Tuesday, June 18, 2013

Defending the One Percent... Poorly

I guess this had to happen. At a time when income inequality is back on the table for discussion, economist M. Greg Mankiw, author of a couple of well-known beginner's economics textbooks, decided to write a paper defending the reviled "1%".

There aren't many surprises here. The notion of there being a trade-off between equality and efficiency is very old and I've addressed it myself; Mankiw chooses Pareto efficiency, like any other fairly conservative economist, as a starting point for distributive justice. He references Stiglitz' work on equality of opportunity, and paints it as a legitimate goal before pointing out that it's basically impossible because of both tangible factors like IQ and intangible ones like behavior of parents in the household.

The beginning analogy, which he writes as if it's revolutionary, is a direct copy of Nozick's Chamberlain Argument as applied to well known contemporary names like Jobs, Spielberg, and JK Rowling. And yet, he doesn't mention Nozick at all, despite later bringing up Nozick's arch-competitor, John Rawls. Why? Possibly because he doesn't want to remind the reader that his argument is less original than a paint-by-number portrait of a sailboat.

Naturally, plenty of people aren't buying this. A featured comment at The Economist points out a number of problems with the paper from a perspective more sympathetic to Rawls and without the parroting of Nozick; this seems to be the standard response from those on the left. But a particular irritant of the entire business to me is the constant referencing from both commentators like this one, and from Mankiw in his paper, about "just desserts".

We know this idea intuitively: you earned what you have because of your contribution to society. Mankiw thinks the markets reflect this. The left thinks it's a crock of shit. (also on that page: CEO's that look like movie villains! Gotta love the Huffington Post.)

This is one reason I was on the left for so many years. The just desserts concept is garbage.

You know perfectly well that you did not choose the circumstances you grew up in, the upbringing you got, the genes you inherited, the experiences you lived through. The "distribution" of all these things both makes us who we are and is completely arbitrary, lacking in metaphysical justification. We are products of circumstance. That doesn't affect the reality of the equality-efficiency trade-off or the need to legitimize a hierarchy to preserve order and get shit done, but it makes for a tremendous propaganda line to get people riled up about how they aren't getting "what they deserve".

Here's the thing, though. Just because our place in the world stems from arbitrary circumstance doesn't mean that it implies egalitarian wealth distribution or some other institutional policy is in order to ease people's pain. Nihilism doesn't imply anything. If we're talking helping people who are in a bad spot as a matter of personal ethical principle, institutionalizing help just depersonalizes the entire experience of altruism. That altruism has value precisely because it was a choice, not because it was a gun-to-the-head requirement of a mob-rule government. The people who say differently have chosen to place their preferred institution - government - above the institutions built on consent, like business, religion, and family. They've chosen populism over individual rights... when it suits their purposes. It's a power grab, and nothing more. In the big scheme, there are no "just desserts", and manipulating that concept is equally disingenuous on both sides.

A Better Defense

The liberal perspective is the one related to social justice ideas. The anchor for these ideas has been driving egalitarians for years: the economy exists to create maximum utility for all involved, and the benefit of an extra dollar of income for those making very little is much greater than for those with serious wealth. From the Rawlsian "original position", this is intuitively fair.

We need not discuss how ad-hoc and deceptively unimaginative the Rawlsian original position is. Basically, it's an endorsement for government by empathy, and therefore, government with equality as a perpetual goal; there is no built-in limit of how far you can take redistribution for the sake of people's utility. Rawls didn't say that, but that's how it works out when you place things like "self-esteem" as entitlements your culture owes you; the wealth gap can shrink to a fraction of what it is now, and still, that CEO earning twice your fast food income might just make you feel bad about yourself.

And that has to be an issue here, because this debate features some of the worst elements of relativism on both sides. I can say with confidence is that the American people are not getting ripped off by the private sector in their economy. The vast bulk of this country's population, including those in low-level occupations, can afford a home of some kind with power, running and heated water, HVAC, plush carpet and plusher beds; they can afford two cars with insurance; they can afford to frequently eat out two meals a day; they can afford Starbucks lattes and two dollar bottled water, web-connected iPhones and clothing that costs 200% more than comparable stuff because of the name on the label. They waste enough to keep the storage unit industry, a business made up largely of storing crap people buy and don't use, earning $22 billion annually. Think about all the places this money could be going, but isn't. Meanwhile, they expect someone else, employer or government, to handle their education, healthcare, and retirement expenses as a matter of living in a civilized country. The recession hasn't affected this very much that I can see.

The 1% typically invest their money into new industries, and that's a standard feature of a capitalist system. They aren't doing it now because spending is down. If the idea here is to boost spending through redistribution using Keynesian logic, and supposedly kick off a recovery, then we've tried it already. The price tag was $787 billion dollars. The liberals complained that it wasn't enough. Sorry, I'm not shedding any tears about the government not having enough economic influence. But the upside of our increasing taxes and stinginess with government money is that we've made progress in trimming this year's projected deficit to just $744 billion. If there's a reason to raise taxes, that's it. I don't really object to more taxes on the rich; the actual number is also arbitrary and people get used to it, whatever it is. But I object to the leftist thinking used to justify changing it.

The real reason why the distribution of wealth isn't "unjust" is much simpler and much more devastating and it will never sell. It's because justice is subjective, and we are not supposed to impose self-serving, subjective viewpoints on individuals here, as a matter of the system's philosophical consistency. This country's entire legal structure is based on individualism. Markets are the way our economy creates wealth, and markets operate individualistically. Whether or not it's "just" for people to get out of the markets what they can is irrelevant so long as they do so under conditions of consent.

