Author Archive

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.

Thomas Sowell Catches On

Wednesday, May 2nd, 2007

From Thomas Sowell:

“When I see the worsening degeneracy in our politicians, our media, our educators, and our intelligentsia, I can’t help wondering if the day may yet come when the only thing that can save this country is a military coup.”

This is followed by a few less important but insightful statements:

“In his book Income and Wealth, economist Alan Reynolds says that people often form ‘strong opinions’ based on ‘weak statistics.’ Unfortunately, that is also true of a wide range of other issues, from ‘global warming’ to ‘gender bias.’

I am so old that I can remember a Democrat, at his inauguration as president, say of our enemies: ‘We dare not tempt them with weakness.”

However, what’s important, is the early recognition that we’re beyond the boundaries of recovering our government. And despite the fact that it’s a tired analogy, we are similarly departing republican Rome and coming close to imperial Rome.

What is not understood is the argument I always press: that civilizations create governments based upon who possesses the money in the society, since that money is the ability to compel others. Governments represent pressure by those who have the ability to finance that pressure. In history, most states go through an evolutionary process: The first phase of control is the nobility which must protect the property and provide safety, next it is the merchants who take advantage of the protection, next is the manufacturers, and next the laborers, and finally the slaves/plebes/unemployed/(moms)/ or whatever group is forcing the pressure of government by virtue of the percentage of the economy they influence. So, as a civilization becomes wealthier the political influence, and therefore control, moves down the economic chain, until those who lack the common values that embrace the protection of property, trade, manufacture, or craftsmanship use their influence to consume resources at a sufficient rate that they make common the value of consumption or hedonism rather than conservation and production.

The only way to counter this economic and political force is with physical force.

The Safeguard of Monarchy

Saturday, January 27th, 2007

We should all bear carefully in mind the constitutional safeguards inherent in the monarchy:

  1. While the Queen occupies the highest office of state, no one can take over the government.
  2. While she is head of the law, no politician can take over the courts.
  3. While she is ultimately in command of the Armed Forces, no would-be dictator can take over the Army.

The Queen’s only power, in short, is to deny power to anyone else. Any attempt to tamper with the royal prerogative must be firmly resisted.

D G O Hughes, letter to The Daily Telegraph, 1st September 1998.

Capitalism, Dinosaurs, and Environmentalism

Wednesday, January 3rd, 2007

This is yet an other essay on environmental catastrophe. It says that something is bad but it does not say why.

The most common reason why people think this kind of thing is fear that comes from the Garden of Eden problem. In a world where one cannot effectively prosper by cooperating with others, we keep alive the fantasy that we have some alternate pastoral reality that we can depart to, just as though we know we can return to the home of our parents should our ambitions in the vast uncertain world fail us. Gardens of Eden are natural places that give us comfort. They let us think that we can return to them if our stresses and strains of daily life become too great.

The second reason for this thinking is caused by the Pharaoh Problem. In this world, one’s state in life is caused by the actions or intentions of some individual, group, society, mystical entity, or natural tendency, rather than caused by one’s own actions. Or more likely one’s failure to act with discipline. And most commonly, one’s ignorance or error about the world itself. People with this affliction rail against the consumption of resources in the world because they seem to comfortably capture so few of them themselves. This is the most common error, which is to apply the egalitarian principles of the family, where you can know how to allocate resources) to the extended order of human cooperation (where you cannot know how to allocate resources, and must let the market do so.)

The third most predominant reason for this thinking is self-loathing. In other words, the belief that man is bad, evil, selfish and violent. The heroic western view is that man is wonderful, exceptional, and capable of great things if given the discipline and tools to accomplish them. These are two visions of the world. It is important to note that only western civilization adopted arete, the idea of excellence, applied it to man, and developed the idea of competition as a means of identifying and improving it. And the commensurate value system that appreciates and even glorifies excellence, rather than envying it.

This article does not explain the underlying problem, which is an increase in human population. Counter to what the UN and others on the left acknowledge, the problem comes from poor countries. The west consumes more, but produces even more disproportionately higher. Even if the underlying problem was recognized, it can be solved through only two means. First, by the dictatorial imposition of birth control. Second by the dictatorial imposition of consumption. And third by the forced implementation of capitalism’s property rights. The latter simply making it both unnecessary to breed large families because of lower costs and savings, because it is more expensive to raise them, and because it takes a greater investment in each individual for them to be productive members of society and to live in prosperity.

Capitalism, even a state of democratic socialism with weak and uncompetitive capitalism, will cause people to decrease birth rates in order to conserve productive capital. The way to save the earth’s species is to implement widespread property rights, and capitalism, regardless of the political structure that the people employ. And given those rights, there are only a few that they will choose if given the chance to do so.

Humans spur worst extinction since dinosaurs

OSLO (Reuters) – Humans are responsible for the worst spate of extinctions since the dinosaurs and must make unprecedented extra efforts to reach a goal of slowing losses by 2010, a U.N. report said on Monday.

Habitats ranging from coral reefs to tropical rainforests face mounting threats, the Secretariat of the U.N. Convention on Biological Diversity said in the report, issued at the start of a March 20-31 U.N. meeting in Curitiba, Brazil.

“In effect, we are currently responsible for the sixth major extinction event in the history of earth, and the greatest since the dinosaurs disappeared, 65 million years ago,” said the 92-page Global Biodiversity Outlook 2 report.

Apart from the disappearance of the dinosaurs, the other “Big Five” extinctions were about 205, 250, 375 and 440 million years ago. Scientists suspect that asteroid strikes, volcanic eruptions or sudden climate shifts may explain the five.

A rising human population of 6.5 billion was undermining the environment for animals and plants via pollution, expanding cities, deforestation, introduction of “alien species” and global warming, it said.

It estimated the current pace of extinctions was 1,000 times faster than historical rates, jeopardizing a global goal set at a 2002 U.N. summit in Johannesburg “to achieve, by 2010, a significant reduction in the current rate of biodiversity loss”.

“Unprecedented additional efforts’ will be needed to achieve the 2010 biodiversity target at national, regional and global levels,” it said. The report was bleaker than a first U.N. review of the diversity of life issued in 2001.


