The horizon is not so far as we can see, but as far as we can imagine

Month: November 2013 Page 1 of 2

Just forbid most retail stores from opening on holidays

Really, just do it.  I’m old enough to remember when only pharmacies and small corner stores were allowed to be open on Sundays and Holidays, and it was no great hardship.  Holidays that are only for people who don’t work shitty jobs suck.  If no one can open, no business suffers a comparative disadvantage for not being open.

This is yet another case where the best way to have a society worth living in is to simply take bad behavior off the table.

And while you’re at it, increase the minimum wage to enough so that people can live on it and Walmart workers don’t need Welfare.

A Meditation on Love and Friendship

Recently, a friend of a friend was fired from their job.  It turns out they were probably fired without cause, but at first it looked like there might be a good reason.  A while back someone I know was fired for cause: they made inappropriate sexual remarks, in a PR position.  The company had reason to fire them.

I have made a point of being kind to that second person, even though he was at fault.

We all mess up, we all do things we regret later.

This isn’t even about forgiveness, this is about “I’m still your friend”, or “I still love you” if it’s that type of relationship.  It isn’t saying the guy who made the inappropriate comment shouldn’t have been fired, he should have been.

It is about saying “this isn’t all there is to you”.  It is about second chances: you pay the price for your screw-ups, but you get another chance, not least because many people who have done far worse things, and harmed people far more, will never pay any meaningful price (yes, Jamie Dimon and Barack Obama and George W. Bush, I’m talking about you.)

Grace isn’t about giving people what they deserve, it’s about giving them what they don’t deserve.

Deserve is the deadliest word: only a fool asks for what he or she deserves.  The wise ask, as it were, for their daily bread, for what they need and what’s good for them, maybe even for what they want, but not what they “deserve”.

Let us all, then, hope for grace, knowing that none of us is free of fault.

Too Much Money Chasing The Wrong Returns

There is too much money in the world being invested in all the wrong ways.

The amount of money being created by the Federal Reserve, Bank of Japan and the ECB is dwarfed by the amount of money being produced by Chinese banks and shadow banks.

This money is being spent on unproductive enterprises.  About 70% of all sales of Brooklyn homes, for example, are going to hedge funds, investors and international buyers, who are looking for income.  In Australia much of the real-estate is driven by Chinese buyers, so Australians buy in the US, because the US is cheaper, and so on.

Money creation is out of control, we are creating vast amounts of money, and then spending it either unproductively or harmfully.  As I noted earlier, virtually the entire run up for the Dow can be explained by “Federal Reserve giving rich people money.”  In China the money is also going into real-estate, most of it shoddy, and entire rural communities are being forced off their land and into the newly built slums (because, very quickly, that is what they will become.  We have a lot of experience with what happens with these sort of planned prebuilt cities: and virtually all of it is bad.)

Money is permission to do things.  It allows you to control what people do.  Vast leveraged financial games and real-estate purchases intended to create income streams are not productive, all they are doing is moving money around, they are not creating new real services or goods which improve people’s lives.  Instead they are meant to concentrate money and power, permanently, in the hands of a small class of people and make it so that everyone else has to pay those people to survive: this is about permanent extraction of virtually all value from the majority to the minority.

This is not a sustainable economic model.  It is creation of money from thin air without underlying economic growth to justify that creation of money.  The money is used to buy up control of the system and future revenue streams, but it does so by damaging the real economic health of the majority of people, making them economic cripples.  People who live paycheck to paycheck cannot create demand for new products and services, cannot themselves create new products and services, are unhappy and increasingly unhealthy and generally unpleasant to be around, because their lives are unpleasant.

Almost all new job creation in the past seventy years has been in services: aka, McJobs and administrative jobs which create little to nothing of value.  What is happening now is accelerating that trend.

When catastrophe hits, and it will, we will be unable to respond effectively, because we will have created billions of economic cripples, of people who, never having been allowed to do anything of significance, never having had any economic agency, and never having worked at a job which wasn’t meaningless, will not easily be redeployed to do what is useful, and needed.  The real economy is what people do to create services and products which are good for other people.  A de-skilled, demoralized population, in the face of climate change and economic collapse, while it will respond as best it can, will be very hard to mobilize, not least because there will be nobody with the legitimacy to  mobilize them.

A basic rule of economic governance is this: when the “private” sector is not doing productive things with money, you must either change the incentives so they are, or simply take the money away from the people who are using it in unproductive ways and spend it yourself.  Make every building at least energy neutral, build the smart power-grid, fund electric cars and 3D printers in a big way, create high speed trains, go to Mars, radically decrease carbon emissions, provide a basic income for everyone, fund advanced research, and so on.