The justice question will always come down to the personal opinion of whoever you ask, and that gets really messy, really quick. Your opinion can be affected by whether you grew up in LA or Kentucky, by whether your third cousin got laid off last week, by your decision to skip breakfast this morning. It's just a personal opinion; you wouldn't know enough about these people to determine what they deserve, even if you had a consistent ideal. The government doesn't exist to serve your personal opinions. It exists to preserve order, and everything else is a matter of convincing people to take action within the context of consent. If people wanted to take money away from the 1%, they should organize and stop buying the wares that the wealthy are peddling; if they can't stop, then it's time to accept that they've been bought and paid for, or that the system is working. Every purchase is a stamp of approval on what that business is doing.

Liberals hate this kind of individualism, which they consider an excuse to not care about people. But when the conversation shifts from economic policy to social policy, that goes right out the window. The family can get burned to the ground to give women more social power, and the losers in this situation are told "tough shit". Religion can get beaten into submission by secularism, undermining the value of religion in culture and probably dooming it in the long run while implicitly encouraging the ostracism of its followers, and they think they're doing the world a favor while destroying not only centuries of tradition, but a huge part of the basis for community identity. Old people can rot in nursing homes, as long as they get their fucking Medicare; no one, including their children, has to treat them with respect, as the prevailing culture of raw narcissism undermines the values of the elderly at a rapid pace. You can believe what you want, say what you want, fuck who you want, speak out against everything, no matter who it offends or alienates. Individual obligations to others have gotten no help from liberalism.

Only by looking at "caring about people" as a matter of giving them comfort and material possession, the most vapid possible definition of care imaginable, can liberals square this circle. They have to become hedonistic nihilists, allowing a culture of pure permissiveness out of a sense of compassion, in order to "do the right thing" here. The right thing is, invariably: prop up the weak, attack the strong, burn your traditions, abandon cultural identity, let everyone do what they want.

Liberal social policy is ALL ABOUT creating a totally individualistic society. It's ALL ABOUT protecting the most repugnant people from criticism and picking winners as a matter of attention span rent-seeking from media and education institutions. Liberal social policy has enabled more people to look at their society's values and tell it to go fuck itself than any other force in American history. So explain to me why I should give a shit, why I should be required to give a shit, about some people's subjective understanding of what constitutes "social justice" in the economy, by all means.

Having said all this, I wish Mankiw would have kept his mouth shut. In the game of public relations, hierarchy simply loses today and nothing this twit has said will make the slightest difference to that. In fact, by saying his little peace, he's thrown gasoline on the liberal self-righteousness fire, giving them something to point to and scream about. From a strategic perspective, it's stupid and counterproductive.

Mankiw's an idiot, although his ideas can be hilarious. That guy writing at the Economist was right: the 1% needs better defenders. ANY other defenders would do, really.

Thursday, June 13, 2013

Two Stories: The Graduate and Family

I spend most of my blog space writing about Western culture, but here and there, I manage to post something about Japan or China, as I'm just as fascinated with the East. I'm going to do a simple comparison of two stories the Western and Eastern cultures have produced at times of upheaval.

Both stories highlight the perceived failures of the past order and the uncertainty and newness of the breakout generation in terms of personal struggle. The American book is The Graduate, by Charles Webb, which was turned into an extremely beloved movie starring Dustin Hoffman. The Chinese book will be Family, by Pa Chin, which I had the good fortune of being introduced to in a class on contemporary east Asian history, otherwise I may never have heard of it.

The Graduate

The plot and purpose of The Graduate revolves around the main character, Ben Braddock, and his struggles to build his life in the face of his traditionalist family's expectations. It's a celebrated work of the American counterculture movement in the 1960's. The movie launched Hoffman's career and the Simon and Garfunkel soundtrack turned the name Mrs. Robinson into something... weird.

The plot serves the interest of describing a state of mind that's reacting to the old ways. Ben, for those of you who haven't read the book, is a recent college graduate who goes home to discover that he has little in common with his family and hometown friends, and doesn't want the life he's being offered by them. He is pulled into an affair with the vaunted Mrs. Robinson, who is extremely unsatisfied with her marriage and really her entire life. Ben doesn't like sleeping with her, and decides he wants her daughter, Elaine, which creates some heavy drama. All these characters are, in some sense, looking for authentic, existential meaning. Ben is essentially being offered the blue-blooded dream, to include social connections and a place among the kind of people who were then still America's elite. He has opportunity, by the conventions of the time, but he doesn't like those conventions and wants something different for himself.

A couple of points to make from a more recent perspective. First, a recent college graduate might look at Ben with envy just for having any comfortable opportunities; graduates today, particularly undergraduates, don't always get jobs of any kind, let alone jobs they are passionate about. So that perspective gets an update, although there's still plenty of entitlement in today's kids. Also, for those who haven't read the book and have only seen the movie, Hoffman does miracles with Ben's character, because the guy is a flat-out douchebag in the book. He's too much of a prick to even bother trying to justify his disinterest in meeting the family friends in the book's opening scene, where they've thrown him a party; he just wants to be alone with his emptiness, and he feels no sense of obligation to go down and thank all these people for coming and wishing him well. Hoffman makes Ben polite and concerned to a much greater degree, and it helps that he is an approachable, Jewish-looking kid in the film. Ben was actually written as a tall Aryan; this would not have worked in the film, as movie-going audiences don't really like entitled, blue-blooded Aryan assholes. Hoffman softened this considerably and made the character empathetic and likable.

