Friday, January 30, 2009

Homo Economicus



As if the actual economic news, that is, the actual numbers and facts about the greater/general economy weren't depressing enough, there is the interpretation of said data by the media, business commentators, and political types to contend with. Also, there are myriad policy suggestions being "debated," suggested, passed, and implemented. And through it all, principles have taken their usual back seat.



There are a few main areas where I have some big time bones to pick however. They are 1) capitalism, 2) Keynes vs. supply-siders, 3) "stimulus" packages, and 4) doing "something" vs. doing "nothing."





Capitalism



It is often said in this present recession that a main culprit was capitalism. The argument runs that rapacious, greedy, and unregulated people in the financial markets and elsewhere ran hog wild while erstwhile pro-capitalist regulators appointed by a pro-capitalist president (Bush) gave a nod, a wink, a nudge, and a "say no more!" and then dutifully turned their backs on the resulting "free market" in derivatives or whatever. The remarkable thing is that this narrative is uttered in perfect seriousness and with a straight face. Not only is it as if capitalism ever actually existed in the United States (which at its peak of economic freedom in the 19th century was, at most, highly capitalistic), but it's as if capitalism existed in someone's actual lifetime. Not only that, within the last several years even! And here all of us capitalists were despairing about the mixed economy when we had capitalism all along!

Of course in reality, all this "capitalism is at fault" and "capitalism existed" stuff is non-sense. No sector of the American economy, except the black market, is unregulated. No sector functions without a federal agency and bureaucrats looming over it with regulations, statutes, and people ready to levy fines and penalties whenever legally required to do so. Jail awaits for whatever economic "crimes" are deemed most heinous. I know I felt safer without Martha Stewart prowling the streets. Most of these sections all have State agencies to deal with as well. The notion that the American economy is a free capitalist economy is a subterfuge, accepted even by erstwhile friends of capitalism, foisted by capitalism's enemies. The American economy is, like nearly every economy in the Western world, a mixed economy. It has free, competitive and capitalistic elements, in some cases quite a bit more than other Western economies. It also has closed, public/government, command elements which are anything but capitalism.

To say capitalism is at fault for the current situation is like blaming God for it. Sure, many people believe it exists, but it, in fact, does not. Or there has certainly been no credible proof offered by claimants, for either, that they exist. And that which does not exist cannot properly be blamed for anything. Fannie Mae and Freddie Mac are government created and supported corporations operating under government laws and regulations which required them to do certain things (i.e. lend to high-risk people in order to meet an arbitrary government mandated goal of housing ownership) with the explicit guarantee that if and when the shit hit the fan, i.e. now, the government would merely tax, borrow, and print enough money to cover the losses. This is capitalism? Certainly not. It is merely symptomatic of the return -- a return which began a long time ago -- to the machinations of planners and manipulators that existed in the age before capitalism's tragically brief triumph (to the extend that it had one in the late 18th and early 19th centuries). Colbert, Richelieu, Buckingham, and Raleigh could not have concocted better schemes to use public/private firms to effect arbitrary government goals and policies which then greatly distorted not only the most directly effected markets, but the whole economy as a result. The infamous "South Sea Bubble" was mere child's play.

As the practise of lending to risky people and not imposing a cost for that risk (i.e. much higher interest) is contrary to sound business practise and contrary to reality (for it is certain that many of these loans would never have occurred without government interference) the government set up an affront to reality -- essentially a contradiction. Now, only if incredibly lucky could the government and the rest of us escape the consequences; by which I mean, some how some way, people otherwise deemed bad loan risks would almost to a man actually prove otherwise. Reality is not a kind opponent. Fighting her is, like fighting the collectivist Borg in Star Trek, futile. The contradiction corrected itself and these loans became "toxic;" as in, no one was ever going to be paying them back. The ramifications of hundreds of billions of dollars of these toxic assets, guaranteed by an irresponsible government with the complicit support of its citizens who have never once stood to halt these encroachments, these regulations, these interventions, is now all around us.

