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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.

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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. )

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Why Are So Many Equatorial Nations ‘Failed States’?

This posting is in response to “Postcards From Hell: Images fom the world’s most failed states” and commentary on The Agitator.

Why are so many equatorial nations ‘Failed States’? “All happy families are the same. All unhappy families are different.” Which means that a lot of things go into making a successful state, and there are a number of reasons why successful advanced cultures develop. And if any one of them goes wrong, a state can fail. Although it will most likely be conquered once it has failed.

And there is one particular reason why most of the failed states are currently failing: the legacy of colonialism.

But let’s look at the reasons why cultures progress differently:

1) disease gradients are higher (safer) in the cold and lower in the warm.

2) physical effort is difficult in hot weather, which hampers the creation of built capital. (Core body temp also affects IQ during exertion)

3) Agrarian cycles in the north encourage cottage industry in winter, farming in spring and fall and war in summer. This creates certain social orders that foster human, built and technical capital accumulation. Compare to the brutal survival farming of the Chinese and their rice.

4) Rivers and sea: rivers in particular provide safe, easy and low cost product transport. The opposite is true: some areas are simply geographically resistant to trade. Europe is gifted with east-west rivers.

5) Unequal distribution of terrain, water, useful plants and animals favors certain regions in agrarian productivity. Mineral deposits favor certain technologies (europe, coal, wood and iron.)

6) Access to trade means access to knowledge, and greater availability of resources and technology. This increases the probability of innovation, and the development of ‘virtues’ as we understand our commercial and moral code.

7) The abstract thing we refer to as social order, that is embodied in accumulated traditions and habits, are the most important and expensive forms of human capital. These habits facilitate the unspoken normative goals of all social and economic cooperation and coordination. We pay for social institutions by forgoing opportunity: the set of things that we don’t do: the opportunities we do not seize. We pay for infrastructure and governance with the results of trade made possible by those forgone opportunities. These institutions include our different definitions of public and private property, manners, ethics, morals and rituals. Manners, ethics and morals are economic codes just as are written laws, most of which, in all of human history, proscribed punishments for violations of manners, ethics and morals. (A vast oversimplification, but an informative one.)

8) The availability of general technical knowledge (how to craft things) and general systemic knowledge (how the natural world operates). We often confuse education with practical knowledge and scientific knowledge. ( The Muslim world is full of Islamic studies which do nothing except perpetuate ignorance. Some of the sub Saharan world is still in the embrace of magical thinking.) Commercial apprenticeship and on the job learning, not education, (imitation of practice) is the primary means of knowledge transfer. Most knowledge (in the USA as well) is political or secular-theocratic rather than useful knowledge. This is the reason the comparative ignorance of our working classes compared to that of europeans.

9) Concordant technologies. Civilizations need to accumulate a greatdeal of human capital by adopting certain technologies before they can adopt others, else these technologies are not disruptive, and do not increase the division of knowledge and labor. Otherwise tyrants simply use it to institutionalize corruption and profiteering. This isn’t any different from children but on a larger scale. If people do not forgo the opportunity to misuse a technology, they will never be able to gain its productive benefits. You don’t give a child a gun.

10) social orders. The west was built by fraternal orders of city/market joint stockholders, partly because of the high cost of equipment and training. This is the source of our republican sentiments, as well as our tools of argument,reason and science. Other societies have not been so lucky. East asia is largely historically oriented. The northern-west is largely future oriented, the greek, greco (southern) italian and eastern block Mediterranean is largely present oriented, and the near east and Indian continent are magically (‘spiritually’) oriented. Social classes have different time preferences, with the highest classes most future oriented, and the lowest classes most present oriented.

11) Political Institutions: what we call ‘rule of law’ is probably the most important for a market economy – because it permits creative disruption and speculation. But more importantly, it requires the ability to concentrate enough power that the political elite can suppress violence in a geography well enough that people can accumulate capital and trade can develop. If trade can develop productivity can increase, and eventually enough extra production can develop that there is something to redistribute to people, first for the purpose of increasing their productivity, and second for increasing the quality of their lives. We avoid discussing the reality of violence, but without the ability to project violence there is no ‘state’. Because that’s what a state is: a territorial monopoly on violence that forces people to use either the market (good) or to become the victims of exploitative totalitarianism (bad).

Now we get to how westerners condemned some cultures:

1) Creating political boundaries and political systems across tribes destroys their ability to create human capital because this uncertainty over-stimulates the need for group persistence and impedes the development of market friendly habits. Thievery and tribal banditry is much easier and cheaper than creating trade and infrastructure. Even today, there is no small sentiment among males that suggests civilization has limited their potential access to mates, and their potential joy, by suppressing their desire for tribal banditry. In certain areas of the globe (in which the USA is fighting) tribal banditry is the primary means of status achievement. And the alternative is the grinding poverty of subsistence farming in an arid landscape. Progress is not always as desirable as it may seem.

