Friday, September 23, 2011

"Class War" and the Lessons of History

One aspect of our re-ignited American Civil War is getting a lot of air-play. It is so-called “class war.”

That's the tag-line ordered up by Roger Ailes. The notion: that any talk of returning to 1990s tax rates - way back when the U.S. was healthy. wealthy, vibrantly entrepreneurial and world-competitive, generating millionaires at the fastest pace in human history - is somehow akin to Robespierre chopping heads in the French Revolution's reign of terror.

That parallel is actually rather thought-provoking! Indeed, can you hang with me for a few minutes? After setting the stage with some American history, I want to get back to the way things got out of hand during that earlier 1793 class war in France.  There are some really interesting aspects I'll bet you never knew.

Wealth-of-NationsBut in fact, "class war" has always been with us. If you ever actually sit down to read what people wrote in times past - for example Adam Smith in Wealth of Nations, or even the Bible - then you know struggle and resentment between social castes was the normal state of human affairs for 6000 years, or much longer.  Seriously, randomly choose (or "roll-up") a decade and locale from across the last few millenia! Tell me who oppressed freedom and competitive markets in that time and place. I'll wait.

In fact, today's American perspective that there is no-such-thing as class - so blithely exploited by Fox - seems rather quirky and charmingly innocent.  Baby Boomers, especially, were raised under  unusual circumstances -- perhaps the only stretch of time in which a great nation experienced a (fairly) flat social order.

Now this calls for simplifying - so let's set aside the battles over racial and sexual equality, etc. - but squint with me here, for a minute.  It's fairly obvious that the period following the Second World War was (for white U.S. males) the least class-ridden of all time.  Disparities of wealth were at an all-time low and the middle class, flush with WWII savings, good wages and GI Bill-fostered competitiveness, experienced a generation of utter dominance over the American experience. A confident dominance that got woven into popular culture through TV and all other media.

= Pyramids and diamonds =


Instead of the classic human social pattern -- pyramid-shaped with a tiny, fierce nobility lording it over peasant multitudes -- ours was diamond-shaped with a well-off middle that actually outnumbered the poor! A miracle nobody in all the past ever foresaw. Except perhaps Smith. Certainly not Karl Marx! In fact, nothing so undermined the honey-seductive mantras of Marxism so much as the living example of the U.S. middle class. Which the whole world wanted to join.

And now the penultimate point (before getting back to 1793 France). Our post-WWII flattened-diamond pattern did not quash or undermine competitive capitalism!  Not at all. In fact, never before or since has there been such fecund, vigorous entrepreneurialism as during the flattest and most "level" social order the world ever saw.

the-theory-of-moral-sentimentsThose who proclaim these two things - social flatness and vigorous market competitiveness - to be inherent opposites, in perpetual conflict, are simply fools or historical ignoramuses -- or outright liars. They are pushing the sick illogic of the zero sum game.  Indeed, Adam Smith himself contended, in both The Wealth of Nations and The Theory of Moral Sentiments, that a relatively flat social order -- combined with lots of opportunities for the poor to get education, so the total number of competitors is maximized -- can vastly increase the total number of people who get rich in the best way, by delivering innovative goods and services.

(Smith held less truck with inherited wealth or dividend-clipping "rents" - the kind of income with the very lowest tax rates, nowadays. In fact, Smith strongly implies that some kind of upper limit to the meaning of "rich" might be called for. But more on that another time.)

= A burden of proof on FDR-bashers =

The final pre-point I want to make here - before tooling off to France in 1789 - is more in the form of a question.  How did we get into a situation where Franklin Delano Roosevelt is portrayed as Satan incarnate?

Yes, yes.  I spend a lot of time around libertarians and I know that their current version is all about hating government.  No other agenda or priority.  See my earlier challenge (two postings back) daring libertarians and decent conservatives to consider taking on a positive goal instead of a purely negative one - fostering competitive enterprise and not just reflexively hating all civil servants, under all circumstances, all the time, while ignoring every other threat to freedom. That may by Ayn Rand, but it sure ain't Adam Smith.

If government is always and automatically evil, then yes, Franklin Roosevelt was the antichrist, because he sure expanded its reach.  If, on the other hand, you judge by outcomes... defeating Hitler, ending the Great Depression, starting the process of racial justice and - above all - engendering a society that both fostered vast amounts of competitive enterprise and kept the social order flat, then maybe we should consider cutting the man some slack.  (Wasn't he admired by the "greatest generation"?)  I'd like to see you -- or any ruler/leader across all of human time -- do better.

Sure, some of FDR's bureaucracy got cloying. Or else it got "captured" and stifled competition.  Democrats themselves axed many New Deal and Progressive agencies - the Interstate Commerce Commission, the Civil Aeronautics Board, for example, had to go!  Others needed trimming and so did the pre-1960 tax rates that JFK slashed.  Indeed, about half of the Reagan-era government prunings seem pretty much called for... a process culminating in the Clinton-Gingrich Welfare Reform, another time that the moderate-right had a strong point. And was listened-to.

But outcomes comparison is not kind to those who gutted Glass-Steagel and other bank regulations, opening the door to abuses that helped bring our Second Depression.  And since every single prediction ever made by Supply Side Economics proved wrong, well, we can understand why science and outcomes comparison are the Big Enemy, attacked by Fox 24 hours a day.  If facts are inconvenient, well, damn those who live and work with facts.

= Okay, back to France =

days-french-revolution-christopher-hibbert-paperback-cover-artAll the shouts about "class war" bring to mind images of rabid Jacobin mobs in 1793 hauling brave nobles and gentlemen to the guillotine. But if Rupert & co. really want us pondering that image, we owe it to ourselves to leaf back just a few pages to 1789, when the revolution began as a much more moderate thing, inspired by events across the ocean, in America.

France was broke.  Louis XVI and his ministers were incompetents who deliberately squelched commerce with internal tariffs and policies that crushed innovation. The church owned much of the productive land, tax-free. So did the feudal aristocracy. Top merchants and corporations managed to wrangle exemptions too. After years of quagmire wars, poor tax revenue, bank collapses and mismanagement, Louis needed more money to stave off bankruptcy and save the country. So he summoned the Estates General.

That was the rough French equivalent of the British Parliament, but with much less authority.  In fact, it had last met in 1614. But Louis was desperate. What he needed was for the first and second "estates" -- the clergy and  nobles -- to vote themselves a temporary levy and join the third estate (the people) in paying their fair share.

That's how it all started.  The country's leader asking oligarchs and aristocrats to pay the same rates as common folk, for a while, especially since they already owned damn near everything.  The answer given by the dukes and bishops and marquiseseses?  Heck no! We're the ones keeping it all together. The managers and investors and owners and job-makers. The government can damn well keep its mitts out of our pockets. It's our money, not the state's.

Now you can see where I'm going with this. So I won't spell out what happened next. (Though a little reading might be in order?  After the last assignment, to learn what the founder of modern market-capitalism, Adam Smith actually said. I promise surprises!) 

And no, I am not predicting tumbrels rolling through American streets, with billionaires holding their chins high as rabid mobs taunt them on their way to chopping blocks! 

What I am telling you is that "class war" has a whole lot more to it than they are telling you with their blithe, two-word nostrums, over at Fox.  As Warren Buffett said: "my side - the rich - have been winning class war for some time, and it won't end well." 

= The American Difference =

Founding-Fathers-9780470117927Across the sea, in America, a different experiment was being tried. The aristocracy over here -- like Washington and Jefferson -- certainly enjoyed being rich, and wanted opportunities to stay that way! But they also knew the frontier virtue satiability -- the notion that getting rich is great! Economic success can both entice and propel innovation, hard work, enterprise, competitive creativity and philanthropy. But that (as Adam Smith proclaimed in the miracle year 1776) there comes a point where enough is enough... and sometimes even too much.

Hold onto your seat, because I'm about to tell you something about Washington and the others that you never knew... that they were "levellers."

The founders started by banning primogeniture, so no family fortune could sit and accumulate, undivided, as a lordly demesne at the pyramid's peak. Instead, they would get divided among the large numbers of children that folks had then -- an intentional act of "social engineering" and outright "levelling" and don't you for a moment think otherwise!  They also seized the assets of the Tory lords and even neutral absentees and distributed them to the masses. And they made homesteading easy, with laws that favored Yeoman citizens. (All right, some of the lands they seized belonged to native American tribes - I never called these guys perfect, just smart, with a goal of not repeating the historical mistakes they loathed. Sure, they proceeded to make others.)

Never heard of these "levelling" acts by the founders? Heck, even liberals have forgotten them. Or they've become used to simply ceding Washington and Adam Smith to the blustering right, without even putting up a fight.  Stupid-lame liberals.

The point is that we never had the kind of violent class war that erupted in France, because our elites were smart enough to avoid it! After the primogeniture and distribution and land grant tricks started to fade along with the frontier, we entered a dangerous Gilded Age when the pyramid shape began re-emerging and Marx rubbed his hands over the growing urban proletariat....

...but even among the titans of the 1890s, there were men who could see. "I would rather leave my son a curse than the almighty dollar," quoth Andrew Carnegie, who was the Warren Buffett of his day.  Even a jerk like Henry Ford realized the essence -- that he benefited from a rising middle class that could afford to buy his cars.  And our agile nation came up with moderate solutions like anti-trust laws and progressive tax rates, that staunched class war without ruining capitalist enterprise.  That kept the goose alive, to keep laying golden eggs.

I've already discussed FDR. But now you can see the context of it all!  It is the context of the positive sum game. (Look it up!) The notion that we can get all the benefits of an enterprise-market system -- using the allure of wealth to reward innovators and vigorous competition -- while somehow preventing the toxic side effect of wealth... the poison called oligarchy.  The same poison that ruined markets and freedom in every culture other than ours, in every other era than ours.

= A wake-up call =

So what now? Well, for one thing, it's time to rouse yourself from propaganda hypnosis.  History repeats itself. And the last thing that the New Oligarchs want you to do is study history.

After a full generation of innocence, since the Second World War, in which we took for granted some highly unusual circumstances, we seem now to be plunging back toward the norm for human societies. And you - yes, you - need to start asking questions:

-- like what degree of wealth disparity would you find discomforting?  Today, unlike 1945 or 1980 or 1999, the top 400 U.S. families own more than the the bottom 50% of Americans. Please, please, please pause a minute and picture that in your mind.  If you can somehow manage to shrug that off, is there some level of disparity that would worry you?

When it's 75%? Or when it's 90%? Admit that there is some level that would make even you call yourself (and your country) the victim of class war. A struggle that's gone on (with a recent, slight break) for 6000 years.

-- or ask what it means when Fox says the top families do pay a lot of money in taxes, despite paying at very low rates.  Can you do the simple algebra in your head, divide and put in an equal sign and draw the obvious conclusion?  If they pay vast amounts, even at tiny rates... doesn't that mean they are getting most of the money in the first place?  And that's supposedly a reason for you to... shrug?

ManufactuirngConsent-- or ask who is financing the propaganda that you watch? When simplistic tag lines are ordered up at Fox News by Rupert Murdoch, Roger Ailes and Prince Waleed, and they are parroted within hours by every politician and talking head on the right, perhaps ask "is this the conservatism of Barry Goldwater and William F. Buckley, any longer?" Ponder: what do these New Lords get out of teaching you to hate every American elite of science, intellect or skill, along with your own freely elected government... while demanding that you ignore the one elite that threatens everything we love?  Theirs?

-- for the first time in American history, we went to war - a decade-long quagmire in Asia - and the rich refused to help pay for it. Isn't patriotism an issue all the time, and not just when you (or Glenn Beck) pick or choose?

More important: doesn't this start sounding a whole lot like what the nobles did on the east side of the Atlantic in 1789... and not at all like the smarter elites did in the west?

