Friday, December 19, 2008

So much for "democracy"

When I was younger, I went through a phase in which I read a lot of espionage/conspiracy fiction (Ludlum, Follet, etc). One of the reasons that phase ended rather abruptly was that I got frustrated with what I deemed at the time an overly used lack of realism: time after time in these books, things happened that the characters got away with some major, obvious lie/conspiracy that I thought they would *never* get away with in the real world. "As soon as any inclination of that got out, those people would be toast" thought I, "the people would not stand for that."

I'm considering going back to the genre: I'm coming to see, over and over, that that scenario is not unrealistic, because I'm watching it play out over and over. The first example where this really hit me was the Iraq war based first on the claims that Iraq had WMD - something I knew was *not* true from information I gleaned while working at the time at a major government facility from whose population some of the inspector teams in Iraq were drawn, and watched in horror as our government baldfacedly lied to our population *and the swallowed it, burped, and asked for more* - and then the so-blatant-even-Joe-the-plumber-could-figure-it-out bait-and-switch that no, it wasn't WMD, it was that Iraq was involved with Al Quaeda and 9-11, yeah, that's the ticket (with a nod to Jon Lovitz' compulsive-liar SNL sketches) (or do I have the sequence of these lies reversed?).

Well, that's old news, but we sure have a whopper staring at us today: President Bush is going to end-around the democratic process and give the automakers the bailout that Congress denied them:

Mr. Bush made his announcement a week after Senate Republicans blocked an automaker bailout that had been negotiated by the White House and Congressional Democrats. The loan package announced by the president includes requirements that are roughly identical to those in that bill, which was approved by the House.
I have my complaints about government even when it is an actual democracy, but ours is not even that any longer: in what kind of "separation of powers" is it possible for more than one branch to do exactly the same thing? That's not "separation of powers", that's "or'd" powers: this thing gets done if branch A wants it done or branch B wants it done...

I just can't see how everyone isn't either going apoplectic or hanging their heads in shame for their own complicity and stupidity. A few short months ago, our populace sat quietly by as our government instrumented an extraordinary power grab, authorizing the staggering sum of 700Billion dollars (estimated by most to really be several times that figure by the time we are done) based on weak and hurried arguments about the eminent collapse of our economy and passed only on the promises to "trust them": that the use of these funds would be specific to the "saving" of the financial industry.

And yet

The money to aid the automakers will come from the Treasury’s $700 billion financial stabilization fund.
Wwwwwwwhat?? That wasn't what we signed on for (to the extent that we signed on at all)! Where is the outrage? How far away are we from just having a system in which Congress just authorizes a huge sum of money for the government to spend on whatever they want, without any debate, due process, accountability, etc?

How the *fuck* do you take extraordinary measures to authorize the partial nationalization of an industry and a huge hidden tax on everyone (that 700 BN dollars is essentially newly minted money, meaning it comes from every one of us by devaluing the money we already have) based only on our trust that you'll do what you said you were going to do with that money and then mere *weeks* later use that money to run roughshod over the democratic process by having the executive branch essentially make the "laws" that congress voted down, and have no one go ape-shit about it??

This isn't theory, this is in-your-face reality, and yet I *still* don't see the outrage that even the most stringent defender of our system should be expressing at this violation of that very system. I don't see how these thing fail to shake the religious belief in "government" or "the state" as our omnipotent, omniscient God. Where is the *thinking*, people?

Sunday, November 23, 2008

Doesn't just wanting "change" mean something was seriously wrong?

Much of the rhetoric around Obama's successful election campaign, as well as the economic problems that are facing the country and world, can be summarized in one word: change. To take a representative quote:

Nobody knows exactly what they should, but anything is better than nothing.
This from New York City mayor Bloomberg, discussing government bailout of companies in the wake of the stock market crash, on the September 21 edition of Meet the Press.

Something really bothers me about this line of "thinking", and I think I can explain it with a little mental exercise.

Imagine a game in which the object is to get the highest score on a scale of 1-100. The game allows you to make "moves" when it is your turn; for simplicity, let's just say it's some set of moves numbered from 1 to n. What the moves actually *are* isn't important for this thought exercise. In fact, the moves are completely meaningless to the players: the game does not tell you ahead of time what the relationship between the moves and scores is. The game also does not tell you ahead of time how many moves you will get to make. All you know ahead of time is that each move gives you some score between 1-100, and to simplify the thought process a little, let's assume that the game also tells you that if you just randomly pick rules, your average score will be 50, that is, the distribution of scores is some symmetric curve around 50 (it's probably best to just think of a constant distribution, that is, every score from 1-100 is equally likely).