The movie is, quite simply, better than the book as a matter of consumer entertainment. David Fincher used it as inspiration for the movie version of Fight Club, which is my favorite film and makes for an interesting contrast. Existential authenticity is basically its own genre now: the great period for films of this nature in my memory was 1999, the year of three highly anti-establishment films that entered the pop culture lexicon with distinct force. The first was, of course, Fight Club. The other two were American Beauty and The Matrix, the first a deconstruction of the new establishment lifestyle in the suburbs in search of meaning, and the second a pure escapist fantasy which presented the mundane as a trap, built by machines, sucking the energy from the populace as awakened freedom fighters kicked ass in the most stylish possible way.

These movies came less than forty years after The Graduate, and turned the seeker mentality up to eleven. American establishments don't last long. The anti-establishment ethos of the baby boomers never did vanish or get comfortable with order. It's worth mentioning that 1999 was the peak of dotcom hubris and of the net generation's power in earnings and culture.

David Brooks pointed out how much of the boomer attitude can be found in The Graduate when he wrote Bobos in Paradise: whatever that generation wanted, it wasn't what was being offered. There was a deep loathing of family obligation and ancestor worship, ordered patriarchy, the soft prejudices of the time, and various forms of stoic restraint heaped onto America's hierarchical masters. This was a generation seeking a more existential satisfaction from work, relationships, and life generally. The movie's ending scene, with Mrs. Robinson telling her daughter, "It's too late!" and Elaine responding with "Not for me!" tells much of the thematic story: the kids saw the old world as oppressive death, and would walk away from their elders to save themselves from it.


The plot and purpose of Family revolves very loosely around the main character, Kao Chueh-hui, and his struggles to build his life in the face of his traditionalist family's expectations. It's a celebrated work of the May 4th Movement in China, although it's unknown to the vast majority of Americans. There is a long list of characters, including Chueh-hui's two brothers, a couple of cousins, servants, mom and patriarchal dad, etcetera. Pa Chin was a radical who was influenced by Western ideas quite strongly, a great speaker for a society squirming upon the introduction of different perspectives.

The similarities outweigh the differences, but the differences are instructive. The characters in Family also held a deep loathing of family obligation and ancestor worship, ordered patriarchy, the hard prejudices of the time, and various forms of stoic restraint heaped onto both China's patriarchs and those subject to them. Family is a classic and a more complete book, and the attitude is different, but still recognizable.

It's incredibly emotional writing; you'll eventually lose track of all the characters that break down and cry, and there are several deaths, including by passion-maddened suicide. But much of the plotting is about issues we know very well; young love abounds and the oppression of the old on the young, the "traps of conservatism", are shown in the lives of essentially every character. Chueh-hui, the most rebellious and aggressive proponent of the new ideas, saves himself while other family members typically fall into the traps or die trying to escape them.

Chueh-hui is something of a little bastard, smart-mouthed, having all the answers at a very young age. The character is not exactly stock, but fits well enough into a mold that he makes a good contrast against his eldest brother, Chueh-hsin, who took on the duties of filial piety and hates them, but lives with his head bowed. Chueh-hsin's fate is sealed, but other characters occasionally fight back, or try to find various ways to scheme the lives they want into existence.

The book exemplifies the period when the first elements of Western-style individualism come into vogue over the established, familistic Confucianism, and there's a huge gulf to bridge. Restrictions and obligations are far more severe here: arranged marriage tragically befalls several characters, the girls want to go to school but cannot, and class holds an importance we simply would not understand in our society. The young characters all hold strong ideals, and the conflicts between them and their elders is fundamentally cultural but intimately personal. The imagery is superb when it needs to be: hearing of her own impending marriage from her mother, a female character, Chin, produces a startlingly powerful vision of her society's treatment of her sex and the cost in happiness women pay for tradition:
Before her eyes there suddenly appeared a lengthy highway stretching to infinity, upon which were lain spreading corpses of young women. It became clear to her that this road was built thousands of years ago; the earth on the road was saturated with the blood and tears of those women.
Chin seriously considers allowing herself to end up on this road, with her mother, just to keep her company, and while there's no shortage of strident disgust with the status quo in this book, there's also no shortage of love for the elders who push the cultural rules that are so hated. It's both strident and complex. The excesses of Confucianism, especially in regards to women, are not exaggerated. Foot-binding is contemporary to this period, as is practical slavery for many people, albeit not quite the cruel and base slavery practiced in the ugliest Western periods. My continued respect for Confucian values can't make an emotional argument in the face of this, only a coldly rational one; such views will never be popular in a world of mass media.

Final Summation

Both stories center on wealthy households, true to the life experiences of the authors and symbolic of the richness of the old culture they fight. Both stories happen at a time of significant cultural change. Both stories have characters caught in generational struggles and celebrate the ideals of youth. They're both good stories, in a significant but limited sense.

Compared to the story of Family, the struggles of the characters in The Graduate are more abstract and less convincing. "Spoiled" doesn't quite cover it; there's a real degree of thanklessness and the worst case examples of relativity in quality of life operating in the West. If you think of social progress as being incremental stages towards equality and ease, then it's easy to think of the state of Western culture as superior to that of China; the time difference, 1920's versus 1960's, doesn't account for it all. If you think of social progress as being more about ultimate meaning, then the crisis is deeper in the West, precisely for the pitfalls of ease which are being overcome on the road towards satisfaction. The Americans have so much, and the price paid is rather miniscule; fighting it can only be done as a matter of pure intuition.

