Not More, Better

Friday, August 1st, 2014

The government spends about 35% of GDP in the US today, Eric Falkenstein notes, and heavily regulates the rest:

It would be far better if, instead of thinking about new tricky ways to squeeze the rich, we instead set government spending to some fraction (say 35%) of the past 5 years of GDP and no more. The endless arguments about the level would stop, and it’s interesting to note that over the past 30 years in the US federal revenues as a percent of GDP has been remarkably consistent across various administrations. By using a moving average of historical GDP this would make spending countercyclical, most importantly instead of politicians being elected for their ability to promise ‘more’ they would instead focus on ‘better.’ That is, it would be nice if the politicians argued about better ways to allocate spending rather than about more or less in aggregate; the net result of the ‘more’ approach has been those who are good at articulating why we need more find they have no idea how to spend it, as when the government had $800B to spend in stimulus, most of it simply went to shoring up state budgets, meaning, state pension deficits, which is just an income transfer to state employees from future taxpayers.

Meditations On Moloch

Thursday, July 31st, 2014

Scott Alexander presents his meditations on Moloch, referring to Allen Ginsberg’s Howl:

What has always impressed me about this poem is its conception of civilization as an individual entity. You can almost see him, with his fingers of armies and his skyscraper-window eyes…

A lot of the commentators say Moloch represents capitalism. This is definitely a piece of it, definitely even a big piece. But it doesn’t exactly fit. Capitalism, whose fate is a cloud of sexless hydrogen? Capitalism in whom I am a consciousness without a body? Capitalism, therefore granite cocks?

Moloch is introduced as the answer to a question — C. S. Lewis’ question in Hierarchy Of Philosophers — what does it? Earth could be fair, and all men glad and wise. Instead we have prisons, smokestacks, asylums. What sphinx of cement and aluminum breaks open their skulls and eats up their imagination?

And Ginsberg answers: Moloch does it.

There’s a passage in the Principia Discordia where Malaclypse complains to the Goddess about the evils of human society. “Everyone is hurting each other, the planet is rampant with injustices, whole societies plunder groups of their own people, mothers imprison sons, children perish while brothers war.”

The Goddess answers: “What is the matter with that, if it’s what you want to do?”

Malaclypse: “But nobody wants it! Everybody hates it!”

Goddess: “Oh. Well, then stop.”

The implicit question is — if everyone hates the current system, who perpetuates it? And Ginsberg answers: “Moloch”. It’s powerful not because it’s correct — nobody literally thinks an ancient Carthaginian demon causes everything — but because thinking of the system as an agent throws into relief the degree to which the system isn’t an agent.

Bostrom makes an offhanded reference of the possibility of a dictatorless dystopia, one that every single citizen including the leadership hates but which nevertheless endures unconquered. It’s easy enough to imagine such a state.

Democracy in Moderation

Wednesday, July 30th, 2014

Democracy, like all things, is good only in moderation, Eric Falkenstein says — it is a means and not an end:

Taken to an extreme it is highly dysfunctional, as decisions are not helped by making them mass plebiscites or town hall meetings.  Go to a school board meeting and watch how quickly thoughtful discussions get sidetracked. Philip Howard’s Rule of Nobody outlines an interesting consequence to increasing public participation in big decisions. As the number of stakeholders grows each interest group seeks its own group’s ends without moderation, they are single-issue advocates nobly advancing their righteous cause (e.g., Native Americans, aquifers, unions), and so veto action unless they are basically paid-off. The result is that usually nothing happens, and so the days when we could build the interstate highway system, the Hoover Dam, or the Empire State Building in only a year, are over.  Small ‘d’ democratic control of property leads to stasis, why government spending today is mainly on transfer payments and studies, not roads and bridges.