According to a “Red List” compiled by the World Conservation Union, 844 animals and plants are known to have gone extinct in the last 500 years, ranging from the dodo to the Golden Toad in Costa Rica. It says the figures are probably a big underestimate.

“The direct causes of biodiversity loss — habitat change, over-exploitation, the introduction of invasive alien species, nutrient loading and climate change — show no sign of abating,” the report said.

Despite the threats, it said the 2010 goal was “by no means an impossible one”.

It urged better efforts to safeguard habitats ranging from deserts to jungles and better management of resources from fresh water to timber. About 12 percent of the earth’s land surface is in protected areas, against just 0.6 percent of the oceans.

It also recommended more work to curb pollution and to rein in industrial emissions of gases released by burning fossil fuels and widely blamed for global warming.

The report said, for instance, that the annual net loss of forests was 7.3 million hectares (18 million acres) — an area the size of Panama or Ireland — from 2000-2005. Still, the figure was slightly less than 8.9 million hectares a year from 1990-2000.

And it said that annual environmental losses from introduced pests in the United States, Australia, Britain, South Africa, India and Brazil had been estimated at more than $100 billion.

About 300 “invasive species” — molluscs, crustaceans and fish — have been introduced to the Mediterranean from the Red Sea since the late 19th century when the Suez Canal opened.

It gave mixed overall marks for progress on four key goals.

It said there was “reasonable progress” toward global cooperation but “limited” advances in ensuring enough cash and research. It estimated that annual aid to help slow biodiversity losses sank to $750 million from $1 billion since 1998.

And it said there was “far from sufficient” progress in better planning and implementation of biodiversity decisions and a “mixed” record in better understanding of biodiversity.

© Reuters 2006. All Rights Reserved.

Credit, Time Compression, and Secondary Outcomes

Tuesday, January 2nd, 2007

Any economic or philosophical argument that attempts to say “all men should behave in such a way” but the outcome of which favors an individual or group, rather than “all men” is logically inconsistent. It says that men should agree to suffer.

From: Brian

I’ve been thinking about this, and wonder what the consequences would be.

?What if we all paid off our credit cards??

Curt, any comments from the economic ramification side?

From: Curt

Sure. I’ll make a pass at this. I think you will need a bit of energy to get through it though. (I’m not sure, but I think this might be one of the smarter things I’ve written lately, so you might actually want to read it….:)

Here we go. First a big idea: Credit is temporal compression. Credit is how we compress time.

This is the root of it. If you think about the system of human cooperation, the answer is in those four words. I’d come up with some eastern-sounding, poetic way of phrasing it, but more scientifically, credit compresses the ultimately scarce commodity: time.

Credit gives you now what you could get if you had infinite time to get all you wanted.

Interest is what you pay someone to have the thing now instead of later.

Time preference is the term for how soon or distantly someone wants something.

To understand the problem, you have to get it out of your head that money is the objective, and instead remember that it is a tool that we use to more easily communicate the satisfaction of our personal, subjective objectives.

If time were infinite there would be no scarcity. We need cooperation (trade and the pricing system) to manage the scarcity of goods and services given the infinite scarcity of time.

For example, the government prints money for time that may yet exist. The banks lend it out for time that they think will exist. Consumers buy that “time” (the credit=time) in order to have now what they could have later. They pay a “use fee” called “interest” to make use of (rent) the capital/money/thing before they have the goods or money or services or time, to pay for it.

All this debt creates time compression on a national, international scale.

But the trick is that this time compression is rooted in a faith that we already know how to maintain the “use fee” of that capital. In other words, we believe that we can continue to pay for our use what we’ve borrowed from other people (who will want it back if they cannot get what they need to pay… etc, etc, etc…. on and on in a long line.

But all knowledge is technology. The most important knowledge in a division of labor is that which tells us what to do to cooperate. Who you work with, for and what rate of exchange to expect for your labors, goods, and services.

Time is a spring. The spring is the knowledge of how to coordinate with each other in trade. (even if that trade is simply friendship).

That sketches out the basic ideas. So now, to answer you question, if we all paid off our credit cards:

  1. It isn’t possible, because at some point (a very low level) if we all start paying them off, this means others are less likely to be able to pay theirs off, which means, that eventually, we are less likely to be able to continue to pay ours off. (And you will see that this is a constant problem no matter what we do.)
  2. This is the cycle of recessions. People spend until they have exhausted their ability to borrow. The people who have been running companies, households, shops, and industries have believed that the “future” will still “yield crops,” so to speak, but now they can’t yield crops.
  3. This happens in the knowledge economy. Economic cooperation (trade with profit) is based upon the development of new knowledge. People consume and commoditize that knowledge until no more profit can be wrung from it. And only innovation can create new knowledge, and innovation requires that one have considerable savings. There is an approximate mathematical relationship between technological innovation (in its most aggregate form: the additional morphing of space-time for the purpose of human utility) with the human capital necessary to do so (money, thought, and labor necessary to research that morphing).
  4. Assuming that they could pay off the loans (for example, we all took out extended mortgages on our houses, or if not a home owner, the equivalent student loan) the same thing would happen: the chain of people in the banking system, the business people who make products, the engineers who research innovation, would now have the money paid off, the businesses would be paid off, the engineers would be paid off, and after all debts are paid in that chain, the normal, scarce profit will come in – but it is minus the anticipated profit that comes from the compression of time, paid for as interest. And now all those people (businesses, factory workers, industry, bankers) now have no means of earning that profit and must find some other means of trade and cooperation. And we’re back to the same problem: With all those people unproductive, everyone else becomes less likely to spend, and we have a circular problem.
  5. Assuming we just paid it all off: Even if the government pays off the debt for us, where does the time, the energy resident in the spring, actually go? The foreign people who consume our products, and the foreign governments that finance our debt, would stop doing so. The spring keeps reaching outward until it can find a way to release the time compression. Again, people’s knowledge is the spring. Knowledge is the means of economic coordination through trade. So, eventually, there are people who will not deal with you.

YOU CANNOT CHEAT THE MECHANISM OF THE SPRING. IT IS A PHYSICAL LAW. Someone somewhere must reorganize society to compress or decompress the spring. I think the human condition wants to have a steady state where the individual believes he controls all variables, so that he can work as he sees fit to gain what he wants, when he wants, as hard as he wants. But that is only possible in the garden of Eden. Our bodies desire that we live in such a place, but we do not. The garden of Eden is a place without scarcity. But the universe is a place of terrible and under contemplation, a sometimes terrifying scarcity.

