Unto Caesar

F.A. Voigt argued that both Communism and National Socialism were revolutionary secular religions that sought to render unto Caesar that which is God's — that is, to transform religious promises into worldly reality — and that Britain had to act, within realistic constraints, to save the Commonwealth:

The greatest extension of international, social, and religious peace ever achieved has been achieved within the British Commonwealth. Throughout a quarter of the world the satanic forces that engender war and revolution are curbed, thanks to the Pax Britannica, with which a benevolent Providence has associated the Pax Americana and the Pax Gallica.

The Pax Europaica is one of these ideals that transcend practical statesmanship, which is necessarily short-sighted and bent on the fulfillment of immediate tasks. Excessively far-sighted statesmanship may be very dangerous, and to pursue an international ideal by political means is to invite a general catastrophe.

The Pax Europaica would certainly be in the interest of the British Commonwealth, but to enforce it is beyond the power of the Commonwealth (we often forget that the greatest power — even the power of the Commonwealth — is limited). England is under the absolute necessity of defending western Europe because that defense is self-defense. That necessity imposes a terrible burden and is attended by fearful dangers. The burden and the dangers must be borne, but to augment them in the pursuit of an ideal that is, in any case, unattainable in so short a time as one generation, would be madness. The Pax Britannica would be shaken and, perhaps, fall to pieces, British vital interests would suffer profound and perhaps irretrievable injury, and the ideal would certainly not be achieved but would, in all likelihood, be buried forever in the irretrievable ruin.

This passage, in Mencius Moldbus's opinion, approaches greatness:

The true lover of peace will be more concerned with peace in the concrete than peace in the abstract; with defending his and his country's peace, rather than with chimerical schemes for extending peace beyond the limits of the possible. He will always reflect whether its extension beyond the frontiers of his own country will be an extension not of peace, but of war. Even a seemingly small extension of peace may be dangerous, as the extension of the Pax Britannica to western Europe is. Inherent in universal peace is the menace of universal war — "indivisible peace" is "indivisible war."
[...]
The modern effort to establish universal peace is perhaps for this reason mainly an English effort. After the armistice, the English experienced a prodigious revulsion against war. But they also felt an island security which could no longer be menaced, seeing that the German fleet had been destroyed. Their pacifism acquired a messianic character — they were less concerned with saving their fellow-countrymen than with saving all mankind from war. Their own security made them more accessible than any other nations to utopian dreams of universal peace — and blinder to the danger inherent in such utopian dreams.
[...]
Monstrous proposals, like the proposal to create an international air force that would emerge — from some Alpine stronghold, presumably — and bomb the cities of the alleged aggressor, found a considerable following in the post-war years. Such inhuman phantasmagoria had an affinity with the secular religions of the European continent. Indeed, English militant pacifism had something in common with the Marxian dreams of a universal realm of peace, justice and well-being. As we have seen, the Kingdom of Heaven on Earth is inseparable from its own opposite. It can only come about by violence.The threat of universal war as a means of establishing universal peace is a peculiarly English conception that has crystallized in the doctrine of "sanctions." This doctrine is analogous to the doctrine of the proletarian dictatorship which would establish social peace by making class-war permanent and universal. "Sanctions" are the counterpart of the revolutionary terror — the purpose of either is peace, but the effect of both is the consolidation, through war or the threat of war (whether between classes or nations), of power in the hands of those hold it.
[...]
To erect the "punishment of the aggressor" into a general system would be to concentrate immense power into a few hands and establish an abominable and universal tyranny. In nothing is the evil inherent in universal systems of enforced morality more evident than in the doctrine of "sanctions."
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There is no reason to suppose that a universal system of "sanctions" would abolish war even for a time. One evil would be replaced by a greater evil. Private wars would be abolished — only world wars would be allowed.

England, Voigt emphasizes, is the only Great Power exposed to the permanent danger of total and permanent defeat in war:

The United States have absolute security. They are exposed neither to blockade, nor invasion, nor attack from the air. Not one of their vital interests can be menaced. Unless their whole fleet engages in some rash enterprise far from its bases, they are safe from major defeat. And even major defeat would not expose them to conquest by a foreign foe. The United States can never be less than a Great Power.
[...]
Of all the Great Powers, England is the most vulnerable. On her armed strength depends her own existence — and the existence of others. She can never share the enviable state of the small countries on the north-western fringe of Europe. Without her, these countries would be threatened with extinction. If it were not for the British command of the sea, Holland would be absorbed by Germany, and her colonial empire would be at the mercy of Japan. It is very doubtful whether Denmark would exist at all if she were not situated on the fringe of the Pax Britannica. Norway and Sweden have a certain security in their remoteness — but the security of Norway, at least, is made doubly secure because England could not tolerate an alien conquest or penetration that would give a foreign navy the use of the Norwegian coast.

Belgium cannot exist as an independent nation without Britain and France. It is not even sure that Swiss independence would survive if the Swiss had not the French for neighbors and the French had not the English for allies.
[...]
England's general interest is in the national independence of existing States within their present frontiers and therefore, in the European status quo. But that interest is not so vital that she can make every change in that status a casus belli. Indeed no change in the territorial status anywhere in Europe, except in the west and in the Mediterranean area, can be a casus belli for England. But so delicate is the European equilibrium and so far-reaching may the consequences be if it is upset, that any territorial change anywhere in Europe may, by involving other Powers (especially France), lead to a situation so full of danger that she must always reserve to herself the possibility of intervening in defense of her vital interests.

Nor is the question purely political. The triumph of the militant, imperialistic Powers would promote the spread of protection and of tied economies. German expansion in central and eastern Europe would extend the area of German "self-sufficiency." Whether Germany achieves political domination, or even a decisive political and commercial influence, tariffs and systems of quotas, subsidies and import and export licenses are promoted to the advantage of Germany and to the exclusion of other countries.

Loss of trade in an area so extensive as the prospective Pan-German Empire and the zones of German ascendancy beyond the borders of that Empire would be a very serious matter for England.
[...]
While avoiding direct intervention in the affairs of central and eastern Europe, [England] must always be able to impinge on the central and eastern European situation, using her influences and her good offices to preserve the status quo. A general anti-German policy would be excessively dangerous and costly. Any general coercive system would be fatal to England if it were to dominate her policy. Isolation would be no less fatal. Her path must run clear of a utopian universalism and an equally utopian isolationism.

This passage, Moldbug says, demonstrates the tragedy of Voigt's liberal realism:

The principal antithesis in the world today is not between Berlin and Moscow, London or Rome, but between London and Berlin. Without this antithesis, a Pax Europaica or a United Europe would be possible.

The greatest — and perhaps unattainable — political need of Europe today is that a relationship, such as exists between London and Washington, should also exist between London, Paris and Berlin. If England, France and Germany are united, not in any federation or any centrally directed system, or indeed any system of any kind, but by virtue of a certain fundamental identity of outlook and by a common civilization (no other unity can be real), then Europe is united, and the dream of all "good Europeans," the Pax Europaica, will have come true.

The Pax Europaica cannot be achieved by protocols or treaties, by pacts, by alliances, by mutual assistance or by the League of Nations. It can only come about through a spiritual change — in Germany, but also in France and England.

Moldbug's reaction:

Here we see the tragedy of the British "appeasers" of the late '30s. Between the Congress of Vienna and the rise of Germany, Britain had enjoyed effective world supremacy, as the US does now. Liberal Imperialism foundered on this rock; it could not let Germany become a world power equal to the British, for Germany was not liberal.

Yet, by opposing Germany and denying it Westphalian parity, Britain made Germany hateful and paranoid, for Germans saw themselves being treated as an inferior in a world system in which it was not just formally an equal, but economically and militarily an equal. Thus the harder Britain worked to deny Germany equality, the less deserving of that equality Germany became.

The appeasers of the '30s inherited the final dilemma of this epic conflict. From the perspective of British interests, the right decision was clearly to abandon the Little Entente-type states created after World War I, whose adherence to democratic principles was anyway quite a bit less than stellar, and allow Germany to create her empire in the East. Yet this decision was both a release of power, which is always difficult for the powerful, and an empowerment of dangerous and illiberal forces beyond the control of Britain or anyone. Unlimited national sovereignty!

Another decision, of course, would have been to support Poland and Czechoslovakia to the hilt. This might not have restrained all future Hitlers; it probably would have restrained Hitler. But ultimately, it would have been necessary to back this bluff with actual war. Hence the course of universal peace, later followed.

But, through the natural tensions in her political system, Britain wound up following a course between these two poles, and one which was clearly worse than both. Seeking to avoid war and preserve her Empire — excuse me, "Commonwealth" — she got war, and lost her Empire. And lo, did Edgar Mowrer inherit the earth. Along with Moscow, for a time.