Intellectuals should run everything as the vanguard of the people

Tuesday, July 29th, 2014

Liberals consider Piketty’s book a must-read, but only, Eric Falkenstein says, because, like Marx’s Capital, it’s a great safety blanket for Liberal prejudices:

The end-game is exactly what progressive conventional wisdom (e.g., the common New York Times or Harvard professor view) has been preaching for over 50 years: enlarge the state. The key point is a highly credentialed academic wrote a long book proving that some abstruse mathematical inequality (r>g) implies we need to raise taxes on the rich and regulate wealth more democratically. It’s really the debating tactic called ‘spreading’, which is top put forth so many arguments, none sufficient or necessary, that you can always claim victory. For example I could question his many empirical assertions, such as how could German inflation have averaged only 14% from 1913-1950 (p. 545) given inflation was 10^10 in 1923, or how depreciation affects his r/g=C/I steady state equilibrium, but that would leave another 20 assertions unstained, and so those who want to euthanize renteirs can retain faith in their big picture.

Piketty is a modern progressive, best defined as someone who thinks intellectuals should run everything as the vanguard of the people, which is why academics, journalists, and writers are predominantly progressive. Hayek noted that scribes have always been egalitarian, probably always lamenting the fact that the idiots in power don’t write nearly as well as them, and thus, are objectively less qualified but via some tragic flaw in the universe, end up in power. It forms the common reverse dominance hierarchy so common today, where obsequious, hypocritical yet articulate and confident leaders pander to the masses and rule via democracy, focusing their envious eyes on those who aren’t interested in that game, such as those concerned with business, religion, or their own family. As Piketty notes, “if we are to regain control of capitalism we must bet everything on democracy” (p. 573), he says from his inegalitarian and very undemocratic position at the Paris School of Economics.

It never occurs to them that the main problem with subjecting markets to democratic control is that those who end up wielding power will be incompetent or tyrannical, and that ‘the people’ have never ruled directly, only their various proxies. Every totalitarian government of the 20th century has rested on at least the perception of massive popular support, which is why they have all ruled in the name of The People. An unchecked democracy becomes mob rule, which becomes tyrannical and highly illiberal, why the Founding Fathers, so familiar with Greek history, were careful to put checks and balances in the US constitution and emphasize the republican nature of government.

What have the Victorians done for us?

Monday, July 28th, 2014

Certainly the eras that gave us our scientific and intellectual heritage were very unequal, Eric Falkenstein notes, with not just an aristocracy but often slavery:

If some inequality is inevitable, how much is too much or too little?  When the West was beginning its industrial revolution and creating an unprecedented growth in productivity and social welfare, giving us the railroad, electricity, indoor plumbing, the internal combustion engine, etc., Piketty notes wages were ‘objectively miserable’ in the 19th century as if they could have been higher but for elite cupidity, and the Belle Époque evokes the specter of exploitation. The fact that the average height was rising and infant and maternal mortality rates were falling at an unprecedented rate after stagnating for centuries if not a millenium, supposedly means little. So too the great increase in technology that economist Robert Gordon notes was not only unprecedented, but singular, never to be achieved again.  In Piketty’s mind it’s an unbearably time, reminding me of the scene in Monte Python’s Life of Brian where John Cleese says, apart from the aqueduct, sanitation, peace, roads, etc., “what have the Romans done for us?”

Roman Slaves and Capitalists

Monday, July 28th, 2014

Rome’s city population swelled from an influx of non-citizens — favor-seekers, merchants, professionals, entertainers — including many slaves and ex-slaves:

Somewhat surprisingly, being a slave in an important Roman family was a path to upward mobility, since slaves did most of the household and administrative work (being a slave in agriculture or mining was a different story) and many of them were eventually freed as an incentive for loyal service.

Since old Roman conservatives looked down on business, ex-slaves became part of the growing capitalist class. Most important of all was a class of capitalists who leased the state’s public land, since they had the capital to achieve economies of scale in working large plantations, mines, timber, and importing the food supply to feed the population of Rome. It was a minimalist state in most respects. Rome owned vast properties but had few public officials, and they were appointed to very short terms. Hence most public enterprises were leased out; capitalists undertook to collect taxes, advancing cash for state needs and squeezing what they could out of subject peoples.