The Chinese characters are bound by a unified love of new ideas that create some shared identity among them; they are rebels with a cause. In the West, the characters are isolated; they are facing, and participating in, something much uglier, a more total collapse of outward-focused duties and obligations of inherited civil society.

About the authors: it's worth mentioning that both men held strong convictions and seemed to have stuck by them where they could. Charles Webb, clearly seeking his own brand of authenticity, has lived a hell of a life, to say the least, not at all the charmed success story you would expect from the author of a book that became a film with serious box-office revenue. But nevertheless, he's owned his life, denying responsibility for nothing. His existence has been an almost goofy mess, but it's been his mess.

Pa Chin was an anarchist, and his personal story is intense. His real name was Li Yaotang, and he lived to be 100, with a generous portion of those years spent being harassed by the Communist Chinese government. His wife was denied medical care and died as a result. Yaotang was forced to renounce his anarchism, then changed his mind when China opened up just enough for this to be safe. He was eventually given some dues as an elder statesman of the written word by his people. The man saw some shit, most of it after the book was published.

As a personal matter, I admire both works and the men who created them. And I understand: I've lived with my own stultifying expectations. Of course I understand. I've been young before. I've wanted to break out. I've been certain that there was more, much more, than a life lived within the confines of my culture; that's an important justifying element of rebellion. But I've also considered that I could be wrong about all of it, that this urge to throw off the shackles comes from nothing more than my own deep-seated desire for empowerment, and there's nothing more noble to it than egoism. The attitudes of the sympathetic characters in both of these books comes down to a myopic emotionalism masquerading as enlightenment.

Digging deep and being realistic leaves you with the sour reality that this is not a complete social ethos and cannot be. The hippies were wrong; existentialism can only be a reaction, not a status quo. The characters in both books were optimists, as kids often are; such an attitude makes a character engaging, relatable, and promises endearing conflict, great for fiction and real-world activism alike. But likable and enlightened are two different things.

It's hard to tell, with both books, if the underlying ideal is the choice of love or the love of choice. The choice of love is taken for granted by modern generations who know they should pursue their desires in matters of relationships and career, and the joblessness and divorce of modern America has to give a sensible person some pause as the ideas spread to the rest of the world. The love of choice is so core to what we consider morally and personally right that it's impossible for most people to imagine a world without it, let alone a good life.

But the struggle defines the individual, and these stories are not of high quality because they have happy endings; that's a disgustingly bourgeois idea. These stories are tragedies, and they can only belong in that category. 

Monday, June 10, 2013


Your birth certificate is proof of guilt.   -George Carlin
It will not surprise anyone who frequents this blog to know that I don't think much of the concept of innocence. It may be slightly more surprising to know that my distaste for the concept is fairly new. I didn't realize that innocence was a problematic concept until about a couple of years ago.

Up until that point, innocence had little grand meaning for me; it was merely the word describing a state of affairs in which someone was accused of something that they did not do, a legal definition. You could be innocent of walking the dog in the morning, meaning that you simply didn't do it. Whether or not this was a good thing would be totally circumstantial and subjective. Such an attitude reflects my own understanding of justice: there's nothing metaphysical to it, no objective good and evil, just positive and negative action when viewed through a lens of a culture's values.

I was unaware of how radically different my perspective was from the perspective of so many others. I'm not at all convinced now that I should be the one to change my view, either.

Inactive Ideals

Innocence is a moral ideal, and core to innocence is not doing. Consider an image you have in your head of someone who is innocent by nature. The innocent are not aggressive, do not pursue whatever pridefulness or vices characterize many other people. They're just living and not doing anyone any harm. They do not play the dirty games of the real world. They might work but they are not the boss. They might love, but they are not jealous or possessive or cunning in any way. They are the embodiment of the most generous possible interpretation of what normal people are. They live by faith, if not in God, then in other people. They don't break out of the mold, but go with it, doing what they're supposed to be doing. They are perpetual bystanders.

They do not know much; in fact, ignorance is very much bliss from this vantage point, distinguishable from naivete only by the inclinations of the viewer. They are normal and relatable enough to apply for credit cards and take out mortgages, but in our recent financial chaos, few would characterize those who over-leveraged themselves as guilty of anything. They simply weren't financially savvy enough to protect themselves by knowing about contracts and risk and bubbles. That actually looks good, that they were dumb on the subject. It draws out pity. These are the kind of people that might stroll into the wrong side of town, then are shocked when they realize that's someone might mug them. They use drugs, but lack the strength to get off them when the shit screws up their life. They key is, they were manipulated, misled, trusted too easily. This kind of stupidity is what legislators and preachers of social justice want to protect. The innocent deserve support, don't they? Don't people deserve to be able to live without fear? Can't people be carefree?

The dependency of the innocent on the proactive guilty defines both groups. If you aren't watching your back and being at least a little suspicious of other people, you're an easy target; someone must help you. So those who subscribe to an innocence-heavy ethical system but still want to lead interesting lives with some sense of purpose often end up trying to valorize themselves as the shield-bearers to the downtrodden. Law enforcement officials, parents, activists, regulatory agency bureaucrats, lawyers, spokespeople of various types all seem to really enjoy the notion of being defenders of innocent people. This is deep in the nature of what we call "idealism".

The perception of innocence draws empathy with intense, religious fervor.