Of course banks won't lend whatever money the government gives them. They have learned a painful lesson. Any business being run by people in their right minds ought to be cautious if they survived intact. Financial institutions far-sighted enough to realize this was not a good deal to begin with are certainly not going to suddenly switch from the astute decision making they have thus far shown and begin making a plethora of hasty and ill-timed loans merely because politicians want their voters to stop yelling at them. Until these bad loans work their way out of the system, leaving behind the wreckage of everything and everyone they have consumed, no one should expect "easy" credit nor should they desire banks to continue bad loan practises.

One note here before moving on. Not having access to "easy" credit is not the same as not having access to credit at all. It merely means that the price of money (interest) and the terms of loans will be higher and stricter. This is an expected correction to the mistakes we have just witnessed. The government pumping in money is merely going to delay the return of reality and create more miserable problems in that some of the institutions will not learn the lesson and make more disastrous loans and cause more of these same episodes.


Keynes vs. supply-siders

The prognosticators on "both" sides of the political spectrum seem to only consider two schools of economic "thought." One, associated with liberals and Democrats, and typified by the economic ravings of Paul Krugman is based in the tradition associated with the British economist John Maynard Keynes. Keynes, of course, the guru of the great depression who advocated abandonment of long-term thinking, rejected the gold standard, and promoted "who cares about inflation" government spending as a way to jar an economy back to life, is like a bad penny. He has more lives than "Toonces the Driving Cat;" every time one assumes that Keynesian economics has died finally, there it is again. The "alternative" to Keynesian economics, often associated with conservatives and Republicans, and built around Milton Friedman and Arthur Laffer, advocates manipulation of monetary policy (interest rates, the printing press, etc.) and tax rates to promote economic growth and job creation, while avoiding the alleged inevitability of an unregulated "boom/bust cycle" of capitalism.

These are both simply policy alternatives which embrace the same fundamental principles. If you don't believe that then I suggest you read Rush Limbaugh's laughably absurd editorial from the Wall Street Journal of 29 January 2009. Limbaugh's bipartisan "stimulus" is merely to "spend" the same $900 billion that's currently bandied about for the package on capital hill (see more on this below) but more evenly between President Obama's Keynesian preferences for random government spending on anything and everything and Limbaugh's supply-side preferences for tax rate manipulation. Both approaches are impossible without first accepting the premise that the government has a right to interfere in the economy, expropriate wealth, and redistribute it at will for whatever purpose. Limbaugh's "half" of the package may be more amenable if one is forced to accept one part or another, but he's willing to spend non-existant money, nearly $500 billion, on Obama's stuff while he's at it. He is countenancing, but with slightly different distributions, the premise of having your cake while also eating it. What is the point of cutting taxes while also spending half a trillion dollars you don't have? Taxes will just have to be raised later to pay it back, with interest, and avoid a default crisis.

Notice as well, that while the Democrats in congress and the white house are expounding new regulations and agencies in the package they are proposing, the "alternative" ideas expounded by the Republicans include no regulatory and bureaucratic reductions. You might say that this is because of their minority status -- they need to ask for and get what is realistic. But when they were in complete power of both the law making and law enforcing branches, Republicans still did not do either of these. In fact, they did just as their opponents are doing, just in different areas, or even in the same areas but in different ways. Window dressing never cost so much.

The reason is obvious. While they may dispute which regulations and manipulations are better and which chips should go where, they do not dispute the principles upon which the regulations, manipulations and chip shuffling are based. Keynesians and supply-siders, far from being widely divergent intellectual enemies, are merely different sides of another bad penny. The bitterness between them? No one wants to be on the side facing the pavement.


"Stimulus" Packages

Stimulus packages are the order of the day. Bush had them, a couple of them at various times actually, and under our new regime of perpetual change, we still have them, only bigger. Theoretically, or perhaps more appropriately, rhetorically, a stimulus package is supposed to "stimulate" the economy sort of like hitting a joint in precisely the right way in order to cause the desired reaction. The problem with stimulus packages as they are conceived of in Washington, D.C., and the current one in particular, is that it's not precisely clear what is being stimulated. To say, let's pass a bill to stimulate "the economy" inevitably begs an obvious question: what part of the economy? The government does not have enough resources to "stimulate" the whole economy even if it wanted to do so, and thus the law of scarcity requires choices to be made and for preferences and priorities to be defined. In so doing, squeaky wheels and crying babes inevitably win out, regardless of any actual stimulus effect.

