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The complete inability to manage obvious problems: California Drought Edition

2015 March 14
by Ian Welsh

California DryingSo, California has about a year’s worth of water supplies, and groundwater is being depleted so fast wells are going dry.

This problem has been coming for years.  There should have been rationing, at the last, last year and probably before, since climate models indicated the strong possibility of the drought continuing.  Moreover farmers should have been forced to move over to less water intensive crops (subsidize the move.)

The total inability to manage obvious problems is one of the hallmarks of our age.  Everyone with any sense knows there’s a problem, everyone with any sense knows at least part of the solution, and we don’t even do the obvious things to fix the obvious problems.

(I am fundraising to determine how much I’ll write this year.  If you value my writing, and want more of it, please consider donating.)

Until a new generation comes of political age or absolute catastrophe wipes out the political class, this will not change.  It’s not quite true that old dogs can’t learn new tricks, but few politicians, senior civil servants or corporate executives are capable of acting in ways different from those that brought them to power.  As with science, the graveyard makes the conversions.

What Intellectual Judgment Is

2015 March 12
by Ian Welsh

Intellectual judgment is not “common sense”, it is its own thing. Many people with excellent intellectual judgment are lousy at running their own lives.  Instead intellectual judgment is about understanding the limits of intellectual systems.

Every intellectual system has premises, axioms and assumptions. There are some things which simply are not true, or cannot be proved as true. They are often approximations of the truth–they are close enough to the truth under certain circumstances. If you do not understand where and when they break down, you will go wildly wrong when you push discipline towards its extremes. You must also be aware of the fact that other people will game your system, that when your assumptions are known, other people will then subvert them.

Any system which says ALL people are or do X is almost certainly wrong if it’s saying anything that isn’t trivially true. All people do not maximize utility (in fact, no one does). Everyone does not act in self interest all the time. Everyone does not act altruistically. Prices do not always convey information about how valuable something is. Supply and demand do not always determine price. Perfect information is rarely available, and people are not even close to rational, except on rare occasions when they are. Entrepreneurs succeed as much by luck as anything else, compensation has little correlation with how hard people work, many people are willing to die for their beliefs, but definitely not all; etc, etc…

(I am fundraising to determine how much I’ll write this year.  If you value my writing, and want more of it, please consider donating.)

Intellectual judgment requires knowing the limitations of any system you’re using, what it’s good for, what it’s bad for, where it breaks down. Good policy judgment requires understanding human nature, not in the operational sense that a good salesman does, but in the sense of understanding how people react to incentives, ideas and laws–how they are shaped by them, how they shape them, how they get around them, how they come to believe in them or how they subvert them.

It’s almost impossible to teach this (almost) and learning it requires both real world experience and deep thought on psychology, history, mass psychology, anthropology, sociology, cognitive science and humanities. Start with Machiavelli, and move on.

Fundraising update: $1,484.36 to go to 5 articles a week

2015 March 12
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by Ian Welsh

As of publication, we’ve raised $414 in recurring donations (which count 3x), and $3,273.64 in non-recurring donations, for an effective total of $4,515.64.  I am immensely grateful to everyone who has donated, and this puts us solidly in the two significant posts a week level, and not too far from 5 posts a week.

If you haven’t given, you can afford to give, and you value my work, please consider donating or subscribing.  The amount of writing I do takes time and it is work.


If you haven’t read them already, there are new articles on the preconditions for Keynesian stimulus to work; a concrete example using those conditions; an article on Venezuelan sanctions and their relation to the Melian dialogue which prophecized the fall of Athens; and an article on how intelligence can cause disaster if it is detached from judgment and creativity.

The Dangers of Intelligence without Creativity or Judgment

2015 March 11
by Ian Welsh
Larry Summers, 2013

Larry Summers, 2013

A friend once said to me “once you’re at a certain level of intelligence, most people you meet are either about as smart as you, or stupider.”

I’m at that level of intelligence, I suspect many of my readers are as well. If I go into a 10,000 person organization which doesn’t select primarily for intelligence, I expect to either be the smartest person in the room, or as smart as the smartest person in the room. In an org that does select for intelligence, I still expect to be able to keep up, and to be smarter than most, even if they know more about the subject than I do. (Plus, lots of very high IQ people have terrible intellectual judgment).

Divide intelligence into three parts, (yes, you can divide other ways):

1) processing power and pattern recognition (measured pretty well by IQ)

2) Creativity

3) Judgment

A lot of people only have the first, they are very smart ordinary people, they will get to the same solution a modestly bright person would, just a heck of a lot faster. The folks who put up their hands first in class, whose self-worth is based around #1.