It's defending innocence that's the obsession, not being innocent. Almost no one sees themselves as being innocent until they're accused of something that could be problematic for them, and even then, they're more inclined to justify it instead of disowning the action outright. Being innocent can be incredibly boring, so while we idolize it, we do not pursue it. Despite our protestations of corrupting the innocent, we prefer to be the rough-but-noble fighter in their stead. There's an interesting pathos of distance going on here: the innocent person is an image with little connection to reality, as often the people who are held up as innocent victims are in fact much more like us than we think. They are aware of how the world works, they can understand risk and responsibility, and they take chances. They'll take help when it's offered, and can even come to expect it. But they are not who their supporters make them out to be.

You can tell someone balls-deep in this ethic by their constantly emotional portrayal of innocent people. They will portray a victim group as helpless every opportunity they get, and use this portrayal to empower themselves. It isn't cynical; they believe in what they're doing as much as the next guy. But they are more likely to be heroes in their own heads, whose contributions are crucial and required, than to see helping people as a matter of respectful mutual exchange. They need a needy recipient for their efforts. That's what they live for, and a world filled with more "innocent" people is practically their definition of progress.



The most obvious example of this innocence worship is the attitude so many people have towards children. There continues to be a perception that small children, uncorrupted by the greed and avarice of the world, are exemplars of innocence and that grown-ups should yearn to be more like them, with their awed and harmless wonder opposing the rapacious activities of the adult world. Kids are supposedly never bad; they're just made that way by adults.

This is ridiculous. First of all, the bullying issue gives lie to this thesis, and there seems to be no clear pattern of adult behavior that prods children into becoming little bastards. One popular way of explaining this has been finger-pointing violent video games, which turns out to be a bust. With violence, genetics are relevant, a result of uneven domestication of the human populace.

Some people need to be reminded something here: little kids are often bossy, aggressive, totally self-absorbed creatures. They see the world their way: they want things, they cry for them, they hit, they grab, they are exhausting. They're little bastards, with no natural sense of concern for the welfare of others out of the womb; that's something that gets trained into them by adults. One dad created an interesting way of showing this: having a grown man portray his 2 year old daughter in a series of viral Youtube videos.

Innocence, here, is a very intuitive thing, a perception mostly shallow in its realization. Little kids fit the superficial mold because they are so obviously harmless; when they get bigger, they're terrifying. England in particular seems to experience paedophobia or ephebiphobia as a cultural trend. Check out the "Mosquito" device; kinda neat, like a teen punk dog whistle.

That Guardian article, of course, finger-points the adults for not being tolerant enough of the children, as if they were fully developed human beings who just need love and unquestioning respect from their elders to be be good citizens. The cry of children being little bastards is incredibly old, of course, but in the past, the ways of civil society handled it with heavy doses of reality. When kids get older, they have real problems and must adapt to adult challenges. Now, we seem to think that the challenges are the problem, and what they need is greater support. Maybe it's a defensive reaction: in a culture that has lambasted fathers like Western society has, lots of people should be expected to refuse the idea that what children need is a father's discipline and authority, or to take on the responsibility of being fathers themselves. But we would never admit such a thing.

Now, don't get it twisted: I actually like kids and get along famously with them. But I'm not very protective of them and I have no problem telling them when they're doing something stupid. I'll swat one on the butt occasionally. Some parents like this about me, some parents don't. But whatever: I'm pretty sure it's helping them more than hurting them. They aren't delicate. Regarding the "tiger mom" controversy, I would identify as being more pro-authority than pro-fawning, and decent cases have been made for both approaches despite a media that can't shut up about self-esteem.

Kids are undeveloped. They don't come from the factory with perfect settings. The attachment to the notion of innocence today sometimes seems to have gone so far that parents won't develop them. Evidently, we're stifling children, refusing to let them bloom however they like, painting them as victims. Is there any place here for an expectation that these innocent little kids learn to deal with the world instead of constantly trying to remake in to their desires? This is a cultural problem that's more prevalent in the West than elsewhere, so can you really separate it from the moral heritage of this society?

The Christian Influence

The reason it took me so long to come around to the importance of innocence is because I hadn't come around to how deeply Christianity affected our moral worldview. When I read Nietzsche early on, his blatherings about Judeo-Christian ethics didn't seem to be all he made it out to be. I saw morality as being, in a roundabout way, rational self-interest.

But the cultural dominance of Judeo-Christian moral ideas becomes all too obvious after you really start to look at all we do morally and figure out why in rational terms. Until you do, it's one of those things that's so obvious and omnipresent that you never notice it. Judeo-Christian ethics remind me of the Taoist story of two fish talking to one another, and one asks, "What is this 'ocean' I keep hearing about?"

In the years prior, I did not understand that a scientifically enlightened society could view aggression as something freakish, despite its obvious evolutionary value in any but the most controlled circumstances.

I did not understand that people had such deep issues with empowerment, simultaneously hating it and being obsessed with it.

I did not understand that so many people saw their moral outlook as Natural Law universal.

I did not understand, at the time, that "good versus evil" was something so many people took so seriously. I thought the dichotomy was a narrative device, a storytelling mechanism that reinforced society's conventions as to what cultural trendsetters thought people should do. I thought people saw this.

I was kind of oblivious back then. And I had a lot more faith in the intelligence of people. Now... well...

Today, stupid people can call anything they want good or evil, innocent or guilty, and their pronouncements just enter the propaganda stream of culture with no vetting. Whether people buy it has to do with the design of the packaging; there's no standards.