So, basically, it's a guessing game: you make a random move, you get a score. The game might end at that point; you don't know. Your score in the game is the score of your last move.

Note, however, that you don't *have* to make a different move. If you're happy with the score you have, you can keep choosing the same move and getting the same score.

So, let's consider playing this game. You must start by making some random guess, and you get back a score. When and why would you choose to make *another* guess? Clearly, if your score is less than 50, it is *always* a good idea to make another guess, because the expected value of your new move is higher than your old one, and you'd rather end up on a better score. If your score is already over 50, it only makes sense to guess again if you have some way of predicting how many moves the game might go on; otherwise, if you guess again and get a lower score, you run the risk of the game ending and thus ending up with a worse score. Since the rules of the game dictate that you *don't* have any way to predict how many moves the game will last, guessing when you are over 50 is at best risky, and perhaps suboptimal.

In either case, it's important to note the following conclusion: the *only* time when it makes sense to randomly guess a new move is when you are already below the halfway mark.

Now let's pull this back to "change": according to Bloomberg and the apparent social, government, and MSM consensus, *any* change right now is better than none at all. Any *random* change; IOW, they are advocating that in our game, we definitely should take another move and randomly get a new score. In the context of our game, this implies that the current "score" must be less than 50, must be less than "halfway".

Do you see the dilemma? Assuming of course that our game is a decent analogy for the "economy" and generally for "society" - and it's clear enough from centuries of failures, mistakes, tragedies, rise and fall of ideologies, etc, that the relationship between the "moves" that government can make and their "economic score" is nearly random (this follows mathematically from the highly nonlinear and thus chaotic nature of economic and social systems) - this means that either A) after 232 years of being "in charge", our government is still scoring less than halfway in this game, or B) random change is *not* the optimal move.

In either case, our government is failing us: either they have failed to achieve the halfway score that a monkey throwing darts at a dartboard to run the economy would achieve (the median of our distribution), or they are now embarking on a venture that is going to make things worse on average.

The point really is: change for change's sake is never a good idea unless you are in the total crapper.

I realize that Democrats will be happy to conclude that the economy *is* in the crapper and that it's the republican's fault, and thus random change *does* make sense. Sorry, you don't get a pass: economic momentum spans far more than the term of one president or congress, and includes the consequences (usually unintended: politicians don't have much incentive to think longer-term than the duration of their terms, unlike private parties who have incentives to think in terms of spans of time that are at least their lifetime long and oftentimes the lifetime of their children and children's children) of decisions made many decades ago. The current economy cannot be laid at the feet of Republicans or the Bush administration; it's a bipartisan failure, tracing some of its origins to events such as the imposition of the individual income tax and the creation of the fraudulent Federal Reserve system that go back almost a decade and which had the complicity of every congress and president since, Republocrat and Demopublican.

If I had hired "government" to run my economy and the solution they gave me after 232 years was "random change", well, they'd be fired.

And isn't that what the government is? People that work for us? Doesn't the preamble say "for the people"?

I say we fire 'em, and look for a group of people who has something better to sell us then "change". How about, you know, an actual *plan*?

Wednesday, November 19, 2008

Government, MSM still using fear to fool the sheeple

I used to have a particularly sensitive friend. The first time I disagreed with him about something, he told me politely that he understood that I had a right to disagree with him, but the way that I had chosen "was not the right way". Fair enough, said I, we're friends and I'll try a different way next time. So, next time I tried a different tact, and got the same message, perhaps a little less friendly this time: "that's not the right way". Over time, I tried several other methods, and got increasingly strident declarations that that was not the way to disagree with him. Growing frustrated, I started to ask "well, what *is* the right way?" He always avoided the answer and instead just pointed out the ways in which my previous methods were poor. Eventually, I started to realize the truth: there *was* no right way. All attempts had been tried and all rejected; no alternatives were left. He would never *say* this, though, there was always the implication that somewhere there *existed* a "right way", but I was just too dense to find it. I eventually came to the conclusion that this was just a way to keep me from ever disagreeing with him, that he was taking advantage of the courtesy and friendship that I was extending him to create an asymmetric relationship, and our friendship drifted apart from reduced trust and poor communication.

The point? I'm ok with being told that "X is not the right way", as long as, you know, there actually *is* a right way. You have to meet me halfway. If you take away *all* of the choices, then my failure to find a "right way" is not *my* fault, it's yours.