(I am fundraising to determine how much I’ll write this year.  If you value my writing, and want more of it, please consider donating.)

High IQ people without 2 or 3 and preferably both, are extraordinarily dangerous if the problem isn’t straightforward. They are the brilliant people who can completely fuck things up. Think Larry Summers — he really is VERY high IQ, I know people who know him. Brad DeLong has very little of #3 either, though he’s very very smart. (He’s very good when his emotions aren’t involved, his historical economic work is excellent). #1 is much more common than #2 and #3.

It isn’t primarily intelligence based, but empathy also has a multiplicative effect in certain circumstances.

Around about 4 standard deviations IQ starts to go really off tracks without #3, because at that IQ level people can make connections between almost anything, the pattern recognition is in overdrive.

To use a metaphor, think of processing power and pattern recognition as the engine of a motorcycle.  Think of creativity and judgment as the rider.  In a straightaway, powering down the highway, no other vehicles on the road, what matters it the engine.  As long as the rider can stay on the bike, the guy with the highest IQ will win any race.

But the more difficult the road conditions, or when you go off road, the more the rider matters.  The guy with the big motor, faced with erratic drivers and lousy weather is likely to get himself, and possibly others, killed.  The good rider will make it thru.

Learning how to think is, in many ways, more important than raw processing power.  The raw processing power will hold you back (to an extent, there are accounts of people raising their IQ by over a standard deviation thru concentrated intellectual effort), but too much power and too little judgment will get you killed, and too much processing power and no creativity will just get you where everyone else would have gone, but faster. Better hope that’s the best place to go.

(Adapted from a comment from 2013.)

What the Melian Dialogue tells us about the End of Empire (Venezuelan security threat edition)

2015 March 10
The Course of Empire by Thomas Cole

The Course of Empire by Thomas Cole

I’ll just point out that in no way can Venezuela be considered a security threat to the United States.  And the “human rights violations”, while some are real are far less than routinely committed by many US allies, including Saudi Arabia, while Venezuela is more democratic, again, than many countries the US has not imposed sanctions on.

This sort of bullying is exactly the sort of thing which will lead to the end of American hegemony.  Though less severe, one is reminded of the Melian dialogue.  The Athenians argue that the powerful do as they will and the weak as they must, and that the Melians should surrender.  If they do not, the Athenians will slaughter the men and sell the women and children into slavery.

The Melian reply in part, is thus:

But do you not recognise another danger? For, once more, since you drive us from the plea of justice and press upon us your doctrine of expediency, we must show you what is for our interest, and, if it be for yours also, may hope to convince you: Will you not be making enemies of all who are now neutrals? When they see how you are treating us they will expect you some day to turn against them; and if so, are you not strengthening the enemies whom you already have, and bringing upon you others who, if they could help, would never dream of being your enemies at all?

(I am fundraising to determine how much I’ll write this year.  If you value my writing, and want more of it, please consider donating.)

The irony of the Melian dialogue is that both sides are right: the Melians are destroyed, and would have been better off if they submitted.  But the destruction of Melos is indeed one of the contributing factors to the eventual fall of Athens, because while Sparta may be nastier internally, they are also less dangerous to other city-states than Athens is.

The analogy is not perfect, because even with all of Venezuela’s problems, much of the population is better off resisting the US than it would be conceding (the poor and the darker colored citizens have benefited immensely under the Bolivaran revolution).

But America, and the West’s continued insistence that nations will kneel or suffer is very similar and is already damaging American power.

The Quick and Clean Guide to Fixing the Economy (Keynesian Stimulus #2)

2015 March 10
by Ian Welsh

dawnHow would one do a Keynesian stimulus properly today?  Remember, the preconditions for Keynesian stimulus to work are that it not overly aggravate bottlenecks (not send oil to $150/barrel, for example); that it not aggravate overused sinks (carbon); and that the money not pool uselessly at the top.  Keynesian stimulus must create widespread demand.  Further, in a world with bottleneck constraints, sink problems and overuse of even renewable resources, it should help resolve those problems.

Create Widespread Demand While Mitigating Sinks and Bottlenecks

1) Every federal building in America to go to energy neutral at least, or energy surplus ideally.  That’s a massive stimulus.

2) In order for a house to be “conforming” and thus qualify for federal loan guarantees it must be energy neutral at least, as well.

3) A subsidized waiver system for retrofitting civilian buildings to be energy neutral—the cost of which is paid back by savings, so homeowners pay nothing, and commercial guys pay little.  You can create a securities market for the certificates to bring private money online.

