cultures: groups ‘fund’ shared objectives by forgoing opportunities. Forgone opportunities are a cost. Taking advantage of opportunities is a theft from those who forgo them. Since different cultures have different ambitions embedded in their habits, there is a forgone opportunity competition that permanently divides people with dissimilar interests. This is WHY people of different grope dimensions compete with one another: differences in forgone opportunity costs.

[callout]groups ‘fund’ shared objectives by forgoing opportunities. Forgone opportunities are a cost. Taking advantage of opportunities is a theft from those who forgo them. Since different cultures have different ambitions embedded in their habits, there is a forgone opportunity competition that permanently divides people with dissimilar interests. This is WHY people of different grope dimensions compete with one another: differences in forgone opportunity costs.[/callout]

Fourth, the status economy is material to people because they ACT as though it is material to them. Just as the race-preference is material to people because they ACT as thought it is material to them. Just as the creed-preference is material to people because they ACT as though it is material to them. And, precisely because of the forgone opportunity costs associated with those preferences. Most cultural differences have to do with the impact on social status of different forgone opportunity costs. People do not want to give upon their investments. Biases are NOT fanciful or meaningless: most often they directly impact mating choices, social status and therefore group-economic status.  Ie: people stay in-group often because they are given better status signals in-group than extra-group.  They transact across group, but they status-seek within group.

Argument by emphasizing the material economy alone is a convenient way of distracting the argument from the forgone opportunity economy (discipline), and the opportunities, resources, financial, and labor costs that are required to create those institutions.

[callout]Argument by emphasizing the material economy alone is a convenient way of distracting the argument from the forgone opportunity economy (discipline), and the opportunities, resources, financial, and labor costs that are required to create those institutions.[/callout]

In the cast of Greece, it is a poor and corrupt culture that cannot create hard-working low-friction institutions that allow people to increase productivity by the process of constant creative destruction. It appears that Greek IQ is declining slightly probably due to poor urban education. And this has material impact on a society: assuming a broad enough population, people with IQ’s above 122 design machines, people with IQ above 105 repair machines, and people with IQ’s below 105 are limited to using machines. IQ distribution matters because it affects the general set of institutions that a body of people can develop. Education differences can depress IQ means by as much as twenty points. (Exactness of this is disputed but it’s certainly ten points). This mean limits the productivity of any nation, and in turn the appropriate institutions for any body of people. We are not equal in ability to comprehend abstractions, nor in our group ability to produce abstraction-producers and consumers in sufficient numbers to lather the group’s competitive advantage.

[callout]assuming a broad enough population, people with IQ’s above 122 design machines, people with IQ above 105 repair machines, and people with IQ’s below 105 are limited to using machines. IQ distribution matters because it affects the general set of institutions that a body of people can develop.[/callout]

Germany is a nearly land locked, oceanic temperate and continental temperate country of rivers and friction-able land transport that despite constant attempts of external containment has remained productively competitive for two millennia. This is accomplished by the discipline of forgone opportunity in order to create institutions that accumulate competitive advantage at a material cost to the citizens as individuals, but which is a cumulative investment of high returns for the group. Greece is a geographically advantaged, climate advantaged, port-rich country with limited agrarian potential, and a large urbanized population with few choices but to increase productivity.

Institutional development costs are the HIGHEST productive cost paid by any civilization. That is why the non-corruption habits are so rarely developed in the world. (We do not yet know why some cultures have such a difficult time forgoing opportunities for gratification and developing longer (lower) time preferences. There are both biological and cultural and environmental hypothesis.)

[callout]Institutional development costs are the HIGHEST productive cost paid by any civilization. That is why the non-corruption habits are so rarely developed in the world.[/callout]

After forgone opportunity costs. The second highest cost is human capital: literacy, education and training. The third highest cost is the political institutions. The fourth highest cost is economic institutions (credit, banking, contract) And lastly comes the material cost of resources. These costs, when combined with the realities of group IQ differences, when combined with the realities of territorial resource availability, are the primary reason for development differences between cultures.

We do know that Greece and spain were more productive cultures before Spain experienced new world gold, and before Greece was administered by the ottomans. So it would appear that these are not biological problems, but institutional (cultural and habitual, and political) problems.

Greece is less productive because it’s institutions are poorly paid for by forgone opportunity, because their government is corrupt and bloated, because their people work in unproductive efforts, and because they have no group incentive to work otherwise – and so Greece is poorer because of its instutions. And since germans pay the forgone opportunity cost as well as the monetary cost, they are (rightfully) resentful of it. And the convenient myopia of quants is that they disregard REAL costs of action in preference for visible monetary costs simply because of the ease in which the data can be collected. A convent way of perpetuating leftist ideas – ignoring the majority set of costs in preference of the confirmation bias permitted by the data that’s easier to collect.

