Archive for December, 2011

Classifying People By Their Government Rather Than Occupation Simply Justifies The Expansion Of State Power

Wednesday, December 28th, 2011

Today, Krugman yet again argues that there is a lack of demand.

Yes, there is a lack of demand, I agree.

There is a lack of demand because our lower classes are unproductive in comparison to their peers in the world. There is a lack of demand for their labor. Since there is a lack of demand for their labor, there is a lack of money for them to spend.

A state is merely one means of classifying people, and it’s a convenient one for statists, whose only purpose is to justify expansion of the state.

In a world of relatively free trade, people are citizens of their occupational sector.

The American upper classes have moved ahead with the rest of the world economy, and the American lower classes have not.

And the reason for that failure is state policy, and in particular, state policy on education.

State policy on education is more concerned with achieving political unity between disparate races and cultures than it is in creating productive citizens who can compete in the world market, and therefore create demand.

Harrison Bergeron writes for TheTimes.

Four Reasons For The Long Term Decline In Violence

Sunday, December 25th, 2011

Regarding Pinker’s new book on the decline in violence in the world over time.

I would argue that there are the following reasons for the worldwide decline in violence.

1. The Abstraction Of Property
Stated by an unnamed commenter on The Economist: Odd that no mention is made of the most obvious point: that when one can abstract wealth (for example, into bank accounts and physical property) violence declines proportionately. In some parts of Africa where wealth is largely a function of how many cattle one has, violence is quite prevalent. This is because wealth can be captured by violent means – the risk/reward ratio is favorable. But in the West, what can a mugger hope to get? A few pounds or euros or dollars. The victim’s wealth is largely inaccesible. So only the most desperate resort to violence – far better to become a Wall Street banker and steal billions quite legally without needing to use any physical force at all. The correlation between violence and the abstraction of wealth is well understood so the omission of this fact is quite surprising.

2. Increases In the Likelihood of Punishment.
Contrary to liberal desires, it turns out that longer, and harsher sentences are in fact a deterrent. That’s the data. That’s the fact. Plain and simple.

3. Increasing real wealth
Obviously a deterrent.

4. Cheap Entertainment
A bored male is a dangerous thing.

List of 20th Century Genocides

Sunday, December 25th, 2011

The worst genocides of the 20th Century (160 million killed)
– Mao Ze-Dong (China, 1958-61 and 1966-69, Tibet 1949-50) 49-78,000,000
– Jozef Stalin (USSR, 1932-39) 23,000,000 (the purges plus Ukraine’s famine)
– Adolf Hitler (Germany, 1939-1945) 12,000,000 (concentration camps and civilians WWII)
– Leopold II of Belgium (Congo, 1886-1908) 8,000,000
– Hideki Tojo (Japan, 1941-44) 5,000,000 (civilians in WWII)
– Ismail Enver (Turkey, 1915-20) 1,200,000 Armenians (1915) + 350,000 Greek Pontians and 480,000 Anatolian Greeks (1916-22) + 500,000 Assyrians (1915-20)
– Pol Pot (Cambodia, 1975-79) 1,700,000
– Kim Il Sung (North Korea, 1948-94) 1,600,000 (purges and concentration camps)
– Menghistu (Ethiopia, 1975-78) 1,500,000
– Yakubu Gowon (Biafra, 1967-1970) 1,000,000
– Leonid Brezhnev (Afghanistan, 1979-1982) 900,000
– Jean Kambanda (Rwanda, 1994) 800,000
– Saddam Hussein (Iran 1980-1990 and Kurdistan 1987-88) 600,000
– Tito (Yugoslavia, 1945-1987) 570,000
– Sukarno (Communists 1965-66) 500,000
– Fumimaro Konoe (Japan, 1937-39) 500,000? (Chinese civilians)
– Jonas Savimbi (Angola, 1975-2002) 400,000
– Mullah Omar – Taliban (Afghanistan, 1986-2001) 400,000
– Idi Amin (Uganda, 1969-1979) 300,000
– Yahya Khan (Pakistan, 1970-71) 300,000 (Bangladesh)
– Benito Mussolini (Ethiopia, 1936; Libya, 1934-45; Yugoslavia, WWII) 300,000
– Mobutu Sese Seko (Zaire, 1965-97) ?
= Charles Taylor (Liberia, 1989-1996) 220,000

Honduran Experiments In Creating The Libertarian Paradise

Sunday, December 25th, 2011

Over On The Economist, an unnamed author writes that the Hondurans are sponsoring a libertarian experiment:

, libertarians have a real chance to implement their ideas. In addition to a big special development region, the Honduran government intends to approve two smaller zones. And two libertarian-leaning start-ups have already signed a preliminary memorandum of understanding with the Honduran government to develop them.