4) No mortgage can be conforming if any laws or homeowner agreements forbid the homeowner from growing their own food or selling it.

5) All new condominiums and apartment complexes must provide for growing food, through hydroponics or other means.  Without it, they are, again, not conforming or the income from them gets taxed higher.

6) Substantial tax breaks for telecommuting. (See section below for how to make corporations do this.)

7) Move to a high speed rail system, subsidize electric cars with certificates (buy one while turning in a non-electric car and the government pays half), and so on.

These actions give you a massive renewable buildout, fast.  Most of the jobs are domestic (even if panels are bought from China).  They reduce energy use significantly, including peak turbine oil use and they enable people to grow food when needed, reducing pressures on various carbon sinks and renewable resources.

(I am fundraising to determine how much I’ll write this year.  If you value my writing, and want more of it, please consider donating.)

Reform the Tax System

8) Move back to high marginal income tax rates.

9) Move back to high marginal corporate tax rates, to force companies to start spending their money and to make tax incentives work again: at 80% tax rates the corporations will be very happy to do whatever the government wants them to do in exchange for a 20% tax rebate.

10) Reform the tax code so money earned in the US cannot be moved overseas to avoid said taxes.

11) Make stock buybacks rare (again, to force corporations to spend their money or give it to shareholders).

12) A punitively high inheritance tax on any inheritance over 5 million or so, with no loopholes.

13) A carbon tax.  Imports from any country will be charged that carbon tax at the rate of their carbon expenditure. Countries which will not allow proper inspections to determine said tax rate will be hit with the highest rate.These actions both stop money from pooling at the top and bring money off the sidelines.  The rich can spend it or have it taxed away.

There are many other things one could (and should) do (property taxes being at least partially based on carbon production and energy use, for example), this is just an outline and high-points.  It doesn’t include “how to get there”, but it is important for people to know that there are other options that would work other than status-quo neo-liberalism. If people don’t believe better worlds are possible, they won’t fight to get to those worlds.

Nor would this program work for every country, it requires a powerful country with the ability to impose conditions.  It would, however, work for the US.

When Keynesian Stimulus Works

2015 March 9
by Ian Welsh
John Maynard Keynes

John Maynard Keynes, 1933

It has become fashionable in many circles to denigrate Keynes and Keynesianism because unconventional monetary policy hasn’t worked.

I’m not going to mince words, people who make that argument are idiots.  Unconventional monetary policy is not Keynesian stimulus.

Keynesian stimulus is about widespread demand: giving money to rich people is not Keynesian stimulus.  The government spends, or even just gives money to people to increase their spending.

Unconventional monetary policy is not Keynesian stimulus.

Further, Keynesian stimulus only works where there aren’t supply bottlenecks. If you were to do (actual) Keynesian stimulus today it wouldn’t work, because oil would rocket past $150/barrel and the economy would immediately collapse.

Keynes did not concentrate on this issue because it wasn’t a problem in his time period: the world, and more importantly, the world’s keystone economy, America, was awash with the stuff.  It wasn’t a bottleneck.  The only bottleneck, before the US went off gold, was the gold-standard.

The bottleneck issue is also relevant to sinks and renewable resources: spending money indiscriminately in a way which leads to more commercial fishing, say, would be moronic, given collapsing fish stocks.  Spending it in ways which lead to vastly more carbon or methane would also be idiotic.

(I am fundraising to determine how much I’ll write this year.  If you value my writing, and want more of it, please consider donating.)

We are facing challenges Keynes did not, but that doesn’t mean he wasn’t right, that means that the policies he suggested need to be modified for the changing times. If you cannot do so, you do not understand either Keynes, or your own time.

This is the great problem with the work of the great political philosophers; of the sages: they come up with a solution specific to a time, and fools think that it should be applied verbatim for all of time, while other fools think “if it doesn’t work verbatim, it’s all crap.”  Doing Keynesian stimulus would be simple, if it was desired. You just make sure the money gets to ordinary people and is used to reduce carbon emissions and uses of other bottleneck resources, while making sure that money doesn’t pool at the top.  (Stopping money pooling at the top is mostly a solved problem. Start with 90% tax rates on all income over 1 or 2 million or so, close loopholes, and don’t privilege any income.)

But Keynesian stimulus hasn’t been done, either smart or stupid: not even the widespread demand part has been done.  So people who rag on about “Keynesianism” are ragging on about a straw man: a policy which has not even been pursued.