-- is history really so boring to you that you find it completely irrelevant? So much so that you'll ignore the patterns of 6,000 years?  If so, wow, FDR sure did make a different world for Baby Boomers to ignorantly take for granted.

But the Gen-Xers and Gen-Y and Millennials won't.  As I foresaw in EARTH, they are waking up.

So don't fret, Boomers. Your children will rescue America.  Not with violent class war... what are we, French? But with the kind of tweaking we saw from Washington and Lincoln and Carnegie and Teddy Roosevelt and FDR. (Three of them Republicans.) The kind that restores that flattened diamond... while continuing the miracle of competitive markets and freedom.


David Brin
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138 comments:

David Bowne said...

Gee, I recognize some of these ideas from somewhere.

I'm just trying to complete the picture. We need to raise revenue because we're amassing a debt, and not funding important things. So how do you anticipate that federal budget will be eventually balanced?

It seems to me that there are only 4 choices, which will be combined in some proportion:
a) raising revenue by raising taxes
b) reducing spending
c) inflation
d) increasing the size of the economy (and thus raising revenue, without an additional tax increase)

What do you think the proportion will be / should be?

Robert said...

The nobility in the Estates General in 1789 voted by a large margin (with very little pressure) to abolish feudal privileges and tax exemptions. There were of course, some who voted against, but not that many. Similarly, the clergy largely voted in favor of reform. The poorer clergy (who were well-represented!) were almost all for reform, while the upper clergy split evenly. Incidentally, a majority of the clergy voted for full religious toleration; even bigger majorities in the other two Estates did too.

What resistance there in the first two estates was more to the institutional reforms than the financial. Examples:

The clergy and nobility wanted the Estates to continue to sit separately, with one vote to each Estate, as had occurred in all previous sessions of the Estates General.

The clergy felt that bishops should only be elected or appointed with the Pope's approval (as is true of all Catholic clergy today).

The hardening attitudes of the upper classes in the Nineteenth Century were another story. Reaction, as the word suggests, was a reaction. And the post-1815 regimes took repression back to the levels known under Louis XIV (and, by no means incidentally, Robespierre and Napoleon).

The actual generosity of the nobility in 1789, almost all children of the Enlightenment, puts the short-sighted actions of the oligarchs of today to shame all the more, and drives your point home all the more.

So why did things turn bloody? I can think of two reasons:

First, the people at the very bottom were not represented in any of the estates, not even the Third. (The very poorest people sitting in the Estates General were some of the lower clergy). The Estates were aware that they were hungry, but much less that they were enraged, and quite honestly had no idea what to do about either.

Second, the shift in influence within the French Enlightenment from Voltaire, who was in touch with, and admired, the English Enlightenment, to Rousseau, an irrationalist Romantic, that had occurred about ten years previously, was a bad sign. It was no accident that the most fanatical Jacobins were fanatical Rousseauists. And it was also no accident that Voltaire reacted in this way to The Social Contract: "Dear M. Rousseau, I have just read your book against the human race. It made me positively long to go on all fours."

Bob P.

David Brin said...

All of the above... but note that #d has always been the chief method and the chief aim proclaimed by both sides.

Liberals claim it can be done by emphasizing education and innovation and infrastructure and scientific research.

Supply siders claim that tax gifts to the wealthiest will result in productive investments that stimulate so much wealth that even lower tax rates will pay off the debt.

The score is... liberals rights a fair amount of the time... though some of their stimulants worked better than others. Science a lot. Welfare not so much.

Supply side? Absolutely pure and perfect zero.

David Brin said...

My reply above was aimed at David Bowne.

Robert, while technically you are right, those votes only occurred after the 3rd went to the tennis court and declared itself a National Assembly, and the writing was on the wall.

A while before Louis called the EG together, he called the Assembly of Notables. And they absolutely refused to pay a damned sous to help the country. So, while your quibble is valid in detail, my overall point is true.

Patricia Mathews said...

Here's what I think. No matter how many of them chant the mantra "Drill, baby, drill," the smartest of them know we're going into a time of declining natural resources. To them, that can only spell Zero Sum Game, and by gum, they are going to make sure their lush lifestyle won't go away.

Because, you know the other mantra, "Grow or die," "We have to keep on GROWING out into INFINITY or we will DECLINE!" We have to GROW the economy to where it was before the bubble burst!" A mentality Spengler called "Faustian" and pointed out would not would take reaching its limits very, very badly. He said the Faustian mentality would make its civilization quite brittle. And we're seeing it.

We could change course even now. We could have in the 70s, but too many heads were in the age of unlimited resources. Call it the Leif Ericsson's Vinland Effect. (Too early is as futile as too late.)

And their stooges just below them in the baboon hierarchy actually believe their own nonsense; sample here:

"The Oil Drum posted without comment this year’s most serenely idiotic statement about peak oil. The source was investment analyst Porter Stansberry; he was being interviewed about why peak oil isn’t a problem, and his reasoning ran as follows: "[G]eology doesn’t create oil; capital creates oil. The more capital you put toward oil, the more of it there will be." (You can read the whole interview http://jutiagroup.com/20110913-porter-stansberry-u-s-shifts-to-gas-export-role/.)"

So there you have my explanation, make of it what you will.

Mitchell J. Freedman said...

David,

Thank you for providing a ringing defense of FDR and the essence of the New Deal programs. It is vital for a majority of important elite members in our nation to recognize that there is a thread that goes from Hamilton to Gallatin to Clay to Lincoln to TR and to FDR, and even to LBJ's domestic agenda.

And these are truly American in that most pragmatic, programmatic and infrastructure building sense.

You, Bill Gross of PIMCO and Warren Buffett are on board. What will it take for our president to give the full throated support for rebuilding and reenergizing America through its government?

As TJ said after talking about life, liberty and happiness: "governments are instituted" to promote these values...

LarryHart said...

Dr Brin:

The final pre-point I want to make here - before tooling off to France in 1789 - is more in the form of a question. How did we get into a situation where Franklin Delano Roosevelt is portrayed as Satan incarnate?


Growing up as I did with the afterglow of WWII still present in movies and comic books, I always thought FDR was universally acclaimed as a hero. It was a shock to find out later on that there were elements of US society that despised him.

The first anecdote my dad told me about that was a joke that was making the rounds in the 30s. A man glares angrily at a newspaper, and the newsvendor asks what he's looking for. The man says he's looking to see if someone's dead. The newsvendor tells him to check the obituaries, and the angry man replies "When the sunovabitch I'M looking for is dead, it will be on the FRONT page."

David Brin said...

I think I made some good points this time. Some of them, like the primogeniture thing, I think I'm the only person saying.

So... guys, tell Paul Krugman he ought to read me? Heck he already knows me! Said so.

Seriously, Krugman is the only smart liberal saying the pro-enterprise - Smithian-liberal - things that need saying. If he read me, everybody wins. Because he'd get some fresh ammo and would thus reach more than the dozen or so pipple I currently do.

sigh

duncan cairncross said...

Hi Guys

IMHO - the regulatory capture is only a side effect
The main problem with a free market is the positive feedback
This means the system will inevitably swing to an extreme position.

It is possible to "drive" something with positive feedback BUT it must be actively guided,
I have been trying to think of an example - blank so far

As illustration I was thinking about falling from an airplane - its great fun on the way down and you get a superb view - but the ground is still waiting

sociotard said...

If, on the other hand, you judge by outcomes... defeating Hitler

I really don't think that FDR deserves credit for this one. Stalin beat Hitler. Yes, Stalin needed the supplies he bought from the US. There's still a gulf of influence between "winning team" and "people that provided the winning team equipment"

The US should've just stayed out. Had they buckled and sold Japan oil (and gotten out of the Philipines earlier or not been there at all) they may have been able to.

And since every single prediction ever made by Supply Side Economics proved wrong, well, we can understand why science and outcomes comparison are the Big Enemy, attacked by Fox 24 hours a day.

Again, "proved" is the wrong word to use here. You can't prove anything in economics because it barely rises above 'incantations'. It is a field of study that targets something too difficult and too complicated for humans to understand. We understand even less about that than we do Climate Science and Cognition.

I will begrudgingly admit that we may make some headway on those two. Economics, though, involves models with recursion. No dice.

David Brin said...

Marx is dismissed as irrelevant. He isn't and wasn't. He was very very smart and observant. The whole REASON that FDR fought so hard to flatten the social order was because the Marxian alternative looked so very plausible to the people of that time.

Oh, I could write for 90 minutes with bleeding fingers about the way old Karl plunged down mystical paths, abandoning all semblance of science and creating a religion, out of what had begun as interesting and insightful economic critiques. There's a level where he's as crazy as Rand.

But where he discusses the failure modes and "contradictions" of capitalism is is savagely on-target. What he never, ever imagined was the possibility that humanity might produce someone like FDR... and tens of thousands of others who looked at Marx's plausible scenarios as PROBLEM-CHALLENGES TO BE SOLVED.

In the spirit of Yankee tinkering and pragmatism, FDR & America simply made his whole scenario go away!.

The question is... can we face the same problem-challenge in a new generation, finding new solutions? Or let old Karl's nasty teleology play itself out?

Screw the old goat. He never understood the positive sum game. Smith did. He invented it! (So did Franklin & Pericles.)

My heroes.

Virgil said...

I'm glad to see you writing about this.
For about a year now I've been noticing that the pendulum seems to swing back and forth from one extreme (business) to the other extreme (people) and that we never seem to learn from it.
That is what led me to start talking about "Balance" at Keep America At Work.

And yes, you are right.
The people, and even the baby boomers like myself that wondered from 2003 till 2007 "What Happened?" are starting to use what resources and skills that we have to educate others so that it will not happen to them too.

Tim H. said...

Concerning the demonization of FDR, it's safe now, so many of the people with first hand memories in their dotage or graves. perhaps a different President could've kept us out of WWII, but the wealth, influence and power of the United States would've been far less and the butcher's bill higher, and where would the iron curtain have run? I think a lot further west.

Tony Fisk said...

But the Gen-Xers and Gen-Y and Millennials won't. As I foresaw in EARTH, they are waking up.

I fall somewhere between the Boomers and GenX myself. Now that you mention it, I recall my University years (late 70's to early 80's) as being singularly bland politically: the issue of an ID card caused one friend to remark 'Yea! Finally! A cause!' (one might have thought the 'razor gang' cuts and imposition of HECS fees on tertiary education might have led to a bit more storming.

I actually noted this blandness increasing as time went on. One person commented that it was because everyone was too intent on getting the qualifications for a job to rock the boat (the aftershocks of the oil embargo were still rippling around, and we were still recovering from the excesses of the Whitlam era)

<paranoia>Since then, I've noted that economic downturns seem to make a blunt, but effective, instrument for keeping the peasants in line. 1991 in Australia was a 'recession we had to have'. And, of course, the 2008 GFC</paranoia>

Now? Well, as it happens I attended one of the many MovingPlanet rallies that are happening today. Organised by Australian Youth for Climate Change.

LarryHart said...

I'm currently re-reading CS Lewis (That Hideous Strength), and it's amazing how much of that 1946 book could be torn from today's headlines.

I was surprised on my first reading how much the modern feminist split between the younger "modern" women vs the older generation who "always expected to love, honor, and obey" was already taking place in the 1940s, and not (as it seems to my generation) a product of the 1970s.

Even scarier, though, is this passage I just hit:


"A large unintelligent population is now becoming a deadweight. The real importance of scintific war is that scientists have to be reserved. It was not the technocrats of Koenigsburg or Moscow who supplied the casualties in the seige of Stalingrad: it was superstitious Bavarian peasants and low-grade Russian agricultural workers. The effect of modern war is to eliminate retrogressive types, while sparing the technocracy and increasing its hold upon public affairs."


