Re-Thinking Corporatocracy

To set the stage, see a fascinating article, The Quiet Coup, in The Atlantic about why nations in economic crisis never do the obvious thing -- go after the oligarchs who caused it.

Kent Pitman has posted a couple of interesting items on OpenSalon.  One of them is “Fiduciary Duty vs. The Three Laws of Robotics” which contends that the modern corporation is exactly the wrong model for an intelligent, artificial organism, one whose feral amoral dedication only to stockholder value conflicts diametrically with all of the values that scholars and philosophers found attractive about Isaac Asimov’s famed “laws of robotics.”

Pitman raised interesting points.  Still, I have to demure a little.  Having served as the last author to channel Isaac -- indeed the one to consolidate and tie together all of his loose ends (see my novel Foundation’s Triumph), I became painfully aware of the flaws underlying Asimov's Three Laws -- especially the fact that super-intelligent lawyers would be able to interpret them any way they liked.  Indeed, there is an additional complaint against the corporate fiduciary law, and that is the way it so easily is hijacked by parasites, like a simple organism taken over by viruses.

We have seen this happen in the corporate world, when the top leadership clade in not just one company, but whole swathes of the corporatocracy, were taken over by a single cartel/ingroup of a couple of thousand cronies, who bent every rule or procedure to assist each other in cycles of parasitism that had nothing to do with maximizing stockholder value. Both deceitful and self deceiving at every level. this small cluster of golf buddies did everything that a cartel does -- creating an artificial perception of “scarcity in managerial talent” that then allowed them to jack up prices for CEOs, directors and all other members of the cartel.

Thus, what we are discussing is not an inherent flaw of capitalism, but a failure of our immune system to deal with a calamity that we already know about.  A crime that is already on the books.

Any system that lends itself to parasitical predation so easily is flawed, not just in moral terms (Pitman’s point) but also in terms if simple Darwinistic common sense -- the basis upon which capitalism was supposed to be more realistic and objective than socialism!  Indeed, the failure of libertarianism to realize ANY of this is the overwhelming top reason why that movement has relegated itself to complete irrelevance, at a time when it might have had useful things to offer.

Another interesting Pitman perspective is “Rethinking Mega-Corporations” -- I don’t agree on all levels.  But it is part of the re-appraisal of corporate capitalism that’s badly needed... if we are to save and re-invigorate capitalism as an economic cornucopia. 

==What to do about Detroit?  About toxic assets?==

I’ll put aside most political matters for a couple of weeks, but let me just reiterate that there are some alternatives that ought to be on the table.  I have suggested elsewhere (see: Offer a Fresh Deal to Labor and Management) that the best way to get the automakers a vastly better deal from the unions, and to get them out of hock, and to revamp management at the same time, would be to admit the core truth, that these companies are already employee owned.  Replacing much of the hourly wage with stock would instantly fix the balance books while prodding workers with a powerful motivation to return the companies to profitability.

I do not understand Treasury Secretary Geithner.  I thought he was supposed to be on our side.  The way to deal with the “toxic assets” is to sop them up in a “negative auction” in which present owners race to the bottom, so we taxpayers get the best deal in buying them up.  But Big G is arranging the opposite kind of auction, in order to boost the banks apparent balance books and keep them “apparently solvent.”  But that appearance of solvency could be solved another way, simply by relaxing the rules for writing down bad debts, temporarily.  Most of the mortgage-backed securities are NOT failing, but banks must liquidate due to reserve requirement rules.  So?  Adjust the rules, for a while!  As long as it takes to buy the toxics at prices that aren’t toxic to you and me.

As if I know what I’m talking about.

==Misc New Items...==

Take a look at the amazing new H+ Magazine.   Singularity 101 with Vernor Vinge, Space Solar, First Steps Toward Post Scarcity, Building Your Perfect Memory, Hacking The Economy, and Nanobots in the Bloodstream are among the articles in the impressive new Spring 2009 issue of the online trendsetting edge-culture magazine H+.