And this is exactly the way that the government and main stream media (MSM) are treating us, the sheeple. On many important subjects, they keep telling us "*this* is not the right way, this is something to *fear*", but then when you conclude "well, then the opposite way must be the *good* way, right", they take away *that* option too: "No, that is also the wrong way!"

Take for example global average temperature: the government and MSM are creating a huge state of fear about the possibility of global warming. They are spending tax money on "solutions", they are threatening "carbon taxes", they are punishing car makers for not making efficient enough cars, they are punishing citizens for driving by taxing gasoline for no other given reason than social engineering, and all in the name of "stopping global warming". Well, ok then: surely this means that global *cooling* must be good, if global warming is bad? Oh hell no. Global *cooling* would lead us to ice-ages, and be a move towards the thermodynamic death of the planet, etc. So wait: warming is the wrong way. Cooling is the wrong way. So what's left? Is staying exactly the same temperature really the *only* thing that doesn't justify sufficient panic and fear for the government to sieze more power? Is that even *possible*, given that temperatures regularly move around?

You haven't left any *right* answers, and that means it's *your* fault.

Now take the economy. Over in Reason, Jacob Sullum has a nice list of all of the things that used to be good but are now bad in connection with the economy. I don't really have much to add to his post, so I'll just copy some of it:

Loose credit is bad, and so is tight credit.

We were told that loose credit created the current mess; we're now told that tight credit is the thing to fear. Which is it? You can't take *both* of them and tell us they are *both* the "wrong thing". You have to leave an alternative, or else it's *your* fault.

Rising home prices are bad, and so are falling home prices.
In both home and retail prices, we were told that it's bad that prices are going up, usually with some tear-jerker about how some joe average can't buy a house or a glass of milk. Now that home prices are going down as are retail prices, we are told this is bad, usually with some tear-jerker about how mary-average had to lose her house or because falling prices mean that we'll have a recession. Which one is good??? If you tell me they are *both* bad, then you're just manipulating me because all you want is for me to fear.

Consumer spending is bad, except when it's good.
The current crisis was blamed on too much consumer spending. Now we are being told that the solution to the current problem is more consumer spending. Which choice are you leaving me??? Clearly, all you want is to make me fear what is going on *no matter what is going on*, because otherwise you'd leave me *an option*. You left me no options; that's not my fault, that's your fault.

Is this just pointless anger on my part? Is there an actual *result* of this?

Only if you count 700 billion dollars as a concrete result. Remember when the government and MSM told us that if congress did not immediately grant 700M dollars for the purposes of buying up bad debt that the economy would crumble immediately? Remember when the sheeple baaaed their acquiesence, frightened into accepting whatever we were told?

It would follow, then, that if those bad debts were *not* bought up, either the economy should collapse, or the government was full of shit, right?

But: the government has not bought a *single* bad debt. It's been 45 days, and yet, the economy hasn't collapsed: no lines at the grocery store, no tent cities in my back yard, no anarchy. Hmm, what happened? We *did* let the government print 700 *billion* new dollars, right? That's over 2000 dollars for every man, woman, and child in this country, right? They convinced us that they needed that money for a very specific purpose to prevent a very important and specific disaster from occurring, right?

What happened? After they got the money, they changed their mind:

In front of Congress, Paulson argued for the 700Bn to purchase *bad debt* *across the spectrum of financial institutions*, saying that purchasing actual institutions was the wrong way:

I'm saying that the model you are looking at is the model where we go to people that absolutely need to sell and say, "If you want to sell, give us something."

The model we're looking at is -- and -- and what we believe it takes to be successful here -- is to go to a broad group of institutions, and a very, very wide range of institutions that own these assets, and have them participate.

Shortly thereafter - after the fear caused by the government and MSM, not fear caused by anything except their own failure to *give us another alternative other than fear* - after receiving his 700Bn dollars, Paulson exhaled and changed his mind:

“Our assessment at this time is that this (the purchase of toxic assets) is not the most effective way to use funds,” Treasury Secretary Henry Paulson told a news conference.

Paulson said the administration will continue to use $250 billion of the program to purchase stock in banks as a way to bolster their balance sheets and encourage them to resume more normal lending.

Fucking slimeball.

And all I hear is "baaaaaaa". The sheeple get manipulated into giving 700 *billion* dollars and then sit back and baaaa while the baldfaced lie that generated the 700 billion is admitted by the person that asked for it.

To be clear, this is like my going to a family member and asking them for money because I have cancer... and then turning around a few days later and saying "nah, I didn't really have cancer, I'm going to Tahiti."

Baaaaa.

