Friday, November 18, 2011

America's and the West's Tocqueville Moments

By Son of Bastiat
“Tocqueville, in 1835 foresaw what the Western democracies are now going through”

In his “Modern Times”, a best-selling book on the history of the 20th C. that came out almost 30 years ago, Paul Johnson, now widely acknowledged to be the UK’s foremost living historian, traces the seminal event that led to America’s slide into economic mediocrity to the 1960s when the US government under John F. Kennedy, upon the advice of his liberal educated, Keynesian-dominated Cabinet, “committed itself to a new and radical principle of creating budgetary deficits even when there was no economic emergency, a new concept of “big government”: the ‘problem eliminator’. Every area of human misery could be classified as a ‘problem’; then the Federal government could be armed to ‘eliminate’ it”. Paul Johnson erred in not dating that event earlier back to FDR’s New Deal but an even more serious mistake was his recent sanguine view that America could still overcome the poisonous legacy of that policy to date: $ 14 trillion in Federal debt and $ 77 trillion in unfunded liabilities of state, local governments and entitlements (Social Security Medicare, Medicaid). He may be forgiven for at 82 he likely would not witness its dire comeuppance, although Americans should thank him for offering this prescient advice.

Writing about societies in decline before their fall is always a risky undertaking. A pessimistic streak is helpful, in the tradition of Jared Diamond’s “Collapse” or David Keys’ “Catastrophe”. On a more limited scope, von Mises, Kindleberger and Minsky broke ground with their analyses of systemic crises. On a more recent vintage, a slew of books on banking and economic crises came out in the wake of Aug. 2008; majority were sensationalist, descriptive (non-analytical) and skewed by the anti-establishment flavor so enticing to liberal book reviewers. Many suffered from one form or other of the Fundamental Attribution Error of blaming complex events on one-variable, simplistic models, often rooted in behavioral (e.g. “greed”) rather than objective factors that prevailed therein. The fatal limitation of ersatz works like these is in not tackling social decline from a holistic point of view, a la Gibbon’s “Decline and Fall. .” or Schama’s “Chronicle of the French Revolution” but rather in focusing on the most handy explanation for complex phenomenon so typical of today’s seat-of-the-pants journalistic style reporting. This is why few non-specialists are able to discern what has gone wrong with the world today.

But not works in the tradition of historians like Paul Johnson which come few and far between until they are followed by books such as 2011 Niall Ferguson’s “Civilization: The West and the Rest”, whose central tenet is that six “killer apps” (along with “the fortuitous weakness of the West’s rivals”) allowed the West “to dominate the world for the better part of 500 years”: free markets, scientific method, property rights, medicine, a consumer society (that ignited industrialization) and “the work ethic”. In his analysis, the West is in the last 500 years of its dominance, not necessarily due to the compelling superiority of its rivals (for there are none) but from internal rot, which is Johnson’s theme. Still, while their end game is more or less the same, these partial diagnoses fail to explicate the precise, true cause of social collapse. 

Alexis de Tocqueville and His Vision of Democracy

Probably next to Lafayette and the Statue of Liberty, the recondite French historian and political writer Alexis de Tocqueville is France’s most admired observer of the young republic that was then starting to flourish across the Atlantic. An aspiring member of the French academic establishment, young Alexis along with a companion named Beaumont, were sent by the French government in 1831 to study the American penal system; because of the unusual events that were taking place in the country, the pair ended up using this commission as a pretext to study American society itself, focusing instead on its people, social institutions, political, cultural and religious beliefs. Returning to France after nine months of study, they each wrote separate books; Tocqueville’s “De la democratie in Amerique” (more popularly known as “Democracy in America”), published in two volumes (1835 and 1840), became the more famous output. The book became an instant sensation and Tocqueville attained celebrity status in Parisian salons almost immediately after it came out, both for its penetrating insights into the differences between the Old World and the New cultures, and also because of the thorough documentation and rigor of its analysis (unusual in French books of the genre of that time, and which to an extent remains a feature). Tocqueville’s book would contain insights that apply to America today. 