The trick for humanity, at any scale, (family, village, region, nation) is to match the rate of social reorganization (new relationships, friends, skills, jobs, trade, innovation, businesses) to the rate at which ideas, and resources are exhausted. And since this can’t be known the only answer is to constantly innovate, even if it means destroying what we currently profit from.

So that’s my answer.

And whether you’re on the right or the left, you’re going to hate this: This explains the Bush/Greenspan strategy, which I think is brilliant… He is going to unwind the spring in a way that is the greatest redistribution of wealth in human history, and in a way that will, if done well, stave off the immediate collapse of the spring. (Depression – 1970’s style.) He is going to create so much debt that the Chinese, in particular, but, really, much of the world, will reorder their societies. Thus taking the compression out of the US time spring and transferring the “energy” of reorganization to other countries. As the dollar falls in value, the rest of the world will control the rate of compression because they cannot afford the social spring compression in their societies either.

The trick here is that the cost of reorganizing a Chinese or Indian civilization is very small, despite its size, compared to a European civilization because they are not innovating, simply consuming existing knowledge, and they are moving from a very low index of cooperation in a very simple distribution of knowledge and labor. Whereas moving a European civilization requires an incentive to reorganize that is far larger, despite the smaller population, since such a reorganization requires social restructuring of a complex division of labor, where much specific knowledge exists, and there are many long-term agreements that cannot be broken without widespread breaking of such agreements, so that the penalty is removed.

Thus reorganization in Europe and the US will only happen under duress: recession and depression.

If this transfer of the spring happens, and it looks like it might, it will be the greatest advancement of human quality of life in human history. We will drag other societies out of ignorance and poverty, and we will get a lot of people into houses, cheap TVs, cars, and housewares in exchange.

In this way, debt is good. In the same way that credit card debt is good. It creates more potential for production by increasing temporal consumption. In humorous terms, it is a humanity-wide time-machine.

This also explains why certain debt is good (that which forces people to socially reorganize to greater production) and some debt is bad (social programs that let people acquiesce to lives of stagnant or limited production.)

Probably a bit heavy. Probably could be twenty pages. But there you are.


From: Sam

What?s interesting about this idea to me is that you?re ignoring one or two major revenue stream of credit cards.

Let?s say you use credit like I do.

I may rack up several thousand in a month, but I always pay it off no matter how painful it is. I literally pay all my bills with credit cards. The banks are doing the same thing really b/c it allows them float time on their money (I call this ?In case shit? money in my world). Banks actually make buckets of money on daily accruals on all the money that?s floated, so even if you pay off your credit card every month, they are still making money from the vendor (who has to wait a while to be paid for quite a while) and from the money they are holding from the previous period.

Also, the money they make spying on you is worth a lot too. Don?t you think retailers and ?other partner companies? are willing to pay for reports on spending habits? I do. Look at our own clients if you want to see it happening on a smaller scale (in number of transactions).

My point is that it would hurt, but I still think they?d make money unless you stopped using cards completely.

From: Curt Doolittle

This is great, except you’re using an example of a small population (those people who pay it off regularly) to address an issue of economic proportions, involving many, many people – when the question involves, by definition, “a lot of money and a lot of people” and where credit not only involves credit cards, but home equity. The latter of which is entirely speculative.

From: Dan

A few years ago I decided I hated my credit cards and paid them all off. In the long run I think it is a lot more secure not to try and compress time. The time you are compressing isn’t just days off your life, its days you spend gainfully employed. Say it took you 5 years of salary at your current wage to pay cash for a $15k car, but instead of waiting you decided to compress time and buy it on credit. You’ve compressed the spring and purchased the car now. Except there is a cost associated with compressing time, this use fee ends up increasing the total cost of the car to 21k and this would have taken you 7 years at your current wage to accumulate. In this way, every time you compress time to allow you to purchase something now you add to the overall time you have to work to pay for it.

So basically the time you are compressing is the difference between the purchase dates of now and 5 years from now, but it actually ends up costing you 7 years of salary. (Or the amount you are able to save from each paycheck over a 7 year period)

The problem is, at some point you have to unwind the spring. At some point you want to stop working, you want to retire, spend time with your family, etc. If your spring is still compressed you will not be able to, at some point you have to pay the piper and put those 7 years into the spring. The institution that gave you the credit expects that at some point for the 5 years they gave you up front you will give them 7. Inadvertently credit ends up being a pool of wasted time, the more credit you have the more time you have to give to creditors that provides absolutely no value to you.

In short, capitol is good; credit is bad, for those who want to retire any time soon. (Barring some lottery, Real-estate bubble, or massive IPO)


From: Curt Doolittle

I think you are correct but you missed the point. If you’re talking about YOU, then you aren’t answering the question, which is, what happens if we ALL pay them off.

From: Dan MacDonald

I will ponder you this one though?

a) it isn’t possible, because at some point (a very low level) if we all start paying them off, this means others are less likely to be able to pay theirs off, which means, that eventually, we are less likely to be able to continue to pay ours off. (And you will see that this is a constant problem no matter what we do.)

As I understand what you are saying, if we all spend our money paying off our credit cards we aren’t putting money into the economy so that some people (probably at the bottom end of things, the poor) wont be making as much money and therefore will not be able to pay off their credit cards.

So what if the middle class decided to pay off its credit cards? Money would go into debt instead of the economy; there would be a recession of sorts. The fed would cut interest rates leaving people with more money. They should be able to make big payments against their CC debt and still put enough into the economy to prevent a full blown recession.

It would be temporary, the middle class would need a certain period to pay off their cards, and during that period interest rates would be lowered and the economy would likely see some recession. Once the cards were paid off you would have to assume that not only would those payment monies be going back into the economy, but also there would be more of it since the middle class would not be paying the use fees on its credit debt. With more flexible income the result would be economic growth. Retailers would have to go back to actually running profitable retail businesses instead of (like in Target and Nordstrom’s case) having over 50% of their profits come from their store credit cards. We might actually produce something again instead of just collecting tribute J

If I misunderstood your reason for why we couldn’t all pay our credit cards off, feel free to elaborate. I just want to point out that it’s not so important that we ALL pay them off, only that the majority do, enough to cause an economic shift.