Then references this chart which lists other attempts at libertarian utopias.

But they only serve to illustrate the futility of these paradises.

The biggest problem for any libertarian venture, is that the cost of developing an economy on anything other than LAND that contains human beings who may act as consumers is simply too high for an economy to form. The sea is, so to speak, infertile soil. The cost of prohibiting rent-seeking is equally high.

Libertarianism states will be created by the application of violence against those who do not wish to possess freedom, and maintained only by the application of violence against those who would steal freedom.

Silly anarchic fantasies to the contrary.

Monarchy. Rule of the One-Law Under Common Law. Private government. Freedom.

Violence is the source of freedom. Do not surrender your violence without demanding freedom in exchange.

Pravda Rails Against Fox News Without Realizing That They're Looking In The Mirror.

Sunday, December 25th, 2011

Over on Pravda, the popular, nationalistic and jingoistic Russian news agency, Fox News is attacked for it’s nationalist sentiments. I replied:

Fox news is not exactly a minority business. It’s the most popular cable news channel.

A better point of view, would be that Fox caters to the same audience that Pravda does: Nationalists. Just as Russians feel they are a threatened minority, so do white americans. And from that perspective, both the Jingoism of Pravda and Fox news serve the wants of their audiences.

FWIW: Americans were against communism, not Russians, or even a Russian empire. And frankly, if Russians would rebuild their empire, if for no other reason than to secure their borders, the world, and the west, would be a better place. However, forming an alliance of any sort that would assist Iran in becoming the core state of islam, by uniting Syra, Iraq, Iran and Pakistan into a military-political block, is not going to help either Russia or the west. Islam is a political system not just a religion, and it is naturally more despotic than even the byzantines.

Defining 'Rich'. It's Easy: Whomever Can Exit Participation In The Market

Sunday, December 25th, 2011

On Economix at the NYT, Bruce Bartlett writes that it’s difficult to count who’s ‘rich’.

The first thing to know is that there is no formal definition of who is rich, middle class or poor. Of course, there is an official definition for the poverty rate, but that figure is just a back of the envelope calculation that has simply been increased by the inflation rate since the 1960s. There are many other ways of calculating the poverty rate that could either raise the poverty threshold or reduce it.

Another problem is that one’s social class is a function of both income and wealth. There are many among the elderly who have little income but may have fairly substantial wealth by, for example, owning a home free and clear. At the other end, there are those with high incomes who are, nevertheless, deeply in debt, perhaps even having a negative net worth.

It is certainly possible to calculate who is ‘rich’. The goal of every individual is to exit the market. Whether that individual studies hard to get a good (protected) job in big company, or works for the government which by definition is extra-market (and protected), or seeks a (protected) union job, or whether that person does none of that rent-seeking, and instead, exits the market through saving or investment.

“Rich” means ‘exiting the market’. To exit the market one needs roughly on hundred times the median income, or about 4.5-5M today. It used to be that a million dollars meant something meaningful, but it doesn’t. You can easily burn through it if you’re the kind of person that can make it in the first place.

Rich is a balance sheet calculation, not an income calculation. If a person’s balance sheet exceeds about one hundred times the median income (which is by definition, the 1%) then realistically, it doesn’t matter how much of their income you tax.

I suspect that the various means of calculating maximum utility taxation is closer to 60 or 65% based upon what I can find.

But if you tax the income of a small business person who is trying to exit the market, then we certainly have the right to wipe out social security, wipe out pension programs, fire federal workers and wipe out their savings. Because unless those assets are counted, the definition of ‘rich’ is asymmetrically used to punish people who participate in the market.

Is Membership In The 1% Club Education Or IQ?

Sunday, December 11th, 2011

Greg Mankiw makes a case for graduate school education:

Apart from their bank accounts, Gallup finds education to be the greatest difference between the wealthiest 1% of Americans and everyone else. The Gallup analysis reveals that 72% of the wealthiest Americans have a college degree, compared with 31% of those in the lower 99 percentiles. Furthermore, nearly half of those in the wealthiest group have postgraduate education, versus 16% of all others.

But it’s not education that gets people into the 1%.

It’s IQ and hard work.

Education produces little more than signaling.