That sounds extremely prophetic for 1946, although Lewis does get the villains wrong. It's not the scientists, but the oligarchs who seem to be benefiting from dropping the "deadweight" which is the rest of humanity. Aside from that bit of legerdemain, though, he was as spot-on prediction-wise as Paul Krugman or Dr Brin routinely are.

Carl M. said...

As long as you package progressive taxation with FDR, you will lose all libertarians. FDR held office long enough that the Great Depression ended under his watch, but to say he ended it defies all your scientific criteria. Most of the Great Depression was on his watch. Did he end it, or did he extend it. The numbers scream the latter. No other Depression has lasted that long in this country.

Cite Eisenhower instead. We had progressive tax rates then, and a general who realized that we shouldn't go to war at every opportunity.

As for Adam Smith: he was a leveller, but the prime levelling mechanism he mentioned was accumulating capital would reduce profit rates with respect to labor rates. High deficits on the part of the government, anti savings policies, regulatory overhead, and mass immigration have tipped the scale towards capital over labor. Were it not for foreign investment and just in time inventory controls, things would be worse.

Barack Obama is no Bill Clinton.

NoOne said...

Charles Johnson of the fairly well known blog Little Green Footballs has a wonderful confessional on how he outgrew Ayn Rand. Johnson has incurred the wrath of Tea Party people everywhere because he switched over to sanity a few years ago.

Perhaps the time has come to coin the term Adam Smith liberatarianism and contrast it with Ayn Rand libertarianism.

LarryHart said...

Heh.

I know it's not under the blogger's control, but it was funny to click over to that Charles Johnson article and immediately see the banner ad with Ron Paul saying "Stop Obama's war on Veterans!" I see the same banner ad on this blog too, btw, but it was especially funny in that context.

Mel Baker said...

As always David a great piece of work! The Science Fiction author as historian! As a journalist I'm terrified that the free flow of ideas and the questioning of assumptions has become impossible. The proliferation of media sources has made it too possible for people to stay in their self-imposed reality filter.

My profession of the Fourth Estate has lost its ability to teach, inform and educate. We are among the most despised of the elites and my coworkers are too desperate to hold onto the few jobs remaining to push back and fight editorial policies aimed at pleasing our target audience.

The much proclaimed alternative media of the internet simply reinforces people's opinions. Instead of a force of democratization, it has become a totally self-reinforcing bubble of propaganda.

LarryHart said...

Mel Baker:

The proliferation of media sources has made it too possible for people to stay in their self-imposed reality filter.


You've got that right.

In a way, I'm glad to see Paul Krugman, Elizabeth Warren, Keith Olbermann, and others getting some traction pointing out the fallacy in all the "class warfare" diatrabes. The "fact" that Obama is out to soak the rich isn't doing so well next to the "fact" that the rich are out to soak us. That much does seem to be clear...to those of us who already tend to be on the side once occupied by the truly-liberal media of the 1970s.

The problem is that so many people get their news and opinions from FOX and Limbaugh that I don't even know they're AWARE of a countervailing argument to the "Obama's doing class warfare!" meme. It doesn't matter how persuasive, how well-articulated our side's arguments are if the other side doesn't even HEAR them.

I'm not sure which I'm despairing of more in 2012--the electorate getting their information from FOX or the GOP-controlled states rigging the elections in their own favor (Florida has effectively crimiminalized efforts to register voters by threatening jail time for the most trivial of procedural infractions like taking more than three days to turn in a form).

Can democracy survive when even the vote is not sufficient remedy against incompetence and malfeasance?

Mel said...

David Bowne,

Some of a), some of d) I would think. Note how a tax on business profits affects hiring and research.

If you knew you could only keep 60 cents from every dollar not spent on wages, and not spent on R&D, look how much more interesting the chancy new venture that needed more people to accomplish would look.

Tacitus2 said...

LarryHart

That Hideous Strength is on my all time fave list. The Chapter "Descent of the Gods" might just be my favorite twenty pages of the English languege!

Now, at Friend Brins insistance I have picked up Wealth of Nations. Smith is a methodical writer, not actually dull, but he is building a very long, gradually sloping ramp up to his main points.

Having read(part) of the March of Folly regardings English governance in contemporary times I look forward to soldiering on.

But distractions call, A.Smith won't be completed for months.

Tacitus

David Brin said...

SEVERAL RESPONSES:

Tacitus methodically reading smith? Admirable. One reason we all here think you are worthy of respect.

Carl, we could argue forever whether the great depression (1929 to 1933 on Hoover's watch, improved under FDR Keynesianism and then relapsed in 1936 because he tried to balance the budget. Eerily almost identical to what's happening now, in the Second Depression.

What we do know is that Depressions are like recessions the way colds are like the flus.... not even remotely. By ALL patterns, we are in a depression, not a recession. And they last a lot longer.

And they are cured by getting people back to work, with hi-velocity wages in their pockets and NOT by the banks and corporations and rich sitting on hoarded wealth, making is low or ZERO-velocity.

Show me the 'supply side" investment in new production that is being done by the rich and banks and corporations, sitting on mountains of cash! That is the Austrian solution and it simply is not happening. They have more than enough in those mountains of cash to do the experiment.

Let me reiterate. The supply-based "solution" should have happened by now. The producer caste has all the money. It is not flowing.

(BTW... is the ReformTheLP site kaput?)

Mel, in EARTH I forecasted that people would self-isolate in little Nuremberg rallies of like-minded isolation. Except for places like CONTRARY BRIN, where that likemindedness means guys who like to poke at each other!

David Brin said...

I don't often laugh out loud at internet videos. But this one lanced my brain with hilarious cognitive dissonance!

http://www.youtube.com/watch?NR=1&v=9_EcybyLJS8

http://www.youtube.com/watch?
NR=1&v=9_EcybyLJS8

Ian said...

All good stuff as usual but I'm surprised no-one is talking about the claims of Neutrinos traveling faster than light.

The initial reaction is, obviously, extreme skepticism awaiting confirmation.

But if the results re confirmed we may be on our way to resolving the Fermi Paradox.

David Brin said...

Only two out of fifty or so Big Wow "discoveries" have (in my experience) really shaken things up for good. Dark Matter and Dark Energy. The rest have been great opportunities to watch experts scurry about re-evaluating all they know... a worthwhile exercise!

LarryHart said...

Ian:

All good stuff as usual but I'm surprised no-one is talking about the claims of Neutrinos traveling faster than light.


This will show my ignorance of science beyond Physics 107, but I thought the theory is that particles can move faster than light--they just can't CROSS the light barrier. So something moving faster than light must ALWAYS move faster than light, just as something moving slower than light must always move slower than light.

I welcome any informed correction of this apprehension.

LarryHart said...

Tacitus:

But distractions call, A.Smith won't be completed for months.


I envy you having a book to be "into" that takes that long to read. It's one of the great feelings in the world for me, having a hefty tome that I can't put down with 1000 pages left to go. If I recall, "Earth" was like that the first time I read it.

I hate to admit this, but so was "Atlas Shurgged". I criticize Ayn Rand often on this list, but it's not from ignorance.

LarryHart said...

Dr Brin:

Let me reiterate. The supply-based "solution" should have happened by now. The producer caste has all the money. It is not flowing.


Exactly!

That's what I mean when I say that supply-side theory has been disproven by reality. The so-called "job creators" HAVE all the wealth. This self-evidently does NOT lead to them creating jobs.

Tim H. said...

Supply side might've worked, in another time. To a point. Now, with a ruling caste that drank in "America can't" with their Mother's milk, not so much.

Catfish N. Cod said...

I really don't think that FDR deserves credit for this one. Stalin beat Hitler.

More so than we did. Churchill deserves credit as a distractor, though none of his gambits ever worked. (Greece? Really? And Italy was such a waste.)

But this was only fair, because the Communists made the Armistice (rather than a true German capitulation) possible. We were rushing over in late '17 and early '18 because of the impending Treaty of Brest-Livotsk, which made a German victory just barely possible without American reinforcement. Despite the pain the Russians were enduring on the Eastern Front, the Commies' act constituted a true Dolchstoss... along with their partition of Poland that started the next round. They paid dearly for their perfidy; barely a Russian family exists that didn't lose someone in the Great Patriotic War.

Marx's prediction of what occurs in the end-limit case of pure laissez-faire was spot on, as Dr. Brin notes. His inaccuracy was declaring his predictions inevitable. This was a scientific prediction: it was falsifiable. It was then falsified: immiseration is not inevitable.

But the closer your national policies come to immiseration, the truer Marxist predictions become. Like Freud, most Marxism is nonsense... but when it's right, it's right.

David Brin said...

Marx spotted failure modes. He was unable to conceive that intelligence might design around them.

As for WWII, people are FAR too willing to credit the Soviets with unlimited resilience. Sure, they suffered, lost 100,000 troops and some cities, backpedaled, did it again and again and again. The impression is that it could have gone on forever, with or without British or American help.

That's simply not true. The Siberian divisions that Stalin threw in, when the Nazis could hear the bells of Moscow in the near distance, were his very last reserves, pulled at risk that the Japanese might simply march right into the eastern vacuum. (they very nearly did.)

Hitler's invasion was delayed a whole month, from May to June, by the Brits' decision to send help to the Greeks, even though they knew it was doomed, they'd lose many brigades, and they had been on the verge of victory in N Africa and could have ended that part of the war. Because they sent those divisions, AH had to delay Barbarosa (the USSR invasion) by 6 weeks.

Those six weeks inarguably saved the Soviets. As did the war materials that piled up on the docks of Murmansk.

David Brin said...

For more about the near thing for the soviets in WWII

http://books.google.com/books?id=ZssbFAvZ_IUC&pg=PA81&lpg=PA81&dq=David+Brin+Christopher+Priest+twins+Churchill&source=bl&ots=ukzV5oeP--&sig=P0pSL7jmBNwa-BwW2i0947r-DJw&hl=en#v=onepage&q&f=false

Tucci said...

Dr. Brin had written: "The Siberian divisions that Stalin threw in, when the Nazis could hear the bells of Moscow in the near distance, were his very last reserves, pulled at risk that the Japanese might simply march right into the eastern vacuum. (they very nearly did.)"

Hm. When next you encounter Jerry Pournelle, do ask him about the Nomonhan Incident (also known as the battles of Khalkin Gol). I recall him having published an excellent article in one of the smaller wargaming magazines about those 1939 Russian-Japanese border clashes back in the late '70s.

To the best of my knowledge, there was no such "eastern vacuum" into which the Kwantung Army could've marched when Stavka drew upon their forces in Siberia to counter Operation Typhoon in 1941.

The Japanese had been handled so thoroughly (and so hammeringly) in those actions that the Imperial Army's "Northern Expansion Doctrine" had been politically bankrupted in the Imperial court, and the Navy-advocated "Southern Expansion Doctrine" had gained complete primacy.

That aside, Dr. Brin, you have failed completely to address the impacts of government spending as adverse effects upon the national economy.

Taxation and currency counterfeiting (theft of value by way of "monetary policy") aren't the only ways in which politicians and other government thugs wreak havoc upon the private and therefore genuinely productive sector.

Whenever popularity contest winners (politicians) and career armed goons (bureaucrats) gain any ability to make spending decisions, they call into existence the commitment of material and human resources which tend radically to distort the national and local economies.

Along with these expenditures and the economically unproductive and therefore unsustainable activities they engender, they also give rise to rent-seeking constituencies which have reason to exert political pressure to maintain and expand those government expenditures regardless of objective necessity or even the most tenuous justification.

That there may be incidental benefits in terms of economic efficiencies as the result of government expenditures tends almost invariably to be an unintended consequence.