The first step to getting out of our current mess, then, is 95% marginal tax rates  on all income over 5 million, 90% on all income over 1 million, and a huge increase of corporate tax rates to over 70% unless they are doing what is in the public interest.  (Tax breaks on 20% corporate taxation rates do not affect corporate behavior.)

There are more fundamental fixes, mind you, but these are the basic, brain dead fixes that are doable within the current system, without radical changes.  This is what basic economics, as understood in the 1950s  with slight updates for an understanding of sinks and supply bottlenecks, tells you to do.

Do not give money,  free money, to people who are not spending it in ways beneficial to society as a whole.

And take away money from people who are spending it in harmful ways.

Money is a social creation, it is permission to tell people what to do.  You do not give money, and permission, to those who use it badly.

The Perversion and Senesence of Great Ideas

If you’re in the idea game, you notice three things really fast: there are very few great new ideas, the form of ideas lose their power, and a truly great idea will be torn from its moorings and used in perverse ways.

Marx, famously, said that he was not a Marxist and predicted the withering away of the State.  He said that Communism couldn’t happen before Capitalism, but those who called themselves Communists and obtained power came from peasant societies which had never gone through Capitalism and created some of the most powerful and despotic states in all of human history.


It is hard to imagine the historical Jesus (if he existed), who hung out with whores, told people to give away all the possessions, leave their families and who thought that tending to the poor and afflicted was so vastly important that if you didn’t do it God would turn from you, would be happy with so many of those who follow him today, who follow none of his teachings.  Jesus was not a Christian.

Adam Smith believed in public goods, public education, that humans were driven by fellow feeling more than selfishness and that  businessmen were constantly conspiring against the public.  Yet he is known for a single line about the invisible hand, the rest of his writing ignored by those who claim to be his disciples.  One imagines that he, too, might say something like “I am not a Smithian.’

A powerful idea, a great idea, will be misused.  Disciples will seize on that which seems useful to whatever they want to do, and ignore both the essence of the idea (Communism MUST come after Capitalism), and the caveats (Capitalism cannot produce public goods) without which the system will fail.

It is, thus, instructive to seek out ideas which have been little perverted (none have not been perverted.)  Amidst ideas that have worked, and worked, and worked, and done far more good than evil, one stands out: Buddhism. Oh, to be sure, you can find Buddhist bigotry and even the occasional riot (Burma, I’m looking at you); you can find Buddhist monks chopping off people’s heads and playing palace politics, and so on.  Yet, a history of Buddhism shows a belief system which has proved remarkably resistant to perversion.  It is simple, and powerful.

I will suggest that it is because Buddhism is a practice.  To be a Buddhist you must do certain things, with a specific end (removing suffering).  If you do not, you are not a Buddhist.  These practices work, you can measure the effect on people who practice on the brain with modern imaging technologies, you can see them when you interact with dedicated Monks or laypeople who take meditation seriously.  Meditate, send your compassion out to the four quarters of the world, and you become a certain type of person.

A great idea, then, let me suggest, must require something of its adherents.  A philosophy which is empty of practice may be great, but it will be perverted if it does not have a practice which creates the sort of people who are able to live by the idea.

The great sociologist Max Weber looked at how ideas would form people: how the idea of predestination made people work like dogs so that they would have proof they were saved, for example.

Whatever your idea requires people to do is what that idea will become.  If it does not require of them practice which makes them suitable to the idea, the idea will not succeed.

Of course, even if it succeeds, most ideas will eventually be perverted. It’s (relatively) easy to create a great idea that a generation or two lives by, it’s hard to create an idea which is capable of replicating itself down through the Ages.  What is mighty about Buddhism is its sheer longevity.  Twenty-fix hundred years, and it’s still doing more good than evil.  Early Christianity was pretty much perverted five centuries after Christ’s death, and one can argue for earlier than that.  Marxism was going bad even before Marx died.  Smith’s ideas were being used as justification for the very mercantalist policies he argued against within a century of his death.

Pity the great moral philosopher, then (and economics is just a branch of moral philosophy). Most will fail, their greatness destroyed by their disciples, their ideas perverted, their warnings ignored.  Look to the great ideas and ask yourself, “to make this work what sort of people are needed?  Can those people be created?  What would it take to create them?  Are they being created?”