Keynes wouldn’t have any problem prescribing solutions for today’s economic problems, and neither should anyone who understands his work.  And those who deride Keynesianism either don’t understand it, or don’t actually want to see widespread prosperity.

Fundraising Update: 2 articles a week reached, with a push can make 5 articles a week

2015 March 9
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by Ian Welsh

In the first week of fundraising we’ve raised $334 in recurring donations, and $2,808 in one-time donations.  Multiplying the recurring donations by three puts the total raised to $3,810, which is over the $3,000 needed for two articles a week for three months.

The next threshold is $6,000 for 5 articles a week—$2,190 away.  If you haven’t already given, and you value my writing, I hope you will consider doing so.


If you haven’t read it already, there’s a new article on the problems with non-fiction today, and I’ve kicked my most popular, ever, article, on the difference between ethics and morals to the front page.  That might seem like an esoteric topic, but the difference is the difference between a good society to live in, and a lousy one.

Problems with Non-Fiction Today

2015 March 7
by Ian Welsh

I’m not exactly old yet, but I’m no spring chicken, and as a child and teenager in the 70s and 80s I read a lot of books from previous generations.  I still read a lot, though not so much as when I was younger, and the non-fiction has changed.  This isn’t surprising as writing changes with the times, but I think it’s generally become worse.

Oh, writing is smoother, as a rule. It’s Gladwellian.  Contemporary non-fiction has lots of anecdotes and fuzzy feelings, lots of profiles of the people affected by whatever they’re writing about, lots of little details about the key thinkers.  Many would argue contemporary books are better written, because they connect with people by making the stories personal.

I suppose they do.  But they’re also disconnected.  Most books today should have been 10,000 word magazine articles.  There’s not enough meat: there’s fluff and detail on one issue or a small cluster of issues, but there is very little wide-ranging intellectual context.  You can read a book on how important it is that everyone share in economic gains, or how people are risk averse, or how smart crowds are (or aren’t), or how people can’t think properly in time and how bad most people are at statistical thinking, or you read a book about how just a few resources can make a difference in history, and it’s all very well, but there’s no context.  There is no world view.

(I am fundraising to determine how much I’ll write this year.  If you value my writing, and want more of it, please consider donating.)

As a result, these books become factoids.  Because they either don’t sit a coherent world-model, or because they don’t state their world model, most people can’t really integrate these books usefully, because they don’t read enough books, they don’t spend enough time thinking or talking about what they read, and they don’t understand the premises underlying the world view.  They have no model of cooperation or competition and how the two go back and forth, they don’t understand generational trends, they don’t understand the rhythms of technology; they understand neither conditioning (nurture) nor nature, nor how those two interact.

This isn’t people’s fault.  This stuff isn’t taught in school, and it’s barely taught in university; when it is taught in university it’s rarely taught well or with proper attention to the assumptions of models.  The disciplines which teach this stuff best, only do so rarely and are either despised (sociology), ignored (anthropology) or the discipline itself despises those who do integrative work (history).

People don’t know how to think.  Despite all the talk about thinking, it isn’t taught because it’s hard to teach, and because employers don’t actually want employees who know how to think on their own (such people are endlessly annoying as subordinates, and executives are chosen largely for knife-fighting skills, not strategic ability, despite what the business books would have you believe).

Specialization can be useful, but before you go narrow, with rare exceptions, you need to go broad. You need context and a model, a schema into which to fit the facts.  Modern non-fiction generally wastes half of its words on verbiage—creating an “emotional connection” without actually providing that context.  As a result, in order to form a world view, one has to read a vast swath of books, throw out what isn’t useful and put what’s left into a coherent worldview, and do it largely on one’s own.

As a result you are far better off reading books like Jane Jacobs “Economy of Cities” and “Cities and the Wealth of Nations” or anything written by Max Weber, than almost anything published by younger authors in recent years.  Nineteenth and early twentieth century authors writing on Empire speak more eloquently to strategy and growth than our current “international affairs experts”, and Keynes, for all he is abused, is far more insightful than most of those who either slag him or claim to follow him while doing what he would not have done.

Of course there is a place for books on narrow subjects, a place for non-fiction books which tug the heartstrings. But the true non-fiction classics, the books that are read and re-read, right or wrong, are generally books with great grasp and reach (The Prince, the Protestant Ethic, The Elementary Forms of Religious Life).  And those books give people enough to work with, enough to understand, and speak to something large in society, something that matters: how to rule, how progress occurs, what religion is.  You may reject them, as many have rejected all three of those (or Jacobs’ work), but they had reach and grasp and ambition and they spoke large about how the world works.