The New Testament gives us a glimpse of these Roman citizens out in the provinces: Jesus offended local ethnic loyalties by converting tax collectors; and Paul himself was a Roman citizen. Since the most important state organization was the army, the biggest state-related business was supplying it with weapons, armor, food, ships, and harbors. Rome thus developed its “military-industrial complex”, similar to the US since late 20th century in outsourcing as much as possible to private contractors.

Piketty’s Terrifying Dystopia

Sunday, July 27th, 2014

Eric Falkenstein returns with a look at Piketty’s terrifying dystopia:

Growth was 3.8% in Europe in the Les Trente Glorieuses (“The Glorious Thirty”) of 1945-75, when marginal taxes and taxes on inheritance were higher, and income became more equally distributed

To him, the implication is obvious. Raise taxes back to what they were in the good old days of Les Trente Glorieuses to reduce inequality. The point of the tax is not so much to increase revenues but rather to “expose wealth to democratic scrutiny” (p. 471) and thus ”regulate capitalism” (p.518). As with all really popular nonfiction, it hits the zeitgeist because many think democracy and equality are paramount unalloyed objectives, a so a big book scientifically proving these noble objectives are under a vicious assault is highly welcome; nothing rallies the troops like news of an attack. Plus, the new tactic is refreshingly more feasible, as making the rich poorer is a lot easier than making the poor richer.

However, the good times he cherishes are what econometricians would call an overidentified event: there are several different correlates that could statistically ‘explain’ the 1950s.  When I was growing up it was common for progressives to caricature the 1950s as a period of bigotry, materialism, and conformism, now those same progressives consider this a golden age; What if the key to reducing inequality is bigotry?  Maybe econometrics shows we need to decimate, in the original Roman sense, our young men every other generation to make them hard working and less whiny.

Most importantly for his case is the fact that because marginal taxes, and inheritance taxes, were so high, the rich had a much different incentive to hide income and wealth.  He shows marginal income and inheritance tax rates that are the exact inverse of the capital/income ratio of figures, which is part of his argument that raising tax rates would be a good thing: it lowers inequality.   Those countries that lowered the marginal tax rates the most saw the biggest increases in higher incomes (p. 509). Perhaps instead of thinking capital went down, it was just reported less to avoid confiscatory taxes?  Alan Reynolds notes that many changes to the tax code in the 1980s that explain the rise in reported wealth and income irrespective of the actual change in wealth an income in that decade, and one can imagine all those loopholes and inducements two generations ago when the top tax rates were above 90% (it seems people can no better imagine their grandparents sheltering income than having sex, another generational conceit).

For example, he writes that Lilian Bettencourt, the richest woman in France and heiress to the L’Oreal fortune (mentioned often, she serves as the archetype of the rich), never reported more than a $5MM annual income on a $30B fortune, a 0.02% annual return. Given his assumed 5% return on capital, and that given Bettencourt’s true returns have been above this average, this implies that it is clearly possible for reported income to stray from actual income by a factor of 100 for a long time. Given this feasibility and the incentives given by changing marginal tax rates and various corporate laws, it seems highly possible the whole U-shaped pattern in capital/income and top-decile-income/total income is just people sheltering their income at various intensities given the tax rate over the past century.

Summary of the Fate of Empires

Saturday, July 26th, 2014

Sir John Glubb summarizes his own Fate of Empires:

As numerous points of interest have arisen in the course of this essay, I close with a brief summary, to refresh the reader’s mind.

(a) We do not learn from history because our studies are brief and prejudiced.

(b) In a surprising manner, 250 years emerges as the average length of national greatness.

(c) This average has not varied for 3,000 years. Does it represent ten generations?