2) Colonialism under England was effective in creating stability. In fact the hallmark of the Anglo model is stability. In the entire anglo civilization. In the anglo colonies as well. Stability fosters the accumulation of all forms of capital. If you were colonized by someone else, then you will suffer for it. If you were colonized by the french in particular you will have suffered for it. Anglo social technology is as important as the development of Greek science and reason. That technology, unbenknownst to most of us, is the development of abstract principles that allow calculation and coordination. (Even law is a form of mathematics or calculation. This is a very complex topic for this forum so I’ll leave it at that.). French colonies are a disaster. In fact, the unspoken question is, why were some cultures able to be colonized? It was possible to do terrible things to China via trade, but not to colonize it. And while even the Japanese conquered china, they could not hold or colonize it.

3) Economic interference, and in particular interference by way of charity. This is a hotly debated problem. But individual and local assistance by devoted people seems to make a difference, while insertion of capital is extremely harmful to developing economies that must transform from tribal to market economies. Why we understand that socialism is devastating to economies yet we interfere with primitive and less flexible economies with much less capital, is a mystery of western behavior.

Unpleasant realities :

1) Mystical Religion: Unfortunately, there are also ways to manufacture ignorance. Some religions are regressive. In fact it could be reasonably argued that many are simply dangerous. Some have argued that they all are dangerous. The reason one is out gunned out germed and out steeled, so to speak, is a function of a culture’s willingness to adapt disruptive technologies. Luddites perish. Most of the scriptural religions are Luddite systems of thought.

2) The Problem Of IQ: Despite the objections of the inequality-deniers, the one factual reality that the vast body of people will fail to accept in the face of overwhelming objective scientific evidence: that IQ’s are unequally distributed in different races — and in clases within those races.

3) The Problem of Status and Racism: All people are racist in that they prefer acting within and with their race. And this will never change simply because of man’s need to learn, his learning by imitation, and his desire to learn from those he most easily can imitate, and his need to identify WHO to imitate. And the consequential need for visible evidence of status in order to choose who to imitate. Status is a necessary epistemological property of human existence. We cannot exist without it.

4) Mate Selection: The hard reality is that women are hypergamic (marry up). This reality is made more complex because men have a wider IQ variance than women, who are more centered around the mean. This situations presents men with the need to compete for mate selection, while women are increasingly selective about their mates, until they reach a point of either opportunity or resignation. (ie: more women are forced to ‘settle’ than are men.) Furthermore, this status economy requires a diverse range of status symbols within each race and class that inform the eternal search for demonstrable differences in status. Furthermore, this means that within races and within classes, except at the margins, greater status is available WITHIN race than without, and therefore people are incentivized to prefer to act and associate within their races.

Racism is as permanent as is classism. The dirty secret of the human genome project is that class is genetically determinant. While economic classes are semi randomly plastic, social classes (which are readily evidenced in the postings on this and other blogs) are decidedly inelastic. (spoken as a member of the upper middle class).

Furthermore IQs are different in consequence between groups. A white, Jew or east Asian with a 60 IQ is perceptibly broken. A sub saharan African is not – he or she just has a higher barrier to the learning of abstractions. But otherwise is perceptibly healthy.

And IQ distributions affect what can be invented, what can be produced, and what can be maintained in a society. In general, To maintain machines requires an IQ of at least 105. To get a liberal education requires an IQ of 110. To design machines requires an IQ of at least 122 . To design abstractions requires an IQ above 130. To innovate upon a system of thought requires, it appears, an IQ above 140. Everyone else simply uses the tools created by others. It is demonstrably true that the top quintile has more influence on productivity of the society than all the rest combined. And it is the number of people with these IQ’s in the population who are educated enough to employ them, in a society with sufficient capital and division of knowledge and labor to make use of their talents. (For this reason, a capitalist china should rule the world in productivity simply because they have so many people above the mechanical threshold, and so much of the population can participate in complex production.)

Since all societies are run by minority elites (even ours) the composition of elites in government, speculative intelligence and innovation in the middle classes, and capable mechanics in the proletariat determine the competitive rates of innovation and change in a society.

Despite Racial, national, and class differences in IQ distribution, it does not take a genius to run a market economy. As our pliticians demonstrate daily. What is important is that in any sufficiently large body of people exist sufficient numbers to adopt the rule of law, the institutions of trade, and some form of capital production. The problem is one of numbers: getting the barbarians and potential corrupt bureaucrats to forgo opportunities for personal gain in order to fund the development of their human capital. The problem of coordinating production in a division of knowledge and labor requires a great deal of sacrifice.

It is the is a sufficient set of principles govern the progress and adaptability of cultures.

As other readers have commented, colonialism is perhaps the greatest determinant today of the relative state of failed nations.

I hope this was helpful in providing food for thought.

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Who Was Hayek, What Are Austrians, And Why Should I Care? (In 1500 Words)

On Old School Economics, someone asks:

Can anyone summarize the basic tenets of this school of economics and what are Hayeks contributions? I’ve been looking all over the place and have found some websites that are a bit confusing so if you could make a list, it would be helpful.

Hayek is one of a line of Austrian thinkers. The term ‘Austrians’ was originally, like ‘capitalism’, derogatory: meaning essentially ‘those quaint hicks’.