See an interesting profile of Freeman Dyson, who has suggested not that Global Warming isn’t happening... (only dingbats and those whores at Cato believe that)... but that there may be a lot of net good to arise out of the warming trend.  He makes some interesting points, and I agree that chicken little scurrying may have gone too far.  On the other hand, rapid transitions... ANY rapid transitions, inevitably spur disruption, habitat extinctions, desertification and local desperation.  Some locales that turn desperate will also have nuclear weapons.  Read and be provoked.

A distinct electric signature in the brain that predicts that an error is about to be made has been found by UC Davis and Donders Institute neuroscientists by analyzing recorded magnetoencephalographic (MEG) brain activity. (Donders Institute) About a second before errors were committed, alpha  activity was about 25 percent stronger in the back of the head (the occipital region), and in the middle region, the sensorimotor cortex, there was a corresponding increase in the 's mu  activity.

Myelin (the fatty layer of insulation coating neural wiring in the ) plays a critical role in determining intelligence, and is largely genetically determined, a team headed by UCLA neuroscientists has found. Myelin-coated tracts make up the brain's white matter, while the bodies of neural cells are called grey matter. DTI scans of 92 pairs of fraternal and identical twins. They found a strong correlation between the integrity of the white matter and performance on a standard IQ test.

Resistance to paternalistic secrecy can take many forms.  Satire is among the most powerful.  See the Chinese people fighting back... with humor.

A fascinating summary of the roots of Chinese history in the conquest of Mexico and the Opium War:

Research spanning 20 years has given us almost a recipe for planting and embellishing false memories in people, said Elizabeth F. Loftus, a professor of psychology and criminology at the University of California at Irvine. This has serious implications for false memory problems that are occurring in society, which are really memory distortion episodes, she said.

An interesting article about lie-detection -- In the first use of fMRI to detect deception in individuals, the researchers used the patterns they identified to correctly determine whether each of the subjects had taken a watch or a ring 90 percent of the time. The use of fMRI represents the cutting edge of lie-detection technology. As far as we know, no region of the brain specializes in lies. But investigators have found that lying activates brain regions involved in suppressing information and in resolving conflicts—such as that between the impulse to describe reality and the wish to contradict it. ...When a subject was fibbing, the scientists noted a burst of activity in a strip of brain tissue at the top of the head that is involved in motor control and sensory feedback and in the anterior cingulate, which performs cognitive tasks such as detecting discrepancies that could result in errors.  Also found that activity in inferior frontal regions and in the right anterior insula, which interprets bodily states as emotions, directly paralleled sweat gland productivity, lending credence to both brain and skin responses as indicators of fibbing.  Otoh, studies of people with antisocial personality disorders, for example, indicate that such patients may have damaged frontal lobes. Because of these discrepancies, a sociopath, psychopath or someone who is simply a good liar might well be able to suppress any suspicious neural responses to the “insider” choices and thus avoid detection. 

==On the Great Apes==

The Great Ape Trust in Iowa is engaging in an  experiment, bonobos, which are part of the great ape family that includes chimpanzees, gorillas, and orangutans, have been given their own house in which to live and dwell. In 2005, organizers placed eight bonobos in a multi-million dollar facility in what is hoped will be a successful long term and multi-generational experiment. The house is equipped with 18 rooms that include a kitchen in which to prepare meals and vending machines that dispense snacks. There are flushing lavatories, an indoor waterfall and walls for climbing. When it comes time to eat, the apes help their human handlers prepare meals in a compound kitchen. The bonobos can monitor the front door with a camera and decide for themselves who can come in – although they are known for welcoming visitors and often taking newcomers by the hand to show them around the complex.

A fascinating development in the war between science and postmodernism.  Apparently, some members of the latter -named cult have come to realize that their beloved nonsense became far more the tool of reactionary oppressors than science itself ever was.