Sunday, November 9, 2008

Another failure of government and "the commons"

One of the reasons often advanced for large government is management of "the commons": things that supposedly don't work well as privatized spaces, that must be managed centrally "for the good of all". This is the command-and-control "solution" to the "Tragedy of the Commons."

In practice, though, the history of government management of commons is pretty poor. Again, for reasons I don't fully understand, the psychology of the masses is that they give a pass to this poor track record while imagining far worse management under a private system. I'm not sure where this myopia comes from. All I can do is continue to catalog the list of failures.

In this article, the FCC's opening of the electromagnetic frequency band currently occupied by broadcast television is discussed. I'm sure that most people have never considered whether the government's management of the "frequency commons" has been good: it just *is*, I get my television on my rabbit ears, and that's good enough. But it has it really been good? Is this opening up a sign that government management of the commons works?

Or is it the case that *this should have been done long ago*? As the article says

The television industry's shift from analog to digital broadcasts will leave "white spaces" -- that is, unused portions of wireless spectrum.
IOW: *digital* use of the spectrum is *far* more efficient than analog use.

And yet: due to government management of the commons, inefficient analog use of extremely important parts of the spectrum has been dictated by government policy for *far* longer than it needed to be, and is *still* dictated in other parts of the spectrum, e.g. the spectrum used for FM radio. There is no technological reason to hog the current FM radio spectrum for analog digital broadcasts, and doing so is actually suppressing many potential technological/product advances.

Digital broadcasts over the EM spectrum could work just like internet communication and cell-phone communication: in terms of "packets" that have "addresses" that allow multiple communications to go on simultaneously on the same "channel". (The TV/Radio equivalent for cell phones would be if each and every cellphone had its own band of the EM spectrum, a situation that would allow for, oh, approximately 100 people to have cell phones). The government's inefficient management of the broadcast TV and radio spaces have suppressed interesting technologies such as personalized radio (in which each person receives a separate "radio station"). Look for example how many programming choices Sirius/XM pack into a single frequency for an insight into how many more choices we could have.

The obvious approach to problems of "Tragedy of the Commons" is to avoid "commons" altogether, via division of the supposed commons into pieces that can be separately sold and operated privately.

Clearly, some situations lend themselves more easily and readily to "privatization" than others. As someone said to me recently when I suggested that *if* there's a "problem" that needs to be solved in "global warming/climate change", that rather than advocating the usual government-control "solution" to a "commons" problem, perhaps the solution is to get rid of the commons altogether: "you want to privatize air?" While I certainly don't accept clever soundbites as a substitute for actual logic and rationality, I'll give that some things lend themselves more easily to "privatization".

Having said that: I don't see the EM spectrum as one of them. Particularly in the digital age, there's arguably not even a "commons" since multiple parties can share the same frequency. But even before that, there's no reason that parts of the spectrum couldn't have been sold. Different frequencies largely are independent, and different geographic regions of a single frequency are largely independent (with the exception being at points on the boundaries). The frequencies could have been sold by a reasonable geographic distribution. If this had been done, it would have incentivized individual owners to most efficiently use their frequency, which would have encouraged solutions like the digital mutliplexing *long* before now.

Saturday, November 8, 2008

Does the near "tie" between Repubs and Dems mean anything?

I have a theory - and I've been too lazy to spend more than shower time considering it - that there's a fundamental reason that US elections come up so even election after election (yes, Obama is crushing McCain in the electoral college, but the popular vote is pretty close... and it has been pretty close - with some oscillation back and forth - for a long time), and that that reason is that basically that they are both equivalent. I don't think I can prove that this virtual "tie" *has* to be caused by this "equivalency", but I suspect that you could make an argument that *if* you had more or less equivalent parties, it would result in the election pattern that we are seeing.

Tuesday, November 4, 2008

Yawn

Today is one of those days where I get left out... kind of like the finals of the national hockey league: two teams are going for the championship and not only do I not favor one of the teams over the other, I don't even fucking care about the sport.

I have friends who are ready to party in the streets until midnight or cry in abject despair at the elections. I have seen people right poetic declarations about how the world has changed, how this is a great day for the world, etc.

Me? I'm looking for reruns of Family Guy. Yawn.

You know, the thing is: I'm jealous as hell. I get it, I really do. I was reading "the Uptight Seattlite"'s column in this week's Seattle Weekly and the emotion expressed there gave me a lump in my throat:

let us first take a moment to soak in the joy. We've become so accustomed to shame, fear, and anger these past eight years that joy may be an unfamiliar sensation. Do not be alarmed. On the contrary, sink into it like a healing bath after a long, cold day. Let it wash over you, the feeling that your country is a place where you belong after all. The relief that your fellow citizens have turned out to be not bigots crouching in the caves of ignorance, but patriots standing tall in the bright light of reason.