It's one thing to say that your ways are better than the other guy's, and quite another to say that the other guy's ways are evil. Innocence is a core concept in the kind of mentality that breeds stridency, crusades, and a false faith in a form of legitimacy that somehow reaches beyond the realities of power in this world. The cause of defending the innocent adds to that power, fuels it, feeds into the mythos of righteousness that prop up the stupid with their own unwarranted egotism.

It isn't an insult to religion that people take some of its ideas too seriously. It's a credit to religion that it has a history of putting an individualistic society on the same moral page. But the very context of the concept of innocence requires institutional control, with the regulation of some kind of ideological supervision; it's too easy and too risky to use it with no rational grounding at all, no sense for consequences. Of course, supervising moral ideas is antithetical to modern moral ideas, but that's in the nature of innocence, too: the powerful are not innocent and therefore not good. We might end up paying for such ridiculous ideas for a long, long time yet.

Sunday, June 2, 2013

Inflation 2: The Necessity of Growth

They be like, "Oh, that Gucci, that's hella tight,"
I'm like, "Yo, that's fifty dollars for a T-shirt ."
 -Macklemore, Thrift Shop

This is an expansion on the Inflation and Hierarchy post. To get an understanding of the situation, I think additional investigation of the tactic of "growthsmanship" will be needed.

If you want a good perspective on why growth has been so popular in economic policy talk, one good place to start would be Robert Collins' book on the subject, which specifically addresses growth policy in the contemporary American context. The point is straightforward: pro-growth policy has been a stalwart platform of both parties since World War 2, with Keynesian demand-side policy characterizing the Democrats. Republicans were restrained Keynesians up until Reagan, when neo-classical economics started to make a comeback and growth was encouraged from the supply side. Voters simply have no interest in policies that restrain consumption in any way.

Beyond this, both the problems and the virtues of growth economics have been interestingly stated for public consumption. Democrats have had the pleasant advantage of using Keynesianism in league with environmentalism as a policy matter, and a different post will address this. Suffice it to say, I am pro-environmentalism but not in the Democratic sense. Quite the opposite, I don't think democratic politics and environmentalism mix well at all, even if you discard the conventional party platforms.

The Mechanics

When I was talking about Bitcoin a while back, I mentioned that growth economics and currency held some relationship, and that relationship is fairly easy to define. Strong economic growth requires increases in the money supply, or at least, it significantly benefits from it.

With an inflationary currency - assuming the inflation is stable - the incentives for investors line up towards using their money instead of saving it. The concept is simple: inflation means that dollars buy less, so in order to keep your dollars from buying less, you have to invest them. Preferably, investors use it to create businesses that profit at a rate higher than the rate of inflation, and will create jobs in the process. Sometimes it doesn't work out that way, but that's the general idea. This isn't a political salesmanship idea; the trend is well-documented. In the 16th century, the volume of gold coming in from the New World via Spain helped lead to significant growth. Prices rose by a factor of four over the century, which isn't nearly as inflationary as it seems, given that we're talking about a hundred frickin' years. And in the process, the economy expanded quite nicely.

Now, assume that you have a slower-growing currency. Because money is more valuable and can be expected to stay more valuable, people are more inclined to hide the money in a Mason jar buried in the yard for a rainy day. Good for them, not so good for everyone else; a slower rate of exchange is bound to happen. People spend less. There's less economic growth. We want expansion, dammit!

Now, one of the criticisms of Bitcoin is that the slow growth of the currency would stifle economic growth in this manner. Similar things have been said about the gold standard. 

This doesn't mean that growth stops, but banking mechanics create some problems here. Assuming a hard currency, banks loan out money while keeping less of it on hand than they say they have; it's in the process, a risk that banks take based on the predictability of the demand for money at their bank and the expectations about economic growth. It's a confidence game. In good times, banks hold little reserves and loan out with some enthusiasm, regardless of the nature of the currency. But if the loans fail, or if the customers make a "run on the bank" and demand all or most of their deposits be returned to them, then you get panics and collapse. The result is a tendency for economic fluctuation, aka the boom-and-bust business cycle. 

Crashes generally create deflation; prices drop as businesses become more desperate to sell their inventory to more reticent consumers, trying to stay afloat. Deflation exacerbates the cycle. With a fiat currency like we have now, one where the banking system can print more money in case hell comes to pass, there is a bit more control.

You can look at this situation and ask the obvious question: why the hell don't we just try some other way to restrain the business cycle, other than killing the value of currency? Does nothing else work?

Well, we don't really know, but probably not. Society's attitude about investing is weird. When there's a boom, the majority of people get caught up in the attitude, and go on a borrowing and spending binge. This helps push the growth. In a recession or depression the opposite happens. Optimism and pessimism are difficult to politically deal with, especially in a democratic society. There are already enough people in this country who think that the Fed is a destroyer of worlds, and all Bernanke has really been trying to do is exactly what the textbook response to a recession is supposed to be: make sure there's no deflation. The point is, any different solution would require something that democratic governments will never produce: a more disciplined consumer and investor marketplace.

You might also ask, what the hell is so wrong with deflation?

That's a better question. Falling prices sound awesome. But the answer is, if you're an employee, a LOT is wrong with deflation. Say that a depression comes along and your company sees a reduction in business to the tune of 20-30%. That's not the end of the world, but a reduction of 20-30% in revenue does not result in employers paying their employees 20-30% less. No employee would stand for it; that's not their fault, as they're as productive as they ever were. It's the business owner's responsibility to handle it, and they generally handle it like this: they fire 20-30% of their workforce

That's what they have to do. Some companies are more loyal to their employees than others, but for many of them, there's little choice if they want to stay in business. Times are tough. This isn't a knock on them; that's how things have to be. But as the unemployment numbers rise, perspectives do not favor the employer.