In the answers to those questions you will discern much of the failure or success of any great idea, and will see not just that it will fail, but in what horrible, twisted debased form it will come live, a mockery of the hopes of its creator.

Or perhaps, just perhaps, you will see a bright shining idea, able to create a better world for however long it lives in a form capable of creating followers who can carry it.

Stirling Update

A number of people have asked for an update on Stirling Newberry.

He’s doing somewhat better, he still has significant aphasia (difficulty finding words) and difficulty controlling his right and left arms.  His personality is definitely intact, and he will most likely moving out of the institution in the next month or so.  He should, with difficulty, be able to care for himself.

One can never say how well someone will recover from a stroke, but I am modestly optimistic that he will make a good recovery.

(One interesting side-note, the aphasia does not effect him when speaking Spanish.)

If you have any acquaintance with Stirling and want to get in touch with him, drop me a note.

What Economy?

Ok, enough, the Dow just skirted 16K and I’m here to tell you that virtually the entire run-up of the stock market is based on one thing, and one thing only, the Fed pumping money into the markets.  That is it, that is all.  Since the market bottom the market has more than doubled, but jobs aren’t even close to recovering as a percentage of the population, Europe is still in crisis, and oil prices are still ludicrously high.

There has been a recovery in a technical sense, in a business cycle sense, and that is very very bad, because this has been the recovery?

I said that we wouldn’t see jobs recover as a percentage of the population in a generation the day I saw Obama’s stimulus plan (after seeing that he was going to bail out banks and not put people in jail) and I was right.  I will continue to be right.  The problems the economy has cannot be fixed by giving more money to banks and rich people and attempting to turn the housing market into a cash cow again.

The economy requires targeted spending, to get off oil, to break up the big banks and other oligopolies, to open up the economy to actual competition, and to increase the pricing power of labor and reduce the pricing power of employers while making sure there we do not run up against supply bottlenecks.  It does not require giving money to people who will simply use that money for more leveraged financial plays or to bury bad assets on balance sheets at mark to model (aka. mark to fantasy.)

To the extent a market works it must be regulated to be competitive, and assets must not be allowed to pile up in a few hands.  Financial profits cannot be allowed to be higher than non-financial profits, and the labor market must be tight, so that people are free to move away from jobs they hate (if your employees hate their jobs they should either be very well paid because the job is absolutely necessary, or it shouldn’t exist at all.)

The US, and indeed, the West, no longer has an economy. It has a bunch of crony capitalists sucking from the state teat or engaging in oligopolistic practices, sucking the population dry in a fashion that is going to leave us in a depression for the forseeable future, and lead to a very nasty economic collapse when real world factors (like climate change or any unforseen shock) intervene.

As for the stock market, it is in fantasy land, entirely a creature of the Federal Reserve, almost completely divorced from the actual economy.

Repeat after me, you cannot have profits higher than actual productivity increases plus inflation plus population increase.  Anything more than that is not profit, it is fraud, underinvestment in real capital or it is diverting future profits to the present.

None of those things are economic growth, and all of them will be paid for, with interest, in suffering.

How the structure of everyday life creates sociopathic corporate leaders

We talked about how the structure of our upbringing teaches people to be passive and choose from choices offered from them, rather than creating their own, better choices.

But that’s only part of the equation. The other question is: How is our leadership created?

For this we must look at the structure that sorts out leaders from the rest of us. Today I’ll write about corporate leadership

A corporation exists to create a profit. It has no other innate purpose, this is embedded in the law. The corporation is structured so as to remove liability for criminal acts from its owners, and, in practical terms, it also somewhat shields those who control it (its executives and corporate officers) from liability for their actions.

A competitive market is one in which profits are steadily pushed towards zero. If anyone can do what you do (freedom of entry), if there are no information barriers (patents, copyright, secrets) and there are no scale advantages others cannot also achieve, there is no reason why any product or service you create cannot be copied by someone else, who then undercuts you if collusion is not allowed.

To make consistent profits higher, then, than inflation plus the rate of growth of the economy requires that you not be in a competitive market. This is explicitly recognized in strategic thinking, that in a fair market, there are no competitive advantages, and that therefore you need to create an unfair advantage.

Anything another company does which increases their profits, no matter how unethical, if not forbidden by effective law (as opposed to theoretical, aka. unenforced law) you must also do.