From: Curt Doolittle

I think that it’s more the rate the debt is paid off in relation to the degree of social reorganization required to maintain or increase production.

From: Chris
My thing (in really simple terms) is that there is currently X amount of money floating around in a system based upon Y amounts of money. X is less than Y. Due to this, not only is it impossible to actually pay off everyone’s credit card debt because debtors do not actually have the money (collectively) to do so. The system itself is based around this concept. Keeping people striving to pay off their debts keeps them working, keeps the machine going.

I know this is effectively a restatement of Curt’s email, but here is my point. All of this money is thrashing. I see it as a very tightly coupled, very inefficient system of money transfer. I know it is required for convenience (parasite) companies to make their money (brokerages, agents, etc), but I bet there could be an incredible amount of money made in a restructure of money transfer – especially intra-business. If I (A), owe company B money, who owes company C money. It is in my best interest to just pay B. and B’s best interest to just pay C, but it is in C’s best interest for A to pay C.

What say you, Curt?


From: Curt Doolittle

I agree with the first paragraph, although I think it is a dangerously simple way of viewing the problem.

The second paragraph is a problem. What is inefficient about it, and if what you state were true, then what would be the impact on civilization – on economics? Furthermore,

Efficiency is a chimera. Efficiency is what you do when you understand all the variables and control all the resources in any endeavor. But what happens when you do not understand, or know, all the variables, all the resources, and the scarcity of them in any endeavor?

As the scale of the endeavor increases to include other people in a division of knowledge and labor, what is unseen by an individual is more important than what is seen by him. Thus efficiency is a logical inconsistency regarding any process that is beyond the knowledge of the individual and his ability to alter it on a moment by moment basis.

The point is that in a process all people provide value, if only to secondary outcomes. The problem with the human mind is that its reason, like its language, is simple and linear like a ladder, and it ignores secondary outcomes and activities. Yet those secondary outcomes are what make the primary outcome possible. I.e.: you have to pay a truck driver to get stuff to you. But he doesn’t drive a truck to get stuff to you. He drives a truck to survive.

All cooperation is indirect, and consists entirely of secondary outcomes. Men do not make bread to make bread. They make bread to not be hungry.

Any economic or philosophical argument that attempts to say “all men should behave in such a way” but the outcome of which favors an individual or group, rather than “all men” is logically inconsistent. It says that men should agree to suffer.

From: Hugo

The last paragraph is freaking smart. Never thought of it that way?

To Bryan K on Socialist Calculation

Tuesday, January 2nd, 2007


This is not such a petty debate as you imply. To attack the calculation argument is, to most Austrians, at least Rothbardian-Misesian’s, effectively an attack on human freedom and the very means of life itself.

This is my specific area of work, and responding to what you’ve said above would require substantial effort. But, in short, the way that you are approaching the problem is so significantly different from both Mises and Hayek that it is not, fundamentally, the same discussion.

Mises says that when you take away man’s need to perform individual economic calculation, you destroy the very process by which men’s minds develop the ability to calculate increasingly detailed, timely, and precise uses of resources.

Hayek sees this same process happening on an inter-temporal scale in large populations – effectively manufacturing ignorance in populations, rather than, as both of these men would advocate, letting the network of human cooperation train each individual inside it to become a master of his portion of it, all in an effort to better manage resources, increase research and development, and, in turn, increase production making all goods cheaper for all men.

Stress is a reaction to learning, and learning and experimentation are necessary to increase production.

This concept is no more complicated than if you say that we were to ban money and accounting, and, in doing so, how would we approach the process of performing economic calculation at any position in a population? People would no longer know how to do so.

I think that Georg Simmel describes this best, as the very destruction of the human mind. Without this inter-temporal calculation, we are simply animals.

So, the debate is fundamentally one of freedom, economic production, and the continual improvement of man. They, and I, see the opposite view, in socialism, as the very destruction of man’s mind, and his concurrent enslavement and long-term destruction of his ability to do otherwise. Unless you are one to say that we are gifted by nature, fate, or some divine entity with infinite common sense and the ability to generate such ideas, even if we lose the traditions of them in our populations. Something that is quite counter to the evidence.

As for your argument to proof with empirical data, there are at least two problems. The first, which is logical and an error in categorization, I think I will leave for Hoppe. The second, which is methodological, is simply an error in what data CAN show, given a sufficiently complex network of cooperation. I am quite sure that any data to prove such a thing as you ask would require such a wealth of data as to represent nearly the entire activity of the economy in question, all measurements being an approximation or categorical convenience given a particular number of variables in a given period of time. But the outcome would be the same. The socialist economies fail. They fail in all dimensions. Whether you speak of the Russian mobilization of women and resulting population declines, or of the negative result of their iron production, or the decay in entrepreneurial innovation, or the destruction of social interactions in small communities.

Your approach is more the typical econometric endeavor for more short-term ends. This is common in the field. It is especially common for those without a tradition of economic coordination in large populations. But the time horizon and ambition of Austrians is a bit broader, and, frankly, a bit more substantive both in ambition and in outlook than mere skeptical analysis of temporary trends.

If you only mean to say that there is humor in the fact that the Rothbardian wing is so emotive as to keep you in good company, then that’s well enough on its own. But there is a long history back nearly to Zoroaster of poking fun at such ideas to discredit them. While it is an effective way to rally the peasantry which lacks the means of evaluating the idea by more critical thought, it is not necessarily indicative of the truth or falsity of such things, and is reliant on the physical restraint and character of the opposition whose dedication is to reason alone – if the subtlety of my meaning comes across.

Hopefully, this is another example of the attention that you would wish to garner.


A Response To Creative Construction

Tuesday, January 2nd, 2007

This is a response to Economist’s View posting on Creative Construction – the problems that India and China face in education that is somewhat different from what we do.

A Response to Creative Construction
/economistsview/2006/03/creative_constr.html original article is posted below)

I think the problem of innovation for the eastern cultures is far more extensive than one of just learning by rote. Basic assumptions about “how the world works”, such as the Asian assumption of “balance.” About how we should interact with one another, such as individual competitiveness and holding to contracts. About what competition means and how it is conducted even in groups. About the content of traditional ideas and how they prescribe interaction. About objective truth.