Here, again, is the tragedy of Voigt's liberal realism. He dabbles with actual, real realism — and rejects it. He ends up, with Mowrer, trying to convert Germany to "good thinking." That this can only be done with bombs, and that it can only end in the death of the British Empire, he at some level knows; but he cannot reject his geopolitics, his commercial advantage, his trade routes, all the cant of late Imperialism. Hence the war sucks him and his country in.

Foreign Correspondents

A foreign correspondent — like Edgar Mowrer in Germany in the 1930s — occupies a peculiar place in the life of a country:

Because he and his friends in the foreign press lead American opinion on Germany, and America is a democracy, they lead American policy toward Germany. And, naturally, they have friends in Germany, and enemies in Germany; and they feel that American policy should result in their friends running Germany, and their enemies... not running Germany.

So, in a sense, when Germany moves to the right, it is rebelling against the nascent international community — and against Edgar Mowrer. And thus his anger. Later expressed in tons of TNT.

We must Americanize ourselves

Heinrich Hauser wrote The German Talks Back to explain postwar Germany to Americans — not, Mencius Moldbug explains, from the point of view of a German liberal but from that of a German national-conservative. An excerpt:

The crucial test to which the American government in Germany ought to subject all claimants and lobbyists is, of course, "Just how many followers do you have? How many hale and hearty democrats can you deliver?" An honest question, to which in honesty the non-Nazified functionaries of the old Weimar Republic can only answer: "None. Unfortunately, the people have become estranged from us. The young generation has forgotten us and doesn't care about democracy. After thirteen years of Hitler, what can you expect?"

This is perfectly true, except that for once it is not Hitler who must take all the blame if American ideas don't work out in occupied Germany. That blame must be shared by German gullibility and American gullibility alike. The truth is that the fathers of the present generation ate sour grapes from America, and now the children's teeth are set on edge.

I will spare you the well-worn argument about Wilson's Fourteen Points, and how the Germans felt let down when they got the Treaty of Versailles instead. No: what you have forgotten, or never became conscious of, is that for ten years after the First World War Germany's most popular slogan was "Wir amerikaniseieren uns!" ("We must Americanize ourselves.") Rarely, perhaps never in history, was there a defeated nation so completely enamored of the victor's efficiency as the Germans after 1919. "American matériel has won the war? So then everything American must be superior. Let's imitate them, let's Americanize ourselves." Such was German logic.

Every American who visited Berlin during those reconstruction years will remember to what ridiculous lengths that German logic went: American bars and American-style nightclubs, American jazz bands, if possible with one "real imported" Negro at the saxophone. American cafeteries and American movie houses were ubiquitous. The neatly dressed German wore "shimmy" shoes and a suit of American cut. American cars rolled on the streets with a new and surprising noiselessness, and in if an American asked his way in German he got an English answer. The dollar was the Elite-Valuta — the elite-professionals of the Kurfuerstendamm demanded it from even their German customers. And the first skyscrapers begain to raise their steel skeletons over the trees of the Tiergarten.

We imitated everything. The National Assembly imitated your Constitution, and the Reichswehr your Sam Browne belt. Industrialists copied your production systems, workers adapted themselves to your speed-up systems, and poets sang in praise of the assembly line. We introduced your weekend and your bookkeeping. We blossomed out in Rotary Clubs and poured sugar into our perfectly good wine to ape the sweet tooth of America.

We really meant it all. Sure, the people were disappointed that their Wilsonian dream hadn't come true after all, but then they still clung to their dream of America. What kind of dream?

"If you will only be good democrats and work like hell and be modern and progressive as we are, then you can live like Americans." That was the siren song which in a thousand variations sounded from across the ocean, and the people listened as starry-eyed as ever Hitler listened to a Wagner opera. They dreamed of the electric refrigerator that would one day be theirs, and of the vacuum cleaner, and, above all, of that cheap little car.
[...]
For a time the carrot worked; the ugly 19th-century brick-and-plaster houses of Germany's Main Streets put on pants: facades of concrete reaching to the second floor and framing modern stores with neon lights. Cities built new municipal buildings and parks and hospitals for themselves. Yes, it was done with American loans — to a large degree, at least. Industry modernized itself and installed new machinery. Yes, American money helped do that, too. It looked almost like prosperity on the face of it, and a typical German crowd looked almost like a normal American crowd.
[...]
It must not be forgotten that private enterprise in Germany had suffered a major blow a few years before the Nazis came to power. In 1930, the great depression hit the economic body of Germany, which owing to malnutrition had a low resistance anyway. And the most significant thing about it was that "Wir amerikanisieren uns," the slogan of the 'twenties, backfired on us with a vengeance.

When the United States retracted her private loans, the first establishments to topple were the ones that had taken the loans. These included the municipalities that had gone farthest along the American way of modernity, and the industries that had gone the limit with American production methods, thereby accumulating an unduly high overhead. The workers on the American-style assembly lines were the first to be thrown on the dole. The most progressive farmers, who had invested heavily in modern American implements, were the first to surrender to the sheriff's sale.
[...]
The cheapest kind of amusement, which even those on the dole could afford once a week, which indeed was thrown in as part of the dole, was a ticket to the movies. People thronged the movie houses, partly for the warmth, partly to snatch an hour of sleep in half-comfort, partly to forget their misery, and partly for the show. And the show always included a newsreel and some slapstick comedy from the U.S.A.

Never shall we forget — we, the unemployed of the depression years in Germany — those nauseating scenes that Hollywood projected for us on the silver screen as ostensibly representing the American way of life. Never shall I forget the incredulous stare at first, and then the tightening of lips, and then the gleam of hatred in the people's eyes...

"So that's the way those fellows live over there in America... did you see those brats throwing pie at each other's faces, and all besmeared, and the whipped cream dripping all over?... And the girls in the sexy bathing suits, swimming in a pond full of apples and banging them around... Don't forget the ones who got their buttocks measured by a bunch of fellows — a beauty contest, they called it... And that other hussy in the beauty parlor; got her hair all plastered with yolk of egg. I've seen it. Real eggs, at least a dozen....
[...]
In that other thing, College Fun or whatever it was, did you see how they wrecked the place, smashed up the furniture and all? Did you think that was funny? No, I call that beastly, and I could have taken a stick and smashed their skulls, and never be sorry I did it."

Pre-war Germany and the modern Middle East suddenly seem eerily similar.

Never has there been a prudent, intelligent and well-informed democratic electorate

The mainstream American conservative or libertarian does not trust the Press, Mencius Moldbug says:

This person is not at all sure about how he wants to purge the Press; but, broadly, he would like it to disappear as a business, ignoring the facts that (a) privileged access to inside information will always be a good business (see under: Reg FD), and (b) if the "MSM" blows this advantage so completely that it fails as a business, it has a thousand and one ways to continue operating as a nonprofit.

The democratic conservative or libertarian believes that his government is bad because it pursues the wrong policies; it pursues the wrong policies because its elected officials are the wrong people; and its elected officials are the wrong people because they were elected by bamboozled voters, miseducated by information sources 1 through 6 as described above.

Here is a question you can ask any conservative or libertarian. Granting that the MSM, today, is not supplying the People with accurate information, causing them to support misguided and counterproductive policies: when did this become true? When did it start?

If the American people of 2010 are, by and large, misinformed by their own journalists, until what date were they well-informed and capable of properly fulfilling their democratic function? 1980? 1960? 1930? 1910? If considering dates between 1856 and 1900, I recommend first consulting this historical sketch by Charles Francis Adams, Jr.
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UR's answer to the question is, of course: never. Never — neither in the age of American democracy, nor in the Athens of Cleon the Tanner — has there ever been anything like a prudent, intelligent and well-informed democratic electorate. None of these three criteria has ever been achieved, least of all the third. Not in the 20th century, not in the 19th, not in the 18th, and not in the 5th BC.

As for the self-enforcing constitution, the magic parchment that compels all to abide by natural law, without any force of sovereign compulsion that could become corrupt, it strikes me as even more fantastic and impossible than democracy itself. When government becomes corrupt, to cry for its absence is only natural. Nothing is more foul than a corrupt government. But as for natural law, nature's first is this: she abhors a vacuum. Paper cannot rule. Some person or persons are always in the throne, or fighting for it. I prefer the former condition.

Uncorrected Evidence 39

Reality, as the faithful know it, has torn itself asunder, Mencius Moldbug asserts, as demonstrated by something innocuously called Uncorrected Evidence 39:

Briefly, reality as the faithful know it has torn itself asunder. All trust in authority is shattered. The Donation of Constantine is a medieval forgery; the Pope is a woman; the Archmonk, in the Tomb of Buddha's Thumb, has found a dried-up gibbon toe. Otherwise, nothing is wrong at all. Your garbage will still be picked up tomorrow morning.

But the Institute of Physics, which is only the national physics society of the country that invented physics, has submitted its public comment to Parliament's CRU inquiry — posted as Uncorrected Evidence 39. Which starts like this:

1. The Institute is concerned that, unless the disclosed e-mails are proved to be forgeries or adaptations, worrying implications arise for the integrity of scientific research in this field and for the credibility of the scientific method as practised in this context.