Austrianism is a micro-economic (versus macro), rhetorical (versus mathematical), approach to political science and economic theory. This approach suggests that we can analyze the behavior of individuals in economic affairs and from that deduce the best macro policy. It assumes (Like all systems of natural law) that people are not terribly plastic, and that they will ‘always act as humans with self interest’ and that we should enact policies that work in tandem with human behavior rather than trying to change human behavior.

[callout] The Austrians used insights gained from calculus (the relative movement of bodies) to create the principle of ‘Marginal Utility’ (wherein each unit of a group of resources changes in value to the owner as they are sold) and the ‘Subjective Theory Of Value’, wherein the value of an object is in what others will pay for it, thus explaining the essentially speculative, and therefore unsettling, nature of capitalism. [/callout]

Historically, the Austrian school is a German reaction to the English school’s theory of value. The English (and then marxist) schools, embraced the Labor Theory Of Value, wherein the value of an object has to do with what work went into it. The Austrians used insights gained from calculus (relative movement of bodies) to create the principle of ‘Marginal Utility’ (wherein each unit of a group of resources changes in value to the owner as they are sold) and the ‘Subjective Theory Of Value’, wherein the value of an object is in what others will pay for it, thus explaining the essentially speculative, and therefore unsettling, nature of capitalism. This theory created a much more complex world of things for economists to measure: if all values are subjective, and if each unit of a resource has a different value, then the world consists of an infinite number of unique objects whose value cannot be known until it is sold, and our attempts to measure them in real time are limited to our ability to make wide generalizations and averages about the economy.

After these initial insights, Austrians also contributed to theories of money, trade cycles, business cycles, and in particular theories of money and interest. But they all depended upon the basic innovation: relativism (like Einstein’s relative motion of bodies) and therefore subjectivism – again, the application of calculus to human affairs. (The depth of this cognitive insight into the nature of relativism might not be apparent to most people, nor the complexity of created by it. Pi For example is forever inaccurate because it is an approximation of an infinite number of triangles. It’s insolvable using the technology of mathematics as we understand it. Economics to some degree, must make similar averages and assumptions and there is simply no way around it. In fact, the only measure of what we may do, is what we did. There may be no mathematics to explain our economic activities other than the record of our economic activities, because we invent the future, we don’t discover it. )

Austrian theory, which explained the workings of money and information in the market economy, provided the analytical and mathematical methodology with which to argue against the socialist’s attempt to revert from the increasingly complex relativistic market economy to the simplicity of the predictable the village economy.

Hayek contributed to this body of economic and political theory in a range of areas. But he is particularly read for his application of the limits of knowledge to political and economic systems. These limits of knowledge are embodied in three essays. They are easy to read. And you can read them a hundred times and learn from them on every reading.

1) “Economics and Knowledge”
2) “The Use of Knowledge in Society”
3) “The Pretense of Knowledge”

(To which I would add one more “Coping with Ignorance” and another by Karl Popper: “sources of knowledge and ignorance”. THey were friends and popper’s essay is insightful. )

And after reading those, the one book he referred to as a ‘pamphlet’: “The Road To Serfdom”.

[callout]One critic has stated that “all of Hayek can be understood in a few essays”. Which is true. Of course, all philosophers can be reduced to one insight. However, his insight is profound.[/callout]

One critic has stated that “all of Hayek can be understood in a few essays”. Which is true. Of course, all philosophers can be reduced to one insight. However, his insight is profound.

Along with Ludwig Von Mises, Hayek helped undermined the advance of socialism in what was called the ‘Socialist Calculation Debate”, in which he and Mises argue: first, that as populations increase and specialize in a division of knowledge and labor, the knowledge needed to coordinate production in time is so vast and so rapidly changing that it is impossible for a central authority to obtain and use that information. Second, that prices are the vehicle by which we communicate and coordinate with one another and by destroying prices you destroy that ability to coordinate our activities. Third, that without prices and competition there is no incentive for people to participate in ‘problem solving’ necessary for efficient production, and instead, production will atrophy through entropy. Fourth, that people will simply turn to recreating the price-market in the form of a black market. There are an infinite number of additions to this list, but the central themes are the same: we must increasingly coordinate our actions in increasingly large numbers, producing increasingly complex goods using increasingly fragmentary knowledge. And that without these tools we cannot coordinate our activities.

For most of his career Hayek was unhappy that ‘The Road To Serfdom’ was so well respected compared to his more ‘scientific works’ as he put it. But he changed his mind later in life.

We should note that Hayek’s ideas are not arguments against redistribution or redistributive public services, so much as arguments against interference in the market economy, and the necessity of using the market economy to provide services. The contemporary reader may not understand that the scope of socialism has changed from one of outright management of the economy to incremental management of the economy. Others have followed Hayek and stated that the behavior of people in a bureaucracy is the problem, not necessarily government itself, when we see government as limited to the use of ‘earnings’ for the provision of public services. Others have theorized that the entire state can be privatized as it was under the large monarchies and can accomplish the same ends. And it appears that this might be true.

Hayek’s strengths are also his weaknesses: he was a polite gentleman, and thus his arguments are often ‘softly spoken’. WHen he refutes someone else, he assumes that they are making a simple intellectual error and that he’s helping them correct it. He assumes all men have the best of ambitions. And in doing so does not expose their motivations. In particular he did not refute Keynes, who simply gave socialism a nicer name, and allowed government to change it’s purpose to that of reducing unemployment and increasing redistribution from that of creating competitive capital, and changing society from a system of saving for the purpose of inter-generational lending, to one of consumption and inter-generational dependence.