Economic coordination and, in particular, the rate of innovation in a population is a deterministic process. One can keep one’s food traditions but little else. Or rather, the “practicality” of one’s traditions as a means of conveying cooperative knowledge to individuals becomes less and less valuable, and perhaps inhibitive. Americans (and the Anglo mentality across different countries) are not the way they are because of aesthetic choices. They are the way they are because the rate of production and innovation requires that they are this way.

Our basic complaint about education is that our children do not compete in science and mathematics, which are a certain class of problems. But the average kid on the street with a sixth grade education can understand the nature of contract, objective truth, obligation to deliver it, and economic consequences. It is not that one should have one set of knowledge or the other, but that in order to produce a top economy, one should teach both.

Mathematics and science are understood by discipline. We have lost our will to require personal discipline, the original source of which is from the necessity of conservation in life surrounded by scarcity. We have little material scarcity in American civilization. This discipline in class can be taught by a teacher, as long as the parents and bureaucracy will tolerate the necessary instilling of it, which is often painful for children, especially when there is little or none of it at home. The inspirational or innovative ideas that we refer to come from a desire for competitive excellence. From the desire to inquire about the limits of our common knowledge. To seek the accolades of our peers from doing what they have not and can not, despite what they think, rather than excellence in conformity of what they do think. And this process must be governed by an ethical constraint that helps them know the difference between what can be and what should be.

It’s not that we are lacking in math and engineering in favor of innovation and exploration. In America, neither of these sets of ideas is taught today. Our competitiveness does not come from the education system, which, after grade five or so, appears to add no value to our students at all, given how hard it is to make our graduates productive in the workforce. That idea of innovation and excellence comes from our cultural heritage in the Anglo tradition. And those traditions are maintained by repetition as well. It’s just that the repetition does not occur in a classroom, but across generations of people in an infinite number of daily interactions and activities.

Our real problem is not the content of our education, it’s the femininization and politicization of the education system which does not encourage discipline and the testability of what’s been learned, but discourages it in favor of non-competitive, untestable outcomes. This lack of testing is not in favor of innovative creative thinking. It’s that neither are taught. Especially in our men. The last generation of which seem almost incapable of anything involving competitive excellence in the Greek sense of arete.

In this way we are failing on both avenues, rote and not. Our schools teach neither, but our cultural values, at least for now, teach by common tradition what they have always taught, and the real source of our innovative nature. And our businesses reinforce it despite the fact that almost all students are unprepared for it.

It’s not so much that India and Asia need to study the Greek philosophers in order to adopt these ideas in their cultural values, it’s that we no longer teach our children to, and that, while we fail in math and science, we are also failing in what makes us competitive: the idea of competitive excellence in all things, independent of the opinions and feelings of others, and independent, often, of our own feelings. This is what makes a Beethoven and a Mozart, a Thomas Jefferson, a Bill Gates, and a Steven Jobs.

For us, at least, the classical education needs to return.

So, other cultures solve the education problem in engineering and science quickly by rote processes simply because it is far, far, easier to solve that class of problems than it is to introduce the ideas of Greek philosophy, excellence, and competitive innovation. Rote happens in a classroom, and creative innovation happens largely from one’s culture. It is even harder to teach “look for the win-win scenario” and “tell the truth even if it harms you.” This last bit being something that seems to be nearly impossible – not so much when you’re asking a scientific question about material things, but when you’re asking an unscientific question about probable human things.

While I suspect that these cultures will cease economic expansion once they’ve exhausted all the intellectual property, which is “stored innovation,” that they can, and once the labor pool for disciplined workers has stabilized. But more importantly, I suspect that these cultures will peak economically and slow in development as they run up against barriers that require problem-solving skills that rely on less rote, and more systemic forms of knowledge, dependent upon a view of the world that is different, and perhaps even counter, to the one of their traditions. It is one thing to teach people skills in a classroom that do not affect the greater social order. It is another to teach them something that requires many others in the social order to cooperate with in order to succeed. Although, perhaps, they will possess the discipline to instill that set of values. Something we no longer possess.

For example, a study of Chinese art will not yield the impression that the Chinese think man is naturally excellent in the Greek sense, or in the German or French sense, or even in the English sense. If one’s view of man is that he is ugly, petty, and evil, that is different from how one will perform economically if one believes that man is beautiful, heroic, and virtuous.

We solved much of the methods of science and put those ideas in our population and we did that before we solved and distributed the ideas of human cooperation, simply because science is in fact easier. It is easier because it is a testable thing. This same conceptual divide exists in economics. The quantitative versus the qualitative debate comes from this same source. And the skill to both understand and to resolve it comes from a study of classical sources.

And just as teaching discipline is a political issue in America, teaching classical ethics and especially competitive individualism, will certainly be a political issue in those countries.

(posted on my blog as well, references this blog)

Creative Construction

The stereotype is that American students aren’t very well-trained technically and thus do poorly when tested in areas such as math and science, but their intuitive skills are fairly well developed. Foreign students are just the opposite according to this view, excellent technically, but less able to express the intuitive reasoning behind the mathematics or the science and less able to use intuitive skills to combine ideas creatively. The difference is generally attributed to a difference in emphasis in education with foreign students far more devoted to rote learning than their American counterparts. While this gives Americans a disadvantage in engineering, computer programming, and so on, they are much more likely to come up with innovative new ideas. Or so the story goes. Is this is really true? India and China believe it and are wondering how to change their educational systems to encourage more creativity:

Worried About India’s and China’s Booms? So Are They, by Thomas L. Friedman, Commentary, NY Times: The more I … travel, the more I find that the most heated debates in many countries are around education. … every country thinks it’s behind. … America agonizes that its … public schools badly need improvement in math and science. I was just in Mumbai attending the annual meeting of India’s high-tech association, … where many speakers worried aloud that Indian education wasn’t nurturing enough “innovators.”

Both India and China, which have mastered rote learning and have everyone else terrified about their growing armies of engineers, are wondering if too much math and science – unleavened by art, literature, music and humanities – aren’t making Indira and Zhou dull kids and not good innovators. Very few global products have been spawned by India or China.