Wow! (And note that no one has claimed that the emails are forged.) If you are unfamiliar with bureaucratic prose, this is extremely strong language. Basically, the IOP is demanding heads. And not just a professor or two, but the entire field.
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Therefore, UE39 poses an immediate practical problem to the entire journalism industry. At least as presently constituted, it is not constitutionally equipped for any of the following tasks: (a) arguing with physicists about physics; (b) agreeing that Rush Limbaugh was right; (c) embarking on a savage, McCarthy-style purge of climate science; or (d) ignoring matters entirely.
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The University and the Press are power junkies. They rule. They know it. Ceasing to rule, they must cease to exist: this is history's law. And their rule is a consequence of their legitimacy, which is a consequence of their perceived infallibility — or, to be more precise, their tendency to converge automatically on the truth.

The Difference between a Dictator and a Monarch

There is a key difference between a dictator and a monarch, and that difference is stability:

There are many differences between Hitler and Frederick [the Great], but perhaps the key one is stability. Frederick, while not intrinsically secure from his foreign enemies, was quite secure from any domestic opposition. No one was trying to kill him; no one could have accomplished anything by killing him. He was, in short, a monarch. A dead monarch is replaced, automatically, by another monarch — the identity of whom is already known. If the old monarch was assassinated, God forbid, the new monarch is generally not the assassin (or his employers).

Not so for a dictator! People were trying to kill Hitler all the time, and it's a Satanic miracle that none of them succeeded. If, say, Elser's bomb had worked, it would have changed the course of history. There was no Hitler 2.0, or vice-Hitler, or Son of Hitler, waiting in the wings. Hitler, for all his faults, was one of a kind. Thus, the incentive was considerable.

And thus, Hitler — unlike Frederick — has to devote considerable effort to shoring up his sovereignty, which is by no means secure. He has to scapegoat the Jews and fight the Communists, for instance; his sovereignty depends on his popularity, and he is popular because he fights these popular enemies.

And, as we already know, it's better to live under a stationary bandit than a roving bandit.

Unleash the Blue Wave!

Official statistics confirm that crime in England has increased roughly by a factor of 50 since Sir Arthur Conan Doyle wrote his Sherlock Holmes stories, in which the great detective made this complaint:

"There are no crimes and no criminals in these days," he said, querulously. "What is the use of having brains in our profession? I know well that I have it in me to make my name famous. No man lives or has ever lived who has brought the same amount of study and of natural talent to the detection of crime which I have done. And what is the result? There is no crime to detect, or at, most some bungling villany with a motive so transparent that even a Scotland Yard official can see through it."

Thinking about this led Mencius Moldbug from Mises to Carlyle:

So we see that an English government of the Victorian era — without DNA testing or closed-circuit TV — managed to largely abolish crime. We also see that the present-day government of England (and of other places governed in the same way) pretends to want to abolish crime — but to be unable to do so. Are we inclined to doubt this pretence? We are. Are we entitled to doubt it? We certainly are.

But if this pretence is indeed a pretence, if crime can indeed be abolished by enforcement, we accuse the present regime of something very serious. It becomes an accessory to this crime, which it could have abolished but chose not to. Furthermore, rather than admitting to this (somewhat) unprecedented abuse, it chose to deny the fact, and plead an obviously farcical incompetence. Certainly, when the SS removed police protection from the Jews of Riga, the SS made itself morally responsible for the subsequent pogrom by the Latvians of Riga. Even if all the Obersturmführers were on their lunch break, or whatever.

Therefore, the simplest way for a libertarian to support natural rights in his own society is to support a savage police crackdown on crime. For instance, by reimposing the standards and practices of the Victorian law-enforcement system, certainly both available and practical.

Inevitably some mistakes will be made; some innocent heads will be cracked. However, as a libertarian in America, exercising your libertarian rights, your goal is to minimize the number of natural-rights violations in America — whoever may be committing them, and in whatever uniform. Hence, you should generally support the police against criminals. The former violate natural rights only by accident and/or malfeasance, whereas the latter do so as a matter of regular procedure. In practice, it is not hard to know who is the cop, and who the criminal.

Unleash the blue wave!

Maturity Transformation

Using short-term borrowing — including zero-term borrowing, like ordinary bank deposits — to fund long-term illiquid assets is a strategy that can go catastrophically wrong.

Mencius Moldbug calls this problematic strategy maturity transformation, because short-term debt is transformed — imperfectly — into long-term debt. In case of panic, the disconnect becomes vivid.

A simple shift away from demand deposits could fix the problem:

If we replaced ordinary bank accounts with money-market mutual funds, then we would no longer have this issue of short-term borrowing going to fund long-term illiquid assets.

Instead, the bank's customers would be equity-holders, and there would be no rush in bad times to run on the bank to get yours before everyone else gets theirs.

The worst-case scenario would be that the fund had to break the buck — unpleasant but not catastrophic.

I've said as much before:

Most of these "maturity transformation" issues disappear when you move away from an old-fashioned bank, which makes explicit promises of r% interest and withdrawals on demand, and move to a bond fund, which makes no promises about what yields it can deliver — and which doesn't have to unwind its investments just because shareholders want to sell their shares.

Certainly bad debt can lead a money market fund to break the buck, and that can cause a liquidity crunch for investors who considered it cash-equivalent, but there's no incentive for a run on the money market fund; shares just lose value, and no new shares are issued until the share price creeps back up to $1.00.

Further, any "maturity transformation" is pretty painless, as those who have cash now can buy shares, and those who want cash now can sell shares. There's no angst about "fraud" from promising on-demand withdrawals while only holding fractional reserves.
[...]
With no notion of first-come, first-served, a fund's in no danger of a run; its shares simply drop in value when its assets drop in value. It's comparatively stable, since no one has an incentive to make matters worse for other investors in order to save their own skin.

Who Will Watch the Limited Watchmen?

Who will watch the limited watchmen?

Another way to see the problem is to examine that shibboleth of libertarians — limited government. Now, the frustrated English teacher in me notes an interesting fact about this phrase: it is in the passive voice. Who shall limit the government? And how can we assure that they continue to do so? And if some other party does this limiting, who shall limit them? This is, of course, the old quis custodiet problem. To which Rothbard has no better solution than Juvenal.

Libertarians can be classified according to their wrong answers to this question. If you are a democratic libertarian, you believe that government should be limited by popular sovereignty. You also probably haven't looked out the window in the last 200 years. If you are a judicial libertarian, you believe that government should be limited by judicial sovereignty — ie, by a judiciary committed to Constitutional principles and the Anglo-American common law. And you haven't looked out the window in the last 75.

The essential problem with both democratic and judicial libertarianism is that, while we see both these phenomena succeed in history, we see them — once again — succeed only on the left. English and American history is a rich trove, as Rothbard can show you, of both popular resistance to state authority, and judicial resistance to state authority. However, this resistance succeeds only when in the process of undermining some higher order, royal or aristocratic. Once the People themselves are in the saddle, they no longer listen to complaints of this form.

In the democratic system today, to ask either the electorate or the judiciary for libertarian government is to ask an empowered body to relinquish powers it has. The People have powers X, Y and Z; they use these powers to vote government services A, B, and C; if you remove these services, you must remove the powers; if you remove the powers, you disempower.

Similarly, we live in the golden age of government by judge. Most significant executive decisions in the modern system of government land, one way in another, in the lap of a judge. This is the direct result of New Deal Legal-Realist jurisprudence. And you're asking the judiciary, itself, out of mere goodness of heart, to relinquish this fat leg of ham? You and what army?

Whereas when the likes of Coke contended with the likes of Charles I, judicially-limited government was a no-brainer. Alas, judges are men. If we had angels on this planet, we would long ago have consigned these duties to them.

Thus, again: libertarianism works for the left and fails for the right. Both sovereign electorate and sovereign judiciary are perfectly happy to restrict the powers of others, ie, the King. Convincing them to restrict their own powers is quite a different problem. When democracy is competing against the remnants of the ancien regime, it is a force for limited government. Once it defeats and disempowers these remnants, it is a synonym for socialism.

Misesian classical liberalism is like Newtonian physics

The problem with taking Ludwig von Mises as a guru is not that he's wrong, but that Misesian classical liberalism is like Newtonian physics:

It is basically correct within its operating envelope. Under unusual conditions it breaks down, and a more general model is needed. [...] Just as Newtonian rules only make sense at low speeds, Misesian rules only make sense in a secure order.

Tyranny is one form of chaos, and freedom is one form of order. To a Carlylean, like Mencius Moldbug, the fatal error of libertarianism is confusing anarchy and freedom:

Not only are they not the same thing; they are opposite poles of the political spectrum. Freedom — spontaneous order — is the ultimate form of order. Anarchy is the ultimate form of disorder.