See Brockman’s EDGE site for a fascinating essay on the 50th anniversary of CP Snow’s famous “two cultures” epistle, about the gaping divide between the scientific and the academic literary world.  Snow's descriptions of the two cultures are not exactly subtle. Scientists, he asserts, have "the future in their bones," while "the traditional culture responds by wishing the future did not exist." Scientists, he adds, are morally "the soundest group of intellectuals we have," while literary ethics are more suspect.

Speaking of apes.... A truly dismal and misleading article in scientific American about   S. JAY OLSHANSKY, LEONARD HAYFLICK and BRUCE A. CARNES says corectly that “no anti-aging remedy on the market today has been proved effective” and that most of the promises made so far are pipe dreams.  I agree, so why do I find their article dumb and below SciAm standards?  First, they dimiss any thought that aging may involve some kind of expiration clock, hewing solely and exclusively to the “accumulation of errors” theory.  But...

 (1) pure accumulation of errors, all by itself, would inevitably feature far more outliers -- individual exceptions -- than we see in human or animal populations.

  (2) Caloric restriction and sex-delay in many species (e.g. flies and mice) have triggered fundamentally and qualitatively different aging profiles and rates... and yet caloric restriction evidently has NO such dramatic effect upon human populations (a puzzle that I can tentatively explain, but that the authors’ theory cannot.)

  (3) There is a famous mass-vs-lifespan curve for mammals, such that most species seem to get roughly the same number of heartbeats!  Yes, this might be consistent with error-accumulation!  Except primates get more heartbeats, apes even more, and humans three times the mammalian norm!

   Funny thing, primates are the mammals that NEED longer lifespans because their babies are dependent longer.  More so apes.  And humans needed longer spans even more.  So... we evolved to get them.  Um... that sounds a lot more like a “clock” than error accumulation!  These guys may be right in their cautionary message to the public.  But it doesn’t stop em from being dopes.

==Please help update the predictions site!==

Until I can arm-twist some billionaire to fund a real predictions registry, we can at least continue our group experiment with the little wiki that holds me accountable.  So folks, please do (if possible) drop by and help Tony (and others) revise, fill and update the predictions wiki at: http://earthbydavidbrin.pbwiki.com/Predictions

Not only is it interesting -- tracking the successful... and embarrassingly wrong forecasts from Earth and other books-- but filling it in and taking care of some of the missing sections could actually help your humble host at getting some attention paid to interesting topics. Making the wiki look fairly professional and respectable could make a real difference.If you want to join with full writing privileges, just ask Tony Fisk via the comments section, below.

Oh, someone be sure to keep an eye on Bill Christensen’s much more general sci fi predictions site, technovelgy.com!  And help the two correlate.  This is part of the long slog toward getting society to admit that sci fi knows best!

==And now for something different…==

After the sublime... the ridiculous! Google is at it again with April Fool’s yuks:

--Research Group switches on world's first artificial intelligence tasked array
--Introducing Google Chrome with 3D
--The easiest email could possibly be

An absolute must-see: FDA approves drug for the annoyingly cheerful!

*** Open call for articles about interesting breakthroughs in augmented or mixed reality, especially overlays of virtual objects on realtime surroundings (e.g. through eyeglass headsup displays.)   Also, anybody with contacts with companies either in DC or Phoenix, I’ll be in those two cities and open to suggested folks who might want an inspirational and stimulating speech or consultation about “the future.”

THE SYNDROME OF THE “ESSENTIAL MAN”

How likely is it that any human is well-qualified to judge his own status as an “essential man”?

It is true that history shows some examples of fellows who resisted all external pressures to step down, knowing with brilliant sureness that they had a vital and historic mission. Almost certainly Abraham Lincoln was right, when he took this stance. Arguably, FDR. And yet, knowing humans as we do – especially their most dismal habit of self-serving delusion, should we not have the reflex of holding this kind of self-appraisal in… well… suspicion?

Should not one of the traits of an honest and mature man be to recognize this delusional habit, and worry about it? The way that George Washington did, when he resigned paramount power – several times – and set the Great Example?