The classic example of the current package is the tens of millions of dollars going to the National Endowment for the Arts. When pressed for the conceivable reason why and the related question of how this will stimulate the economy when hundreds of billions directly to banks and consumers failed is simply, "artists are losing jobs too." I'm still shocked that artists have jobs in the first place considering the state of modern art, but that's beside the point. Anything and everything anyone, in Congress, can think of has made it into the bill. Unemployment benefits are being expanded and extended, which will have the result of keeping people unemployed longer while also increasing the number of unemployed since it's now even more attractive than it had been. Medicaid is being extended from the poor to the unemployed, again, making the latter status even more palatable. State governments are being subsidized so that their poorly planned and deficit-ridden budgets are either greatly ameliorated or even "balanced." Public works projects of every shape and size, which are merely temporary jobs for mostly skilled union workers, litter the bill at every turn. Contraception is funded under the horrific notion that more people cost the government more money in benefits and entitlements and should thus be discouraged. The list is endless and woe unto those brave souls at Citizens Against Government Waste, The Wall Street Journal and elsewhere who are trying to sift through it all.

Actually stimulating the economy? This bill will stimulate statists, collectivists, hippies, acolytes, "artists," and whoever else gets a piece of it, but the economy? No.


Doing "something" vs. doing "nothing"

President Obama and nearly every other talking head, jabbering congressman, and self-proclaimed "expert" bewails the danger of doing "nothing." Of course what they mean by nothing is: not passing any new regulations, stimulus packages, taxes, etc. But not doing those things, of course, is doing something (doing nothing is literally impossible without all of us dieing), just not the something the President and his mob of drones desire.

Many somethings could be done, including the current trading game between tax manipulation and runaway spending. But one could easily imagine a government deciding to wait and see what happened under the previous round of bailouts and legislation, to see if that "worked" before deciding the next response, if any. That would be something.

One could imagine a government deciding to scale itself back to be within itself a little more. To start saving and paying down its debt a little like most of its responsible citizens are currently attempting to do.

And one could dream of a government learning from its many and wide mistakes, and reversing course, deregulating (gradually to avoid chaos) the various sectors of the economy, withdrawing itself from monetary and tax manipulation.......yes, one can dream.

The point here is not that anything other than what is happening now will happen, but that these other alternatives are "something" and not "nothing" as everyone keeps saying. They may not be the "something" you or they support, but to pretend that this current proposed solution is the only one, is ridiculously and maliciously false.

Ironic that in this age of enlightened "change," the old shamelessness of false alternatives, fearful hectoring, and outright deception continue without missing a beat.

Thursday, January 29, 2009

Since I am almost always putting mostly, if not entirely, serious posts on this blog I thought I would digress a little and post something for everybody that I did for another forum. Facebook, a social networking site once reserved for college students and now open to all, has a thing going around inviting people to list 25 random factoids about themselves. Obviously this, while potentially serious, is a way to let people into some of the more personal and bizarre things that differentiate us all, even more than we are already, as individuals. I participated and below are my factoids, enjoy!


1. I stole pieces of the Turkish railroads that T.E. Lawrence and his Arab Legion blew up in the first world war, and no, I'm not returning them to the kingdom.

2. For some reason, probably because I don't think that they are, ipso facto, pure evil, people in college always suspect me of being a Republican. I am not. I do not affiliate with any political party and while being intensely political, modern politics disappoints and disgusts me no matter what letter happens to follow your name.

3. Because I live(d) in Las Vegas for so long people naturally assume I gamble all the time and live in strip clubs. FALSE. I gamble only when people insist on taking me to casinos for that express purpose and I've only ever been to two strip clubs in my entire life, once for a bachelor party and once because some relatives wanted to see one (they were not impressed and left after 10 minutes).

4. A frequent question when people see my room for the first time is "have you read all these books?" A fair question I suppose, but some of the books obviously displayed are dictionaries, who in god's name reads the dictionary? The answer by the way in no, I'd say I've read somewhere in the range of 35-40% of my holdings.