To a Carlylean, anarchy and tyranny are fundamentally and essentially allied and indivisible. And again: the apparent affinity between anarchy and freedom is wholly illusory. In fact: to maximize freedom, eradicate anarchy. To achieve spontaneous order: first, achieve ordinary, down-to-earth, nonspontaneous order. Then, wait a while. Then, start to relax.

Here is the Carlylean roadmap for the Misesian goal. Spontaneous order, also known as freedom, is the highest level of a political pyramid of needs. These needs are: peace, security, law, and freedom. To advance order, always work for the next step — without skipping steps. In a state of war, advance toward peace; in a state of insecurity, advance toward security; in a state of security, advance toward law; in a state of law, advance toward freedom.

The Newtonian envelope of libertarianism is the last of these stages. Once the state of lawful government is reached, that state can generally improve itself by minimizing its interventions and applying a policy of laissez-faire — advancing from enforced to spontaneous order. With the caveat, of course, that this policy not jeopardize the more important achievements of peace, security, and law.

When a state finds itself outside this Newtonian window, however, Mises and Rothbard are of no assistance whatsoever in helping it get back in. Worse: Rothbardian libertarianism can be a positive hindrance to the Carlylean roadmap.

Too many corporations wait too long before firing the boss

Too many corporations wait too long before firing the boss, Robin Hanson says:

Consider Michael Eisner at Disney, Carly Fiorina at HP, Jack Stahl at Revlon and Scott McNealy at Sun. All of these chief executive officers were kept on long past the point when a rational owner of the companies in question would have told them to leave.

Why are boards so slow to fire the chief? One reason is that they don't have enough skin in the game. They own few shares and therefore don't feel obligated to protect their investment from an out-of-touch boss. Besides, most of them owe their cushy jobs to the chief executive.

Hanson suggests a solution though:

Set up two new stock markets where investors would be making not outright bets on the future of a company but conditional bets. In one market the trades are consummated only if the current chief executive remains in place at the end of the current quarter. In the other market the trades are consummated only if the incumbent is bounced out by the end of the quarter. The price spread between these two markets would send a signal about whether the boss should stay or go.

The directors' job then would be to listen to the markets, and, if a wide enough spread opens up in favor of a departure, get out the pink slip.

Hanson believes that such fire-the-CEO markets could evolve into a political tool superior to one-vote-per-person democracy — something he calls futarchy. Mencius Moldbug, no fan of democracy, is no fan of futarchy either and dismisses it out of hand as too easy to manipulate. Hanson retorts:

In the debate, I suggested we start by trying fire-the-CEO markets, and only gradually rely more on them in CEO decisions as such markets collect good track records. Moldbug seems to accept wide trading in ordinary stock markets because he doesn’t think any decisions depend on them, but strongly advises against allowing non-employees to trade in fire-the-CEO markets, due to manipulation concerns. But even a track record showing that firms which followed market advice do better on average than firms that do not would not persuade him.

In fact, Moldbug the “engineer” says no data anyone could collect in the lab or in any organization smaller than a nation would be relevant, and even with nations he doubts we’d see hidden manipulation. Nor does any data collected in the last century test his belief that the best governments are single rulers running city-sized polities with iron fists and complete discretion. It is not even clear what prior data makes his case — apparently it can’t be summarized in any concise form; you have to just read dozens of books and have a feel for it.

Not only does Moldbug know such iron fists would rule best, allow emigration, not cheat their investors, and never ever accept manipulator payola, he apparently knows this deductively, as a noble philosopher, not like we data-addicted pansy social scientists. And he has no interest in improvements in the status quo below his philosopher-deduced-best pinacle.

What more can one say to such a person?

Biology and Justice

An anonymous liberal biorealist — yes, it's hard to imagine — takes a first cut at biology and justice — and Mencius Moldbug offers his advice:

Your project is ambitious, original, invigorating. I hope something comes of it. I would love to see your real identity disclosed one day in the Times Book Review. Keep it up.

That said, here is the basic problem I see: you are trying to reason your way outside the many logical and factual contradictions of 19th and 20th-century Anglo-American liberal democratic thought, more or less from Bentham to Rawls, using only your own philosophical muscles.

Well, you have no shortage of those! A strong man can wrestle an alligator and win. A marathoner can outrun a horse at distance.

Still, if I have to wrestle an alligator, I’d rather have my .45. If I have to race a horse, I’ll make sure I bring my BMW. That is — if my goal is victory, rather than entertainment.

The BMW or .45 in this case is the enormous corpus of pre-liberal and non-liberal thought, ten times as old and at least as massive. (Despite all the subsidized logorrhea of the 20th.) Denied this corpus, you are struggling with great energy to reconstruct it on your own. You would like to see farther, but without standing on any giants — whose existence, in fact, you deny.

So far as I can discern, your only reason for eschewing pre-liberal thought is that its believers were defeated politically and militarily in the 19th and 20th centuries, and it is therefore no longer studied or at least officially sponsored.

This is an excuse, not a reason. Let’s take this .45 and see what it does to your alligator.

For instance: you start with the highly contentious (really almost Orwellian) Rawlsian definition of “justice” — ie, fairness, assuming a basically Christian concept of charity.

Now the word “justice,” of course, is Latin. Predating all this Jesus stuff. And the classical and Continental authorities (originally Ulpian, I believe) give us a two-word definition of “justice” that satisfies me perfectly: suum cuique, “to each his own.” If this two-word formula strikes you as too much the tautology, there’s an equivalent three-word chestnut — pacta sunt servanda — “promises are to be kept.”

Going down this path gives us a definition of “justice” which is not moral, but legal. Of course this is in keeping with the actual origin and meaning of the term, which is why I feel free to regard the Rawlsian redefinition as contentious at best, Orwellian at worst.

Note also that this formal definition strikes us as intuitively correct, as can be seen when we consider its negation. If promises are not kept, if each does not receive his own, we recognize this instantly as a case of injustice. Moreover, in what way can we find injustice, when each receives his own, when all promises are kept?

Here is the .45. Now, let’s shoot that alligator.

You and Rawls are wrestling with the charitable responsibilities of the State. Under your moral definition of “justice,” this is a knotty problem indeed.

The fundamental question is: does the State owe payment X to recipient Y? (The State may also deliver services, but substituting monetary payments is a Pareto optimization.)

The answer is: has the State promised payment X to recipient Y? If so, then X is Y’s own; promises must be kept; failure to pay would be an injustice. If not, no payment is owed; payment is an injustice, a robbery of the State.

Now, we can separate State payments into two categories. One is payments that are fundamentally debts, ie, promises of future payment exchanged for present value. For instance, I would put Social Security in this category, although the Supreme Court disagrees. Insurance claims, of course, are also financial debts. Is it just for the State to pay its debts? Of course it is just.

There is another class of promise and payment, however, which represents a condition of paternal dependency between State and citizen. As non-liberal authorities from Aristotle to George Fitzhugh will tell you, this relationship is fundamentally analogous to that between (a) parent and child, and (b) master and slave.

Thus, it is just for me to buy milk for my daughter, because I have accepted the obligation of caring for her as a dependent. In return, dependency always implies authority: because I feed my daughter, I get to tell her what to do.

Historically, you will find it another of your human universals that dependency without responsible authority leads directly to moral degradation, often literally dehumanizing. Of course we see this everywhere in the 20th-century welfare state, unique in history as a charitable system utterly unconcerned with the well-known degrading impact of dependency.

Thus, under the cold light of Ulpian, we see that all payments of the welfare state resolve into two categories: debt payments, and paternal dependency. Both of these are entirely just, because they are promises fulfilled.

The English word for an adult unrelated dependent is “slave.” The transfer of the bulk of the African-American population from the control and responsibility of private masters, to the State, is not a freeing of the slaves. It is a nationalizing of the slaves. (With a brief window of actual independence, not coincidentally the golden age of African-American civilization, between the Freedmen’s Bureau and the Great Society.)

Moreover, in “welfare reform,” we actually see a recognition of this fact. Even liberals realized: since we have nationalized the slaves, we have to make them work. Otherwise, their human condition becomes unmentionable. Fact. Somewhere, Carlyle laughs.

Sacrificing the permanent interests of the country to the immediate advantages of the proletariate

Macaulay, the celebrated English historian, thanked the American author of A Biography of Jefferson for sending him a copy of his book — in a letter dated 1857 and included in Edmond Scherer's Democracy and France (1884) — and included his thoughts on democracy sacrificing the permanent interests of the country to the immediate advantages of the proletariate:

I am certain that I never wrote a line, and that I never, in parliament, in conversation, or even on the hustings,—a place where it is the fashion to court the populace,—uttered a word indicating an opinion that the supreme authority in a state ought to be entrusted to the majority of citizens told by the head; in other words, to the poorest and most ignorant part of society. I have long been convinced that institutions purely democratic must, sooner or later, destroy liberty, or civilization, or both.
[...]
But the time will come when New England will be as thickly peopled as Old England. Wages will be as low, and will fluctuate as much with you as with us. You will have your Manchesters and your Birminghams, and in those Manchesters and Birminghams hundreds of thousands of artizans will assuredly be sometimes out of work. Then your institutions will be fairly brought to the test.