(d) The stages of the rise and fall of great nations seem to be:

  • The Age of Pioneers (outburst)
  • The Age of Conquests
  • The Age of Commerce
  • The Age of Affluence
  • The Age of Intellect
  • The Age of Decadence.

(e) Decadence is marked by:

  • Defensiveness
  • Pessimism
  • Materialism
  • Frivolity
  • An influx of foreigners
  • The Welfare State
  • A weakening of religion.

(f) Decadence is due to:

  • Too long a period of wealth and power
  • Selfishness
  • Love of money
  • The loss of a sense of duty.

(g) The life histories of great states are amazingly similar, and are due to internal factors.

(h) Their falls are diverse, because they are largely the result of external causes.

(i) History should be taught as the history of the human race, though of course with emphasis on the history of the student’s own country.

IQ Shredders

Thursday, July 24th, 2014

Singapore is an IQ shredder, Spandrell has pointed out. How does an IQ Shredder work?

The basic machinery is not difficult to describe, once its profound socio-historical irony is appreciated. The model IQ Shredder is a high-performance capitalistic polity, with a strong neoreactionary bias.

  1. Its level of civilization and social order is such that it is attractive to talented and competent people.
  2. Its immigration policy is unapologetically selective (i.e. first-order eugenic).
  3. It sustains an economic structure that is remarkably effective at extracting productive activity from all available adults.
  4. It is efficiently specialized within a wider commercial network, to which it provides valuable goods and services, and from which it draws economic and demographic resources.

In sum, it skims the human genetic stock, regionally and even globally, in large part due to the exceptional opportunity it provides for the conversion of bio-privileged human capital into economic value. From a strictly capitalistic perspective, genetic quality is comparatively wasted anywhere else. Consequently, spontaneous currents of economic incentive suck in talent, to optimize its exploitation.

If you think this sounds simply horrific, this argument is not for you. You don’t need it. If, on the other hand, it conjures up a vision of terrestrial paradise — as it does for the magnetized migrants it draws in — then you need to follow it carefully. The most advanced models of neoreactionary social order on earth work like this (Hong Kong and Singapore), combining resilient ethnic traditions with super-dynamic techonomic performance, to produce an open yet self-protective, civilized, socially-tranquil, high-growth enclave of outstanding broad-spectrum functionality. The outcome, as Spandrell explains, is genetic incineration:

Mr Lee said: “[China] will make progress but if you look at the per capita they have got, the differences are so wide. We have the advantage of quality control of the people who come in so we have bright Indians, bright Chinese, bright Caucasians so the increase in population means an increase in talent.”

How many bright Indians and bright Chinese are there, Harry? Surely they are not infinite. And what will they do in Singapore? Well, engage in the finance and marketing rat-race and depress their fertility to 0.78, wasting valuable genes just so your property prices don’t go down. Singapore is an IQ shredder.

The most hard-core capitalist response to this is to double-down on the antihumanist accelerationism. This genetic burn-rate is obviously unsustainable, so we need to convert the human species into auto-intelligenic robotized capital is fast as possible, before the whole process goes down in flames. (I don’t expect this suggestion to be well-received in reactionary circles.)

Lying Commies

Wednesday, July 23rd, 2014

An experiment last year tested Germans’ willingness to lie for personal gain:

Some 250 Berliners were randomly selected to take part in a game where they could win up to €6 ($8).

The game was simple enough. Each participant was asked to throw a die 40 times and record each roll on a piece of paper. A higher overall tally earned a bigger payoff. Before each roll, players had to commit themselves to write down the number that was on either the top or the bottom side of the die. However, they did not have to tell anyone which side they had chosen, which made it easy to cheat by rolling the die first and then pretending that they had selected the side with the highest number.

[...]

The authors found that, on average, those who had East German roots cheated twice as much as those who had grown up in West Germany under capitalism. They also looked at how much time people had spent in East Germany before the fall of the Berlin Wall. The longer the participants had been exposed to socialism, the greater the likelihood that they would claim improbable numbers of high rolls.