Defining Capitalism

Sunday, December 11th, 2011

“Capitalism as it is used in common discourse, refers to a decision making-methodology in it’s narrowest form, and a general bias in it’s broader form, that is used by members of a population that describes a broad spectrum of property definitions from the most several (individual) property, to the most shareholder (collective) forms of property, the entire spectrum of which requires calculable means of planning production, and the transfer between individuals by voluntary means — and which specifically prohibits transfer by involuntary means. This institutional bias, it’s property definitions, the modes of transfer, and the means of dispute resolution, can be represented along a second axis describing a broad spectrum of enforcement mechanisms from the most informal and voluntary, which rely entirely upon the power of ostracization and opportunity deprivation, to the most formal and involuntary, which rely upon a contract called a constitution that enumerates property rights and exceptions, either written and explicit or oral and traditional, and that includes a judiciary that resolves disputes according to those enumerated rights and exceptions no matter how they are encoded.’

X-Axis: Individual ->Shareholder
Y-Axis: Informal -> Formal
(Diagram Attached)

An anarchist might argue that capitalism consists of individual property rights (informal+individual). A classical liberal would argue that capitalism consists of individual property rights that are constitutionally administered (Individual+Formal). A communist would argue that property is entirely shareholder driven and at least according to marx, rules would be unnecessary under communism (Shareholder + informal). A democratic socialist would argue that property is communal, and divided up for purely utilitarian purposes, and that laws and administration are needed (Shareholder + Formal).

All current political philosophies incorporate the notion of property rights, since economic calculation is impossible without them. The current argument is that all individuals in an economy are shareholders (which is hard to refute), and that because they are shareholders they are due dividends. Our ancestors solved this problem by suggesting that freedom was sufficient compensation for shareholders. ‘Input freedom’ or ‘freedom of opportunity’. This means that there are no involuntary transfers allowed.

Property requires institutions because institutions are required to defend property.

The private law society, and it’s progenitor the monarchy, are superior forms of government.

They are perhaps the best form of government ever invented.

Inverting The Argument: Inequality Is The Product Of Diversity

Sunday, December 11th, 2011

Over on Stumbling And Mumbling, Chris Dillow writes about inequality, and refers to OECD Gini-charts on inequality and trust, in an effort to suggest it’s ‘how we believe’ one thing or another that determines redistributive policy. As if conservatives simply need to ‘feel differently’ in order to desire a more egalitarian society.

I try to show him that a tolerance for redistribution is a function of cultural homogeneity, and a lack of threats to the status economy.

Here is most of Chris’ article:

My chart shows that the correlation between big government and equality is weak. Yes, countries with big government spending tend to be more equal, but there’s a lot of variation around this. For example, France and Norway have similar levels of equality, but France spends 13 percentage points more of GDP. And the UK has the same inequality as Australia or Japan, but spends 10 percentage points more of GDP.

In fact, it could be that the positive correlation between equality and public spending doesn’t reflect causality from the latter to the former at all, but rather an omitted variable. Countries that combine big government and equality tend to be high trust societies. It could be, then, that the same high trust that makes people supportive of redistribution – because they believe “welfare scroungers” aren’t ripping them off – also makes them support big government as they trust politicians not to waste money.

This possibility hints at another – that perhaps it’s possible to combine small government and equality if the right cultural or institutional factors are in place. I mean, for example:

– Strong trades unions. These not only raise the pay of the worst off, but also help restrain top pay.

– A collectivist culture. A society that believes that corporate performance depends upon the abilities of all its employees will be more egalitarian than one which believes that organizations can be transformed by star managers.

– Education. A highly educated workforce might be more equal, if only because it creates more competition for top jobs. There is a correlation between education levels (pdf) and equality – the egalitarian Nordics do better than the inegalitarian US and latin Americans. And the causality mightn’t be entirely from inequality to poor education. However, high educational standards are achieved not by increased spending, but by a culture which values schooling – and the UK lacks this.

Herein, I fear, lies the big challenge for the Left. Although it is technically possible to reconcile small government or fiscal conservatism with greater equality, the UK lacks the cultural underpinnings which would permit this happy combination.

Despite the fact that for many of us equality of outcome is not a goal, but freedom, the difference between egalitarian and non egalitarian states is, driven by factors in addition to those you mention:

    a) Education — Yes, as you state, education, but that means education of the lower half in productive trades, rather than the USA, which educates with ‘equality’ as if all of its citizens will end up in the upper middle class, thus penalizing the lower classes. Education must be seen as a path to a better life. In the UK’s lower classes there is little incentive for class migration. (I’ve always found this amazing myself.)