Distress everywhere makes the labourer mutinous and discontented, and inclines him to listen with eagerness to agitators, who tell him that it is a monstrous iniquity that one man should have a million, while another cannot get a full meal. In bad years there is plenty of grumbling here, and sometimes a little rioting; but it matters little, for here the sufferers are not the rulers. The supreme power is in the hands of a class, numerous indeed, but select, of an educated class, of a class which is, and knows itself to be, deeply interested in the security of property and the maintenance of order.

Accordingly, the malcontents are firmly but gently restrained The bad time is got over without robbing the wealthy to relieve the indigent. The springs of national prosperity soon begin to flow again; work is plentiful, wages rise, and all is tranquillity and cheerfulness I have seen England pass three or four times through such critical seasons as I have described. Through such seasons the United States will have to pass in the course of the next century, if not of this. How will you pass through them?

I heartily wish you a good deliverance. But my reason and my wishes are at war, and I cannot help foreboding the worst. It is quite plain that your government will never be able to restrain a distressed and discontented majority, for with you the majority is the government, and has the rich, who are always a minority, absolutely at its mercy.

The day will come when in the state of New York, a multitude of people, not one of whom has had more than half a breakfast, or expects to have more than half a dinner, will choose a Legislature. Is it possible to doubt what sort of Legislature will be chosen? On one side is a statesman preaching patience, respect for vested rights, strict observance of public faith. On the other is a demagogue ranting about the tyranny of capitalists and usurers, and asking why anybody should be permitted to drink champagne and to ride in a carriage while thousands of honest folks are in want of necessaries. Which of the two candidates is likely to be preferred by a working man who hears his children crying for more bread?

I seriously apprehend that you will, in some such season of adversity as I have described, do things which will prevent prosperity from returning. Either some Caesar or Napoleon will seize the reins of government with a strong hand, or your Republic will be as fearfully plundered and laid waste by barbarians in the twentieth century as the Roman empire was in the fifth, with this difference, that the Huns and Vandals who ravaged the Roman empire came from without, and that your Huns and Vandals will have been engendered within your own country by your own institutions.

Searching for Hari Seldon

Mencius Moldbug has been searching for Hari Seldon in "the awesome, humbling lost library that is Google Books":

With more or less the entire Victorian corpus, modulo a bit of copyfraud, the Hari Seldon game is to enquire of this Library: which writers of the 19th would feel most justified, in their understanding of the eternal nature of history, humanity and government, by the events of the 20th? Whose crystal ball worked? Whose archived holograms delivered the news?

Broadly speaking, I think the answer is clear. Hari Seldon is Carlyle — the late Carlyle, of the Pamphlets. I consider myself a Carlylean pretty much the way a Marxist is a Marxist. There is simply no significant phenomenon of the 20th century not fully anticipated. Almost alone Carlyle predicts that the 20th will be a century of political chaos and mass murder, and he says not what but also why. And what a writer! Religions could easily be founded on the man — and perhaps should be.

But there's no reason the Library need contain only one Seldon. Our mission today suggests a different candidate: another titan of Victorian letters, Sir Henry Maine. Here is history's actual message on Climategate, delivered without benefit of Ouija: Maine's Popular Government (1885). The Ouija board adds, Glenn Reynolds style: read the whole thing. It's quite readable, especially if you can tolerate UR.

I will leave you with some samples. What is unique about Maine, even among his fellow Seldons, is that he is not just the greatest Victorian scholar of comparative government; he does not just correctly predict his future and our past; he also predicts our future. At least, in Maine you find many predictions which come true; few which come false; and a few which have not yet come.

First, watch him refine Austin's understanding of aristocracy and democracy:

The most interesting, and on the whole the most successful, experiments in popular government, are those which have frankly recognised the difficulty under which it labours.

At the head of these we must place the virtually English discovery of government by Representation, which caused Parliamentary institutions to be preserved in these islands from the destruction which overtook them everywhere else, and to devolve as an inheritance upon the United States. Under this system, when it was in its prime, an electoral body, never in this country extraordinarily large, chose a number of persons to represent it in Parliament, leaving them unfettered by express instructions, but having with them at most a general understanding, that they would strive to give a particular direction to public policy.

The effect was to diminish the difficulties of popular government, in exact proportion to the diminution in the number of persons who had to decide public questions. But this famous system is evidently in decay, through the ascendency over it which is being gradually obtained by the vulgar assumption that great masses of men can directly decide all necessary questions for themselves.

The agency, by which the representative is sought to be turned into the mere mouthpiece of opinions collected in the locality which sent him to the House of Commons, is we need hardly say that which is generally supposed to have been introduced from the United States under the name of the Caucus, but which had very possibly a domestic exemplar in the ecclesiastical organisation of the Wesleyan Methodists.

The old Italian toxicologists are said to have always arranged their discoveries in a series of three terms — first the poison, next the antidote, thirdly the drug which neutralised the antidote. The antidote to the fundamental infirmities of democracy was Representation, but the drug which defeats it has now been found in the Caucus.

By "Caucus" Maine means, of course, the modern political party. Note his perfect description of the same paradox we see in Lippmann's work — the spontaneous appearance of an antidote to democracy, often promoted under the very name of democracy itself. You knew, of course, that representative government was an antidote to democracy; you also knew that progressive scientocracy was an antidote to democracy; you never connected these two points. Or associated them with "the old Italian toxicologists."

Note also that in 21st-century scientific bureaucracy, we have seen only two of these three steps. We have seen democracy and its antidote. The latter quite toxic itself, and growing only more so. We have not, however, seen the neutralizing drug — yet.

Here Maine explains his theory of aristocratic judgment:

Under all systems of government, under Monarchy, Aristocracy, and Democracy alike, it is a mere chance whether the individual called to the direction of public affairs will be qualified for the undertaking; but the chance of his competence, so far from being less under Aristocracy than under the other two systems, is distinctly greater. If the qualities proper for the conduct of government can be secured in a limited class or body of men, there is a strong probability that they will be transmitted to the corresponding class in the next generation, although no assertion be possible as to individuals.

Whether — and this is the last objection — the age of aristocracies be over, I cannot take upon myself to say. I have sometimes thought it one of the chief drawbacks on modern democracy that, while it gives birth to despotism with the greatest facility, it does not seem to be capable of producing aristocracy, though from that form of political and social ascendency all improvement has hitherto sprung.

But wait:

But some of the keenest observers of democratic society in our day do not share this opinion Noticing that the modern movement towards democracy is coupled with a movement towards scientific perfection, they appear to be persuaded that the world will some day fall under intellectual aristocracies.

Society is to become the Church of a sort of political Calvinism, in which the Elect are to be the men with exceptional brains, This seems to be the view suggested by French democratic society to M. Ernest Renan. Whether such an aristocracy, if it wielded all the power which the command of all scientific results placed in its hands, would be exactly beneficent may possibly be doubted.

Our exact problem in a nutshell — 125 years ago.

The faults to which the older privileged orders are liable are plain enough and at times very serious. They are in some characters idleness, luxuriousness, insolence, and frivolity; in others, and more particularly in our day, they are timidity, distrust of the permanence of anything ancient and great, and (what is worse) a belief that no reputation can be made by a member of an ancient and great institution except by helping to pull it down.

But assuming the utmost indulgence in these faults, I may be permitted to doubt whether mankind would derive unmixed advantage from putting in their place an ascetic aristocracy of men of science, with intellects perfected by unremitting exercise, absolutely confident in themselves and absolutely sure of their conclusions.

Yeah.

Maine misses one small point here: this "ascetic aristocracy" will degenerate in talents, as well as morals. One fact that rings loud and clear from the CRU emails is the basically second-rate nature of these bureaucratic pseudoscientists — not just evil, but also not that bright. Though still aristocrats of unremitting intellectual exercise, to be sure, next to the broad population. We can't all be Feynman.

And finally — the future:

The question, however, will not long or deeply trouble those who, like me, have the strongest suspicion that, if there really arise a conflict between Democracy and Science, Democracy, which is already taking precautions against the enemy, will certainly win.

This is how bad Sir Henry Maine is. Not only does he tell us about the great battle at the end of time which will pit Democracy against Science, a conflict unthinkable to you and I until this freakish spirit chat with the ancestors, but now perfectly clear and clearly inevitable — but he has no dog in that fight. Bow to the ancestors! For lo, their greatness is palpable.