(Hat tip to our Slovenian Guest.)

The Welfare State

Tuesday, July 15th, 2014

When the welfare state was first introduced in Britain, it was hailed as a new high-water mark in the history of human development, Glubb notes:

History, however, seems to suggest that the age of decline of a great nation is often a period which shows a tendency to philanthropy and to sympathy for other races. This phase may not be contradictory to the feeling described in the previous paragraph, that the dominant race has the right to rule the world. For the citizens of the great nation enjoy the role of Lady Bountiful. As long as it retains its status of leadership, the imperial people are glad to be generous, even if slightly condescending. The rights of citizenship are generously bestowed on every race, even those formerly subject, and the equality of mankind is proclaimed. The Roman Empire passed through this phase, when equal citizenship was thrown open to all peoples, such provincials even becoming senators and emperors.

The Arab Empire of Baghdad was equally, perhaps even more, generous. During the Age of Conquests, pure-bred Arabs had constituted a ruling class, but in the ninth century the empire was completely cosmopolitan.

State assistance to the young and the poor was equally generous. University students received government grants to cover their expenses while they were receiving higher education. The State likewise offered free medical treatment to the poor. The first free public hospital was opened in Baghdad in the reign of Harun al-Rashid (786-809), and under his son, Mamun, free public hospitals sprang up all over the Arab world from Spain to what is now Pakistan.

The impression that it will always be automatically rich causes the declining empire to spend lavishly on its own benevolence, until such time as the economy collapses, the universities are closed and the hospitals fall into ruin.

It may perhaps be incorrect to picture the welfare state as the high-water mark of human attainment. It may merely prove to be one more regular milestone in the life-story of an ageing and decrepit empire.

The Master Race

Monday, July 14th, 2014

Every empire is ruled by the master race, Glubb notes:

The people of the great nations of the past seem normally to have imagined that their pre-eminence would last for ever. Rome appeared to its citizens to be destined to be for all time the mistress of the world. The Abbasid Khalifs of Baghdad declared that God had appointed them to rule mankind until the day of judgement. Seventy years ago, many people in Britain believed that the empire would endure for ever. Although Hitler failed to achieve his objective, he declared that Germany would rule the world for a thousand years. That sentiments like these could be publicly expressed without evoking derision shows that, in all ages, the regular rise and fall of great nations has passed unperceived. The simplest statistics prove the steady rotation of one nation after another at regular intervals.

The belief that their nation would rule the world forever, naturally encouraged the citizens of the leading nation of any period to attribute their pre-eminence to hereditary virtues. They carried in their blood, they believed, qualities which constituted them a race of supermen, an illusion which inclined them to the employment of cheap foreign labour (or slaves) to perform menial tasks and to engage foreign mercenaries to ?ght their battles or to sail their ships.

These poorer peoples were only too happy to migrate to the wealthy cities of the empire, and thereby, as we have seen, to adulterate the close-knit, homogeneous character of the conquering race. The latter unconsciously assumed that they would always be the leaders of mankind, relaxed their energies, and spent an increasing part of their time in leisure, amusement or sport.

In recent years, the idea has spread widely in the West that ‘progress’ will be automatic without effort, that everyone will continue to grow richer and richer and that every year will show a ‘rise in the standard of living’. We have not drawn from history the obvious conclusion that material success is the result of courage, endurance and hard work — a conclusion nevertheless obvious from the history of the meteoric rise of our own ancestors. This self-assurance of its own superiority seems to go hand-in-hand with the luxury resulting from wealth, in undermining the character of the dominant race.

The Pageant of Empire

Saturday, July 5th, 2014

The striking features in the pageant of empire are, according to Glubb:

(a) the extraordinary exactitude with which these stages have followed one another, in empire after empire, over centuries or even millennia; and

(b) the fact that the successive changes seem to represent mere changes in popular fashion — new fads and fancies which sweep away public opinion without logical reason. At first, popular enthusiasm is devoted to military glory, then to the accumulation of wealth and later to the acquisition of academic fame.