This gentle conservatism perhaps limited the scope of his theory. But for whatever the reason, his theory was too limited. Among all theorists back to Hamilton and Jefferson, Hayek came the closest to solving the problem of political economy in an industrial society: but failed. He gives us warnings about what not to do, and why not to do it, but despite his efforts, he failed to tell us what we should do. Or at least, he failed to sufficiently innovate such that we could implement a society that would preserve our anglo-saxon ‘rights as englishmen’: those rights and obligations as a fraternal order of peers participating in a republican self-government operating a market economy. Which is really what the conservative movement is, and always will be, about.

[callout]he failed to sufficiently innovate such that we could implement a society that would preserve our anglo-saxon ‘rights as englishmen’: those rights and obligations as a fraternal order of peers participating in a republican self-government operating a market economy. Which is really what the conservative movement is, and always will be, about. [/callout]

He tried to solve the problem of political economy in the industrial age, but he failed, along with Mises, Popper and Parsons. Socialism is not an innovation. It is Luddism: the attempt to make comprehensible a market economy, which exists precisely because it is so complex and incomprehensible that we must use the pricing system and a division of knowledge and labor to administer it. But that does not mean we know how to govern a complex and diverse empire using the traditional republican methodology of opposing powers using debate and consensus over abstractions and an unaccountable legislature relying on intuition and hearsay because the numbers that they have to work with are of such imprecision and speculation that they are meaningless. And when, under fiat paper money, they are not limited by the opinions and willingness of others to comply with their ambitions.

Republicanism is a methodology for operating the extended family we refer to as the city-state in a hard-money economy: people with shared economic incentives and shared values.

[callout]Republicanism is a methodology for operating the extended family we refer to as the city-state in a hard-money economy: people with shared economic incentives and shared values[/callout]

We have not yet solved the problem of Imperial Government under Fiat Money. Hayek thought too small and failed us. The libertarian answer is a Luddite response as well: either reduce government and our states to city states (classical liberals) or fully embrace a market government (Rothbardian-Hoppian Anarchists). And so far, we are left with creeping socialism and no sufficient answer to the problem of preserving our freedom from within competing empires.

These articles can be read at http://hayekcenter.org/?page_id=11.

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A Tiff : Hoppe and Tom Fleming and My Response

Hans Hoppe posted what I thought was a sentimental statement on the five year history of his movement on the libertarian web site VDARE. It’s titled The Property And Freedom Society—Reflections After Five Years

In this article, he gives us his interpretation of the history of his organization, the Property And Freedom Society. (of which I am a member.) It describes, as all members of these political groups tend to, the reason why the conservative and liberal wings broke up at The John Randolph Club: they were based upon a relationship between Murray Rothbard, a libertarian, and Tom Fleming, a conservative. And after Rothbard’s death, the society broke apart because there was no replacement for Rothbard that could work comfortably with Fleming. There is no mystery here. This is how the partnership process works. When one partner dies, the remaining partner tends to hold onto the previous set of commitments, and the new partners want to be seen as new peers, and to write new commitments.

[callout] I care that my waiter is pleasant. I care that my intellectuals are either correct or insightful. [/callout]

However, Hoppe states that Tom Fleming is ‘a difficult person’. Which is not just hoppe’s opinion, but pretty much everyone else I’ve mets opinion. And I’m not sure it’s an insult. I know I’m considered difficult by plenty of people. Intellectuals are rare, and for them, the unsophisticated are often a lot of work to deal with – it’s just frustrating. Coming to terms with people who have different metaphysics from you, is awfully hard work, and very painful at times. It’s just irritating. And these petty realities are just part of the problem of being a human being. I think Tom has done good work. I think a lot of people think he’s difficult. I think a lot of people are put off by Hoppe. That doesn’t matter to me. I just want to know if they’re right or not. I care that my waiter is pleasant. I care that my intellectuals are either correct or insightful. Their manners are immaterial to me.

Tom’s response only served to confirm Hoppe’s statement. The title says it all Hans Hoppe Welcomes You to his Fantasy Island

Now I’ve only met Tom I think once, and I’m not sure where it was. And he seemed an intelligent and civil guy. But, I was kind of thrown by his response. You should read it.

Myself, I am over-reactive on purpose. I found that as a rhetorical device, false-hostility will give your opponent incentive to invest in, and stay with a complex argument — and that when you’re done, and get to agreement it’s more satisfying. I learned it from watching Friedman, who never gave in. And I supposed I picked up some of it from Hoppe.

[callout]false-hostility will give your opponent incentive to invest in, and stay with a complex argument[/callout]

The comments, per usual, are more interesting than the author’s post.

My Response below is visible at Chronicles Magazine here.