*This* is the way I *want* to feel. I envy those who feel it now. If my preferences in government were ever met, I think the feeling would exceed even this, for after all, democrats waited only *8* years to get one of theirs back into the presidency, they spent the last 4 of those with a congressional majority, and they've always pretty much held 50% of this country. Contrast that to those of us who champion civil society: we've *never* had a president, we've arguably only ever had one congressman (Ron Paul), we regularly poll about half of a percent in elections etc, and there is virtually *no* hope of an advocate of civil society becoming president in this country in my lifetime. Not that I hold "suffering" up as a noble endeavor, but if you'll indulge me for a moment: no democrat (or republican) has suffered like I have.

It's an emotional issue. I envy those who feel like this, and I want it, and its incredibly frustrating to know I'll never get it, and it takes a certain amount of heroic will or stupendous stupidity to somehow keep soldiering on knowing that.

And it sometimes requires some venting:

Like there's a fundamental difference between the Republocrats or the Demopublicans. Have either decreased the size of government? Have either balanced the budget? Have either moved in the direction of respecting individual's decision making over their own desire to run other's lives and make others' decisions for them? Have either advocated *anything* except "give me the power and I will solve all your problems for you?"

I know you Democrats thing that now things are going to "change", but I've got news for you: they aren't going to change in the *slightest*. The two major parties are just factions of the same party. The concept that there is a fundamental difference is an *illusion*. Please enjoy your day in the sun, your day of optimism, because it will come crashing down around you shortly in abject disappointment. Given the democratic majority's complete inaction on Iraq, I have doubts that Obama will do the one decent thing that he could do: end the fucking genocide in Iraq. Get us the fuck out. Stop pissing our money down a shithole. Even if he *does* do that, I expect that that will just be a prelude to sending the troops back out to every bywater that has issues, following the Clintonian fiction that the US military is paid for by the people so that he can try to play humanitarian and savior across the world. Hey, I'm all for humanitarianism, but it's a *private* matter, not one that our government should be attempting to do with a military that the people paid for *to protect them*. It's dishonest and theft.

And the scary thing is that Obama's *strongest* point is probably his approach to foreign affairs. The economic mess we have now? It's going to get far worse under increased socialism (I won't regularly make this kind of defensive statement here - it's my space, and I don't want to waste my time saying boring, obvious things - do not mistake my use of the term "socialism" here for some sort of McCain sympathy. I consider *McCain* to be a socialist for the most part, as both the republicans and democrats have increased the size of the federal government at the expense of individual decision-making. McCain's pathetic campaign attempt to discredit Obama as a "socialist" is purely coincidental to my use of the term).

For those who think that Obama represents Americans "coming together to help each other out": you can't *force* charity. By definition, if it was forced, it's no longer "charity". You can't force someone to do something voluntary; it's a logical contradiction. So while I understand the urge - my own advocacy of "civil society" *is* a humanitarian, "let's treat each other better" advocacy - it is unfortunately doomed from its conceptual start if the urge to be humanitarian is implemented via coercion.

It's the grand paradox of civil society, and one I will return to again and again until I fully understand and learn to harness it: the more you want to control things to be civil society, the more you have to resist the urge to control.

Saturday, November 1, 2008

Trying not to kill the goose that laid the golden egg

Over in Reason, Ronald Bailey takes a first, partial step towards redeeming his awful recent record with respect to the global climate change issue. Bailey has long represented a voice of, well, reason, in the area of humanity's responses to scientific issues. In the last 6 months or so, he has done a dramatic turn-around on this one issue, throwing aside years of hard-won understandings and instead drinking the cool-aid of government intervention.

In this article, though, he returns to his rational roots. The article addresses a special issue of The New Scientist detailing "The Folly of Growth," whose general theme is "Economic growth is folly because "our economy is killing the planet."" Bailey outlines the insane extrapolations made by the authors in this issue and the extent to which they are willing to use those doomsday predictions to begin the lobbying now for stronger big-brother states, with some clearly laying the groundwork for a truly frightening big-brother *world* government.

But Bailey throws off his recent big-government costume and lays out the same fundamental arguments that are so devastating to his own foray into government control over carbon emittance: that we've seen these kind of doomsday scenarios before and careful monitoring and non-panicked action proved to be the best course of action; that the extrapolations made by these apocalyptic prognosticators ignore the demonstrated history of technological advance; that it is generally *non-privately* owned commons that have (predictably: there's a reason it's called the "tragedy" of the commons) suffered the worst degradations; and, most importantly, that rather than being a *cause* of environmental neglect, economic growth is the great *reducer* of environmental neglect.