Why could not all these legitimate, and indeed beneficent, activities be carried on simultaneously, each of them in due moderation? Yet this never seemed to happen.

The Age of Intellect

Friday, July 4th, 2014

After the Age of Affluence comes The Age of Intellect, Glubb says:

We have now, perhaps arbitrarily, divided the life-story of our great nation into four ages. The Age of the Pioneers (or the Outburst), the Age of Conquests, the Age of Commerce, and the Age of Affluence. The great wealth of the nation is no longer needed to supply the mere necessities, or even the luxuries of life. Ample funds are available also for the pursuit of knowledge.

The merchant princes of the Age of Commerce seek fame and praise, not only by endowing works of art or patronising music and literature. They also found and endow colleges and universities. It is remarkable with what regularity this phase follows on that of wealth, in empire after empire, divided by many centuries.

In the eleventh century, the former Arab Empire, then in complete political decline, was ruled by the Seljuk sultan, Malik Shah. The Arabs, no longer soldiers, were still the intellectual leaders of the world. During the reign of Malik Shah, the building of universities and colleges became a passion. Whereas a small number of universities in the great cities had sufficed the years of Arab glory, now a university sprang up in every town.

In our own lifetime, we have witnessed the same phenomenon in the U.S.A. and Britain. When these nations were at the height of their glory, Harvard, Yale, Oxford and Cambridge seemed to meet their needs. Now almost every city has its university.

The ambition of the young, once engaged in the pursuit of adventure and military glory, and then in the desire for the accumulation of wealth, now turns to the acquisition of academic honours.

It is useful here to take note that almost all the pursuits followed with such passion throughout the ages were in themselves good. The manly cult of hardihood, frankness and truthfulness, which characterised the Age of Conquests, produced many really splendid heroes.

The opening up of natural resources, and the peaceful accumulation of wealth, which marked the age of commercialism, appeared to introduce new triumphs in civilisation, in culture and in the arts. In the same way, the vast expansion of the field of knowledge achieved by the Age of Intellect seemed to mark a new high-water mark of human progress. We cannot say that any of these changes were ‘good’ or ‘bad’.

Defensiveness

Thursday, July 3rd, 2014

Another outward change which invariably marks the transition from the Age of Conquests to the Age of Affluence, Glubb suggests, is the spread of defensiveness:

The nation, immensely rich, is no longer interested in glory or duty, but is only anxious to retain its wealth and its luxury. It is a period of defensiveness, from the Great Wall of China, to Hadrian’s Wall on the Scottish Border, to the Maginot Line in France in 1939.

Money being in better supply than courage, subsidies instead of weapons are employed to buy off enemies. To justify this departure from ancient tradition, the human mind easily devises its own justi?cation. Military readiness, or aggressiveness, is denounced as primitive and immoral. Civilised peoples are too proud to fight. The conquest of one nation by another is declared to be immoral. Empires are wicked. This intellectual device enables us to suppress our feeling of inferiority, when we read of the heroism of our ancestors, and then ruefully contemplate our position today. ‘It is not that we are afraid to fight,’ we say, ‘but we should consider it immoral.’ This even enables us to assume an attitude of moral superiority.

The weakness of pacifism is that there are still many peoples in the world who are aggressive. Nations who proclaim themselves unwilling to fight are liable to be conquered by peoples in the stage of militarism — perhaps even to see themselves incorporated into some new empire, with the status of mere provinces or colonies.

When to be prepared to use force and when to give way is a perpetual human problem, which can only be solved, as best we can, in each successive situation as it arises. In fact, however, history seems to indicate that great nations do not normally disarm from motives of conscience, but owing to the weakening of a sense of duty in the citizens, and the increase in selfishness and the desire for wealth and ease.