A book which tries to explain any part of the world must both have integrative ability and context.  If it is not clear what is not explained by your theses, then your theses have failed.  Everything cannot be explained by any one theory, whether that be self-interest (Darwinian reproduction or Economic utility) or more ancient (but still strong) theories about the will of God.

Let magazine articles be magazine articles.  Let books be books, and let them try to shine light on enough of the world to matter.

Ethics 101: The difference between ethics and morals

2015 March 6
by Ian Welsh

EthicsThe best short definition I’ve heard, courtesy of my friend Stirling, is that morals are how you treat people you know.  Ethics are how you treat people you don’t know.

Your morality is what makes you a good wife or husband, dad or mother.  A good daughter or son.  A good friend.  Even a good employee or boss to the people you know personally in the company.

Your ethics are what makes you a good politician.  It is what makes you a statesman.  It is also what makes you a good, humane CEO of any large company (and yes, you can make money and pay your employees well as Costco proves.)

When you’re a politicians or a CEO, most of what you do will affect people you don’t know, people you can’t know, people who are just statistics to you.  You have no personal connection to them, and you never will.  This is at the heart of Stalin’s comment that “a single death is a tragedy, a million deaths a statistic.”  Change the welfare rules, people will live or die, suffer or prosper.  Change the tax structure, healthcare mandates, trade laws, transit spending—virtually everything you do means someone will win, and someone will lose.  Sometimes fatally.

Ethics is more important than morality in creating a functioning society.  This comes back to what I was discussing earlier, that it is worse to kill or harm more people than to kill or harm fewer people.

Morality dictates that you take care of your family, friends and even acquaintances first.  It is at the heart of the common admonition to “put  your family first.”  Whenever I hear a politician say “I put my family first” I think “then you shouldn’t be in public office.”

We call the family the building block of society, but this is nonsense except in the broadest sense.  The structure of the family is entirely socially based, generally on how we make our living.  A hundred years ago in America and Canada the extended family was the norm, today the nuclear family is, with single parent families coming on strong.  In China this transition, from extended to nuclear family, took place in living memory, many adults still in their prime can remember extended families, and were raised in them.  The wealthy often have their children raised by servants (I was for my first five years), tribal societies often put all male children into the same tent or tents at puberty, and so on. A hundred and fifty years ago children were taught at home, by the extended family, and not by professional teachers.  They spent much more time with family until they were apprenticed out, if they were.

(I am fundraising to determine how much I’ll write this year.  If you value my writing, and want more of it, please consider donating.)

To be sure, children must be born and raised for society to continue, men and women must come together to get that done, but there are many ways to do it, and God did not come down and mandate the nuclear family.

This may seem like an aside from the main point, but it is not.  Family is not fundamental, it is not first.  Society is first, and family is shaped by the needs and ideology of the society.

For a large society, a society where you can’t know everyone, to work ethics must come before morality, or ethics and morality must have a great deal of overlaps.  By acting morally, you must be able to act ethically.

Our current ethical system requires politicians to act unethically, to do great harm to people they don’t know, while protecting those they do.  This can hardly be denied, and was on display in the 2007/8 financial collapse and the bailout after.  The millions of homeowners and employees politicians and central bankers did not know were not helped, and the people the politicians and central bankers and treasury officials did know, were bailed out.  Austerity, likewise, has hurt people politicians don’t know, while enriching the corporate officers and rich they do know.

The structure of our economy is designed to impoverish people we don’t know.  For developed nations’ citizens this means people in undeveloped nations.  For the rich this means cutting the wages of the middle class.  For the middle class it means screwing over the poor (yes, the middle class does the day to day enforcement, don’t pretend otherwise.)  We are obsessed with “lowering costs” and making loans, and both of those are meant to extract maximum value from people while giving them as little as they can in return.

We likewise ignore the future, refusing to build or repair infrastructure, to invest properly in basic science, and refusing to deal with global warming.  These decisions will overwhelmingly affect people we don’t know: any individual infrastructure collapse won’t hit us, odds are, and global warming will kill most of its victims in the future.  The rich and powerful, in particular, believe that they will avoid the consequences of these things.  It will affect people other than them.

To put the needs of the few before the needs of the many, in public life, is to be a monster.  But even in private life if we all act selfishly, as our reigning ideology indicates we should, we destroy ourselves. If we all put only ourselves and those we love first, and damn the cost to everyone else, our societies cannot and will not be prosperous, safe, or kind.

The war of all against all is just as nasty when it is waged by small kin groups as when it is waged by individuals.

(Reprinted from 2013: this is the most popular article, by traffic, I ever wrote.)