On the issue of "shrinking forests", for example, Bailey says

It is true that tropical forests are shrinking in poor countries in which such forests "belong" to the government. However, a 2006 study published in the Proceedings of the National Academy of Sciences found that "among 50 nations with extensive forests reported in the Food and Agriculture Organization's comprehensive Global Forest Resources Assessment 2005, no nation where annual per capita gross domestic product exceeded $4,600 had a negative rate of growing stock change."
That is, that economically advanced countries are *saving* forests, not shrinking them. In fact,

the Consultative Group on International Agricultural Research points out that the "main threat to tropical forests" comes from slash-and-burn agriculture practiced by poor farmers who have no other option for feeding their families.

On the issue of technological advancement and previous "scares", Bailey does not explicitly mention the world starvation scare of the 1970s led by Paul Ehrlich, but he does refer to it obliquely:

Between 1980 and 2005, the world's farmers nearly doubled crop production while increasing cropland only 7 percent. If farmers around the world produced crops as efficiently as American farmers, global cropland could be cut in half.
For those with short memories, it is imperative to point out that the starvation scare of the 70s was just as prominent and highly touted as the current global climate change scare, and drastic measures involving the use of force to control behavior of the multitudes were advocated as the only way to stave off a pandemic that was predicted to kill as many as one *billion* people (the global climate change literature is actually pretty bereft of actual predictions of the damage that is supposedly to come as a result of their dire predictions, but nothing I've seen gets anywhere *close* to predicting a billion dead. It is something I'd like to understand better: what is the current state of analysis of the *consequences* of the global climat change scenarios, assuming that the change actually occurs? Mostly I've seen vague mentions of rising sea levels; while that clearly has some negative consequences to those living in low-lying areas, it's clear that these would be gradual changes, and so presumably would kill *no one* in any sort of eminent disaster way, right? If it takes 50 years for an area to flood, isn't that sufficient time to save those lives? Clearly at an expensive cost, but I still count lives as the most important resource). That we didn't panic and kill many people in the pursuit of saving more has turned out to be a *very* good decision. Technology improves rapidly and there's every reason to be careful about over-reacting before we've had a chance to let technology, and it's bigger brother economic growth, play themselves out. (I know for example that there are researchers working on ways to "sequester" excess carbon at the bottom of the sea through clever application of microbes to the problem. I have no idea if that is a promising approach, but the fact is, there *are* many lines of inquiry that can be made into these issues).

Kudos to Bailey for returning to his roots: reason, thought, and working together via civil society over panic and the urge to forcibly control.

Friday, October 24, 2008

Poor private property rights can kill economies/investments

The issue and theory of "private property" has been analyzed to a level of depth that even I find somewhat tedious, and I don't really have interest at this time in contributing at that level. At a macroscopic level, though, I think it's important to understand what this seemingly "theoretical" concept, this "tool of greedy capitalists" gives people. To that end, I saw a conversation recently amongst people interested in the possibility of investing in land in India:

Yep, the lack of transparency is a big issue.
No one knows who owns the land as the govt. records are not reliable/can be forged. Apartments/houses are a little
better as u get the keys and can rent/occupy. :)
Off late, the Indian land investments have become a typical pyramid scheme with the land changing hands
multiple times within a short period.

Even if it is scrutinized carefully and the deal is closed, you never know who can show up at your doorsteps tomorrow claiming that it’s their property, by creating fake documents and using political influence and sometimes anti-social forces.



Private property - like all contracts - provides *predictability*. A simple and basic result from computational theory is that the accuracy of a computation is limited by the predictability of the processes being computed. When people are making decisions, that is a computation: it's a computation in which we are trying to optimize "future value" over the set of possible decisions (I'm attempting here to use just enough of the language of computational theory to be illustrative, without having to give a primer on the entire field). It follows, then, that for people to make good decisions, they need predictability in the systems within which they are making those decisions. Private property and contracts in general are a wonderful manmade tool for providing that predictability and thus driving good decision-making and an efficient economy and society for all people.

We see here the opposite: without reliable private property conventions/laws, predictability goes out the window, and the ability to make good decisions goes with it. We are left either with people who make bad decisions (e.g. those that are getting taken in by the pyramid schemes mentioned above), or those unwilling to participate at all because they know that they can't make good decisions.