5. What do I consider to be a "turning point" in a relationship for it to become "serious?" Well, saying "I love you" is all well and good, but I'd posit that burping and farting in front of one another and being neither embarrassed nor offended is actually the "big" moment. That's right ladies, now you know what to look forward to.

6. Writing a dissertation is a lot like pursuing a woman, there's lots of careful studying and planning, patience and thought. And in the end it's completely in somebody else's hands. Unless you decide to quit, in which case this analogy is pretty useless.

7. I hate self-deprecation and yet I employ it all the time to defray a constant critique of myself made by others, namely my alleged arrogance. I'd make a new's years resolution about it, but I oppose picking random days to suddenly start altering one's behavior. Besides, it's not my fault I'm better than you! ;)

8. I love 18th and 19th century clothing, if I could wear it all the time, I would.

9. Would I have conspired to kill Caesar on 15 March 44 BC? Yes, yes I would have.

10. So the most exciting thing about coming to graduate school in new england was that I would be in the land of dunkin donuts again. I've been there maybe five times and they've since opened them in Vegas, go figure.

11. Since I'm an atheist I enjoy reading the holy legends of all active religions the same way religious people read the holy tales of the greeks, as myths and legends. So if Jesus came back from the dead, wouldn't that make him a zombie in the parlance of the present? If so, Voodoo and Christianity may become the syncretic super religion the world has been waiting for.

12. When I first became interested in history, I was swept up in the glory that was, or so I thought at the time, Napoleon Bonaparte. Over time I realized this was an error, and now I despise the man with something bordering on the feeling one has for an intimate that has severely betrayed and disappointed them. Bizarre I know.

13. I've only ever seriously kissed two women in my life. I've half seriously kissed countless others.

14. I was so caught up with youthful exuberance as a lad for women's legs that I used to kiss Tina Turner's when her music videos came on TV.

15. I collect busts. That's right, you heard me. Most are still in my room in Las Vegas, but it's a decent collection.

16. At one point in my life I was not fond at all of reading. What turned it around? Young Indiana Jones novels.

17. I never beat the first Super Mario until I was an adult.

18. Which is better, James Bond novels or James Bond movies? The answer is obvious to anyone who has read all the former and seen all the latter. I am such a person and the answer is, without doubt, the novels. The Sean Connery films however are still great.

19. My favorite run of the mill story plotline? Revenge tales, and here I mean a guy who has a legitimate reason to seek it, not some robber who is pissed at his partner for screwing him over or something. Christians may prefer vengeance in the hands of the lord but not I.

20. My favorite city in all the world is Chicago, the home of the world's greatest sports team the Chicago Cubs.

21. So Obama keeps comparing himself to Lincoln, like an ass, but not to the other President from Illinois, U.S. Grant. The Ku Klux Klan Act and the 15th Amendment aren't good enough or something? Oh yeah, something about me, I like Grant and am acerbic!

22. If I could be Vice-President my first goal would be to task NASA with sending me to the moon in order to solidify our territorial claims there. I would just hope there were no tie votes in the Senate!

23. I did not sleep the night before my Ph.D oral exams, and while I started off decently, by the end of the three and a half hours i just wanted to crawl onto the table and go to sleep. Unfortunately I then had to pick up a friend from the airport and then went out to celebrate with friends. The moral here is sleep before your orals, nothing I stayed up studying was a damn bit of help.

24. I am committed in theory to procreating one day, but no time soon, I am temperamentally unfit to raise a child at this time. Sorry ladies, I'll let you know when I can be your baby's daddy :P

25. If I could punch one "intellectual" in the face (assuming it would result in no lasting harm to them or me, and assuming that I suddenly became the sort of person who would do such things) it would without a doubt be Noam Chomsky/Howard Zinn/Gore Vidal/Al Gore. OK, so there is more than one intellectual I would punch in the face and, also, that last one made it in by mistake, Al Gore is by no means an intellectual.