As a consumer, falling prices sound great, until you realize that you're in debt and you haven't been saving your money. Debt becomes more expensive when there's deflation: if you owed $20,000 on credit cards and there's 10% deflation, you now owe the equivalent of $22,000. Plus, you might be out of a job: the fate of the average voter in the world is much more dependent on there being employment available than on there being low prices.

To put it simply: it's perceptually and politically better for the system to encourage inflation. It's better because more people are in debt than are saving, and therefore it's politically more advantageous to support debtors than savers in a democratic system.

I've figured this out opening a small business. I'm going to do the bulk of my production in-country, but some accessories will be bought from foreign companies found on Alibaba.com, and let me tell you, the cost of many goods wholesale today is so stupidly minuscule that one may reasonably wonder why the hell we pay so much at the register here. That Super Soaker you paid $19.95 for likely cost about a dollar to produce. Some products I could concievably carry would grant me well over 500% on margins. For a businessman, this is ludicrous; all I have to do is take a relatively minor risk by carrying a significant inventory, buying hundreds of units at a time. One would think economics would have driven down the cost of everything by now, with such cheap production available.

But it doesn't; the margins are what pays the wages of most people in this country. Everything eventually costs the labor required to produce it, plus rent-seeking. So there's a rent-seeking element that is responsible for many, many people having a job, and that comes from the relative stability of the business sector. You get used to going to Wal-Mart and Target for your crap. Your local shoe store lets you try them on first. And then there's brand loyalty, a form of trust built on return policies, threats of legal action, and location. It's convenient. You don't have to think too much, just compare the prices at the store at most. You sure as hell aren't going to spend hours of your life finding the absolute lowest price on something that costs twenty bucks; nickel and diming is for losers. The field of economics looks at consumers as demanding low prices all the time, which they certainly prefer, but holy shit the American consumer is lazy as hell.

The status and behavior of the consumer does not depend on thriftiness. People have plenty, as a matter of volume. What this has evolved into is a cultural situation where people go in for goods that describe who they are as a person, attaching themselves to brand identity. You can call someone a Wal-Mart person and mean it as derogatory; you move up a bit at Target, then get into "real" retailers and brands. Gucci is just the beginning; how much of our identity gets bound up in cars and homes? Ask my mother when she gets done watching House Hunters. This has become who we are as a people: consumers. Modern capitalism is consumerist, not "producerist", and all this excess choice exists to create a place where you can become who you want to be through your consumer decisions. You need to work to finance your lifestyle; rebellions against this find some light counter-identity in urban farming, living off the grid, and other hipster fads... and brands are moving to exploit the new trend.

Big name retailers and well-known brand names have a form of market power that's quite significant today, with our over-crowded marketplaces: they can draw people into the store, and when people think that they need to buy something, they almost automatically go to these places and brands. They have power in the attention economy. The low-ball online retailer does not, although amazon.com and other aggregated one-stop-shops are reducing this market power very slowly. Still, you should hope that they don't do it much faster; millions of people depend on the rent-seeking power of big name stores and brands to provide them with jobs. Those are institutions in this culture. With a big company, you usually get job stability, which is about the last bastion of cultural expectation that empowers employees. That creates standards which are held in contrast to small businesses, forcing those small businesses to treat their employees comparatively. This means, of course, that they keep charging high prices relative to manufacturing costs for their goods. Job insecurity results in employees more desperate to take what they can get, and the market power of big business, with their significant market power, eases that pressure.

This is all possible because the system encourages expansion as fast as possible. The restraint comes only from consumer hesitation, which vanishes in good times, when credit is cheap and jobs are at least available enough to justify charging it now and paying for it later. It helps for people to feel rich; that's how we do individualism today. The pressure to economize still exists to some extent for retailers and manufacturers, but low price is less important than image and advertising skill. The consumer sphere is where we show our value in the hierarchy. Work is the primary way we acquire that value. We need high-growth economics to be useful and valuable as employees, and thus we need a growing economy and currency. Without it, even if we have good jobs now, they might not exist long and they might not have existed at all without the last seventy years of American economic history focusing on expansion. It makes everything easier.

Basically, the system as it stands, inflationary tendencies and all, can be traced back to your unwillingness to get your ass off the couch to find a better deal, and the employment made possible by your sloth. The system must adapt to you, wise voter. So by all means, stay on that couch until an ad on your iPhone tells you that Gucci T-shirts are on sale.

Class by Choice

Question: why isn't every employee an independent contractor?

On the surface, the benefits of being independent seem strong. You have a degree of control over your activities, assuming that they're strongly demanded enough to garner interest from those hiring you as a contractor. You can hold on to your money instead of essentially paying for an interest-free loan that the government will pay back next year. Basically, it wouldn't be wage slavery.