This is a very interesting series of posts to read. I’m a supporter of both LVMI and PFS. (I have given them money.) I’m probably one of the most literate members of the faction in the private sector. And I agree that it’s a tough crowd to spend time with. Yes, it was extremely difficult to get past the doctrinal attitude and Randian cultishness that you are complaining about in order to understand and make use of the philosophical content that’s in their line of thinking. What made it worthwhile was the number of answers provided by them, and the vast amount of effort they put into educating people of all stripes that made it easy to become involved in this branch of the history of ideas.

[callout]I have never found Hoppe’s theatre anything other than entertaining[/callout]

First, I don’t really care about someone’s rhetorical posture. I have never found Hoppe’s theatre anything other than entertaining, and have found him helpful and a good mentor if you’re worth his time – which I can count on having received in seconds or minutes at best. And if you accepted praxeology (I don’t for technical reasons having to do with closed systems of logic – and praxeology is a subset of behavior and so it’s a falsely closed system) you’d also look at the world as Hoppe does: if you disagree you’re just wrong because it’s logically impossible to disagree. I am pretty certain he actually believes it. And I have never pressured him on any point and found anything other than honesty underneath his posture. This posture is an incredibly effective, controversial, and therefore valuable, rhetorical device. But it’s important to understand that it’s a rhetorical device. Every single TV Producer understands this, or we wouldn’t have talking-head shows to entertain ourselves with. Part of his knowledge base, (as was Friedmans and Rothbards) is this somewhat intentionally antagonistic posture. It undermines the opposite posture: opting out of the argument. Again, this is an ancient rhetorical technique in the european model.

In fact, I suspect that the members of this blog, who have left comments above, do not understand the emotive rhetorical device they themselves are using. Or rather, that Hoppe is baiting in order to obtain engagement, and most of the comments above are attempting to force methodological conformity derived from assumptions of equality under the civic republican tradition – the presupposition of majority sentiment rather than superiority of ones argument. While I’m not certain, Hoppe’s method may in fact, be the only device possible to use against the method that you’re using.

And I think you’re relying upon that sentiment rather than the veracity of any argument you possess. I don’t think that needs to be the case. I think that your method lacks an analytical foundation and you’re stuck between a desire for positivist solutions to unarticulated moral problems, and relying upon majority sentiment and tradition as an argument. (WHich is the default human position in any field of endeavor.)

[callout]Hoppe, Rothbard and Mises have fallen into, or intentionally embraced, a logical Godelian trap in an effort to find a pseudo-scientific device with which to fight the pseudo-scientific positivism underlying the rationalizations of democratic socialism.[/callout]

Unlike your majority position, I think Hoppe, Rothbard and Mises have fallen into, or intentionally embraced, a logical Godelian trap in an effort to find a pseudo-scientific device with which to fight the pseudo-scientific positivism underlying the rationalizations of democratic socialism. So while they have advanced the body of thought, they have failed to date. Hayek failed as well, at least, to make a strong enough argument, because he relied too much upon psychology rather than calculation — and the two wings of theorists failed, (Along with Talcott Parsons) to actually uncover the problem.

Despite these failings, as a research program the Anarchists have proved very fruitful. While Rothbardianism is flawed, for technical reasons this group members would not understand without quite a bit of unwilling-and-skeptically-expended effort, the structure of Misesian, Rothbardian and Hoppian argument is a strong analytical foundation for discussing what have been, for all of the history of thought, undefinable abstractions. [callout]Hoppian argument is a strong analytical foundation for discussing what have been, for all of the history of thought, undefinable abstractions.[/callout]

They haves provided an alternative framework (property and calculation) to the process of balance-of-powers-through-debate, which is the technology of republican government. Or rather, they have show that WITHOUT reliance on a calculative framework, that rhetorical debate devolves into either error or fraud. They see property as a moral argument rather than necessary argument – and they do so because they failed to articulate the full spectrum of human behavior by relying on the easy-epistemology allowed by the records left from the exchange of money. They did not include the invisible institutional economy of sacrifices that people make by NOT doing things with their property, their time, their bodies and their money. I suspect the Misesians make these errors because they are a little too enamored of infinite property rights — a bias which stops them from seeing and articulating the limits of property rights, and how those limits can be calculated. (Calculation being necessary when time, permutation and content are beyond human perception without such tools.) And I suspect that they intuit, if not understand, that if they did explain that full spectrum of human action, that they’d be confronted with the necessity, rationality, and morality of redistribution and public services.

[callout]Rothbardianism and Misesianism are an attempt to create a luddite religion based upon trade, rather than a technical political order based upon land holding, trade route holding, market participation, coordination, calculation and adaptation.[/callout]

Rothbardianism and Misesianism are an attempt to create a luddite religion based upon trade, rather than a technical political order based upon land holding, trade route holding, market participation, coordination, calculation and adaptation. I suspect that this is simply an unconscious attempt to justify the Jewish maternal minority sentiment that comes from non-land-holding disaporic people, as opposed to the european majority fraternal sentiment of land-holding soldiers. These are sentiments, derivations and residues that we rarely if ever understand of ourselves. This Misesian and Rothbardian jewish wing is in direct contrast to the Hayekian and Christian wing’s sentiments of group persistence in order to be able to defend and hold land, and in holding and defending land, hold and defend markets and trade routes. These sentiments are the underlying difference between the Jewish and Christian wings of libertarianism: jewish reliance on words and systems of though and christian reliance on the republican and militaristic models of land holding. We cannot escape our Hayekian knowledge no matter how hard we try. and in turn, these two libertarian programs are attempts to find a solution to the problem of maintaining freedom and prosperity without having to confront the reality of the necessity of using violence to retain that freedom – when that freedom originated uniquely in the west precisely because it was obtained by, and held by, violence. In other words our political dialog is distracted by the contra-rational desire to ignore the necessity of using violence to retain sufficient power to retain freedom. [callout]our political dialog is distracted by the contra-rational desire to ignore the necessity of using violence to retain sufficient power to retain freedom.[/callout]