    But b) Status Signals: cultural competition from diversity versus cultural reinforcement through homogeneity also matters for encouraging egalitarian sentiments using status signals. France has a highly centralized cultural ministry which disallows competition using status signals. This forces more compliance with cultural norms and because of that, allows the wealthy within the culture to feel that they are contributing to what they already value. Multi-culturalism discourages equality. Since minorities will try to create status signals counter to the norms of those in power, it creates a disincentive for redistribution.

    c) Access to power, Resistance to Changes In power: soem political systems allow radicals access to power and some do not. Cultures are more egalitarian if they deny disrupters access to political power through either formal or informal processes.

    …small homogenous Protestant countries with high median IQ’s are more distributive than factional, non-protestant countries with lower median IQ’s.

    d) Size: it is easier for a small homogenous culture to create an environment that tolerates redistribution. This is the reason for the egalitarianism of the nordic countries. They’re small and homogenous and there are few if any external pressures from ‘unlike’ groups with different cultural and therefore status signals and different “property definitions.”

    e) Composition: IQ distribution matters. This difference affects the USA, and dramatically effects South America. South america is also highly tribal – as are Brits. The USA is a domestic empire over a set of different cultures consisting of different economic, religious, racial and cultural interests in various compositions, each with different IQ distributions, and this in turn correlates pretty consistently with performance of the groups, which in turn creates competition for status signals, and a desire for access to power in order to expand them, and a counter-desire for people who which to resist that expansion.

A number of these factors run counter to the progressive fantasy about the nature of mankind, and individual behavior in society. And failing to include them in your list, is simply a prescription for failing to accomplish your desired state of ‘equality’, by denying the factors that dramatically affect political preferences in redistribution.

The lesson to take away from any analysis of the tolerance for redistribution of one’s productive gains (‘equality’), is that **Human beings seek status as much or more than money, and that those who have money will redistribute it to the less advantaged if they perceive that they are not undermining their status as individuals, their status as a cultural class, or their status as a system of cultural manners, ethics and morals.**

In other words, if the proletariat has to behave and conform, (which it does in france and doesn’t’ in england or the USA) then people will tolerate redistribution. If the proletariat doesn’t have to behave or conform, then they will resist it.

That’s the difference between seeing people as disadvantaged and lazy and incompetent or threatening and destabilizing.

*Adherence to norms determines the tolerance for egalitarian sentiments. And cultural diversity reduces tolerance for egalitarian sentiments.*

Economists look only at the monetary economy. But the monetary economy is a Maslowian pyramid that exists first to support basic needs, second to provide individuals with the needs for reproduction, and third to provide the needs for status signals – which in turn provides access to mates, and ease of nesting/reproduction. As the economy improves, and the upper classes expand, the status signal economy dominates the monetary economy – ie: the society becomes politicized. The only solution is cultural homogeneity.

In other words, there are opposing curves that describe cultural homogeneity and the tolerance for monetary redistribution, which in effect describes the status signal economy.

Here are the charts the you’re referring to.

And from these charts, we are expected to deduce that ‘high trust societies’ are the most redistributive.

However, what these charts actually show, is that small homogenous Protestant countries with high median IQ’s are more redistributive than factional, non-protestant countries with lower median IQ’s.


And Charles’ argument is just another example, of why any economic argument that mentions the nordics is be definition, false.


Why Are Artificial Breasts All The Rage In Columbia?

Saturday, December 10th, 2011

A friend posted a humorous advertisement from Columbia, where young women are advocating that ‘natural is better’. Someone asks why this kind of thing happens.

An exacerbated interest in youth and sex is a cyclical expression of human behavior that is usually caused by the intersection of:

(a) the ‘winter’ period of a civilization wherein the institutions that perpetuated the set of forgone opportunity costs we refer to as customs, myths, manners, ethics and morals are insufficient to coordinate status signals in the economy due to a combination of institutional calcification, and

(b) a substantial increase in population causing an over representation of single people of mating age, and

(c) a period of economic prosperity that enables the proletariat access to leisure — usually caused by an increase in technology or shift in trade routes. (Or a decline in the aged population as we saw after the plague as is demonstrated by 13th century french literature.)

The synthetic historians have all discussed this process in one way or another. (Toynbee, Quigley, Durant, Spengler and Braudel.) Strauss and Howe address this somewhat in their books on cyclicality such as ‘Generations’.