The Interstate highway system was an effort to create a military resource, facilitating the rapid transfer of motorized forces within the Zone of the Interior, remember, and the Department of Defense sure as hell didn't have the World Wide Web in mind when ARPANET was brought into existence.

For all the putative benefits you've perceived to have been the results of extortionate government interferences with the peaceable pursuit of voluntary market exchange, you've really failed to take into account the whole spectrum of damage done by critters like FDR and similar megalomaniac "brightest guys in the room."

Tacitus2 said...

With a military geared for amphibious/naval warfare Japan would not have made much progress in Siberia. About all that could be done would be cut the Trans siberian railway and take Vladivostock. Neither a KO for Stalin.

As I have said before, alt.hist is a sterile exercise, but I would expect the sheer distances in Russia would defeat Germany even without Pearl Harbor and with a Japanese intervention. The only way to alter that would be Hitler appealing to ethnic minorities inside Russia (Cossacks were well disposed for instance) and/or arming many Russian POWs. And the Ubermensch did not think that way.

Nope. Just a longer war, a US entry on a Freedom of the Seas rerun and a nuking of Berlin in about 1946.

Tacitus

Tucci said...

Tacitus2 had written that "With a military geared for amphibious/ naval warfare Japan would not have made much progress in Siberia."

Not entirely true. In the China-Burma-India theater, the Imperial Army was maintaining assets which were certainly not "geared for amphibious/naval warfare," even up to the level at which they were undertaking serious offensive operations aimed at the invasion of eastern India during the Spring and Summer of 1944 (the Imphal-Kohima campaign).

Tacitus2 continues, writing about "Hitler appealing to ethnic minorities inside Russia (Cossacks were well disposed for instance) and/or arming many Russian POWs.

Let's not forget the Ukraine, where the Reich found an extremely friendly reception less than a decade after Stalin had perpetrated the Holodomor, murdering more people in the space of two or three years than Hitler managed to slaughter in all the extermination camps and Sonderkommando operations throughout the war.

Insofar as I've been able to learn, Russians are still extremely unwelcome in the now-independent polity of the Ukraine.

duncan cairncross said...

Tucci - you are an idiot!

If you want to look at the effects of minimal government look at Somalia

Free enterprise can only work inside a framework of government.

And that's before you think of the advantages of having infrastructure
(water, sewage, roads, schools) so your workers/customers can survive

Paul451 said...

Tucci,
"currency counterfeiting (theft of value by way of "monetary policy") [...]
and other government thugs wreak havoc [...]
and career armed goons (bureaucrats) [...]
extortionate government interferences [...]
FDR and similar megalomaniac [...]"


Wow, the propaganda really does work on you, doesn't it.

Ian said...

"This will show my ignorance of science beyond Physics 107, but I thought the theory is that particles can move faster than light--they just can't CROSS the light barrier. So something moving faster than light must ALWAYS move faster than light, just as something moving slower than light must always move slower than light."

Hi Larry,

Tachyons are hypothetical particles which travel faster than light,

However by definition they can't interact with normal particles. (Although in theory their existence could be detected if the mass, energy, spin or information of the particles or energy emitted from the breakdown of a particle didn't add up to that of the precursor particles or photons.)

That's good from a physicists perspective because it means you can't use them to transmit information which would result in a causality violation. (I get in a car crash so I use my tachyon message system to warn myself not to take my car that day)

Similarly, because the exact position of quantum particles is indeterminate they can in theory move between points at superluminal speed - but again no information can be transmitted.

However if the Neutrinos are traveling faster than light and are being detected at the other end then in theory you CAN transmit information by switching the emission source on and off.

That's why IF the measurement is confirmed (and my scanty reading on newscientist.com already has meeven more skeptical than before) it'd be the biggest scientific story since the Atomic bomb.

Ian said...

A quick empirical experiment which almost everyone here should be able to do at home.

Construct a standard XY chart.

On one axis, measure government spending as a percentage of GDP, on the other, measure per capita GDP (or HDI, or life expectancy or infant mortality or virtually any other measure of wellbeing.)

Now population the chart with countries.

Quick question: while recognizing occasional outliers, if you construct a trend line, is it rising or falling?

Tucci said...

duncan cairncross rings in the standard brain-dead statist "look at Somalia" kneejerk simulacrum of an argument in a frantic spasm of effort to defend government spending.

While anarchocapitalism (AnCap) is certainly a good idea, there's reasonable support for the contention that "Free enterprise" can function well within "a framework of government."

Indeed, it has to be borne in mind that "Free enterprise" invariably creates "a framework of government" as participants in the voluntary exchange of goods and services seek to devise forms and usages which facilitate the preservation of those individual rights which bring them into commerce with each other to begin with.

Among the best counters to the "Somalia" whine is the history of the American frontier from its inception on the Atlantic coast, in which self-government was not only established by way of formal autonomously initiated measures such as the Plymouth Compact but continued to be re-established at every increment of settlement throughout the 17th, 18th, and 19th Centuries. Even the totally illegal mining camp that became Deadwood, South Dakota, achieved those protections of individual rights judged needful by its inhabitants.

Nobody comes into society from "the state of nature" with the intention of submitting to pillage or enslavement. Bear in mind (for example) what happened during Stalin's "collectivization" of agriculture in the late '20s and early '30s. Commanded to turn their tools, equipment, and animals over to the ordained collectives, many thousands of the smallholding farmers thus imposed upon destroyed their tools, set fire to their barns and creameries and grist mills, and slaughtered their animals to sell or sequester the hides and meat as best they could.

There are always unintended but clearly predictable adverse consequences to government intervention in the marketplace. Politicians and other thieving "official" thugs are too stupid or too thoroughly decoupled from responsibility to give these unintended consequences proper consideration.

This is one of the principal reasons why turning spending power (much less the authority to tax and counterfeit currency) over to the officers of civil government is such a hellaciously bad idea.

As for "infrastructure" (yet another standard statist reflexive decerebrate spasm) such as potable "water, sewage, roads, schools" and other capital assets, there is a magnificently idiotic historical illiteracy implicit in this contention that willfully ignores the ways in which the services provided by way of these kinds of investment were brought into existence by profit-seeking actors in the private sector long before vote-seeking politicians and empire-building bureaucrats co-opted them.

Frankly, what third-world hell holes like "Somalia" exemplify tend reliably to be too many (or perhaps too much in the way of) government actors plundering and otherwise interfering with purposeful economic action on the part of people in subsistence farming communities which had been sustaining themselves well enough - if only on damned thin margins - to support the populations that are today starving to death.

The folks in "Somalia" (to stick with that example) had been handling such "infrastructure" matters as they'd needed in the way of "water, sewage, roads, schools" until they began to suffer from a surfeit of "government," a "framework" that's been rather more like a gallows than something conferring any sort of benefit.

Tucci said...

Paul451 doesn't like explicitly plain speaking about:

"currency counterfeiting (theft of value by way of 'monetary policy') [...] and other government thugs wreak havoc [...] and career armed goons (bureaucrats) [...] extortionate government interferences [...] FDR and similar megalomaniac 'brightest guys in the room.'[...]"

Which is, of course, why such violations of Orwellian "political language" conventions are absolutely necessary.

Note that Paul451 does nothing to argue that the subjects under discussion aren't all precisely as I've termed them.

Might as well say so, right?

Paul451 said...

I can't see that anyone has posted this yet.

It's the footage taken of the decent of Apollo 11 frame matched to LRO images via Google Moon.

http://www.youtube.com/watch?v=G9Nh5qWzqMY

LarryHart said...

Tucci:

Among the best counters to the "Somalia" whine is the history of the American frontier from its inception on the Atlantic coast, in which self-government was not only established by way of formal autonomously initiated measures such as the Plymouth Compact but continued to be re-established at every increment of settlement throughout the 17th, 18th, and 19th Centuries. Even the totally illegal mining camp that became Deadwood, South Dakota, achieved those protections of individual rights judged needful by its inhabitants.


Sure, society's infrastructure didn't spring from nature. It had to evolve over time, just as any other complex system does.

And in North America, that evolution has been taking place over a period of 2-to-4 centuries, creating complex systems that continue to function as long as everyone (or at least most people) do their part while counting on the rest of society to do ITS part.

Hence the social compact. Because you as an individual can't do your part as a doctor or a plumber or a policeman or a science-fiction writer (or whatever) if you constantly have to concern yourself with fending off hostile neighbors or hunting for your next meal, or finding potable water or hoarding goods for the next rainy day. "Just do your job" is only possible in a society that mutually takes care of those basic needs.

The system has largely worked here. And now the people (the corporations, really) who have benefited the most FROM that system claim the right to exist wholly outside OF the system with no responsibility for its upkeep. Billing them for a share of that upkeep, they claim, is confiscation and "class warfare". No, now that they've "won", and they think they can live without the rest of us, suddenly everybody is responsible for their own protection and survival, and there is no such thing as "society".

That's what you're defending.

LarryHart said...

Tacitus2,

Regarding "That Hideous Strength":

I've read the trilogy three times now, and while I always particularly enjoyed the first book ("Out of the Silent Planet"), the final book of the trilogy seemed too preachy, too much a rigged game to me (in the same manner as "Atlas Shurgged") to really enjoy the first time around.

I have to say that the experience has improved with each reading, and that this time through, I'm getting some of the same excitement that you do.

The only other book I can think of that has improved so much on subsequent readings is "The Grapes of Wrath". And come to think of it, the reasons for that improvement are similar--both stories seem "torn from today's headlines" much, MUCH more than they did when I first read them in the 70s and 80s.

Anonymous said...

I always enjoy Brin's commentary, even when he is clearly wrong on some points. For instance, while he is clearly wrong about FDR (who with Hoover extended a recession into the Great Depression and whose policies assured the rise of fascism before ending it) he makes an excellent point about primogeniture. I would point out that the Roman institution of monogamy works in much the same way, and that countries in which rich men naturally take on many wives and have many children do not see the same sort of concentration of wealth as societies that demand monogamy.

That said, we could still do a great deal to bolster the middle class. The statistic that the 400 richest families hold more wealth than the bottom 50% of the country is somewhat misleading, however. Many middle-class families have significant debts - mortgages, student loans, credit card debt - that keep their net worth below zero or at least quite low. They may, however, enjoy a high standard of living, and blaming the rich for the poor saving habits of others is not helpful. Certainly we could establish a fairer tax system, but financially the greatest problem remains too much spending and too much government control of the economy.

Of course, there is one other factor which Brin and most other commentators appear to be ignorant of: namely, that there is a large class of men in the West who have been systematically discriminated against in appalling ways, particularly in the English-speaking nations. Some members of this invisible minority have taken it upon themselves to decrease the influence, power and wealth of the Western nations as a simple matter of self-defense. In other words, the United States, Canada, Britain, and Australia are already in the midst of an undeclared struggle, which has largely gone unnoticed because the direct casualties have so far been low and one-sided. Have no doubt, however, that this conflict is quietly being waged with real world consequences, and will continue to be waged until the persecution ends.

Aaron said...

Thank you for your post, Mr. Brin. I have a question for you. Do you think that the idea of Malthusian Catastrophe has anything to do with it? It's always been my experience that the idea that there isn't enough to go around is what triggers "zero-sum" thinking.

And I have come to the conclusion that one of the messages that we commonly receive from the media, and not just Fox and other conservative outlets, is that we live in culture of scarcity and want, where there simply aren't the resources required to support everyone.

LarryHart said...

Anonymous:

Many middle-class families have significant debts - mortgages, student loans, credit card debt - that keep their net worth below zero or at least quite low. They may, however, enjoy a high standard of living, and blaming the rich for the poor saving habits of others is not helpful.