“We have … everyone going into engineering and M.B.A.’s,” said Jerry Rao, chief executive of … one of the top Indian outsourcing companies. “If we don’t have enough people with the humanities, we will lose the [next generation of] V. S. Naipauls and Amartya Sens,” he added, referring to the Indian author and the Indian economist, both Nobel laureates. …

Innovation is often a synthesis of art and science, and the best innovators often combine the two. The Apple co-founder Steve Jobs … recalled how he dropped out of college but stuck around campus and took a calligraphy course, where he learned about the artistry of great typography. “None of this had even a hope of any practical application in my life,” he recalled. “But 10 years later, when we were designing the first Macintosh computer, it all came back to me. And we designed it all into the Mac. It was the first computer with beautiful typography.” …

Capital will now flow faster than ever to tap the most productive talent wherever it is located … Hence the concern I found in India that it must move quickly from business process outsourcing … into knowledge process outsourcing … coming up with more original designs and products.

“We need to encourage more incubation of ideas … to make innovation a national initiative,” said Azim Premji, the chairman of … one of India’s premier technology companies. “Are we as Indians creative? Going by our rich cultural heritage, we have no doubt some of the greatest art and literature. We need to bring the same spirit into our economic and business arena.”

But to make that leap, Indian entrepreneurs say, will require a big change in the rigid, never-challenge-the-teacher Indian education system. “If we do not allow our students to ask why, but just keep on telling them how, then we are only going to get the transactional type of outsourcing…” said Nirmala Sankaran C.E.O. of … an Indian-based education company. “We have a creative problem in this country.”…

Conservative and Liberal Conflicts of Vision

Tuesday, January 2nd, 2007

This is a simple dialog I jumped into on a site on political economics. I just wanted to test the argument with some liberals.The full posting can be found here:

Sadly, cynical satire, irony, and highlighting flaws in logical reasoning and objective fact just doesn’t fly between the coasts. Nope, it seems that one needs to use shamless demagoguery combined with outright lies to rally the peoples support.

Posted by: Robert

February 8, 2006

Who’s Hormonal? Hillary or Dick?

The Republicans succeed because they keep it simple, ruthless and mythic.

In 2000 and 2004, G.O.P. gunslingers played into the Western myth and mined images of manliness, feminizing Al Gore as a Beta Tree-Hugger, John Kerry as a Waffling War Wimp With a Hectoring Wife and John Edwards as his true bride, the Breck Girl.

Now, in the distaff version of Swift-boating, they are casting Hillary Clinton as an Angry Woman, a she-monster melding images of Medea, the Furies, harpies, a knife-wielding Glenn Close in “Fatal Attraction” and a snarling Scarlett Johansson in “Match Point.” (How many pregnant mistresses does Woody Allen have to kill off in movies before he feels he’s reversed Dostoyevsky and proved that if the crime is worth it, there should be no punishment?)

Republicans think that men who already have nagging, bitter women in their lives will not want for president the sort of woman who gave W. a dyspeptic smile or eye-rolling appraisal during State of the Union addresses.

In “Commander in Chief,” writers were careful to make Geena Davis’s chief executive calm and controlled under pressure ? even when her rival, played by Donald Sutherland, made an insulting menopause crack.

The hit on Hillary may seem crude and transparent. But in the void created by dormant Democrats, crouching in what Barack Obama calls “a reactive posture,” crude and transparent ploys work for the Republicans. Just look at how far the Bushies’ sulfurous scaremongering on terror, and cynical linkage of Saddam and Osama, have gotten them.

The gambit handcuffs Hillary: If she doesn’t speak out strongly against President Bush, she’s timid and girlie. If she does, she’s a witch and a shrew. That plays particularly well in the South, where it would be hard for an uppity Hillary to capture many more Bubbas than the one she already has….

Posted by: anne

I landed here quite by accident, but, if one compares conservative and liberal postings, chat, articles, speeches, talk radio and news media, it is hardly the conservative branch that is devoid of fact. To each side the other sounds childish and foolish. When in fact, the differences are substantially in how they interpret facts as they relate to the broader questions at hand. Conservatives believe that everything is scarce and that we should manage that scarcity, even if it involves social and economic coercion. Liberals believe little if anything is scarce, and that no social coordination is necessary, except that of money and property. These are both forms of coercion. The difference is that the conservatives will let all people do with their resources what they wish, and liberals will happily take from whomever they can to fulfill popular whim.

All differences between the left and right are no more than this.

Posted by: Curt Doolittle

Curt wrote:

“The difference is that the conservatives will let all people do with their resources what they wish, and liberals will happily take from whomever they can to fulfill popular whim.”

Neither sounds completely Christ-like, the guy that encourages every one to happily share their resources.

Posted by: Winslow R.

Whoa…. Curt you seem to have come through some sort of time warp…. how did you manage that?

Posted by: Winslow R.

So Curt would that be the liberal schemata or the conservative?
-I appreciate Winslow’s dragging Jesus into this. I do.

Posted by: calmo

>>”Neither sounds completely Christ-like, the guy that encourages every one to happily share their resources.”

Assuming the circumstances applied, if they used the name Daedalus or Hermes instead of Christ, in order to show “what happens when you do such a thing over a long period of time” would that make any difference? Substantially, this is a difference in language.

These people use mythological constructs to convey the interaction of humans to describe what happens to humans over long periods of time. As a methodological program for prescribing human behavior alone, this method is superior to those that prescribe behaviors that one can experience the outcome of directly. These two competing ideological methods are simply tools. But they depend on differences in how we see the world. But that world view is completely different. Methuselah would see the process of human life differently from the child and the child different from the mayfly, simply because of the knowledge that they can derive from experience. Conservatives rely less on direct experience and more on the wisdom handed to them by Methuselagh. This is a form of intellectual humility. Unfortunately, the Zoroastrian idea of revealed wisdom has replaced the typically Proto-European polytheism. If one separates the wisdom from the Jewish-Zoroastrian vehicle, the basic ideas inside this mythology are an economic model. That economic model is the source of nearly all human prosperity: overproduction, savings, delaying gratification, technical craftsmanship, and material innovation. It also contains what people rail against: hierarchical social orders, expansionist militarism, social coordination through economic inclusion or exclusion.