As the right always says “we are not against taxes we are against bureaucracy”. The problem is not taxation. It’s the USE of taxes to steal the productive result of forgone opportunity costs : double taxation on the productive which only serves to limit the investment by the non-productive in the bank of forgone opportunity costs, which are, in reality, the primary cost any civilization must pay : behavioral costs. Property itself is a forgone opportunity cost. The more granular and abstract we make our definitions of property the more opportunity that people have to steal it. Objective truth telling is a forgone opportunity cost. Each forgone opportunity for deception and fraud is a high cost. One does not need to be materially wealthy to pay that cost. One simply needs to forgo opportunities to profit from deception. One does not need to be deprived of good pay as a bureaucrat, one needs only to forgo opportunities to charge for one’s services rather than render them at the lowest cost to the beneficiary.

[callout]This is the moral argument for redistribution of wealth: if you conform to forgone opportunity costs, you may receive redistribution from the results of productive ends. But ONLY if you pay your ‘taxes’ in forgone opportunity costs.[/callout]

Or put another way: the secret to the success of the pacifist monotheistic scriptural religions is that they undermine the forgone-opportunity-cost economy via redirection of opportunity costs toward the group-persistence costs of a new social institutions, and away from materially productive institutions. In other words, they are a non-participation rebellious movement, a form of economic tax evasion. (In case this isn’t clear, there are two forms of tax evasion: monetary and forgone opportunity, with the productive classes seeking to evade monetary taxation and the unproductive classes seeking to evade forgone opportunity costs.) This is the moral argument for redistribution of wealth: if you conform to forgone opportunity costs, you may receive redistribution from the results of productive ends. But ONLY if you pay your ‘taxes’ in forgone opportunity costs. In other words: conform or no redistribution. This effectively is the german argument against Greece.

Or more precisely, monotheistic religions are resistance movements and they are what people like Paine advocate: the adoption of a lower cost forgone opportunity strategy that undermines the productivity of the more productive classes, making them subservient to the resistance movement.

Greece needs an austerity program. It needs freedoms to compete disruptively internally, it needs to concentrate its capital on goods that are competitively productive, it needs to improve its infrastructure. It needs a broken window policy of zero tolerance (the place is a dump), it needs regulations on quality (which are underrated as a social institution), it needs better education. But most of all it needs the elimination of a predatory state whose members see their positions as personal property to be exploited rather than a public service to be rendered at the lowest cost to the population.

Leftism is predation on the productive classes. Rightism is too often predation on the non-productive classes. (Productivity being different from labor hours). The issue for any culture is to reduce predation in favor of cooperation, maximizing the productivity of the group in response to other groups. Acknowledging inequality is only acknowledging rarity. we are vastly unequal in our abilities. Therefore we are vastly unequal in our productive capacities. However, we are equally productive in our ability to forgo opportunity from theft or fraud, especially theft by over breeding one’s self into permanent poverty. If you conform to these institutions, then you are PAYING for these institutions, and therefore you are EARNING some amount of redistribution. But if you are not willing to work regardless of the job (as are the Japanese and chinese) and if you are not willing to forgo drugs and violence and theft, and if you are not wiling to forgo the effort of manners and ethics and morals, then you are not worthy of redistribution of the productive gains because you have not PAID for the effort needed to create the institutions that make such productive gains POSSIBLE. We can all equally forgo opportunity.

In this context, Universal egalitarianism is simply another means of predation on the productive classes. Which means predation on the society itself.

Greece needs to pay it’s taxes. It needs to pay it’s forgone opportunity tax. It needs to pay it’s monetary tax on the result of productive efforts. The most important feature of taxes on productivity, is that it incentivizes the government to enforce forgone opportunity costs, for the purpose of increasing productivity. This creates cultural unity, class unity, and competitive advantage for the group.

[callout]And “it is not taxes that are paid, but unpaid” is true. It is the unpaid tax of forgone opportunity cost which is the very ‘charge’ for entering the civilized market, and becoming a citizen rather than a barbarian.[/callout]

Ie: Paine is advocating thievery, economic and social destruction here on a daily basis, by simply replacing the absurd moral arguments of monotheistic scriptural religion with the one-sided absurd argument of economics and egalitarian redistribution of productive gains in order to fund his predation on the productive classes, so that he, and others, do not have to pay the forgone opportunity costs needed to create institutions that permit productivity. Yet another silly religion that is simply a rebellion movement that justifies tax evasion.

And “it is not taxes that are paid, but unpaid” is true. It is the unpaid tax of forgone opportunity cost which is the very ‘charge’ for entering the civilized market, and becoming a citizen rather than a barbarian.

Hayekian knowledge is economic knowledge: it’s an institution. And it’s the most expensive institution we have to pay for.