Yes and no. Borrowing, especially against rising home equity values, allowed people to continue their expected standard of living while not noticing or realizing how much value their wages were losing. Had credit not been so freely available, perhaps wages would have kept up with productivity gains. Or at the very least, people would have realized what was being done to them much sooner.


but financially the greatest problem remains too much spending and too much government control of the economy.


I totally disagree, The greatest problems remain too LITTLE spending and too much CORPORATE control of the economy--acutally of all of society.

Tim H. said...

What gets me is the tendency to cut slack for non-governmental bureaucratic entities even when they're larger and more expensive than governments, one might think they'd never read dilbert.

"remon", forthcoming Alzheimer's drug.

Dave said...

"Many middle-class families have significant debts - mortgages, student loans, credit card debt - that keep their net worth below zero or at least quite low. They may, however, enjoy a high standard of living, and blaming the rich for the poor saving habits of others is not helpful."

Okay, the middle class still does not own much of the "wealth" it enjoys. Considered it rented. Rented or borrowed, the (financial) benefactors of that debt-based lifestyle are, again, the banks and the wealthy that own and control the banks.

All of which is irrelevant. If you took every last dime of the lower 80% of population, it would only pay down about half the debt. Who pays the rest off, then? The wealthy will have to pay a bigger share in the form of taxes because there is simply no way to pay down the debt otherwise.

David Brin said...

Tucci it is one thing to be afraid of 20 fierce Soviet divisions who beat you last time. It is another thing to be afraid of 20 fierce Soviet divisions that have been hauled 5,000 miles away, leaving almost nothing behind. If the Brits had not distracted the Nazis in Greece, Barbarossa would have happened in early May and the USSR would have been divided in two.

Your fixation on spending ignores many things:

1) Discretionary spending is no higher than it was when Clinton was paying off debt. Period. Discretionary spending is the ONLY USG expense that has not gone up. Yet it attracts all the rightist screeching.

2) Virtually all the current deficit is attributable to

- TWO endless quagmire land wars of attrition in Asia, something we swore we'd never do again.

- Endless waste in a project the Goppers swore they'd never allow again - "the failed and discredited doctrine of so-called Nation Building." WHich they have now poured vastly more of our treasure into than ALL previous "nation building" efforts ever before, combined. Pouring it all into infertile soil where democracy is impossible. (Funny how it's okay to do this on THEIR watch.)

- A vast and totally unfunded prescription medicine program to bribe seniors in 2004. Vastly vastly more expensive than Obamacare would be AT ITS WORST!

- Repeated supply side tax breaks for the rich, cutting in good times and cutting in bad, in fat times and lean, during peace and war, proclaiming that it would all go into productive investments. It never ever ever did. Instead, this "stimulus" took the money and made it as low-velocity as it could possibly be. The rich and corporations are just sitting on it. Clipping bonds.

David Brin said...

Tucci... You wave your arms and proclaim DAMAGE that FDR did, but you do not for an instant look at the facts I presented and ever deal with them.

1- the 6000 year reign of misrule of oligarchy.

2- The fact that America found was for 200 years to stave off that failure mode WHILE maintaining a Smithian incentive-market system

3- the fact that FDR left us with BOTH a flat social order and the most vibrant capitalism the world ever knew.

All those (and more put a burden of proof on you. A burden that will not be satisfied with mere armwaved assertions and incantations.

David Brin said...

Aaron zero sum thinking is not a matter of scarcity (much). It is a matter of personality. In all cultures there are those who "get" the notion of the positive sum game... and those who by personality never will.

I consider this to be the fundamental nexus of the Red-Blue divide in America. It has nothing much to do with left versus right in the old senses of the words.

Oh... regarding the wars and nation-building... look at who got the contracts! Using "emergency" over-rides, contracts worth tens of billions were let to Bush family friends without competitive processes or accountability. "Conservatives" who divert their eyes from this... after having screeched at Clinton over some 2 or 3 million $ discrepancies in the old Oil For Food Program... well they are poster children for hypocrisy.

Jacob said...

Hi Tucci,

You said... "the private and therefore genuinely productive sector." What is your definition of productive? Please try to be specific.

One of the largest problems in our society is that the solution to broken government is its removal. Rather than ending programs, you should work to fix them. You talk about the only benefits of government being unintended consequences. If we put you in charge of such a program, could you intend and improve upon the positive consequences associated with that activity? Could you lower the waste associated with accomplishing tasks you did not agree with?

If Anti-Government types turned into Efficiency Experts, less government and lower taxes would happen. Furthermore, Pro-Government types would be a LOT more open listening to you when it comes time assess the inherent value of a program in the first place.

Jacob said...

The Saudis get +1 in my book for improving gender rights.

NPR Article

David Brin said...

Guys Tucci is welcome here. We need bright ostriches here. They challenge us! And when they wake up to become former-ostriches... well, then we need more!

Jacob: "The Saudis get +1 in my book for improving gender rights."

Well... we'll see. Maybe on a scale of a million.

Catfish N. Cod said...

Jacob: "The Saudis get +1 in my book for improving gender rights."

Dr. Brin: Well... we'll see. Maybe on a scale of a million.


Let's see... as I recall, the Roman definition of a mile was a thousand steps.

So a million steps would be a thousand miles.

It could then be said that, if a journey of a thousand miles begins with a single step, the Saudis have taken that first step on the Brin million-point scale.

Every little bit helps.

Pouring it all into infertile soil where democracy is impossible.

I wouldn't necessarily say that. I would only say that we can't impose it even with an unlimited budget. The Arab Spring might create democracies, but the Coalition of the Willing could only create friendlier dictators.

@Tucci: you have much criticism to level at what mechanisms you don't like. Can you speak any of mechanisms you do? Pray tell what you would institute to prevent tragedies of the commons and feudal/barbarian capture of the economy. Magical thinking about the invisible hand won't cut it. Until you can say how you will make sure your markets deliver the intended efficiencies... well.. I'll take the unintended consequences of the bureaucrats over the totally intended consequences of the aristocrats.

Carl M. said...

Dr. Brin: I am not arguing in favor of Reagan's supply side tax cuts here. I was comparing Obama to Clinton, not Reagan.

I am arguing against deficit spending as stimulus. Put me in charge and I would raise taxes on the rich and cut government spending.

Depressions last longer than recessions ever since the government got into the business of propping up wages. Depressions in the 1800s were quickly followed by deep wage cuts followed by people going back to work. Unpleasant, but much shorter than the Great one, or the depression we are in today.

Then again, in prior depressions, people didn't mortgage houses for 30 years at a time. That's a relatively modern practice if I recall correctly. The exact ramifications are unclear to me. In some ways the 30 year term makes more sense. With shorter terms I suspect many people expected to refinance and local bankers could profit by refusing, twirling mustaches and tying maidens to railroad tracks (if movies of the time are to be believed). Then again, with the long terms, you create situations of inflexibility, overleverage, etc. Tough call there.

One of these days I'll go back and read some back issues of Time or some such to bypass later filters. I read from some that the New Deal was started by Hoover, but I'd like to see detail and levels.

Here is some of the dumnitude I know about:

Hoover: passing a check tax of $.02/check ($.30 in today's money). Talk about trying to create a bank run!

Hoover: passing high tariffs as Germany struggles to pay its war debts.

Roosevelt: Throwing away food as people go hungry.

Roosevelt: Creating a minimum wage and increasing union powers as millions are unemployed.

Roosevelt: Insisting on the Rural Electrification Administration even as private utilities were moving into rural areas.

Roosevelt: Mandating higher truck shipping rates as crappy trucks were underpricing the railroads on pre-Interstate highways -- instead of allowing the railroads to lower their rates.

The Federal Reserve Board: Abruptly changing the reserve requirements, ending the Real Bills doctrine. (I waffle here. I admit needing to do some more reading on this subject.)

---
I have more on Roosevelt here just because that's what the school history texbooks report. I need to do some digging to figure out what Hoover did and did not do.

-----
As for the Reform Caucus, I shall inquire. I am no longer part of said organization, but I have some relevant email addresses.

Robert said...

Claims that FDR turned a recession into a Great Depression with his policies fail to consider something important: there has been more than one economic depression in the history of America (and the world). The reason why the Depression of the late 1920s and 1930s was considered the Great Depression was because it was such a severe Depression. Before that, what is now known as the Long Depression HAD been considered the Great Depression: 1873–1896. There was also the Panic of 1837. And there have been regional Depressions as well, often in Latin America, during the 1970s to 1990s.

The system of finance that came into existence during the Great Depression WERE NOT AROUND for the previous Depressive cycles. Thus their existence did not extend the Great Depression - if anything, their LACK was one of the reasons for the Long Depression that happened 50-odd years earlier.

If you are going to try and disprove history, be sure to try and LEARN history first. Because your lack of knowledge is quite telling and ends up with you with egg all over your face.

Rob H.

David Brin said...

Carl, you speak with great intelligence, as usual. But you raise issues that go beyond your assertions.

Whether or not you are a "Keynsian" it is clear that a depression improves when you have high-velocity money in circulation and people with jobs. These things are not always beneficial! When demand inflation is running away, Volcker-like discipline may be called for (moderated by human decency.) The irony is is that an overheated economy can benefit from supply side antics. Not because the rich will invest in capital (a myth) but because the money becomes low-velocity.

I am not universally a high velocity man. For example. Wall Street desperately need a 0.01% transaction tax. It would not affect folks who see a company, study it and decide it has a real future. It would pulverize the assholes who think "economic efficiency" consists of computerized forecasts of what other people plan to buy and leaping in like a parasite to suck the price gradient before the human being can benefit from his intuition or study.

Your litany of FDR crimes is a melange. SOme indictments are true and should have been obvious then. Some have become obvious only in retrospect, and some are just unfair. It took years to get rid of the ICC, which could only make sense AFTER the alternative of highways and trucks became available, for instance.

But your list of indictments is standard stuff and assertions are easy to come by after 60 years of polemical accumulation. What no one answers is my clear statement of the burden of proof created by OUTCOMES. THE OUTCOME of FDR was undeniably the best mix of social flatness, generational improvement and capitalist cornucopia ever ever ever...

The requires any decent person to start the debate from a position of assumed gratitude, and not Randian surliness.

Robert said...

Just a reminder that awakened ostriches are not converts to The Democracy, and not fans of either FDR or LBJ. We vote for Democrats on a case by case basis as an emergency measure, which is not at all the same thing as liking them. If the Republicans are reformed or replaced, the alliance with the Democrats would end fast. Of course, we'd negotiate deals when necessary. Expecting old-school rational conservatives to do more than that is unreasonable - the existing disagreements with the Democrats are still there. It's just that existing alternatives are worse.

I stand corrected about the Assembly of Notables in the run-up to the French Revolution. Interesting that the country nobility and the lower clergy (who were both poor and radical) were excluded, though. From what I remember, an anti-reform faction at court (or at least an anti-Necker faction) controlled its selection. Definitely time to re-read Citizens.

Finally, I must say I'm with Obama on his current campaign. It's long past time for a "Give 'em Hell, Harry!" moment with the idiots in Congress (this includes the people in both parties who voted against the debt ceiling deal - though the worst blame goes to the Tea Party crowd). You're absolutely right about who's carrying out class warfare right now.

Bob P.

Patricia Mathews said...

LarryHart said "Had credit not been so freely available, perhaps wages would have kept up with productivity gains. Or at the very least, people would have realized what was being done to them much sooner."

An analogy to the guy in the bar slipping something in the gal's drink comes to mind.

That would make a good Jeopardy answer: why is credit like a roofie?

Hey - Dr. Brin - the word verification is "sific." How apt!

David Brin said...

Robert I am totally cool with your "wakened ostrich" warning to all your current democrat allies that "once conservatism (or possibly libertarianism) regains its sanity, this alliance is over!"