The question remains which wing of classical liberal thought, whether it be the ‘liberal’ factions or the conservative factions, have made progress in articulating a framework for political economy once the epistemological boundary conditions imposed on the republican model by hard money were broken by the adoption of fiat money. The Austrian prescription is a return to the gold standard. Which is wrong, because the insurance provided by fiat money, or at least, paper money, is too valuable to ignore. This is simply the only solution that they can think of – and since they’re economists rather than information architects, they fall into a selection bias.

We must understand that Misesian and Rothbardian thinking is that of luddites, just as was Marx – they are trying to return to a technology they understand without understanding why it’s necessary and what alternatives that there may be. These regressive ideas are conservative solutions — historical solutions to a problem of increasing individual participation in a market consisting of larger and larger numbers of people with increasingly localized and fragmentary knowledge, and operating in real time, in order to exploit opportunities that present themselves because of necessary and permanent asymmetry of information in a large population engaged in diverse production.

The gold standard It is not the only solution. There are others. There is a very good one in particular. But you cannot understand that solution unless you understand the value of the methodology used in the Misesian, rothbardian, and hoppian models, and the limits of knowledge brought to bear by Popper and Hayek.

This information-weakness in our existing political and economic institutions is the underlying problem of political economy with the civic republican model — If you can fathom it from the few and admittedly abstract words I’ve posted here. The problem is one of practical epistemology that allows experimentation and innovation without exposing us to the risk of human hubris on one end, and corruption, theft, and slavery on the other. [callout]The problem is one of practical epistemology that allows experimentation and innovation without exposing us to the risk of human hubris on one end, and corruption, theft, and slavery on the other.[/callout]

And debates like this one over form and protocol, manners and arrogance, are frankly beneath me, and should be beneath anyone who is concerned about discovering real solutions to the problem of political economy. Both sides of this dispute, from my standpoint, are simply acknowledging their failure when they rely upon ideological, methodological, or rhetorical conformity as a means of argumentative discovery of the solutions we seek. All I read into Hoppe’s piece was sentimental reflection, and tame taunting elitism. Perhaps this is one of those debates among academics that is so important precisely because the stakes are so small. And I don’t think the above retort does much to disprove hoppe’s taunt. The tactical response would be to tease him and therefore disprove him rather than reinforce his position.

And the real argument here is that everyone within this absurdly minority movement, just like all desperate little academic movements, is that it’s desperate for followers. And not operating logically, but instead, using silly socio-political tricks because we’re all desperately seeking confirmation biases in the face of a problem we cannot comprehend, rather than understanding each other’s position and desperately seeking a solution to political economy. Libertarianism is a fantastic research program within the branch of conservatism. And the world needs the movement simply because conservatives have failed to muster and articulate a rational and technical alternative to encroaching socialism. Historicism is insufficient because HISTORICAL MODELS FAILED. EACH OF THEM FAILED.

The Austrians and Anarchists are very close to providing a rational solution to political economy. I suspect that they (myself included perhaps) will fail for the same reasons that this silly dispute of egos and manners illustrates.

Even if someone were to publish an essay with the solution in it, and the truth of it were patently obvious, I would venture that everyone in every faction would desperately seek to use whatever content was inside that essay to justify his own position in order to keep his followers or demonstrate that he was right all along.

Hume told us what the problem is. Kant failed to find a solution. A legion of political economists have spent a hundred and fifty years trying to find an answer. They came closest in the 1930’s. But Mises, Hayek and Parsons failed, just as Weber and Pareto failed. And because they failed the political sector reached out to Friedman, which provided a temporary solution even if it was the wrong one, and Hayek, because his sentiment was correct even if his solutions were faulty. The conservatives hoped to get enough people into the property society that they could counteract the dependence society. But they used general liquidity (cheap money) rather than direct investment, and so the money was used for consumption not innovation and increases in productivity. The liberals, having converted us from a saving to a debt society, the conservatives hoped to alter it, but only accomplished further indebtedness. Only the libertarians have attempted to reconvert us to mans greatest innovation: the saving and investment society. [callout]Only the libertarians have attempted to reconvert us to mans greatest innovation: the saving and investment society.[/callout]