Pragmatically, the cost here is less investment in Indian real estate and thus lower real estate values even for those that are honest and above-board. And who is *really* getting screwed here? It's not the rich: they are the ones abusing the system, sitting on top of the pyramid schemes, using their influence with government to get decisions to go their way. It's the rest of society that is paying: entrepreneurs trying to pull themselves up out of their economic level get rebuffed as their property is taken by influence and fraud, the poor who invest in their property to make it better and lose on that investment, etc.

It's ironic that many people see private property as an instrument of the rich against the poor, when it is fact a *protection* of the poor from the rich (or at least, the dishonest rich).


Thursday, October 23, 2008

Greenspan's stock slides further

There is a lot of interesting things to comment on in this article on Greenspan's testimony to Congress in the face of the financial meltdown:

http://www.nytimes.com/2008/10/24/business/economy/24panel.html

Mr. Cox replied, “There’s no question that somewhere in this terrible mess many laws were broken.”
This probably isn't the most important part, but it sits with the theme I've been running with lately: what good are "laws" when the government doesn't actually stop anyone from *breaking* them? We see this problem over and over: the disconnect between "we'll pass a law for X" and "X actually happens." The record is clear: the correlation between passing a law for something and it actually happening is pretty slim. I sometimes think people get confused by social "laws" and scientific/physical "laws", which are entirely different concepts but unfortunately share the same word: physical laws are inviolable (note: there's a much subtler sense in which that isn't entirely true, but that's a subject of some later philosophical note, not a political note), whereas social laws are really just threats: do this, and this other thing will probably happen to you. Like any threat, sometimes it will work and sometimes it won't, and sometimes it will have weird, perverse consequences.

In either case, the point stands: we *passed* a bunch of laws that supposedly should have stopped this from happening, but "many laws were broken." So where were our law enforcers? What good is it to pass laws that don't actually do anything? Isn't this just a cheap facade of "doing something"?

Will we remember this when the inevitable call comes to prevent this from happening in the future by passing even *more* laws? It astounds me that when pouring gasoline on a fire doesn't put the fire out, the majority respond by pouring even *more* gasoline in the fire in the thought that *this* time, it's going to work.

As for Greenspan himself, his fall-from-grace in my eyes is falling as fast as what little net-worth I once had. Of course, that started long before it did for most people: for many, he was the wizard of wall street for much of the last 10 years. For me, his fall from grace started long before that, when he went from being a free-market advocate to holding the reins of one of the more vile tools of central government: central banks. I'm hardly alone in that assessment, and so it doesn't add much for me to repeat those criticisms in depth here (short version: central banks are dishonest at best, since they issue fiat money and as such tax the populace in a hidden way via inflation, and at worst they are a contributor to and even a reason *for* pointless "wars" like the Iraq "war", the "war" on drugs, and the "war" on terrorism. It's part of the machinery of the state of fear and control, and Greenspan should *know* better, he was trained in free markets and decentralization and he's become a turncoat to those ideals).

However, it's worthwhile picking on him for the further capitulations he commits in this testimony:

“You had the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis. You were advised to do so by many others,” said Representative Henry A. Waxman of California, chairman of the committee. “Do you feel that your ideology pushed you to make decisions that you wish you had not made?”

Mr. Greenspan conceded: “Yes, I’ve found a flaw. I don’t know how significant or permanent it is. But I’ve been very distressed by that fact.”

On a day that brought more bad news about rising home foreclosures and slumping employment, Mr. Greenspan refused to accept blame for the crisis but acknowledged that his belief in deregulation had been shaken.

This reminds me of the question illustrating false premises: "Have you stopped beating your wife yet?" Implicit in this exchange is the patently *false* and absurdly so assumption that what Greenspan presided over was "deregulation ideology". Putting aside the inherent sophistry in the term "deregulation" (there is only *regulation*; "deregulation" is a manipulative attempt to convince people that the norm is "regulation", and that anything different is somehow abhorrent and risky), no system with as much central control as the Federal Reserve system can possibly be called "deregulated". I invite you to try minting your own currency and trading in it to see just how "deregulated" the issue of currency in this country is. The fed owns a monopoly on the production of currency, and it prints more whenever it feels like doing so. The private equivalent would be buying stock in a company and then having them print more stock willy-nilly, without compensating you for your now devalued stock. It would never fly in the private sector, which Greenspan pays lip-service to as a "free marketeer", but he's perfectly happy to pull the puppet strings of a deceptive monopoly.

What exactly is the "flaw" that Greenspan has now had his epiphany about?