I dream of a Party Of Enterprise Alternatives that would fight for competitive capitalist solutions to the same problems that make people turn to the state.

Barry G wanted to re-align the incentives built into the insurance industry so that the marketplace rewarded companies for the simple act of MAKING THEIR CLIENTS LIVE LONGER. All State Farm clients would get a newsletter health advisory and a house inspection every year, including the medicine cabinet, gradually competitively winning more clients because STATE FARM CLIENTS LIVE LONGER.

ANd thus, the USG could wither back from the FDA and FTC and other paternalistic solutions, because the market was doing it. THAT logic... instead of grouchy bitching about the FDA and pretending that it's not there for a reason....

...that is the thinking pattern that would make such a party a great adversary-partner with the democrats. Each swing of statist and marketist govt would ratchet us FORWARD.

Instead of a problem solving POSITIVE version, we have today's mad conservatism. But there are other models. I miss Barry.

sociotard said...

A quick empirical experiment which almost everyone here should be able to do at home.

Construct a standard XY chart.

On one axis, measure government spending as a percentage of GDP, on the other, measure per capita GDP (or HDI, or life expectancy or infant mortality or virtually any other measure of wellbeing.)

Now population the chart with countries.

Quick question: while recognizing occasional outliers, if you construct a trend line, is it rising or falling?


The correlation on that line is very loose, at least with the metrics I tried.

I'm actually curious what you were hoping to demonstrate with that test? A Keynesian would say that the amount of government spending should be based on what the economy is doing at a given time.

Tony Fisk said...

I tried that X-Y test on GapMinder, mapping income /person vs Tax as a % of GDP (there is no setting for 'govt spending as a % of GDP', but this seems to be the same thing!)

The result: all nations oscillate between 10-25% tax over time. There is no correlation with income. What were you expecting?

David Brin said...

So cool. "descend" to the moon along with Neil Armstrong and Buzz Aldrin with their Apollo 11 window footage next to LRO images from Google Moon. 1969 that 1st landing was hard. Plopped into the only boulder field on a flat plain! Apollo 12? Perfect! Landed 100m from Surveyor!

http://www.youtube.com/watch?v=G9Nh5qWzqMY

Ian said...

Tony,


If you map a randomly selected group of countries at the same point in time at any point in the past 50-odd years, you should find that government spending as a percentage of GDP correlates with higher GDP.

I'm not suggesting a causal link in either direction bit its the exact opposite of what one should find if Tucci's arguments were correct.

Carl M. said...

Roosevelt extended the ICC to include trucks. The ICC prices were apparently high enough that trucks were cheaper than trains despite the lack of superhighways. One of these days I want to hire a grad student to dig through the ICC price schedules. I suspect they were kept at pre Crash levels.

Let's see: people going hungry in the cities, and farmers going broke. Solution: increase transportation costs!

Kind of makes George Bush look smart.

Tony Fisk said...

@Ian, according to Gapminder, there is no perceivable correlation whatsoever.
(I am using tax revenue as a % of GDP rather than govt spending, but since tax is a govt's main source of income and govts are supposedly not for profit agencies, they should be similar)

Paul451 said...

Dalai Lama has decided to lay out "clear guidelines to recognise the next Dalai Lama" while he was still "physically and mentally fit" so that there was "no room for doubt or deception".

China has responded:

"China adopts a policy of religious freedom which includes respecting and protecting the form of succession of Tibetan Buddhism," Chinese foreign ministry spokesman Hong Lei told journalists at a briefing.

Riiiight... so when you say "respecting", you actually mean...

"The title of Dalai Lama is conferred by the central government and is illegal otherwise."

Ah, there's the China we know and love.

http://www.abc.net.au/news/2011-09-26/successor-chosen-by-dalai-lama-illegal-china/2943118

Tony Fisk said...

I've just been reading that. I particularly like the Dalai Lama's comments about him deciding whether or not he will allow himself to be reincarnated at all!

(brings to mind a converse version of that running Monty Python line: 'I'm not live yet!'*)

*His Holiness seems to have a sense of humour that would appreciate this, I think/hope!

nataki: martial art weapons made from corn chips

sociotard said...

Tony Fisk said:
The result: all nations oscillate between 10-25% tax over time. There is no correlation with income. What were you expecting?

Just in case there was confusion, I was quoting Ian in the part in Italics in that first post. I was trying his test, just like you did. I didn't see much either. I'm not sure what he was expecting.

Robert said...

Love the Dalai Lama thread. If only Benedict was more like him; hell, I'd be happy if Benedict was just more like John XXIII. The Dalai Lama is the only major religious leader I know of who has said he'd change his beliefs if new scientific discoveries. As for the Chinese Reichsleitung, vile as usual. I'd love to see a China that Tibet (or Taiwan) would freely join, but I'm not holding my breath.

Thanks for the reply to the Ostrich post. We really need a viable two-party system. One of my pet peeves is the kind of "tactical voting" where you vote in a primary for the worst candidate in the other party; it's irresponsible as hell. On the other hand, voting in the other party's primary for the best candidate, especially when the race in one's own party isn't open, is just fine. And, on the gripping hand, who would blame any Democrat this year for saying that the Republicans will pick a candidate so bad that he'll (or, if you want one of the two very worst candidates, she'll) guarantee that Obama gets reelected in the middle of a Depression (I agree with you about that, too)? After all,
a) Democrats are only human, and this is a temptation that cannot be resisted.
b) it's probably true, so
c) almost all the Independents, close to half the Republicans, and most of the media are already saying the same thing, and
d) the Republican candidates are saying it about each other.

Any ideas on whom the Democrats could have nominated in '32 to make sure Hoover got reelected?

Bob P.

Tim H. said...

Jimmy Walker might've kept Hoover in office. A second Hoover term might've been interesting, he had the right ideas, but too timid, or not desperate enough in his first term to hit the problem hard enough.

Stefan Jones said...

Taking a break from libertarians rewriting history:

From Der Speigel: Study shows that Share Traders More Reckless Than Psychopaths, Study Shows

'Particularly shocking for Noll was the fact that the bankers weren't aiming for higher winnings than their comparison group. Instead they were more interested in achieving a competitive advantage. Instead of taking a sober and businesslike approach to reaching the highest profit, "it was most important to the traders to get more than their opponents," Noll explained. "And they spent a lot of energy trying to damage their opponents."'

Walt said...

I'm enjoying your conversation over on Google+ with David Friedman regarding restoring the tax rates of the nineties.

Friedman points out that the the lowest quintile then paid twice the rate they do now and the rich paid roughly the same.

David Brin said...

Robert, as it turns out there were many rivals of FDR who were not just worse than him but who (I hope) would have driven the masses to support Hoover. The top one to come to mind was Huey Long, who was the Rush Limbaugh radio shock jock of his day while corrupt democrat gov. of Louisiana... with a socialist rhetoric-tilt, of course. But there were olders, like a fiercely racist priest named Father Coughlin.

We need to recall the era was completely insane. All over the world, guys who were talented speakers used radios and loudspeakers to make themselves sound like gods and the public wasn't inoculated. (To see this in action today, watch a Beck follower glued to his show.) America was no exception. Except we lucked out. OUR master of polemic and radio was aman who was on our side.

Carl, I never claimed FDR was perfect ! Indict him with every specific you can find. We are still left with the basic facts:

1 - our parents who adored him were not idiots. They were the Greatest Generation. They were there, right there. You aren't and never were.

2 - the OUTCOME of his years was the greatest surge UPWARD America ever experienced. In every conceivable metric of national health - including social mobility and flatness and competitive enterprise, we wound up not just better off but vastly and incomparably better off.

Compared to these two facts, all else is quibbling.

Possibly VALID quibbling! Remember, the dems and libs went along with a lot of the reduction in FDRian measures over the years. They are the ONLY ones who tore down captured agencies like the ICC & CAB. JFK cut the absurd 90% graduated tax rates.

But the ASSUMPTION that ALL FDRian measures are automatically evil is just plain flat out ingratitude.

David Brin said...

Businessweek lays open the scandal of tax rates:

"For the 400 U.S. taxpayers with the highest adjusted gross income, the effective federal income tax rate—what they actually pay—fell from almost 30 percent in 1995 to just under 17 percent in 2007, according to the IRS. And for the approximately 1.4 million people who make up the top 1 percent of taxpayers, the effective federal income tax rate dropped from 29 percent to 23 percent in 2008. It may seem too fantastic to be true, but the top 400 end up paying a lower rate than the next 1,399,600 or so."

http://www.businessweek.com/magazine/content/11_16/b4224045265660.htm?chan=magazine+channel_11_16+-+how+to+pay+no+taxes_11_16+-+how+to+pay+no+taxes

http://www.businessweek.com/magazine/
content/11_16/b4224045265660.htm?
chan=magazine+channel_11_16+-
+how+to+pay+no+taxes_11_16+-
+how+to+pay+no+taxes

read it.

rewinn said...

I have yet to see a reasoned counter to the argument that high marginal tax rates on the rich (...however you choose to define them ...) encourage them to retain profits within their businesses, instead of taking them as income, for the sole and selfish reason of avoiding taxes ... and thereby increasing economic activity, whether they like it or not.

Anyone care to take a shot?

I did just run across a 1926 newspaper in which Henry Ford editorialized in favor of the five-day workweek, reasoning that the man compelled to work six- or seven-days had no time for leisure, and therefore did not contribute to demand for products. Ford was many things, some admirable, some less so ... but I don't think he was either foolish nor a Commie.

TwinBeam said...

Perhaps it's time to be thinking about a 4 day work week.

I wonder if any candidate would make that part of his platform for 2012...

"We need to spread the work around! It's unfair for less than 60% of the population to monopolize all the paying work, when 14 million people are out of work!"

If we went to a 4 day, 9 hour/day workweek, that should be just about right to drive up employment.

TwinBeam said...

Rewinn - are you SURE you want to encourage the rich to keep investing back in to their businesses, where their money will just keep piling up, giving them an ever larger fraction of wealthy ownership?

Maybe you should be advocating making any money over $250000 CONSUMED, tax free - including money given to charity, of course, and excluding spending on investments of any sort.

Paul451 said...

TwinBeam,
"If we went to a 4 day, 9 hour/day workweek, that should be just about right to drive up employment."

But once set, it won't be undone when the economy recovers; even if it worked. So when the economy just barely recovers to what would normally be full employment, you will already be deep within the wage inflation boom-cycle. That lessens the amount of non-inflationary growth before you hit the next bust.

Krugman made a throw-away comment about how deflation screws up labour because wages deflate too slowly to retain full employment. Which got me thinking, wage regulation (like minimum and union negotiated wages) and even contracts move slowly, reducing flexibility.

Could there be a way of setting wages against a standard measure that is somehow traded, but preserving the protections of minimum wage, collective bargaining and contract law.

Ie, your wage wouldn't be set in fixed dollars, like "$500/wk". It'd be required by law to be stated as "TBW+5".

TBW is Traded Base Wage, some mechanism that exposes all wages, collectively, to the market. (The +5 would then be your wage relative to the TBW: 50% above perhaps, or 5 times, or just "in the fifth band".)

Problem 1: I have no freakin' clue how to "trade" the TBW without it being a race to the bottom. (I get as far as tradeable payroll tax rates (like pollution permits), but then everything goes fuzzy.)

Problem 2: It's pro-cyclic. Ie, it reinforces booms/busts in the short-term. At times like this, it reduces the national wage, reducing spending. (Even through it preserves full employment, and shortens the downturn, it increases volatility.)

I guess if I skip the "Traded" part of the TBW, then it could be set monthly by the Fed as part of monetary policy. This partly solves 2, since it would make the Fed consider the combination of wage/interest rate setting. But shouty people wouldn't allow that.

tl;dr - Stream of consciousness. Nothing to see here, move along.