Democracy in America” was a comprehensive and ambitious project, its expansive coverage of some 60 + topics made it susceptible to varied interpretations by those trying to promote narrow agendas. As it appears at times to be a disorganized collection of random observations and thoughts on American democracy, the best way to discern its central theme is to reflect the author’s scattered ruminations through the prism of one primordial idea: the prospect of continued liberty and the progress it makes possible, amidst a growing demand for equality that is the inevitable offshoot of modernity. It is this idea which is lost in the din and shuffle that pass for progressive thinking and reform that makes front page news in today’s ersatz media. If only today’s columnists could write essays so packed full with erudition.

In a series of observations that presciently capture the essence of what is going on today, Tocqueville stated that the main threats to democracy lie in a disproportionate concentration of power in the legislature, the lack of true appreciation for freedom, an excessive drive for equality, extreme individualism, and wanton materialism. With regard to the first, concentrating power in the legislature, a concession to republicanism, not only makes democracy vulnerable to capture by vested interests, but is a perversity in mistaking “majority” opinion for “right” or “best”; it also nurtures the idea that going against the majority is to go against what is right for everyone. It is the fatal conceit that has made the legislature in one-man one-vote systems such a lethal instrument for subverting personal freedom and promoting the dysfunctional state. As regards the last two (individualism and materialism), Tocqueville believed that those are offshoots of the drive for equality, which not only makes people see things mainly from a selfish point of view, but makes them disdain lofty ideas in favor of what is immediately beneficial. Tocqueville’s genius was in seeing that if representative government, political and economic freedoms are modernity’s trappings, then the main threat to freedom is no other than modernity itself.   

The “Tocqueville Moment” for Western Democracy

The term “Tocqueville Moment” appeared recently in columnist Anastasia O’Grady’s column in connection with recent moves by the political class in Costa Rica (Central America’s “Switzerland” and vying with Panama for the region’s best performing economy) to raise taxes in order to fund ambitious social programs. O’Grady quotes Tocqueville: “that democracy can endure up to the point when politicians realize they can bribe people with their own money." It is not certain where this quote appears in Tocqueville’s famous book or in his numerous writings, but in the larger context of his work such an observation is not out of form: in societies where sufficient progress has been attained such that people have become too individualistic and materialistic, the political process (in a representative, one man one vote system) can be manipulated in order to promote precisely the kinds of liberal political and social policies that Paul Johnson cited as the cause – the precise moment - of America’s decline.      

For how else to explain why Johnson’s Great Society, Kennedy’s New Frontier and now Obama’s ambitious welfare state programs – all initiatives no doubt passed with the best of intentions for their poor (and even rich) but materialistic beneficiaries – ended up bloating the US government and crippling it with debt, except with the enthusiastic connivance of individualistic members of Congress? How else could the 2008 financial crisis get so severe, financial complexity and materialistic (greedy) bankers notwithstanding, if both Executive and Legislative branches of government did not first make it a deliberate policy to relax loan standards and encourage leverage to fit the second-house aspirations of individualistic homeowners? Or, for that matter, how could public labor unions so gin up compensation and pension systems as to bankrupt municipal and local government finances, unless materialistic government officials had not been incentivized (or dis-incentivized) by electoral victory (or ouster)?        

It now remains to show whether this same Tocqueville moment applies to Europe, and to the rest of the Western world, where legislatures tend to be more impotent but citizens so dependent on the State that leaders have to bribe them with their own money before they can take minimal reform to help themselves. A little reflection proves that indeed it does: workers so nonchalantly individualistic that workweeks last 35 hours, benefits so liberal and retirement starts at 55 at 80 % of their pay. Or a continent full of materialistic people so diffident about morals they see nothing wrong in LT abortion and assisted suicides. Those values give primacy to political equality irrespective of social consequences.