Tuesday, January 27, 2009

Leave Iranian "Terrorist" Organization Alone

Today's Wall Street Journal ran a story today concerning an impending legal challenge to be launched by an Iranian dissident group called "Mujahedin e-Khalq" (MEK). They will be challenging the designation by the State Department under former Secretary of State Rice that they are a terrorist organization. This group has recently won similar lawsuits against the British government and the European Union, much to the dismay of the regime in Tehran and Qom. According to the news article, the group has been charged by the State Department with such "terrorist" acts as assassinating senior Iranian officials and bombing overseas Iranian [diplomatic] missions. The article goes on to say that the group has renounced it's violent past and is more concerned now with bringing outside pressure on the government in charge in Iran. However, even if they were still engaged in the aforesaid activities, the fact that the U.S. government would designate such acts as terrorism merely underlines two related problems with current U.S. strategy in the war. The first is not properly identifying the enemy while the second is prioritizing negotiation and diplomacy with our actual mortal enemies above eliminating them.

Terrorism, by which I mean the use of any tactic designed to strike terror and fear into the civilian population of an enemy, is a tactical approach or even a strategic decision made on the part of a belligerent state or group. To fight a war on it, as such, would be to condemn ourselves and every other country that has ever made the strategic decision to make a war terrible for the civilians of an enemy nation in order to get them to quit/surrender. War, particularly if existential survival is at stake, sanctions all tactics whether we want to admit it or not, so long as those tactics are aimed at bringing the war to a quick and successful conclusion (i.e. punishing the enemy for initiating force or threatening it, and guaranteeing to the extent possible that they never will do so again). Our enemy is not terrorism anymore than it is flanking maneuvers or amphibious landings or paratrooper invasions. Our enemy is the people and states currently employing terrorism to kill and subdue us. They are Islamic radicals and fundamentalists who literally believe that an imaginary super-being commands them to kill those who don't believe in their delusions and martyr themselves if necessary in order to wipe non-believers and enemies of the faith off the earth. As the United States is clearly and obviously the most powerful nation of the western world, the part of humanity which has clearly staked itself (in fits and starts, inconsistent and half-hearted) to advancing humanity, civilization, reason, science and life -- in essence, everything Islam and its fundamental adherents are against -- we are ipso facto their prime enemy. They understand this implicitly and they occasionally identify it explicitly. Western post-modern hubris and self-immolation is so advanced that our so-called intellectuals scoff at this motivation as "simplistic" (as if identifying, let alone hating, the essential characteristics of a competing civilization were a simple and easy task to perform) and instead point to some alleged "imperialism" in our foreign policy as the "real" cause of these people's discontent. This explanation is, for reasons I will not go into in depth here, fraught with historical inaccuracy as well as being logically quite convoluted.

Since our diplomats and leaders cannot properly identify our enemy, and instead have targeted a tactic, every use of said tactic is now illegitimate regardless of context. Now I'm no expert on what MEK's goals are or what they would do with Iran if they somehow toppled the Islamic theocracy in power, but I do know that the current Iranian government is a radical Islamic terror regime par excellence. They have waged an open and deadly war against us from the very inception of the regime and we have responded as lamely and as meekly as anyone could from Carter forward without exception. MEK is a group that has every right, as human beings resorting to their natural right to throw off tyranny and revolt, to assassinate government officials and target its representatives in Iran and elsewhere. To do as the Iranian government wishes and to condemn MEK for waging a war on evil (tyranny and the kind of anti-reason, anti-life policies of the "Islamic Republic of Iran" are about as evil as anything that exists today) is repulsive and reprehensible. I'm not saying we should support this group, but we certainly should not punish them for doing the proper thing in attacking an illegal, oppressive, and tyrannical regime we don't even officially recognize.

Of course, our reason for doing this is to curry some diplomatic points in order to diplomatically dissuade the Iranians from developing a nuclear weapon. Our diplomats and their bosses seriously believe this can work, as seriously as diplomats believed that they could resolve the crisis in the Balkans in 1914 and as seriously as Neville Chamberlain believed he could diplomatically "dissuade" Adolf Hitler. We continue to use diplomacy on a regime that declared war on us thirty years ago. This begs an obvious question: when will we realize they are not screwing around? We need to start taking some lessons from MEK about how to deal with those in charge of Iran and not a moment should be spared in our education. However, all that I've been discussing is leftover Bush policies. His replacement was elected to soften his predecessor's alleged hawkishness and to rely on "diplomacy first." President Obama is unlikely to do anything approaching what is appropriate in this matter without another attack from the Iranians on us or an ally, I just hope too many people do not have to die for his (and his predecessor's) errors and false hope in diplomacy.