Sure, a certain bullheaded determination is essential in politics. But there are ways to compensate. To ensure accountability. To (above all) provide that your institution and constituents get the benefit of the doubt, and not you. The nation and not the leader. When overwhelming evidence suggests that maybe a guy should go… shouldn’t he go?

You see the same classic syndrome across the entire CEO caste, driving up compensation/pay/stock-option rates toward the moon, as chummy fellow members of the caste vote each other outrageous pay scales, justified on what basis?

Why, it seems always to be a variant on (surprise!) the old Essential Man thing!

So let’s veer aside for a moment and ponder this version of the syndrome. The CEO variation.

Start with basics. These guys believe in capitalism, right?

All right, then. The core assumption of capitalism – and I believe this too - is that high rates of return will normally attract new talent to a field! Right? Imbalances and shortages should be self-correcting.

Specifically, if a shortage of good managerial talent stimulates high market prices for managerial talent, then, within short order, new managerial talent should commence to train itself, ramp-up, then compete (presumably fairly) and innovate until there is so much of it around that the shortage is eased. Whereupon, anomalously high premiums will no longer have to be paid.

In other words, the predicted curve is that a brief period of elevated CEO pay should soon give way to a talent migration that causes a surfeit, even a glut of skilled executives, easing the shortage and causing pay rates to drop.

Isn’t that the fundamental premise? Isn’t that the absolutely basic article of capitalistic-freemarket faith?

But it is not what we’ve observed. Not at all. Instead, the pattern across the last two decades has almost perfectly matched what you see when insatiable demand meets an absolutely limited supply. Like the limited supply of Da Vinci paintings, or Stradivarius violins. Or seven foot centers who can both rebound and pass accurately from mid-court.

Members of the CEO caste seem to be saying “we are actually mutants, like pro basketball players. No matter how much we are paid, the pool of skilled corporate administrators will remain fixed and small.  Market incentives – even astronomical ones - will never augment supply. All companies can do is bid up CEO pay in order to hire the few mutant managers away from each other, just like sports teams!”

Well? Is that not EXACTLY the logic implicit in the CEO compensation spiral, as we see it endlessly accelerating skyward? The justification for taking billions away from research, from reinvestment, from worker benefits and from dividends for smalltime stockholders? So that top managers can move around like football free agents, playing rapid musical chairs and games of golden parachute?

Hm. Interesting proposition. Mutants. Like Sports stars. (In which case, are we best served coming up with some kind of league-wide reserve clause, hm? Don’t some of these same guys own sports teams and cry for caps? For cost controls? Oh, but then let’s also leave off the whole youth factor. They seem also to be saying that in this field, unlike any other across all of human endeavor, youthful brilliance is entirely irrelevant. Hm. And double hm.)

Alas, there is a problem. In sports, there are explicit performance metrics that can be applied, in order to determine who are the top fifty or so mutant-level -- and thus irreplaceable -- athletes in a given sport. But in business, tremendous effort is made to obscure and obfuscate every performance metric. Correlations with stockholder return or rates of innovation or long term company health are vague, at best. The one correlation that seems always to affect pay is how well you manage to pack the Board with your pals. And that is a dead giveaway. Because truly superior men would be ashamed of having to use tricks like those. They would refuse.

Here’s an example offered by financial expert John Mauldin: “John Walter joined AT&T, but after nine short months he was out of a job. The complaint was that Walter "lacked intellectual leadership." Walter got $26 million for that little stint in a severance package. That's what you call really beating time. Of course, a few of us might have another word for it -- and for AT&T.”

And yet, let’s reiterate the irony -- these same guys sing the praises of capitalism as a perfect mechanism for swiftly correcting imbalances of supply and demand! It always works, they say. Well, except where you just gotta have mutants. Amazing.