What Is Wrong with (Undeserved) Equality

The cause of this rot is a system where the only thing that counts is perfect and full equality regardless of whether anything meritorious lies behind it. It is a set of beliefs nurtured by progress that considers one’s standing only relative to everyone else, a referential view centered on the self and nobody or nothing else that plays a role in creating the conditions that make up that reality. Add to that egotistic belief the possibility of incomplete, biased and/or erratic understanding of the outside world, along with (almost certainly) inappropriate extension of one’s limited experience to an entirely different setting, and one comes up with the perverted ideas that have undergirded calls for egalitarianism since time immemorial. This quest for perfect justice sustains the most alluring and dangerous ideologies, and creates the conditions that continuously promote policies to enslave the poor and rob everyone else of their freedoms. By eventually destroying the basis for progress it is the ultimate fount of injustice itself.

In the hands of ambitious (and individualistic, self-referential) politicians like the current W.H. occupant and his coterie of like-minded legislators, the policy outcomes can be very devastating, not to say anomalous: creating results so totally contrary to what had been originally anticipated, aggravating the initial problems and making it even more difficult to “fix them”. This is why the global recession became much worse than it should have been, and why there is virtually no more chance to fix the mess except at an even worse tradeoff. Look carefully at how an irrational and undue concern for inequality had actually prolonged suffering and led to still more inequality. But no matter, these views seem so  contrary to “common sense” it being “normal and human” to relieve inequality and suffering totally and immediately, regardless of consequences, especially if those consequences lie far off into the future.

So Who is Ultimately to Blame?

The tragedy is that the Church, the only institution that can attenuate this nonsense, buys it too. Not just swallow it hook, line and sinker, but it advocates liberal views premised more on human rather than spiritual tenets. To the Church, the only thing that matters is equality, nothing else comes close, not the concept of natural loss, randomness, unavoidable policy mistakes, errors of human judgment, incomplete information and, certainly not even differences in effort, risks assumed or sacrifices taken. Such is the fallacy of looking at morality from an absolute, unyielding stance, when the more rational position is to weigh which moral positions can be provisional, which can be situational, and which will never be compromised (such as matters of ultimate belief). This absolutely unyielding position can only flow from a flawed understanding of its role as shepherd of flock, one that is more concerned with man’s physical rather than transcendental needs. 

Such errors result from a profound confusion in what the Church’s role should be, dabbling in areas that lie beyond its authority, not to say technical competence. It forgets that the limits of what is expected from it are defined ultimately not by its self-concept, but how much leeway it has to provide escape from the human predicament itself, of which the Church has little, “being not of this world”. How much better off if it just observed Cicero’s (1st C.) warning: “Although physicians frequently know their patients will die of a given disease, they never tell them so. To warn of an evil is justified only if, along with the warning, there is a way of escape”. Aside from reminding people to minimize or avoid falling prey to evil, there is little else that the Church can do, unless it wants to arouse more unwarranted demands of itself. 

This is sad, for in not properly understanding this role, the Church itself becomes complicit in the blatant commission of the mistakes that the liberal ideology inflicts on society, under the guise of concern or compassion for the oppressed poor, with the result that the Church itself ends up with less credibility. It forgets where its contributions can make a true difference, inside the heart of man, not in the councils of state. To help save its reputation, the Church should ponder these words of Alexander Solzhenitsyn:
The line separating good and evil passes not through states, not between classes, nor between political parties either, but right through every human heart”. 