Frankly, I remain skeptical. In real life, Hari Seldon never gets it exactly right. Science has already proven far more durable than Maine imagined. Its destined foe, Democracy, has never been weaker or more contemptible. Still, if history shows us anything about the latter, it shows us that Democracy can lie dormant and apathetic and seemingly dead for decades, even centuries, then burst out again in volcanic explosions of frenzied mob energy, irrational, irresponsible and irresistible, driving God knows where in a river of heads on pikes.

Should we prefer this? Or the long grim gray decaying reign of Michael Mann, Climate Stalin? Democracy, infinitely stranger and more dangerous; Science, the frozen tyrant we now know. Dear reader, the ancestors have left this one to you.

McCarthyism Failed

McCarthyism failed to purge the government of Communists:

The reality behind "McCarthyism" — a good recent history is that of Stanton Evans — was one in which Americans discovered that their government had been employing, in positions of great responsibility, individuals known as "Communists," who were often extremely capable and brilliant, but who did not seem to have the best interests of Americans at heart, and seemed capable of misleading them with disturbing facility. There are no more Communists — not in the literal sense of the word. But surely the parallel is clear.

In particular, Americans discovered that their own foreign-policy organs, not to mention their own official press, had been consciously and deliberately misinforming them about the nature of events and regimes in Russia and China. Oceans being oceans, these events had relatively little direct impact on Americans. (Except, of course, in the Korean War, where American soldiers fought a major conflict against the Jeffersonian reformers to whom its diplomats had just delivered a quarter of humanity.) However, their effects on Russians and Chinese were dire. Especially the Chinese.

USG, or at least its foreign-policy organs, or certain networks therein, were seen correctly to bear culpability in this matter. (In modern-day historical works, for instance, you can see the correct history in either Jay Taylor's life of Chiang Kai-shek or Jung Chang's Mao. Chang doesn't give a crap about American politics; Taylor is himself a former Foreign Service officer. If you read either work, or any other reliable source, you will come away with the feeling that "George Marshall" is a perfectly sensible answer to the perfectly sensible question of "who lost China?".)

The basic problem faced by McCarthyism was that McCarthy's shop itself, run in practice by the freakish legal child-prodigy Roy Cohn, was a tiny dog that had caught a very large car. There was no substantive way to differentiate between a New Dealer and a Communist. After all, between the German invasion of Russia in 1941, and the Anglo-Soviet split of '45-'48, the two had been essentially the same movement. The two were also littered with homologous doctrinal doxology — starting, but not ending, with "progressive."

Therefore, McCarthyism had to operate under an essentially erroneous narrative of foreign subversion. Broadly, in general, his specific charges were accurate. The many sub-rosa connections to the Russian intelligence agencies that he uncovered were real. But the meaning of those connections were completely misinterpreted. As a result, a false picture was presented, both by McCarthy's allies at the time and by his present conservative defenders.

A man like Harry Dexter White did not see himself as a tool of the KGB. A man like Harry Dexter White saw the KGB as a tool of Harry Dexter White. The KGB could put him down in their files as a tool; I'm sure they did; and perhaps, in the end, they were right. But to White and many others like him, America should have been working with the Soviets as with the British, because the two systems were on a path to convergence. No one then or now would think anything of any contact between British intelligence and anyone in Washington.

This is actually not a reassuring conclusion at all. The problem is that it directs complicity in the other direction. Instead of the crime of workin' secretly fer furriners, ie, Stalin, the FDR administration strikes me as more likely to be prosecuted by history for employing Stalin. Who certainly made quite a steely iron fist. It is neither unusual nor unfair, however, for a leader to be prosecuted for the work of his henchmen. The Boss cannot be expected to have executed his victims personally — as if he were, say, Saddam Hussein.

But I digress. The point is not the accuracy of McCarthy's charges, but the actual effectiveness of his actual purge. There is no doubt that many Communists and other progressives, across a fairly wide cross-section of American institutions, not entirely sparing even the most elite, were purged as a result of McCarthyism. In that sense, the purge succeeded. The tumor regressed.

A little. And not for long. We can see easily that McCarthyism failed. If McCarthyism had succeeded, McCarthy would today be hailed as a hero, and his victims execrated as villains. Since his victims are hailed as martyrs, and he is execrated as a villain, we can see easily that he lost. Any successes were only temporary. The tumor came back — and prevailed.

Too Hot, Too Cold, or Just Right?

Is our current climate too hot, too cold, or just right?

[I]n the pre-IPCC era, climatologists (such as Professor Lamb) simply took it for granted that the present temperature is well below the optimal point. This can easily be seen in the names they assigned to past periods warmer than the present — such as the Medieval Climate Optimum and the Holocene Climate Optimum. Had they considered this a serious question for debate, it would have been easy to choose a neutral name.

We can easily see the reasoning behind "Optimum" by looking at a more recent historical precursor to the AGW movement: the embarrassing false step of the global-cooling movement. We have always been at war with Eastasia. However, Time magazine has performed the decidedly anti-Orwellian act of making its entire 20th-century archive free, and apparently unexpurgated, on line. So you can click here, and see what Time said when we were at war with Oceania.

One of the things you'll notice is that much, much less effort is required to conjure disasters due to global cooling, than disasters due to global warming. Crop failures and starvation don't involve a long chain of fanciful inference.

That 1974 Time article, Another Ice Age?, reads like it was written yesterday — with a few points inverted:

As they review the bizarre and unpredictable weather pattern of the past several years, a growing number of scientists are beginning to suspect that many seemingly contradictory meteorological fluctuations are actually part of a global climatic upheaval. However widely the weather varies from place to place and time to time, when meteorologists take an average of temperatures around the globe they find that the atmosphere has been growing gradually cooler for the past three decades. The trend shows no indication of reversing. Climatological Cassandras are becoming increasingly apprehensive, for the weather aberrations they are studying may be the harbinger of another ice age.

It is a long way from Science to the Federal Register

It is a long way from Science to the Federal Register, Mencius Moldbug says, but not as far as many think:

Think of this leg of the decision process — from hockey stick to cap-n-trade — as a slow, arduous, but essentially automatic mechanism, like colonic peristalsis. The various political glands in the pipeline, including Public Opinion Itself, can exert resistance, but not insert independent input. They are brakes, but not motors. They can stall the process, but not stop it, and certainly not turn the wheel and do something else instead.

Money is the bubble that doesn't pop

Money is the bubble that doesn't pop, Mencius Moldbug says, as he examines the game theory of central banks and gold reserves:

If you are anyone who has large amounts of money, central banker or no, your goal is to spend that money in a way that does not move the market. Ideally, you would like to buy at a price set by supply and demand (not including you). You would rather not buy at a price set by supply and demand (including you). This is a tricky task in which many are paid much to succeed.

Market-moving purchases — as we'll see later in the program — pose a special challenge to accounting. They create what George Soros calls reflexivity. Standard 14th-century Italian double-entry accounting, while perfect if you are running a bodega, is not capable of handling this matter. Because central bankers are not used to thinking about monetary game theory, and have no idea how to integrate this with their 14th-century accounting, they fail to see the optimal strategy.

The problem that breaks Florentine accounting is: if I drive the market up by buying, how should I value what I just bought? Should I mark it to the market price? If so, I am marking it to supply and demand (including me)? Or should I mark it to the price I could sell it for? If so, I am marking it to supply and demand (not including me). The larger the position, the larger the difference between demand (including me) and demand (not including me).

Suppose, for example, that you have 50 billion dollars, and you use this stash to buy the entire 2008 and 2009 peanut crops. You triple the price of peanut contracts. Congratulations! Your position is now valued at $150 billion. You've made a 200% profit. You've made money just by marking to market. You should be a spammer.

This is called "market manipulation," or more specifically "cornering the market," and it happens to be illegal. But even if it was not illegal, it would be unprofitable, because you cannot generally profit with this strategy — as you sell, you are driving the price back down. Your peanut contracts are valued at $150 billion — but can you get $150 billion for them? You can't buy lunch with peanut contracts.

This is called the burying-the-corpse problem, the corpse being the vast quantity of peanuts that you have bought but don't intend to eat. The accounting profit is indeed a mirage. Unless of course you can bury the corpse — ie, get some other fool to take all those peanuts off your hands, at anything like the inflated price you have created.

There is an easy way to avoid this entire weirdness. Spread it around. Diversify. Don't make market-moving purchases. For the standard large investor, and doubly for the standard central banker, distorting the market with a purchase is considered a rookie mistake.

Thus the old-school CB answer to gold, now just beginning to fade. When asked why a return to the gold standard is impossible, the standard answer is: "there isn't enough gold."

What this means is that the stock of monetary gold is relatively small compared to the number of dollars it would have to absorb, were gold to replace the dollar as the international reserve currency. (Ie, not even considering the awful possibility that ordinary citizens decide to redirect their savings into the yellow dog and 100%-backed instruments, obviating the entire concept of a reserve currency.)

Thus, if CBs buy large quantities of gold, they drive the gold price up. Or more precisely, if they exchange large numbers of dollars for gold, they drive the gold-dollar ratio up. Or at least, so theory predicts. And for once, practice seems to match theory — at least, in China:

“Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not stimulate the market,” he said.