Just for the record, I most definitely believe in competitive markets and have said so countless times. Indeed, my aim during this aside is to point out a hypocritical betrayal of markets by those who most vocally claim to be defending them. In fact, there is a business correlate with the kind of price curve that we have seen in the area of CEO compensation. You’ll see a similar curve in a market for a commodity has been cornered so that production is controlled by a small, collusive group, in order to create artificial scarcity. Think diamonds.

And no better example is served (as we return full circle to the earlier topic) than the situation we observe with Defense Secretary Donald Rumsfeld.

The man who oversaw our humiliation in not one, but two catastrophic Asian land wars, who supported Saddam for decades, till the maniac slipped his leash, who participated in the incredible Blunder of 1991, who later perceived Saddam bulging with hair-trigger WMDs, who suppressed military counsel about troop levels, who confidently predicted we would be greeted by the Iraqi people with “kisses and flowers,” who sanctioned torture, who declared “mission accomplished” while predicting a short happy transition to peace and democracy in Iraq, who oversaw the worst decline in our state of readiness in generations and has alienated most of the Officer Corps and most of our allies…

…now appears to be claiming (without offering a scintilla of evidence) that he is such a superior manager of our nation’s defense that there are no possible replacements. None at all. Not even from the pool of experienced and well-respected conservatives. (e.g. some retired general?) (Er, some other retired general?)

Look, there are many ways to look at these things, but I always try to ask… ”what are you REALLY SAYING?”

And what this “essential man” seems to be saying is “you must continue to put up with all my failures, arrogance, bullying and unending chain of mistakes. Because my political faction cannot find anyone else to bring forward. Nobody else who might – while lacking my heavy burden of liabilities – actually do a better job.”

It’s all the same dreary rationalization – and hearkens to the pattern that really destroyed markets in most cultures, for 4,000 years.

A market for a commodity has been cornered and production controlled, in order to create artificial scarcity. But this market – for managerial talent – must be opened and freed, if our civilization is to prosper.

See also: The Contradiction of Capital Markets

              and Deep Cheating and the CEO Cartel

 ==The Generals' Revolt==

Some of you have commented upon Donald Rumsfeld’s response to the Generals’ Revolt, in which he firmly dismissed any possibility of resigning the office of Secretary of Defense. He admits that there have been problems and miscalculations and failures – many – worthy of deep criticism. Yet, he insists that his leadership remains badly needed.

Instead of joining the back-and-forth hatefest at its superficial (and least interesting) level, let’s dig a bit. Inherent in everything that Rumsefled is saying appears to be one core assumption -- that there aren’t any other qualified conservatives – untarnished by scandal and failure – who are capable of doing his job.

In other words, despite taking responsibility for AbuGhraib and failed intelligence and mangled war planning and losing the confidence of the Officer Corps, he remains the “essential man.” Impossible to replace, even by another, similar conservative.

Notice how I expressed it. Of course, many of us would like to see neocon leadership replaced at the top of our republic. This movement has acted as if they had a “mandate” to utterly transform America, despite having “won” disputed and at-best profoundly narrow electoral victories. A troglodytic and roughshod era of rationalization and contemptuous dismissal of all dissenting thought.

See: The Real Culture War: Defining the Background


and NeoConservatism, Islam and Ideology: The Real Culture War

But I am not going there right now. Instead, let us perform another of our patented thought experiments.

Let us assume, for a moment, that DR and his movement do have a “mandate.” A blank check from the American people to pursue a general line of policy called “neoconservatism” – including all of the adventurism and romantic Platonism that comes part and parcel with the Straussian worldview.

Even if his movement had such a mandate, that is irrelevant to the issue of whether or not Rumsfeld should resign. For what he is actually claiming is that he – himself – is not replaceable even by some other neocon who has a top defense background and is politically compatible!

In other words, his own movement has such a paucity of talent that it cannot step in with another highly qualified person who can pursue conservative policies WHILE soothing the trainwreck of morale within the Pentagon and across America at large.

Let’s take a moment to delve into the implications of this dogged stand. Whether we call it “stalwart and determined” or “obstinately power-grubbing,” there are even deeper levels that merit exploration.