(natens: Martial art weapon made from babies.)

rewinn said...

@TwinBeam - tax-free consumption is an interesting idea, at least in theory, but the objection you raise relates to the distribution of wealth, not to economic activity per se. It's not really an argument against the effectiveness of high marginal tax rates for getting the economy rolling at a high rate and thereby enriching nearly everyone, except perhaps to the extent that a highly skewed distribution of wealth reduces overall economic activity (as Henry Ford noted back in the 1920s).

The classic American solution to the distribution of wealth problem is estate taxes (and, of course, the end of primogeniture ... often overlooked!) Let Bill Gates enrich himself and the world with his genius/hard work/sharp dealings/good luck/or whatever ... and then let his children set out with only a few millions of dollars between themselves and the cold. It's better for them but, more importantly, better for our nation.
To be fair, "better" is a subjective term. One may feel that a radically unequal distribution of wealth, and its concomitant impoverishment of the nation, is a "good" thing; to some, the England of Dickens is a paradise! But even without this normative evaluation, the purely mechanical question remains: what rational argument either in theory or in historical practice can be made against the effectiveness of high marginal tax rates at the upper end for keeping the economy moving?

rewinn said...

@Paul - the "...wage inflation boom-cycle...." is several decades from being a problem for our great nation.
You know the facts: Real wages have been in decline for decades, and when you factor in productivity gains the picture is even worse. We could use some of that inflation because the collapse in consumer demand is a huge problem - "job creators" are not going to hire people to build widgets that no-one has the cash to buy.
The globalization of labor markets has also exerted enormous deflationary pressure on labor rates, and frankly, it's unlikely that will change anytime soon. If there is simply less work to go around, the obvious solution is to require less of it per person for a decent living.

Paul451 said...

rewinn,
"If there is simply less work to go around, the obvious solution is to require less of it per person for a decent living."

That was how it was meant to work. Probably would have if the productivity sharing that happened between WWII and 1980, had continued. Instead we got the combination of chronically under- and unemployed and the over-employed (two or more low paying jobs to make a single decent wage.)

(turcil: A turkey stuffed with Citrils.)

LarryHart said...

rewinn:

If there is simply less work to go around, the obvious solution is to require less of it per person for a decent living.


YES! You don't know how glad I am to see someone other than myself making what seems to me to be the obvious point.

Less work is required per person to make the system work than at any time in human history. That means either liberation from drudgery for all, or else it means that those who can assert "ownership" of the means of survival take all of the benefit, while the vast majority are cast out with yesterday's trash.

The latter interpretation makes no sense. It would have residents of the Garden of Eden die of starvation for lack of money to pay for food.

Paul451 said...

Speaking of FDR.

Krugman and co. catch WSJ writers in an apparently deliberate attempt at Great Depression deception:

http://krugman.blogs.nytimes.com/2011/09/27/bad-faith-economic-history/

David Brin said...

Lovely!
http://www.stumbleupon.com/su/2jRGYC/dd.dynamicdiagrams.com/wp-content/uploads/2011/01/orrery_2006.swf

One advantage of the 4 day week. The 3 other days... a fair number of people would get bored and either travel (stimulates) or else putter and start new businesses. Alas, some would use it to get second jobs and keep the unemployed that way.

Instead of tax-free consumption, how about extending the property tax to include all wealth that just sits. Including passive investments... but excluding active investments in startup businesses for 10 years. Get capital flowing into new business... the way supply siders claimed that it would, but never has.

Requires total world transparency of who owns what.

David Brin said...

Joke for nerds Mike Gannis sent me:


"We don't allow causality violations in here," the bartender says.

So, this neutrino goes into a bar.

Patricia Mathews said...

For aristocratic propaganda in comic books -

http://www.juliansanchez.com/2011/09/21/ceos-in-comics-villains-earn-heroes-inherit/

Shudder.

LarryHart said...

On the neutrino faster-than-light thing...

Can someone who actually knows the physics explain to a lay person like myself how it is impossible for information about a faster-than-light neutrino to be known by slower-than-light instruments.

I can understand that information wouldn't be available BEFORE the neutrino reached you, since any information about it would be travelling slower than the particle itself. Just as you can't hear a supersonic jet before it reaches you.

But once the faster-than-light neutrino actually impacted your detector, wouldn't that constitute information?

This isn't intended as an argument, but rather a legitmate quest for knowledge.

LarryHart said...


"We don't allow causality violations in here," the bartender says.


"Well, at these prices, I'm not surpirsed."

:)

Rob said...

If the speed of light through a medium is known, and the medium (say, the Swiss Alps) is also known, then all you have to do is carefully synchronize timers and do a subtraction problem to compute velocity.

I think there's a "well, duh" moment coming for these neutrino observations.

Rob said...

Ha! Larry, I can't decide whether I answered your question or restated it!

David Smelser said...

Here is a good blog write up on the neutrino experiment.

http://scienceblogs.com/principles/2011/09/faster_than_a_speeding_photon.php

David Smelser said...

and
http://scienceblogs.com/startswithabang/2011/09/are_we_fooling_ourselves_with.php

David Brin said...

Guys your opinion on this?
http://news.yahoo.com/blogs/cutline/bbc-victim-hoax-no-yes-men-154724196.html

Patricia thanks for this interesting and thoughtful essay about the ethos of the superhero and how being a self-made or inherited mogul enters into it.

http://www.juliansanchez.com/2011/09/21/ceos-in-comics-villains-earn-heroes-inherit/

Jacob said...

Hi David,

The guy in question does seem nihilistic. I say this mostly because he couldn't think of anything that could be done right. His recommendations would likely hurt the markets unless you interpret moving value and price towards one another a helpful thing. I'm guessing the guy doesn't have a very wide perspective. He wants to help people behave in their self interest at the expense of others.

As a general impression, I think the BBC has an obligation to seek out at least one hopeful (idea man) traders for each nihilistic one.

Tony Fisk said...

Used to dream of living in' cardboard box!

In twelve months, millions of peoples' savings are going to vanish, eh? Where to? Goldman Sachs? Making money off a recession, by investing in a lot of sharp, backstabbity knives. Very civilised.

Of course, if you know how to make money of a recession, why not induce one?

Anyone for Sterling's version of Maneki Neko?

Neil Miller said...

David wrote:
Instead of tax-free consumption, how about extending the property tax to include all wealth that just sits. Including passive investments... but excluding active investments in startup businesses for 10 years. Get capital flowing into new business... the way supply siders claimed that it would, but never has.

No need for an exemption. Money invested in a start up is transferred to the start up and is no longer wealth for the investor, merely a share of a company, which is worth, at present, very little.

Corporate wealth would have to be taxed too, of course, or it would be big loophole for the wealthy. Just create a shell corp and park your money there. Probably by assigning the wealth via stocks and shares to individuals, rather than taxing those shares at market value.

Stefan Jones said...

Some blogger has already tied together that @$$hole BBC-interviewed stock trader with the article I linked to about psychopathology of that class.

Um. If bankers and traders destroy the wealth of millions in the normal course of pursuing their business, then it is time for society to PUT. THEM. DOWN.

Banking and stock markets had an important function in greasing the skids of finance that allowed businesses to start and grow. They've mutated into parasites. Time for a purge. Time to send the sociopaths packing.

David Brin said...

A lot of "independent traders" are guys who inherited money and never got a job.

Hey! You want to know the secret to how to make a small fortune Independent Trading?

Start with a large fortune.

Tony Fisk said...

@Stefan, neo-liths killed off the bankers of the mammoth steppes for a quick snack. The common wealth was locked into the permafrost vaults of the arctic tundra (today, it's a Swiss glacier).

LarryHart said...

Tony Fisk:

Of course, if you know how to make money of a recession, why not induce one?


Which puts the lie to the old pro-business canard (which was more true back in its day) that "What's good for General Motors is good for the USA".

When banks can deliberately give mortgages to people they know are incapable of paying them off, and then make billions of dollars betting on the FAILURE of those mortgages, the entire relationship between those institutions and society is disfunctional. It is no longer the case that a rising tide lifts all boats--now a few boats rise on the drowned carcasses of the rest.

Carl M. said...

I'm grateful for how Warren Harding handled the depression of his day.

ObamaCare: It's working:
http://www.nytimes.com/interactive/2011/09/27/business/A-Jump-in-Health-Care-Premiums.html?nl=todaysheadlines&emc=tha2

rewinn said...

Is Rastani a Poe? The delightful thing is that you can't tell!

I tend to think he's sincere, because we have seen the very same sort of talk from enthusiasts of one ideology or another ... since forever. The "Left" is not immune from the idea that the worse things get, the better ... it's just that at the moment, that particular perversion is fortunately out of favor. Mostly.

The only surprising thing is that Rastani would get caught on camera saying what most of the Aristocracy of Wealth say in private. Although perhaps the Aristocracy is powerful enough that it doesn't have to care anymore.

---

@CarlM:

"I'm grateful for how Warren Harding handled the depression of his day...."

Alcohol?

"Obamacare..."

Post hoc ergo propter hoc?

But seriously, @CarlM, when merchants are compelled to deliver the goods they promise, they respond by raising prices ... because they can no longer profit from collecting your premiums, then dumping you when you get sick. An increase in premiums is therefore merely the accurate accounting of costs that you already paid ... it's just that formerly you "paid" by being taxed to support your ER or losing coverage for your preexisting conditions when you lost jobs.

Sort of like waging wars "on the books" instead of via emergency appropriations, it's an example of the disadvantage of honest public policy.

But of course rising premiums *could* have been avoided by providing a public option: simply removing the minimum age for voluntarily signing into Medicare. This didn't happen because it would have subjected health insurers to actual competition, as was heavily discussed at the time.

Jack said...

Rastani is hustling work. From his perspective the appearance was a free commercial. He probably grew up and learned his craft in the big trading companies( Goldman sacs, BOA, etc.)
What he said was not new , revolutionary nor insightful. Just basic stuff you will see in the comment section of many financial blogs.
What is obvious is that his pitch is directed toward scared money. So rather than being an owner of inherited wealth he is looking for inherited wealth that is scared they may loose it all and have to work for a living.

Jack

Jack said...

BTW
Much of the points on trading that Rastani made were made many years ago in the 1923 classic
"Reminiscences of a Stock Operator"

Jack

Robert said...

There's a lot of suspicion he's one of the Yes Men and this was just a big prank.

Rob H.

Paul451 said...

Robert,
Re: BBC's Yes-Men hoax.

Does anyone know if there's a faux grass-roots campaign against the BBC by... Murdock/Ailes and their ilk? I've noticed a sharp increase in anti-BBC comments by random conservative commenters.

I don't watch Fox News, so I don't know if there's been increasing attacks by Fox commentators, too, but I know Uncle Rupert has spoken out against the "unfair competition" of the BBC. And there's been a conservative/Murdock-press campaign against Australia's public network (ABC) for years.

Even if people can determine that the Yes-Men weren't hoaxing the Beeb, that claim subtly undermines the BBC's credibility. Remember, the counter to "It's a hoax" ends up being "He wasn't qualified to speak about markets! Who vets these people!" (Even though the segment looks more like a Trader Vox Pop. Ie, they didn't puff up his credentials. "I'm a Trader" not, "I'm an Economist".)

Tony,
Thanks for that Sterling story. I'd be both as enamoured with the "network" as the main character, and as horrified by it as the American woman.

CarlM,
If you wanted to jack up your premiums, to increase profits, without your customers shopping around for alternatives, blaming Obamacare is a great way to do it. You create the perception that it's an external factor, therefore something that will apply to every fund. (And when it works, it quickly applies to every fund.)

Paul451 said...