But the way we solve our political problem is not debt, or even monetary policy. It is to create an innovation over the greek city state and the roman empire and the anglo mercantilist and american consumer republic. And to understand why we need to innovate beyond that model: the limits of human perception in a complex division of knowledge and labor. And that when we break with hard money, AND at the same time pool information (accumulate quantities in categories using numeric values of abstract objects we call property) we launder the necessary causal information needed to make rational decisions. And in doing so we also remove the incentive for people to obtain and hold that information, and to be disciplined and truthful in their valuations. The information needed to evaluate Property cannot be embodied in numbers. It’s a perishable not conveyed by the number. Numbers and values are subjective judgements, not objective truths. This is the error of both liberal positivists and the general political fantasy of scientific politics sought by the socialists. [callout]The information needed to evaluate Property cannot be embodied in numbers. It’s a perishable not conveyed by the number. Numbers and values are subjective judgements, not objective truths. This is the error of both liberal positivists and the general political fantasy of scientific politics sought by the socialists.[/callout]

The solution is to fix our institutions of banking and accounting, so that we possess sufficient information to make rational decisions under the economically stable civic republican model. This change in institutions is a technical problem, not a philosophical, religious or cultural one. And as a technical problem, it is a solvable problem. It does not ask anyone to ‘believe’ anything. Faith is not a strategy. Hope is not a tactic. As weber said, all advancement in institutions is calculative.

[callout]it is bureaucracy that is a danger to us, not government.[/callout]
The second half is to understand that it is bureaucracy that is a danger to us, not government. A bureaucrat lives outside the market, as does a priest, a politician, a union laborer, or a welfare recipient. They are no different – they are class descriptions of the same behavior. But government is the means by which we concentrate all forms of capital. It is a joint stock company whose membership is paid for by respect for property rights, and frankly, whose dividends are paid for in public services and redistribution. The problem we enter into is when public services become the purpose of government, rather than the concentration of capital necessary to provide the joint stock company with competitive economic advantage so that there are returns great enough that redistribution can be performed in one form or another. Aside from the transforming from the saving society to the debt society, the transformation of government from creating wealth to consuming it is the artifact of the 20th century. It is far easier for the houses of government to debate over spoils, than it is to debate over the creation of prosperity so that it can distribute the spoils. [callout]Aside from the transforming from the saving society to the debt society, the transformation of government from creating wealth to consuming it is the artifact of the 20th century.[/callout]

The anarchists are working on solving, and have largely solved, the problem of bureaucracy. And the solution is not anarchy. The solution is privatization of the bureaucracy, and the improvement of our institutions such that the knowledge that was provided by individuals THROUGH hard money, can be provided by individuals through shared investment in borrowing from the public’s future commitments in exchange for mutual gain, while retaining accountability, and with those who are willing to be accountable because they possess knowledge by which to make rational decisions. Under this model, the government may make rational decisions about investments, and we are protected from enslavement by either debt or the bureaucracy.

This is too much content for a posting, too poorly articulated for the scope of the problem. But I was trying to put the different factions into a context so that we could focus on the real problem: finding an answer to providing institutions that deliver both freedom and prosperity.

And for my side, I consider Hans Hoppe a gift to all of us. He’s innovative, creative, pedagogically gifted, and most of all, funny.

Uncategorized

Save Bradley? Maybe.

Save Bradley. The soldier who leaked the video to Wikileaks?

Sorry. No dice.

People die in war: People kill intentionally in war. All sorts of people die by accident in war. Guilty people die by accident. Innocent people die by accident. Innocent people die because of bad information. Innocent people may die simply because someone used poor judgement. War is dangerous, messy, confusing, frightening, and largely conducted by people who are dehydrated, frightened, under extreme stress, operating largely by instinct and without the time to think, and who are physically and mentally exhausted. Only very silly people think that war is surgical, or manageable, or nice or neat or safe — for anyone at all. And some people are foolish enough to think that soldiers have time to make good judgements. War is scary, dangerous and risky. Thats why people are very cautious of it. And besides that, it’s dangerous for soldiers to behave as if everyone isn’t out to kill them.

[callout]As a soldier, you are a voluntary, paid, and willing participant in killing, breaking, destroying life and property. And if you don’t believe in it, then you better not join. Because when you join, you give up your right to have an opinion.[/callout]

As a soldier, you are a voluntary, paid, and willing participant in killing, breaking, destroying life and property. And if you don’t believe in it, then you better not join. Because when you join, you give up your right to have an opinion. That’s how it works. And you’re just trying to steal a paycheck and benefits, or operate as a saboteur if you enter the military without understanding that this is the very purpose and nature of war.

We grant soldiers certain special rights when the enter the military. In particular, we allow them to kill people and destroy property. We allow them to do what we allow no others to do. And in exchange for that special right, they lose the right to have an opinion. Just orders are easy to understand. Unjust orders are not. The problem isn’t just or unjust orders. It’s the very fact that there is nothing just or good about war. It’s just war.

[callout]Immoral orders are one thing. Your choice is not to obey them, resign (accept court martial) and let the military court accept it. That’s the method the military has had for centuries. Accidents, bad judgement, stupidity are part and parcel of war. There isn’t any crime in error, any more than war itself is simply terrible[/callout]

Immoral orders are one thing. Your choice is not to obey them, resign (accept court martial) and let the military court accept it. That’s the method the military has had for centuries. Accidents, bad judgement, stupidity are part and parcel of war. There isn’t any crime in error, any more than war itself is simply terrible.