What is important about this is that the drive for profits above all and the requirement to gain an unfair advantage as dictated by modern strategic thinking (there are other ways to create an advantage that aren’t unfair, but that’s not what most companies concentrate on) means that you have to do evil. If your competitors use cheap conflict metals from the Congo, the control of which is gained by mass campaigns of rape, you must do so.  If an insurance company denies healthcare to people who are desperately sick, it makes more money.  If a power company doesn’t spend money on anti-pollution equipment, or dumps untreated effluents rather than treated ones, it makes more money.  If a clothing manufacturer doesn’t spend money on safety equipment for its highly flammable factories, it makes more money.

It is also in the interest of corporations to create barriers to entry: to enforce stringent patents and copyrights; to ask regulators to say that only some banks get access to the Fed window, giving them a massive advantage over others; to buy politicians who can use public money to subsidize them or bail them out; to insist that money go to them for bailouts rather than to ordinary householders, and so on.

At the lower executive level, the more you can get out of your employees, no matter how you do it, the more likely you are to be promoted.  And fear, terror and cost-cutting, while they aren’t the only way to do this, are easier to sell to higher management and pay back faster.  When they backfire in the long run, as is often the case, well, you’ll be gone, because you’ll have been promoted.

This leads to the common observation that corporate life is about the next quarter or year, not the next decade.  What matters is how much profit you’re making now and next quarter, especially to your chances of promotion, not what will happen in the future.  Corporate capitalism is largely incapable of planning more than a few years out, certainly not decades (there are exceptions, but even those exceptions, like insurance companies, have been losing that ability.)

High compensation is also an issue.  Once you ascend to the senior corporate ranks, your bonuses are based on short term performance and are large enough that after a few years, and sometimes just one, you have enough money you’ll never have to work again.  So you don’t care about the long term, because you don’t need the company to be there long term, only to make as much money as fast as possible.

As a low ranked boss, you terrorize your employees, treat them badly in whatever way is required to make short term profits and are promoted upwards.  As a high level executive you make strategic decisions that require you to hurt people you’ve never met through pollution, failing to invest in safety, or political corruption.

The summary of all this is that the structure of your life, of incentives, in the corporate world, sorts out people who are willing to hurt other people, now and in the future, for their own benefit and to corrupt their own system of government and law for short term advantage.  If you aren’t willing to do these things, you are unlikely to rise far in a modern corporation, and almost certain not to make it to the CEO level.

It is not that there are no other ways to run economic organizations, and it is not even that these things are necessary to gain a sustained economic advantage, but these appear to our current corporate leadership to be the easiest and quickest ways to make money.  It’s simple to make the argument “if we cut wages and make people work like dogs, our profits will go up.”  It is hard to make the argument “if we raise wages and treat our people well, our profits will go up”, even though the second is true.  And much of modern economic life is a hostage situation: if company A is using metals created through the terror of mass rape, well, you’re at a disadvantage if you don’t too.

Strong and ethical government takes those hostage situations off the table, but when you’ve bought out government, that’s no longer possible, so  you feel compelled to do evil.

People with strong ethical foundations will eventually balk.  There will come a point where they will say “no, I’m not doing that, I’m not rewarding people who rape hundreds of thousands of people by buying their blood-drenched minerals”, and that’s the end of their promotions.

Even people with weak ethical foundations may eventually say “that’s just too much, I know these employees and they’ve been loyal to me and I’m not laying them off.”  End of that person’s career.

The end result of this is Jamie Dimon.  You wind up with people who, if they aren’t clinical sociopaths and psychopaths, act like them.  At best they care for a few people close to them, their family and friends, and they hurt everyone and anyone else around them as necessary to get ahead.  People who get off on it are probably at an advantage, taking joy in your work is a competitive advantage after all: love what you do!

This isn’t necessary, in an economy where we decide to take certain behaviours off the table by agreement, legislative or ethical.  It isn’t necessary from an ideological point of view, since there’s plenty of evidence that happy employees are more productive, and it isn’t necessary even from a theoretical point of view because even very light protection of works plus happy employees allows you to create a sustained economic advantage by just creating teams of people who are better than the opposition rather than winning because they have a positional advantage.

But it is how we’ve chosen to do things.  Our society elevates functional sociopaths and psychopaths because that is not just the behaviour we reward, it is the behaviour we demand.

I’ll be on Virtually Speaking Tonight at 9pm EST

You can listen in here either during or after.

Conversation will most likely center on these three posts:

Baseline Predictions for the next sixty years

A New Ideology

How to Create a Viable Ideology

And, I suspect, on my comments on why the progressive blog movement failed.



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