CarlM,
Meant to add, re:Obamacare. They could have added a campaign to encourage people to shop around for a better deal, along with promotion of consumer-watch websites that (honestly) compare value for money. It would have offset the Obamacare-raised-prices claims by temporarily increasing competition in the industry.

(OTOH, they had enough trouble just getting the thing passed, given the cowardice of the dems in Congress. Which I never understood. People voted for Obama believing he was a left-wing liberal, they are disappointed that he's not. So why fear occasionally doing exactly what the voters asked for?)

(barksink: Crazy.)

Jack said...

Some bio info on our "trader"

http://tinyurl.com/6efo363


Jack

David Brin said...

onward... next blog...

Anonymous said...

Interesting article:
Two points:
1) Survey (week after article posted) in Australia had most people favouring the middle ground, both main parties fought over it, not party represented it, the extremes a minority.

2) The government of the day whatever flavour is faced with the hard reality of making financial ends meet, that have to get practical somewhere, and this can consume them more than policy or doctrine.

mik3cap said...
This comment has been removed by the author.
mik3cap said...

Us Gen Xers will just charge the Boomers A LOT OF MONEY for their retirement care. Or maybe we just won't share the technological advancements we come up with and we'll leave the Boomers behind; code always precedes politics.

paul said...

I was just noticing this one and thinking about the level of economic illiteracy it implied:

Let's see: people going hungry in the cities, and farmers going broke. Solution: increase transportation costs!"

Why is this so stupid? You have farmers who can't sell their crops at a decent price, and people in cities who can't get the food they need. So you create the conditions for profitable investment and rapid growth of the industry needed to get food from the farmers to the cities, while excluding unreliable low-ball operators. What a terrible idea.

Michiel said...

Very good post. I am so amazed that Marx is mentioned and Henry George isn't. He showed already in 1879 that the people who have the powers over the land are wealthy and keep the rest on marginal living standards. That was in 1793 true and it is true in 2011. He also gave us the solution, but it seems everybody forgot that solution... http://bit.ly/bDGsIz

The Libarbarian said...

"So don't fret, Boomers. Your children will rescue America. Not with violent class war... what are we, French? But with the kind of tweaking we saw from Washington and Lincoln and Carnegie and Teddy Roosevelt and FDR. (Three of them Republicans.) The kind that restores that flattened diamond... while continuing the miracle of competitive markets and freedom."


Sadly, I'm not sure that is possible anymore. There may already be too many wealthy entrenched interests who can & will block even moderate & commonsense reforms which ought to be no-brainers.

How can you fix things incrementally, and through the political process, when a minority of bought politicians can hold up almost all congressional action on almost any subject?




In fact, the fall of the Roman Republic had many of the elements we see in America today. An explosion in the gap between rich and poor, massive increase in debt by the middle class that lead to a a radical reduction in their numbers, and a political system which had become too beholden to the new uber-rich to make even the kind of basic non-radical reforms obviously needed to keep society stable let alone prosperous.

They could have reversed this early with some relatively minor reforms.
Tiberius Gracchus just wanted to enforce an age-old law that was already on the books. His short-sighted wealthy opponents just kept buying politicians to block him politically. Finally, when he eventually managed to outflank them and get in a position to have his program passed, they just decided to skip the political process altogether and have him beaten to death.

Anonymous said...

So, exactly how are the Gen-X and Gen-Y -ers going to save the U.S.? I'd like to hear that one! And, by the way, if they are going to actually do that - they'd better hurry - because it looks like social security, medicare, etc. will be gone before the year 2020, maybe even 2015.

Richard said...

"Hegel remarks somewhere[*] that all great world-historic facts and personages appear, so to speak, twice. He forgot to add: the first time as tragedy, the second time as farce. Caussidière for Danton, Louis Blanc for Robespierre, the Montagne of 1848 to 1851[66] for the Montagne of 1793 to 1795, the nephew for the uncle. And the same caricature occurs in the circumstances of the second edition of the Eighteenth Brumaire.

"Men make their own history, but they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past. The tradition of all dead generations weighs like a nightmare on the brains of the living. And just as they seem to be occupied with revolutionizing themselves and things, creating something that did not exist before, precisely in such epochs of revolutionary crisis they anxiously conjure up the spirits of the past to their service, borrowing from them names, battle slogans, and costumes in order to present this new scene in world history in time-honored disguise and borrowed language. Thus Luther put on the mask of the Apostle Paul, the Revolution of 1789-1814 draped itself alternately in the guise of the Roman Republic and the Roman Empire, and the Revolution of 1848 knew nothing better to do than to parody, now 1789, now the revolutionary tradition of 1793-95. In like manner, the beginner who has learned a new language always translates it back into his mother tongue, but he assimilates the spirit of the new language and expresses himself freely in it only when he moves in it without recalling the old and when he forgets his native tongue."

--Karl Marx

The comparisons you make with the past are, I feel, entirely too facile. While the wealth disparity we have is disturbing, the situation we're in cannot be strictly paralleled with the past for a number of reasons (e.g., computers). The comparisons to the French Revolution are especially tenuous. Every era deserves to be treated on its own terms.

That said, you are correct that things are obviously not going well, and that wealth inequality has a big role in that. But I fear we are headed toward some new, fresh hell, rather than an old, familiar one.

Anonymous said...

Gee Dave: You seem not to understand the salient fact here. Obama IS trying to create only one thing -- and that is VOTES. And he has nothing to run on so he offers up the political-tax-the-rich mantra. And it's a scheme Dave -- because it won't even significantly put a dent in the $1.5T annual deficit. Spending reductions are necessary, but alas that is 1) anathema to Democrats and 2) won't get them votes -- actually 1 is the same as 2, for Democrats.
And Dave, taxing the 'rich' won't create jobs will it? And in 1993, the increased tax rates on 'rich' from 28% to 39% was clearly not the cause of the job-creation in the '90s, now was it? Of course not. In other words, the economy improved and created jobs IN SPITE OF those tax increases.
You see Dave, federal govt (and state & local) taxing and spending has become much too large. 40% total taxes on people who seemingly have good incomes, is a disgrace. Do you know what the marginal tax rate is for a self-employed person who tries to work harder and get their revenue from $80,000 to $100,000? In many states, factoring in ALL taxes, it's around 60%. That's right, if they bust their butt to make that extra $20k, they'll only keep $8,000. Adam Smith was NOT in favor of taxes that large. He was in favor of taxes that were just large enough to pay for the basic necessities of a frugal, small govt. Dave, that's not what we have now. And Obama's class-warfare is NOT designed to help the deficit or create jobs -- it's ONE PURPOSE. Get votes from people like you. You like the sound of "Clinton-era" tax rates. But that would only make matters worse now. I hope you're actually smart enough to realize that. Actually I don't care how smart you are. You're voting for Obama, again, obviously, ergo his scheme is working with you. Sad tho. -SBourg

Bernadette Wilson said...

David Brin said: I spend a lot of time around libertarians and I know that their current version is all about hating government. No other agenda or priority.

When you make a lazily sweeping and grossly inaccurate statement like this...

...it becomes very easy to ignore the rest of your message.

Anonymous said...

Tax rates during the 1990s weren't particularly relevant to economic growth in the 1st world. We have been living off of a massive credit bubble since the 1980s. In reality the USA has had an uncompetitive economy for decades.

rewinn said...

Neither @Anon 12:55 nor @Bernadette actually addressed the subject matter of this post, so I don't see any reason to reply.

As for the Class War et cetera, it seems a wee bit prescient with respect to the Occupy Wall Street movement. Who knows if this will persist, or will flicker out, but the evidence that there really is a lot of displeasure which is not being addressed by the Koch-financed Tea Party would seem beyond question.

What may be really really different from the times of the French Revolution is communications technology; we don't have to be individually smarter than we are, if we can share each other's brains.

Anonymous said...

David please look at this chart on Credit Writedowns

Debt is the Problem and Private Debt is Even More of a Problem

From the 1980s until the housing peak in 2006 nominal tax rates didn't matter. We borrowed so much money into the economy that no amount of taxation would have slowed us down.

And don't forget money borrowed against home equity is 100% tax free! By comparison money earned through work is heavily taxed.

Sterling Too said...

What Brin is skirting across are the different weaknesses of Marxism/Command Economies versus Capitalism/Free Markets:

The first fails on its face due to an incorrect characterization of human behavior basing socialism on the willingness of people to:

Value things the same way and
Be willing to work for little or now personal incentive.

The second fails on its rear end due to the unwillingness to recognize the ultimate result of the expected unequalness of success in a free market system:

Unequal concentration of wealth into the hands of the few and the capacity to translate wealth into legislative, judicial, and police power to protect and extend the wealth that has been concentrated.

Therefore we need to develop a better way of blocking the consequences of free markets to maximize the benefits to society in general while minimizing the fallout of unequal accumulation of wealth.

Anonymous said...

"Instead of tax-free consumption, how about extending the property tax to include all wealth that just sits" - this wealth was already taxed, Dumbo. Tax consumption - too hard to get it?

Anonymous said...

One of the best articles I've read refuting the fundamental principles that are the basis to any opposition to the "death tax" and not taxing the rich.

Just subscribed to your blog!

David Brin said...

Thanks folks. I just realized this post has had a huge amount of re-interest. If you really want to discuss these matters, please come to the vigorous and smart blogmunity we have under comments... in the LATEST posting of Contrary Brin. You'll find really bright folks willing to discuss anything.

Sterling, the big mistake of Marx was to fail to understand the lesson of Darwin, that competition is the great creative force. The mistake of Laissez Faire mystics is to think that competition can maintain itself in the face of human propensity to CHEAT... especially when they become rich and powerful.

But Smith wasn't fooled. He says it clearly. The engine must be TUNED! Tended and watched and modified.

Those preaching that we should rage against civil servants and scientists are precisely the ones who will benefit if the engine sputters and fails.

Anonymous said...

Good post David.

How does the world stage fit into this?

From inside the US, we may be moving back to a pyramid shaped wealth distribution.

However, one could argue to the rest of the world, the US is at the top of the pyramid and there is a great leveling occurring with emerging markets and countries.

psikeyhackr said...

Did the 20th century kill Star Trek technology?

LOL Consider what replicator technology would do to an economy? How many people would need to work? But when Henry Ford created assembly lines to produce Model-Ts didn't he give us replicator technology? But what did we do with it? We invented planned obsolescence.

Our concept of economics is keeping the lower classes running on a treadmill, not everybody having enough wealth so most people do not have to work much. We are supposed to want useless variations in cars just to play status games with each other. Most of the variations make no technological sense.

But double-entry accounting was old when Adam Smith was born. So with cheap computers everywhere why hasn't it been mandatory in our schools for years. When do capitalists or communists or socialists or libertarians suggest something that simple?

One thing has not changed despite the technology. The system depends on keeping the lower classes appropriately ignorant. So don't these computers and the Internet present the possibility of blowing that out of the water?

Anonymous said...

sorry david, tech has given rise to the gen y er under the baby boomers spell..... and its means a violence to come... a binary reactionary millennial group that when they reach 35, wont be "great diplomats and levelers" but only " great dictators" and tools users.... yes. millennials are now french...they gave up being american for being googles this last decade.

c3

gonna be bloody.. not happy.

Anonymous said...

http://pages.simonandschuster.com/greaterjourney

as noted.. our iGen IS the french...

and will react accordingly..
i think we waisted our FDR years so far... our genxers-Obama, etc. are just too impotent to the machines funded by the boomers... if the rich in france had robots...they poor would have been fodder... same goes for washington and roosevelt... if the british had google and hilter the ufo/ a bombs, then well... well edith keeler would be alive...

cube3

J Fan said...

"How did we get into a situation where FDR is portrayed as Satan Incarnate?"

I'm not sure either. Seems like he's pretty pro-market to me.

--Posted Dec 27

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