Indeed. Hu Liaoxian is even trying to jawbone the gold market down:

“We must keep in mind the long-term effects when considering what to use as our reserves,” she said. “We must watch out for bubbles forming on certain assets and be careful in those areas.”
[...]
However, officials in Beijing are aware that China’s $2.3 trillion reserves are now so enormous that the central bank cannot buy much gold without distorting the price, so they have adopted a de facto policy of buying in a calibrated fashion each time prices fall back to their rising trend line – “buying the dips” in trading parlance. Experts say that China is putting a floor under the gold price but does not chase rallies once they are under way.

Either Mr. Cheng and Ms. Hu do not understand the game theory of monetary formation — or they do and they are playing it close to the chests. If they — or their colleagues — ever figure out the game, God help the dollar.

When a CB buys gold, four things happen. One: the CB insures itself against the chance of gold remonetization. Two: the chance of gold remonetization increases. Three: the gold price goes up. Four: the buyer looks good, because the assets he bought went up.

How is this different from buying the pound, or buying peanuts? Because the price increase in the pound, or in peanuts, is unsustainable. What goes up has to come back down. For their own different reasons, the pound and peanuts are incapable of absorbing total global monetary demand, and acting as a stable international currency. Therefore, a sophisticated investor of large money avoids generating phantom profits by distorting the market in pounds or peanuts.

With gold, it is different. What goes up can go back down, as it did in the '80s. (In 1980, it looked rather as if gold was to be remonetized. Then Volcker saved the dollar with 20% interest rates. Of course, at the time America was also a net creditor.) But because we know that gold is a viable monetary system, we know that when gold goes up, it does not have to come down. If it doesn't come down, that means gold has been (re-)monetized. Peanuts cannot be monetized — they cannot become arbitrarily expensive. Gold can. Therefore, the decision calculi for gold and peanut purchases are fundamentally different.

The gold price has been increasing at roughly 20% a year since 2001. Perhaps coincidentally, the global dollar supply is diluting at rates not too different from this. Betting on the continuation of this trend is not difficult — one the way to bet on it is to buy gold. Which causes the trend to continue. Reflexivity! The dollar itself is a bubble, held up by the monetary demand for dollars — and the dollar does not appear to be an especially stable currency.

Thus there is an entirely different Nash equilibrium out there — one in which all the central banks dump the dollar for gold. This causes the gold price to skyrocket, creating permanent profits for all the reserve-accumulating central banks.

Don't believe me? Think about it. When remonetization is complete, by definition the CBs will be computing their accounts in gold. Since the price of gold in dollars, under this scenario, is much higher than it is today, it will look like the CB made an enormous profit on the transaction: in exchange for green pieces of paper, now of minimal value, it received good gold. Or it was foolish and held on to the green paper, in which case its bankers are lynched in the street.

This is a self-reinforcing feedback loop. The more gold the CBs buy, the more incentive they have to buy gold. Because if the game ends with gold winning, the game will be scored by how much gold you got for your dollars. This will be a consequence of how soon the CB exchanged its dollars for gold. Devil take the hindmost! A classic panic scenario. A melt-up for gold; a melt-down for the dollar.

In other words, when gold is remonetized, the numerator and denominator on the "gold price" are exchanged. The relevant price is now the "dollar price." What is a dollar worth? How many milligrams of gold can you trade it for? This piece of paper is a financial security, n'est ce pas? Does this security yield gold, own gold, redeem itself for gold, etc? No? If you want it to be worth anything, you might want to change that...

Here is the difference between gold and peanuts. No one will ever ask how many peanuts a dollar is worth, because peanuts will never be a monetary good. For one thing, it is too easy to grow them. Gold can be monetized, and peanuts cannot be monetized, because of fundamental physical differences between gold and peanuts.

Every monetary system is a self-supporting market-manipulation scheme of this type. As Willem Buiter points out, money is the bubble that doesn't pop. In a free market, a currency is stable if and only if the currency is reasonably watertight and does not dilute much. In this panic — the same panic "John Law" anticipated — we see the "dollar bubble" popping, and a new "gold bubble" forming. If someone finds a way to print gold, of course, the gold bubble will pop and some other good will accept its monetary demand — rhodium, perhaps. Or baseball cards.

So, if Cheng Siwei and Hu Xiaolian understood the game theory, they might go ahead and "stimulate the market." China cannot prevent her purchases from stimulating the market. But she can ensure that when she stimulates the market, she stimulates it first — thus getting the best price. And thus ending up with the most gold.

Collectively, the central bankers of the world might agree that they do not want gold to be remonetized. Individually, it is in their interest to defect from this consensus. As the American Century decays, individual motivations tend to become more prominent. You and I are not in a free market — but the central banks are.

And there is another individual motivation that CBs might have for remonetizing. Suppose a large exporter, such as China, which undervalues its currency and runs a large trade surplus as a result, takes a huge radical step and goes all the way to a 100%-reserve gold currency. The ultimate hard currency. If this succeeds, China is the new England — the financial capital of the world, forever. Everyone else's money? In a word: pesos. Hard currency is Chinese currency. China's natural supremacy over the barbarian kingdoms of the West is restored.

Climate science is a Hydra

Climate science is a Hydra, according to Mencius Moldbug:

So here is what will happen to climate science if Mann, Jones, et all go to jail: it will become stronger. Considerably stronger. At least, in the near and medium term.

What happens when you kill the top 20 members of al-Qaeda? Everyone in the top 200 joins the competition to replace them. Decapitation is not an effective attack against a disorganized institution. For every Mann or Jones, there are 10 or 20 ex-students trained by a Mann or Jones. Do not these disciples aspire to their mentors' positions? Damn tooting they do! Moreover, just because they lose their leader, does not mean that leader will be replaced by those who are the most disloyal to him.

In short, any such involuntary circulation of elites will have a notably beneficial effect on the entire movement. The reader of the CRU emails cannot help but fail to notice what was already obvious: as scientific minds, Mike and Phil are most definitely among the second-rate. Why? They are leaders in climate science simply because of their seniority; they got in when paleoclimatology and climate modeling were (as they deserve to be) scientific backwaters; through bureaucratic ruthlessness, they made their field big and powerful.

Therefore, not only do these pioneers have many disciples, but the disciples were attracted to a hot — no pun intended — and growing field. Thus, they are likely to be both more ambitious than their sacrificed former leaders, and more talented. If Mann, Jones et al get the axe and become poison in any position of formal authority, even if they lose their jobs, even if they go to jail, their former students will continue to worship them (and exclude any of their peers who don't).

Are patriotic Americans allowed to learn from the Nazis?

Are patriotic Americans allowed to learn from the Nazis?, Mencius Moldbug asks:

I think that question was more or less answered when NASA shipped the German ICBM program to Alabama. When SS-Sturmbannführer von Braun's spaceship landed on the moon, did patriotic Americans applaud? Or did they shout: "Boo! Hiss! Nazis!" Apollo 11, of course, was not made in underground caves by starving slave laborers. Therefore, it seems that one can copy the things the Nazis did right, and discard the things they did wrong. One can fail in this; one can fail in anything.

America is not the creature it once was

America is not the creature it once was, Mencius Moldbug reminds us:

The 19th-century American was an incredibly politicized, democratically engaged, and — not least — macho and violent creature. It is not surprising that in 1861, when a bunch of states tried to secede, the rest broke out in a paroxysm of enthusiasm for a war to save the Union. (It was certainly not a war to free the slaves — not in 1861, anyway.) If you were teleported into that mania, you would speak the language, but you would feel no other cultural connection to the people. You'd feel more or less as if you'd been sent to an insane asylum.

In 2009, or at any later date, what will happen if a state government tries to secede? So long as it has strong internal public support and the support of the state security forces, it will — secede. Nothing at all will happen. The state will simply become an independent country. Washington simply does not have anything like the political energy to coerce a seceding state. It barely has the political energy to coerce a seceding city. Americans simply are not going to shoot at other Americans for this reason. If this assertion is true, as I believe it is, state police with shotguns can easily thwart the entire US military in a secession situation. The latter simply won't attack. They will not be ordered to. The hate just isn't there.

The idea that any national force could prevent a state from seceding strikes me as rather like the idea that the US will guarantee Israel against Iran's nuclear weapons, by promising nuclear retaliation against Iran if Iran nukes Tel Aviv. Frankly, I don't think the America of today — the America that prohibits its own soldiers from shooting back at the Taliban, if the Taliban are shooting from a house — has the stones to nuke Russia if Russia nukes America (not that it will). The proposition that Washington could or would incinerate millions of Iranians, whatever the Iranian government did to Israel, is ridiculous. It is simply reverse presentism — anachronistic translation of past assumptions to the present. Washington once had an ideology that allowed it to nuke cities for reasons of state, but not now.