Tuesday, January 13, 2009

"Proportional" War is a Prescription for Never-Ending War: Israel vs. Hamas, Hezbollah, Fatah, etc.

As everyone is no doubt used to hearing, every time there is any sort of flare up in the never-ending conflict between Israel and her various enemies, is that Israel's actions are not "proportional." By this it is meant that while Hamas or whomever fires unguided rockets into Israel, possibly killing someone, possibly not, the Israelis retaliate with precision guided bombs and tanks which, while localized, are more deadly than the above rockets and tend to kill targets other than those the Israelis are after (whereas anyone is a target for Hamas, they're just hoping their rockets hit something human and preferably Israeli). Invariably, the shoddy weaponry of a dilapidated organization like Hamas kills fewer Israelis than the high tech firepower the Israelis deploy in response. This, to many of the allegedly educated peoples of the West, somehow constitutes a serious "problem." But questions arise. First, why is it a problem and second, what is the solution if it actually is a problem.

Much of the media coverage, it will be noted, assumes a giant fact not in evidence, principally that the lack of "proportionality" in Israel's response is a problem. That Israel has the power to fight a war where they lose as few as possible of their own people and kill as many as possible of their enemies should be neither surprising, nor should it constitute a problem. It is, ipso facto, the goal of all combatants to achieve this end to the best of their ability. The whole twisted logic of the suicide bomber is bent towards this end, one sacrificial martyr can wipe out hundreds in one fell swoop.

This of course does not mean that there never could be a problem of proportionality in foreign affairs. To suggest a ridiculous example illustrates the point. It would hardly be a properly rational response to hear news of a diplomatic insult and then order a nuclear strike on the offending government. The reason this is not a "proportional" response is that while annoying and even serious, a diplomatic snub of some sort does not constitute the use of force which would be required for a retaliation of any sort, nuclear or otherwise, to be justified. Israel is not reacting out of hand, they are meeting force with force. That Israel is far more wealthy, sophisticated, powerful, and advanced than their enemies is the fault of their enemies, not Israel, and it is their enemies who should pay the price for initiating force against a far superior enemy. The very fact that so few people have died in Gaza, a very small area with over a million people crammed into it, is a testament to just how much tip-toeing the Israeli armed forces are doing considering the wholesale destruction they are easily capable of. If a people or government abhors the results of war as we are led to believe the Palestinians do, they have a curious way of always provoking conflict.

Let us pretend for a moment that this "proportional" critique is legitimate. What is the solution? So Hamas plans to fire rockets into Israel. What does a "proportional" response entail? Must it be equal? Should the Israeli's forget that they have precision guided munitions and instead construct the inferior arms of their enemies to use against them? How would Israel firing unguided rockets into Gaza help this situation? Both sides would just be randomly bombing each other's civilian populations ad nauseum. When would it end? Has it ended so far?

The Israeli's have only ever achieved progress with their neighbors by beating them in war, thoroughly, and gaining recognition and respect that all the western diplomatic pressure in the world could not achieve. In every effort they have made where they restrain themselves and accept the notions that they, even while being attacked, would be in the wrong responding in whichever way they choose to minimize their own casualties and maximise those of their enemies, they have found themselves the losers. One only need think back to the operation against Hezbollah in Lebanon where this bleating whine of "proportionality" actually produced a retreat by the Israeli army before an inferior force. The conflict has been never-ending because the Israeli's never deal with it forcefully enough or because when they try the international diplomats step in to stop them, though the important player their is the United States. Every President since Nixon has thwarted moves and initiatives by the Israeli's to deal with its existential threats by threatening to halt arms shipments. It's a shame that we should do so unless we have some sort of interest at stake which would be harmed by Israel winning. If so, what is it? I have heard of none whatsoever, but I will keep my eyes and ears open for when it suddenly materializes.

In the meantime I will continue to hope that people realize that the only way to end a war is to make it so terrible for one's enemy that they either decide to quit or they die in it, not by playing a ceaseless game of tit for tat. No war ever ended that way and no war ever will.