Unfortunately, the rise of the scientific method has led to an attempt on both sides to treat this mythology, which contains many very good ideas, as a science, and this has hurt the interests of both sides.

Realistically, the division of labor is a division of knowledge, and there is value for humanity for some people to have long term visions, and some to have shorter. The conflict between those visions only comes about because of a democratic government and the ability of that government, mostly through the control of schools, to impose a philosophy on the population. In effect to prescribe a single way of thought and action.

>>>”you seem to have come through some sort of time warp”
If you mean that my pattern of thought has been developed by the great thinkers over the past two and a half millennia, then that is possible, and comes with all such things entail. But that doesn’t change the fact
that the commentary above claims conservatives do not use facts, and that they are fools, and that in turn, I am making an argument, but you have essentially used name calling, which is, of course, not an argument at all.

It is very interesting, but humor and sarcasm have been used by the peasantry to conduct a non-rational assault on any set of rational ideas for, that I know of, something like three thousand years. The purpose of this is to create common knowledge in a population that disregards the idea, independently of logic of the opponent’s argument. They then rely on the common knowledge to discredit it, rather than learn to analyze the problem on its own.

If one were to compare religious belief systems, and say that one is based upon the experience of generations handed down as myth, some good and some not so, and the other belief system to rely on common knowledge based on such humor and sarcasm, which would be more likely to contain accurate information? In fact, which must contain more accurate information?

Humor and sarcasm deployed in an argument are not rational and not an argument. They are tactics specifically designed to avoid the argument, and call in the consensus of the ignorant to provide collective validity when reason and logic and knowledge are absent.

If a population is taught sophisticated ideas by myth and allegory, because they are young and unable to reason, then learn reason late in life when they are more able, how would they speak? And given a distribution of intelligence in a population, how would people at different points in that population speak of current issues?

On the opposite side, how would people behave if they were not taught such issues? When would they learn about the outcome of long-term human cooperation? It would be later in life. Too late to make use of it.

>>>Revisited: “the guy that encourages every one to happily share their resources”
He says that individuals should be charitable. He specifically admonishes the government and the leaders at the temple for interfering in the people’s use of money. Individuals can judge an occasion for charity, and judge their willingness. The taking of money from people so that it can be distributed by others is not charity, does not teach charity but teaches the opposite. This is quite different. Conservatives want to train the population to conform, be productive, save and materially innovate.

Conservatism, which is an economic strategy, contains the most economically productive ideas in human history. It uses myth and allegory to teach children to think about the long term outcome of their actions, and to delay gratification, to develop discipline, to save, and to produce. The Zoroastrian format of that information that comes from Judaism is an intellectual disease that this underlying philosophy is plagued with. But that underlying philosophy has been the most important one in human history. Unfortunately, it requires social pressure to instill. And these people no longer have enough control of their environment to maintain it. So they do what any group of that nature does: place extraordinary emphasis on it, and shut out those who work against it. Of course, this implies economic peril for the rest of us.

>>>”Would Christ have invaded Iraq”
Christianity, in the sense that you are using it, mixes Jewish mysticism as a religious order with underlying ideas that are entirely Aryan (in the academic sense of the word) Christianity is just a soft wrapper around these ideas. They speak of Christ when they mean the feminine charity of Judaism. They speak of God when they mean the heavy hand of masculine Aryanism – harsh judgment. Zeus is still there behind the medieval Christian robes.

Like any system of thought, this is a bit of a problem because they are arguments to authority. Polytheism lets this happen, and the Jesus (feminine), God (masculine), Mary (maternal), Saints (everything else) structure keeps that multiplicity of authority alive. Not a bad idea though.

So, no, Jesus wouldn’t have invaded Iraq. But God sure would have. And been happy about it.

>>>”would that be the liberal schemata or the conservative”

Again, this is an argument to form, not content, and an attempt at sarcasm or humor rather than reason. You may disagree with my arguments, but the statements you made only prove my assertions.

Again, I will state my original premise, that the reason conservative literature and media is more successful is that it is based on reason even if embedded in myth. The reason that liberal literature and media cannot compete in the same medium is that they are based upon humor. This humor does not contain any substantive theoretical content.

This leads to the question of whether people on the left are poorer based upon what they believe, or believe what they do because they are poorer. Which leads to the fact that having a mutual fund tends to make one vote conservative, and this is what the right means by “ownership society”.

There are many differences in these philosophical structures. The most important one is the absolute nature of property rights. The second most is the temporal index of the theories included. But both epistemic and stylistic differences exist. It’s just that the stylistic ones are what everyone talks about, because that’s the limit of their understanding.

To use the same form of ridicule as an example, the posts above on this topic are the equivalent of “Look Betsy, (expression of shock and awe) isn’t that terrible?” While to the left this sounds like a reasonable statement, “Jesus said so” to the right, sounds like an equally reasonable statement. They are both the same: shorthand messages to those with the same language, same ideas, and same ambitions. It is the underlying physics of human cooperation that we should be debating. Comments on the form of either are simply an admission that one cannot either understand or debate the thing in question.

But liberals should take comfort. This process has been leading to the left for over a hundred years. The Republican Party today is just the Democratic Party of the nineteen eighties, and is just as destructive. And the left is clearly winning the battle in the population. They do so because we are, at least in the short term, wealthy enough that we can tolerate this kind of consumptive activity because the economic impact of those actions is a long time in coming. But this same cycle has happened thirty or so times in human history and I suspect that the painful outcome will be the same.

History will prove that Keynes and Marx got their come-uppance. Well, Marx has gotten his. Time for Keynes.


Posted by: Curt Doolittle | Mar 25, 2006 5:38:25 AM

Thoughts on Economics, Kings, Religion, Culture and Intelligence

Tuesday, January 2nd, 2007

I think that one of the reasons I like the Austrian vision of human cooperation is that it does not require that a majority of people agree to believe in anything that is common to all or share any vision of the world – whether it be personal activity in daily life or the general purpose of man in the distant future. Since all men have different abilities, and with different abilities we see the past, present, and future just as differently, we must all have slightly different strategies for pursuing our happiness and welfare.