Similarly, Washington once had an ideology that allowed it to coerce states, or combinations of states, or even cities, that wanted to be independent. But not now. I would not say the thing is trivial, but any state, or even major coastal city, can almost certainly succeed if it plays its cards right.

I do have to wonder how the federal government would react to a state seceding, because it's hard to remain apathetic with that much tax revenue on the table.

Spontaneous deprogramming

Our modern political structure receives its guidance from the Cathedral of modern academia and respected media outlets like the New York Times, Mencius Moldbug says, but he expects to see more spontaneous deprogramming in the coming years:

Here is the problem: the Modern Structure is complete. The ancien régime is no more. Therefore, it is simply impossible for the progressive movement to generate anything like the energy it generated in the '60s. The whole Obama experience, in particular, is a major downer. But this apathy would be growing anyway. It is just increasingly obvious that the '60s will never be repeated. The logs it burned are ash.

What this means in practice: in practice, for a young person, it is very hard to squeeze any power or status out of the Left. All the institutions of the Left are bureaucratically stable. If you join them, you join them as an intern. If you want to achieve any status through them, you have to suck your way up a very long, greasy pole. It is just not exciting to be a mainstream left-wing activist. The lifestyle is grim and boring. You can be an extreme left-wing activist, like an Earth Firster, which is a little more exciting; but still exudes an ugly flavor of desire and futility.

Young people seek power and status. This is natural. It will always be the case. However, they are young; so they seek not the things that will bring them power now, but the things that will bring them power when they are of age to rule. Not, of course, that this is a conscious strategy; it is more a matter of evolutionary biology. But it still works. The number of former '60s radicals in positions of power today is remarkable.

Thus, it is better to say that young people seek potential power and status. If an elite is open to new talent, they will seek it in that elite. If an elite is not open to new talent, or if the process of entering it excludes much of that talent...

In this case, we see a prerevolutionary condition. The classic case is late 19th-century Russia. Young elites, instead of being attracted to careers in the administrative or clerical arms of the Czarist state, were attracted to revolutionary activism — plotting to replace that regime. They seek a different path to power — not an existing path, but a potential and hypothetical path.

Why? I imagine that, to work and rise in the late Czarist bureaucracy, one had to both swallow and regurgitate some rather stale bagels of the mind. Certainly the literature of the period gives one that impression. Also, Jews were disliked. Rather actively disliked, as a matter of fact. Some of my ancestors left Imperial Russia on account of this nonsense.

The alternative? Communism. Out of the fire, into the frying pan. Or rather — out of the sauna, into the crematorium. Nonetheless, a prerevolutionary condition is a prerevolutionary condition.

The last thing a democratic party wants to do

The rule in conventional democratic politics — followed rigorously for centuries — is to be as broad and vague about your ideals and desires as possible, so as to attract the largest possible base:

Consider the tea parties. What were they about? Their namesake — a thoroughly left-wing phenomenon, a mob of vandals who masked their faces like Hamas to ransack a private business whose only crime was obeying the law? A mood, a feeling, a thought? Maybe an agenda, if a negative agenda counts? No to healthcare reform? But not just no to healthcare reform...

It was, and is, nowhere near clear. No surprise. The more people you get, the more powerful you feel. Unfortunately, if those people are milling about randomly in a "big tent" the size of Nebraska, you have accomplished very little in terms of coordinating support. You have not coordinated anything. All you have is a feeling. If you could get a million people behind some defined objective, you might be able to get that objective to happen.

But if the tea parties were promoting an actual manifesto, they would have had a much harder time recruiting. This would just have been weird. When you involve yourself in something like a tea party, you feel that you are contributing your thoughts, your ideas, your dreams, to a collective movement. This is the experience of conventional democratic politics. The last thing a democratic party wants to do is to crush those dreams, brutally, with its own.

Washingtology

The study of the US government deserves its own department — Washingtology:

Washingtology is an applied discipline, like archaeology. Its mission is simply to study the real Washington. This mission requires no engagement with any of USG's PR arms. Washingtology is not journalism. It is the study of what Washington is and does — never what it says. Unless that speech is in some sense an action.

One of the few systematic mendacities that I see across the entire spectrum of American punditry is the convention of writing as if political actors personally wrote, or believed, their lines. Of course, all these pundits know that the speeches are composed by teams of professional writers. Nonetheless, they invariably report these speeches as if they were actually personal productions. They never say: "Today in St. Louis, President Obama read a White House speech which called for..." They never say: "Today in St. Louis, the White House called for..." They say: "Today in St. Louis, President Obama called for..." This is a classic Orwellian abuse of English.

Wing Commander Pink, the Pashtoon Whisperer

Jane Mayer writes in The New Yorker about The risks of the CIA’s Predator drones and "targeted international killings by the state" — which are, it would appear, totally different from hunting down pirates, killing captured spies, etc.

Mencius Moldbug takes this as an opportunity to mention "a relevant little bit of inconvenient history" — Pink's War:

Jane Mayer, meet Wing Commander Richard Charles Montagu Pink. Which of these people knows more about how to subdue the troublous Pathans? If you wanted to solve the problem, whose advice would you take? And what do ya think Wing Commander Pink would have done with a Predator or two?

He reiterates a point Porphyrogenitus made recently — and goes a few steps further, I suppose:

Reprisal, including reprisal by bombardment, is a perfectly legitimate tactic under classical international law. Moreover, reciprocity holds; the laws of war do not protect those who choose not to observe them. Eg: savage Pathan hill-tribes.

The result is that civilization wins, savagery loses, and wars end. Insurgency is ineffective and basically unknown under these rules, which I suspect would put Margaret [a commenter who called using a Predator drone predatory] out of a job. Instead, people die, and keep dying. And she eats. She is not alone in this.
[...]
You don't even need a pith helmet and a lisp to understand how a civilized nation can subdue and govern savages and barbarians. You can stay on our side of the Atlantic and our century, and look at the US experience in the Philippines or Haiti. You can read any pre-1945 field manual from the US military. PC-COIN basically consists of taking every known axiom about how to solve the problem properly, and reversing it. Instead of constantly demonstrating strength, for instance, it constantly demonstrates weakness. This masquerades as counterintuitive, which masquerades as smart. Indeed, one cannot defend it without being pretty damned smart.

And it's not even the willingness to bomb villages from the air, or whatever, that generates victory. Since we have way better gear than Wing Commander Pink, we can be way more subtle. All that is needed is that USG demonstrate to the Afghan people that it has chosen to rule them by force and without their consent, as a result of their actions in harboring Osama, KSM and their nasty friends. Seal the border, register and tax the population, impose indirect rule. Find some modern equivalent of Lord Cromer to run the whole thing.

Instead, we create the ultimate in passive-aggressive goverment. We whine and wheedle and curtsy before the savage tribe, pay it welfare for its misdeeds, apologize at every possible opportunity. At the same time, we hunt it with Predators. It's like a bad episode of "The Dog Whisperer," with the Pashtoons instead of the dog. Couldn't we get Cesar Millan to run Afghanistan for a while? His skin is about the right color, and he could hardly do worse.

Mencius Moldbug on the Obama prize

Mencius Moldbug on the Obama prize:

To Americans who wonder how anyone could be so tone-deaf as to pull a stunt like this, it has nothing at all to do with the person, Barack Obama. Probably you can blame the Obama White House for not (a) knowing that this was going to happen, and (b) having the sense to prevent it from happening. And the ultimate diagnosis, of course, is American. But today's symptom is most definitely European.

The problem is that Americans, even progressives, are the people in the world who adore Obama the least. Normally it is advantageous, for continuity purposes, that Europeans love Obama. But it is not advantageous that they love him so much. It is weird, distracting and confusing. In short: off message.

This strange European affection is easily explained. You see, there was once an agency named the Office of War Information, which was more or less the pro-Roosevelt press organized as a government agency. OWI no longer exists, but not because it fell from favor; some of its people went to CIA, some went to State, some went back to pretending to be ordinary citizens. OWI is essentially the bureaucratic ancestor of the "mainstream media" as we know it today.

After the unfortunate events of 1941–45, the surviving Continental friends of these gentlemen were organized into a new industry, the official media of Europe. Even in Britain, those loyal to the new military configuration of the planet were praised and petted, and reproduced intellectually; those who were not so sure grew old, had no students, declined and died. Europe is a Darwinian paradise of information, all adapted to military events. You can be sure that had things gone otherwise, the grandchildren of Celine, Brasillach and Drieu la Rochelle would constitute "European public opinion."

So the problem is: Europe is gaga for Obama not because the wise Europeans, with their centuries of history, raw-milk cheeses and infinitely subtle wines, have deliberated long on the subject, gazed into their crystal balls and detected the promise and meaning of Obama. Europe is gaga for Obama because Europe, as we now know it, is a propaganda colony of Washington. The pre-1940 Europe is of historical interest only, like the Aztecs.