But then, wage slavery has its advantages. You probably don't have strong demand for your services most of the time, but wage jobs get you a paycheck anyway; don't complain about being bored when you have the privilege of being bored on the clock. A halfway decent employer will help cover all sorts of benefits, since it gets them a tax write-off, and consistent schedules have advantages when you have other shit you want to do and need to schedule your life. Being a conventional employee is a matter of convenience for all involved: you work a solid number of hours and the employer pays a solid wage, and it becomes comfortable. People generally like comfort. The modern struggle is the struggle to be valuable for the individual acting in a market society, and being an employee means that you have an arrangement that grants stability. You can adapt to your wage with just a little discipline, and more and more, even that discipline seems redundant as Social Security, public education, food programs, and government health care assures the individual that they can only screw themselves so badly. The struggle becomes the drudgery: it gets old after you're used to it, and you want more variety. But historically, that's a very small degree of discipline that the working world requires of you. 

What the government really encourages is large-scale, stable employment. The government can regulate large corporations more easily than many small businesses, and since large corporations usually have enough market share to assure some financial ability to consistently pay more for employees, they can expect corporations to pay well and provide big fringe benefits that look good on paper. Unions have enjoyed this for decades, albeit with gradually reduced political and economic influence. People don't really want to handle savings, insurance, and looking for work any more than necessary, even if the potential benefits are great. Most people suck with money.

And really, it's not wage slavery. It's more like the remains of serfdom, without the clarity or permanence. Remember a few paragraphs ago, when I was talking about the 16th century in Europe? Back then, being a peasant was a very normal way for people to survive. You generally got food, shelter, and clothing at the least, with a slight spending allowance from your own marketable projects, even in eastern Europe where conditions were the worst. Feudalism sounds ugly, but that's just our way of looking at it, of course: the reality is one of a relationship between landowner and subject imbued with a near-religious sacredness that is completely lacking today. The arrangement was one of responsibilities of one party to another, taken on with much ceremony and social pressure on all parties to conform to roles. It was institutional and expected. There were good lords and bad ones, good serfs and bad ones, healthy relationships and unhealthy ones. 

Conversely, the 16th century was the period in which the serf/lord relationship started to fall to the wayside and the merchant class took on a new and more powerful role. The century after the sixteenth was the century when things were going worse, with less Spanish gold and more Malthusian population limits and war; the lords made a slight comeback, but it was strictly economic convenience, people needing to eat so they went back to the being land tenants. The attitude was changing. That goes along with the individualism of the era, which was in part a product of the Protestant Reformation.

Many of the complaints from that time would sound familiar today. The difference today is that there is no straightforward agreement on who owes what to who. The general idea that employees owe the employer the respect of coming in on time every shift and doing the job is about as elaborate as it gets, and that comes in for heavy revision when you think the boss is being a dick. The idea that the employer owes the employee any kind of loyalty is just as sporadic. Most people would say that employers are worse than employees in these situations today, but of course they would say that: most people are employees. Jack Donovan's recent article sums up an attitude that's already well established out of most people I know. That attitude is not so much being wrong as failing to recognize, for whatever reason, the reality that we are not as necessary to employers as we'd like to think we are most of the time. We have no leverage, so why not see the system as mercenary? There are no institutional obligations anymore; we call this freedom.

The Need for a New Structure

Institutions are not physical things. They are arrangements, formalized into social expectations, roles to play with defined privileges and responsibilities. You look at any stable arrangement for a while, and you can begin to gather an appreciation for the organization of it, for the sense of identity and place that a well-ordered society can provide. 

At least an ordered society can function predictably and with some semblance of justice. Justice is, after all, really a matter of expectations. Today, we want and expect equality, which is ludicrous and pathetically short-sighted. The expectations have become radical; we expect government to do what is necessary to give us value as economic actors, expect big business to sacrifice some of its power to help us out of sheer Christian decency, even as the population at large abandons Christianity with enthusiasm. The individualism is such that our eccentric lifestyle choices, our behaviors and style which might come off as a middle finger to others, is expected to be tolerated without question. Meanwhile, when the business classes blow us off in the name of them pursuing their self-interest, we hate their guts. We want noblesse oblige, but have no moral justification for it in an individualist culture. Say what you want about our shitty behavior not being on the same level as people unable to find work and eat, but no one owes any of this to us. You want individualism, then the responsibilities must be measured with the rights. 

In the first Hierarchy post, I talked about explicit and implicit hierarchies, and I stated that explicit hierarchies have serious advantages. This kind of thing is what I was talking about. Explicit hierarchies hold the security we want, by dividing up responsibilities explicitly. The implicit, market-based hierarchies we operate on now, counting on values expressed in the markets to fuel our world, turn against us when we want stability, when we find that we aren't nearly as valuable as we think we are to others. You can call it oppressive fear that drove people to accept aristocracy and its rigors before, but any time you fear for your economic welfare, you experience that fear yourself. It is tremendously, metaphysically wrong that this happens? It probably feels like it, but it's not. A lion chasing a tasty human on an African plain millenia ago might have felt unfair to the human, but it was also reality. Fairness is a luxury of a society that develops systems to ensure that expectations meet reality. The more individualistic we get, the less structured our world becomes, the less fair we should expect it to feel.

We should feel lucky that the system tries, with its inflationary currency and democratic suckup tendencies, to help us out. We don't, we never give any thanks, but we should, because given our behavior, this system provides what we want. It has kept food cheap, integrated huge numbers of women into the workforce over the last half-century, its tax revenues have been harnessed to turn over significant public benefits, and you can be pig-ignorant about money and know that the government won't allow you to be exploited "unfairly". But it can't change all of reality to work for your benefit. And it doesn't owe you that.

If you want the benefits of noblesse oblige, then we should start that conversation honestly. I've been thinking it for a while. If you don't, then it's your life and you should be thankful that the system you have to deal with works as well as it works.