“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told the House Committee on Oversight and Government Reform.
What bothers me about this is now no longer does Greenspan not stick with the principles that formed his origin, he doesn't even *understand* them any longer.

Free-market theory does not say that institutions in a free market *will regulate themselves*. Any 5th grader can see the flaw in that: institutions are composed of people, and people will in the aggregate do what is in their self-interest (with some asterisks that aren't important in this screed). Of *course* institutions need regulation. Even the hardiest anti-free marketeer wants the majority of its businesses to be private, for the benefits of competition and consumer choice on the quality of those businesses has been displayed over and over (I hear no call, say, for the government to take over the car manufacturing business).

What free-market theory properly applied to the problem of regulation says is not that businesses will be self-regulating, but rather that *regulation itself is a business*, and thus like other businesses, the "regulation industry" will be better as a private industry because of the benefits of competition and consumer choice.

Of course we need regulation of our businesses, but we need a private industry in "regulation". Government would not be good at making cars because forced monopolies have no incentive to be efficient, innovative, etc; the same applies to a forced government monopoly on "regulation". Indeed, the failures of our government system to regulate are glaring at us all in the form of zeros in so many bank accounts and foreclosure signs on so many yards. Why do we give a pass to a system that is clearly not working?

Greenspan was intellectually brought up in an environment of free-markets; that he would make this crucial blunder of understanding is at least as unforgivable as his turned-back at the aspects of free-markets that he does understand.






Bloomberg and Term Limits: Wow

New York City Council Votes to Extend Term Limits

After a spirited, emotional and at times raucous debate, the
New York City Council voted, 29 to 22, to extend term limits,
allowing Mayor Michael R. Bloomberg to seek re-election next
year and undoing the result of two voter referendums that had
imposed a limit of two four-year terms.

Read More:
http://www.nytimes.com/?emc=na
I don't know if I have much more to say other than "Wow". This is democracy in action?? The hairs on the back of my neck go up when I see something like this, it reminds me of the kings and tyrants of old changing rules on the fly to suit their personal agendas. What kind of "rule of law" do we have when the rulers get to change the laws??

Like the previous post, I put this one down as another black mark against our current system: this is a failure of government.


Wednesday, October 22, 2008

The government protects us from crime?

Anyone who knows me knows that one of my most abiding passions is the advocacy of "civil society", which is basically an advocacy for what is at least a very different direction in "government" and at its most is an advocacy for an end to the concept of "nation-state" as it has been practiced over the last couple of centuries. This is not the post to go into the detail of all of that, but part of the intellectual process of that advocacy is an honest analysis of our *current* system as part of the process of comparing alternatives and the current system on even ground.

Detractors of my ideas are dedicated to the notion of finding flaws, of finding ways in which the resulting society would be less than perfect. I'm perfectly ok with that: that's part of a rational process of evaluation. What I find very *irrational* is that those same people are unwilling to honestly assess and see the flaws of the *current* system. My contention isn't that the alternatives I'd like to consider and ultimately advocate are "perfect", just that they are *better* than what we have, in large part because what we have now does not, frankly, set the bar very high.

In that line, I find the following datapoint interesting. Supposedly, one of the "failures" of my advocated systems is that they are "weak" on law and order (because most of my suggestions involve much smaller and less powerful governments than what we currently see in the world). The implication is that the current system is particularly strong on law and order, that the government protects us from criminals and other bad doers.

But does it really do a very good job at that? Or have we just become habituated to its failures to the point where we don't notice them? I've read in many places - and largely been convinced by - the notion that in fact, our police force does not actually *protect* us from criminals at all. For the most part, police don't *stop* crimes; they catch criminals after the fact. Is that really "protecting" us from criminals?

I was privy to a particularly poignant (to me, at least) illustration of this notion the other day, associated with etail giant Ebay: out of 15,000 Ebay employees, a full 3,000, or 20%, work in their anti-fraud department. Think about that for a second: fraud is a *crime*, and those that commit fraud are criminals. Isn't it the government's job to protect us from criminals? Then why does Ebay need to hire 3,000 people to *protect themselves* from criminals? This isn't a handful of security guards, this is an enormous overhead on a company. There's basically *no* expectation that the government is going to help prevent this fraud. The police force have basically just said "you're on your own".

The list of failures of the current form of government (and I'll comment mostly on American government since that's what I know best, but the American system isn't different enough from other major western countries - and many eastern countries are worse - to really distinguish. My comment, IOW, are not limited to America) is something that I want to capture here over time, and this sure seems like an interesting place to start.