If you want to leak something, become a journalist. We grant journalists very special rights that we would not grant others. Journalists are more often wrong than write, and create as much bad as good. We simply think the good is worth the bad. If you want to be a journalist, then be one. A journalist’s job is to have a point of view. A soldier’s job is to break stuff and kill people until the other side gives up. Period.

[callout]If you want to be a journalist, then be one. A journalist’s job is to have a point of view. A soldier’s job is to break stuff and kill people until the other side gives up. Period.[/callout]

Besides. Telling us that people died by accident, or because someone made an error, or even lost their judgement during a military exercise, is simply stating the obvious. That’s what happens in war. And so the only reason to leak it is to create propaganda for the enemy, and undermine the will of the citizens to support their military.

Supporting the military may be a grand game. No one wants to see sausage made. But when you sign up, that’s what you sing up for. And if you break that confidence, those rules, from the inside, then you’re just thief and a criminal, and you deserve to be punished to the fullest extent possible.

Now assuming that he leaked it because he’s a young, stupid kid who had not motivations other than to show his friends something cool, is very different from having some cause or purpose. One is bad judgement, one is treason. That’s for the military courts to decide.

Uncategorized

NYT On Libertarianism

The NYT posted an article today titled The Economics of Libertarianism, Revealed. And the usual NYT crowd followed with critical comments. Which is useful. Because we get to see what the proletariat think of a subject about which they know little to nothing.

This is a very odd set of comments. Heresay on one end and incompetence and error on the other.

Desipte that libertarianism is the most fully articulated political philosophy we currently possess, it is both incomplete, its authors mix semi-charismatic language with reason, and they start from a convenient and erroneous premise: non-violence. And thereby simplify the problem of political economy dramatically enough that they overstate the ease of attaining their goals.

As a theorist in this field, I’ll try to correct some statements made here:

1) there are a numberer of libertarian sects. They share a preference forindividual freedom and property rights. But they vary greatly from a branch of articulated classical liberalism (cato – english sentiments) to articulated conservatism (hayekians – german sentiments) to articulated radical anarchists (rothbardians – jewish sentiments). You cannot take ‘libertariansim’ as a coherent body of work. Or better stated, you cannot take the words of any thinker at face value: most if not all human debate is an attempt to find a rational explanation for sentiments. And sentiments are residues of our cognitive biases. (Pareto)

2) Libertarianism is NOT anti-government it is anti-bureaucracy. This is the issue that confuses everyone by incorrectly framimg the debate. The terms Government and Bureaucracy are not synonyms. And libertarians are both right, rational, and supported by data when they argue against bureaucracy. It says that humans in bureaucracies (whether private or public) once they become insulated from the market and prices, live by self interest without the market function that puts their self interest to good use in the service of others. It is possible to live a life outside of the market by the homeless or hippie lifestyle, by making enough money to live on your wealth alone, or by joining the bureaucracy and simply living off the efforts of others, and ignoring their signals – prices.

The underlying theory of libertarianism is a) economic calculation is competitively impossible without prices and the market. b) market incentives are necessary to create a prosperous advanced society. c) our cultural institutions are economic strategies that, much like our sentiments, we do not yet fully understand and they should be treated cautiously. Most importantly, our most cherished values are often false: people are unequal, cultures are not equal in value, diversity breeds discontent not happiness, people are racist, classist and culturist, and it’s in their interest to be so, even if it is not in their interest for legislation to be so. (Really.) d) Leglislation as we understand it is infereior to credit as a means by which we can change the behavior of people in a society. We must move from the law-society to the credit society, and our government is not organized to make that change, while the private sector is. Therefore we must push our ‘bureaucracy’ into the private secctor where the market will kill off organizations once they are no longer useful. e) insurance companies taht are highly regulated will do a better job than the governmetn of regulating most market activity. But we have over-corporialized both banking, insurance and management. In simple terms, your banker should personally back your loan, and not be able to resell it. Same for insurance. This is a complex topic but we cannot abstract all accountabilty without losing the knowledge to be accountable with in the process. f) All bureaucracies are anti-market, anti-prosperity, self-serving, eventually corrupt, and stagnate the culture and prey upon the citizenry. The market puts our selfishness to better use than the bureaucracy does. It’s that simple.

The libertarian strategy is to push as much of the FUNCTON of government into the private sector where iti is subject to competitive market functions so that we can prevent the bureaucracy from forming. Because it is the bureaucracy, or, the market-exiting of people within the bureaucracy that is the problem, not government.

None of the libertarians is right, word for word. They are attemtping to find a solution to a perrenial problem: coordinatoin and ocoperatin in a dynamic dividsion of knowledge and labor. They intuit solutoins based upon their cultural heritage then try to articulate solutions in a long term, vast attempt, to explain what it is that we do, and why it works. We’ve had markets for a long time. Economits don’t invent anything. They just try to explain it the best they can.

Libertairnism is the best, most fully articulated political philosophy we have. But that does not mean it can be implemented without an ‘event’. Because our government is not structured to replace itself. And the citizenry will always favor democratically imposed tyrrany, commonly called Bonapartism, and teh certainty of it, over freedom.