This universal possession of a single idea of human behavior is one of the problems with monotheism and the Zoroastrian religions in general: the benefit of religions of this nature is that they help large populations coordinate their activities. (Even if it constrains them to simple ones.) And, in particular, it allows the development of trust that will permit an increase in cooperative activity, namely trade. And this is accomplished partly through the universal respect for life, and partly through the sharing of visions of what we all should be doing in our daily lives. But on the opposite side of the spectrum, by “walking in the footsteps of the prophet” it goes too far and asks all men to be the same. And this is the bad part: we are not equal in our abilities and circumstances, and therefore by pursuing similar outcomes we tend to pursue minimalist and static futures, with masculine zeal. This limited view of man is a destructive process.

Christendom was not an innovation in cooperative technology. It was not the progress that we commonly think it was. It was a regression. It was a comforting yet economically destructive idea like socialism that the west took a millennium to shake off. While men of the Enlightenment attributed the success of Europe to Christianity, the truth is that Christianity, while making us adopt strategies that benefited Christendom, which was a very large population equal to essentially “everyone”, they missed the fact that the underlying beliefs that created their economic success were not Christian but pagan, Aryan individualism. And the truth is that Aryans (from the Kurgans forward) were committed to a universal population in the first place.

My opinion, and it becomes more certain with each passing day, is that military conquest that imposes individualism is more honest than religious conquest that imposes collectivism, is better for the economic prosperity of the population, and more tolerant of a diverse population.

Even more so, in an expanding division of knowledge and labor, it inhibits the rate at which technology spreads in a population.

In this way, despite what we attribute our past to Christianity. And the fact that the church and the Catholic philosophers added significant value, largely defending us against the eastern philosophy. The fundamental truth is that humans will prosper better under individualist polytheism.

Kings have often been a problem. But you can kill a bad king. It happened time and time again. It was often done by the king’s family, whose interest was in protecting their assets. But the travesties in human history are not from kings and princes. They are from emperors and priests. The combination of a powerful king who claimed divine revelation is the worst combination of all.

In the west, our kings were not divine. They were men. They eventually adopted the mantle of divine right, but never divine revelation.

If one looks at history, the natural state of man is to have kings and princes. These are just fanciful titles for tribal chieftains. If one looks at history, and applies a bit of reasoning, the optimum philosophy for men is one that is polytheistic. Because men themselves are polytheistic. Because men are different.

The real problems facing man are those that provide visions of leadership that are epistemologically impossible: governments and religions. Our first problem is to shake off the error of divine revelation as the means to enforce economic and social coordination, and to use education and knowledge of economics instead. Our second is to shake off the mantle of government, the increase of which, beyond having kings, places people in slavery and poverty.

This can only be done though kings and polytheism. In this way, we can provide a better certainty to a diverse population who wishes mythical allegorical advisers to help them cope with the universe. It also prevents the rest of the alternative. The stifling, stagnating human social order that makes slaves in poverty of men who would sacrifice their freedoms for temporary security.

There are those that say that Zoroastrianism was developed to counter Aryanism (military expansion, technology, hierarchical division of labor, bending nature to man’s will, limited births, excess production of food stuffs, rational realism). But the door swings both ways. Aryanism has been reacting to Zoroastrianism as well. And the competition between the two ideas goes onward. (Of course, the fact that one has led to widespread prosperity, and the other to ongoing poverty is enough of a determinant in the only test of any such philosophy.)

Very few people have made the world rise into prosperity. We are still the very few. And when there is enough prosperity that the peasantry can use economic and political force to unseat the aristocracy, the civilization – all of them in history – falls. The only question is whether, with such an integrated and mobile world, the economic individualism that has raised the world kicking and screaming out of ignorance and poverty can continue. I suspect not.

Not unless the differences between people’s economic strategies is actually biological in nature. And if (and when) this is found to be true, then the world will be a very different place.

Now, I will add that there are multiple dimensions to intelligence, and that this division will not work the way most people think it will. For example, some people may be better with verbal skills. Some with abstract reasoning, some with physical movement. But the thing that is most interesting is whether some people are better at suppression of impulsive emotion, or better at, most importantly, network cooperation. I have begun to suspect over the past year that this is not just an aesthetic or learned value, but that given the way the mind works with spatial and temporal memory, that some people are just better geared to cooperation than others. I am probably the first person to explore this avenue. But the reason that I have an interest is that I am fairly certain that I understand how the chemistry and physical properties of the brain will allow memory and memory-prediction to provide different levels of temporal skills to people. While exposure to similar ideas does alter the brain, and may account for some of it, simple observation of babies and toddlers in my family and that of others has shown me that this is not due to education, but to genetic predisposition.

And being placed in circumstances that do not allow that coordination makes someone look less intelligent, and frankly it’s much more frustrating for them as well.

In this way, if we are all slightly different in this spatial-temporal ability, we will choose economic models (social organizations) that are slightly different. It may be that this ability rests in a distribution in all races and populations, and that as the ability of people to move about, especially among economic strata, increases, each population will develop this ability equally. However, it appears to me that just as I cannot seem to fathom “objects” and “sounds” the same way as a Mandarin Chinese, that outside of a very narrow band of European descendants, it appears that I cannot find from any other culture anyone, even those raised here in the States, who can handle spatial-temporal coordination in the same way.

My Economic Prediction for the Next Five Years

Tuesday, January 2nd, 2007

In 2004, I predicted the following:

  • By November of 2005 the expansion of the US economy would stop (Correct)
  • By August of 2006 we would structurally be in recession, regardless of the numbers promoted by the federal government (Correct)
  • By October of 2006 we would see a slowdown in business (correct)
  • Between November and February we would see a market correction of 30%. I refined this to December 15th, which has since passed. (Incorrect)
  • By March 2007 we would openly discuss a state of recession. By August of 2007 we would be in full recession.
  • The recession will last until the spring of 2010.
  • The baby boomer reduction will hit shortly thereafter and fight against the attempted recovery.
  • The US will drag the planet into worldwide reorganization the scope of which we have not seen since the fall of the Roman Empire.

This does not mean that people will not make money, or that businesses will not continue. It means that there will be less of a distribution of prosperity, and that prosperity we have made by our knowledge production will expand far less quickly. The counter-argument is that the number of people in the population simply affects the amount of economic innovation that occurs, but this is counter to what has happened in the history of Asia, which returns to the equilibrium of poverty just as quickly as the innovation can be implemented.

I will try to keep this updated as we move through time.