Good and evil; Equality and Inequality; Happiness and Suffering; Freedom and Oppression. Progress and Poverty; all are elements that Tocqueville understood as springing from the innermost recesses of the human heart, not from some abstract economic goal or political principle. Ironically that is where the Church isn’t because it is trying to be where it shouldn’t and therein lies the ultimate cause of the bleak human prospect today


Sunday, November 6, 2011

The Clueless Occupiers from La La Land

By Son of Bastiat

“I’m not the 1 %. I’m not the 99 %. I’m me” – Vinnie, a self-made art entrepreneur

One of these days, without wishing that fate on them, an Occupier, a pedestrian, a bystander along with scores of others will have their asses kicked, heads cracked, ribs broken, limbs severed or worse, in an orgy of violence that will erupt over issues that few of them have clearly grasped, and thus have little chance to influence: economic justice, income distribution, bankers’ greed, corporate power, welfare or whatever other causes of their disempowerment. Apart from providing critical mass and excitement that liberal media love to hype, they will end up as little more than cannon fodder for clever agitators with more focused and sinister agenda, the useful fools that revolutions since time immemorial have relied on for the dirty job of capturing mass movements that just as quickly fade into egoistic fantasies.

When it happens they will experience the imperfect, unforgiving world first hand. They will learn about the millions who, just like them aspire to better lives, but the pursuit of which result in making life less than ideal for themselves and everybody else. They will meet the legions who, day after day, suffer the cruel stings of unintended consequences, their best efforts and purest intentions notwithstanding. Maybe they’ll appreciate how sordid the “human condition” is, from which their efforts to escape embroil them in all sorts of transference problems. If they’re lucky they’ll learn how the complications in their lives grow in proportion to the degree they fantasize “how the world ought to be”, rather than “seeing it as it is”. They might conclude that much of their beef about life is delusion willfully indulged.

Parsing Egalitarian Entrails

They hate it that the world is too unequal? Well, so do I, but to get anywhere, a precise definition of “inequality” is needed. Time magazine offers one aspect of it: average incomes of $ 1.5 MM and $ 50,000 for the 1 % and 99 % of all Americans respectively. But do they really think that eliminating differences between two figures is all there is to it? Sadly it isn’t, because income (or wealth) gaps hide more things than are apparent on the surface. Just ask: will dragging the 1 % down and bringing the 99 % up make things better? The answer is no, because even if the latter are numerically superior, it punishes the few “heavy lifters” and rewards lots of underperformers, with the result that society as a whole ends up less productive.

And why should productivity matter? Because in the long run, redistributions that do not ensure wealth creation end up making things worse – just look at how farmers who receive land after land reform without provisions for making them productive promptly lose them, leaving agriculture worse off than before. Instead of bringing people down it would be better to create opportunities; taking away the fruits of work of the 1 % will lead to a capital strike that reduces those opportunities. Few Occupiers realize that this nasty “come back” is what causes their joblessness.

But what if perceptions of “just” differences are frivolous or subjective? If there is no objective basis for doing it, income and wealth will be redistributed with neither the support of givers nor the gratitude of recipients. It’ll not be easy but even assuming that it can be done, keeping it there will require constant infringements on every one’s freedom or expectations, which as Machiavelli pointed out, endears the egalitarian to neither. Thus redistributions don’t last long, especially if people are free to do what they
want, from refusing to create wealth to running away from it altogether (now rampant in the US and even China) . Instead of removing inequalities, they only end up making them worse and permanent.

Voluntary redistributions via taxes are only a tad less chaotic, requiring one to reconcile peoples’ differing needs for, and respective contributions to the creation of that which is sought to be equalized. Unless everyone yields to reason or sense of moral worth, disagreement will lead to discontentment. Redistribution even with volition means that one doesn’t care how motivations and capacity to generate wealth are affected; all that matters is less inequality at whatever the consequences. Coercion can effect and maintain it, but eventually egalitarians will have to make up for what is lost in the process, with the result that the 99 % will have less income and no jobs. Such are the calculations of fantasists.

This is why the most practical distribution policy (Rawls’) aims not at full equality, but the toleration of some of it in exchange for motivating those who contribute more towards wealth creation and income generation, provided that that those at the lower end of the distribution scale are not made worse off as a result of the policy. It admits that no human society – even the most truculently egalitarian - can avoid inequality; it is a matter of how well members can tolerate it, and of where they have a better chance at rectifying it if they can’t. If that approach still creates too much inequality, blame those who formulated policies that produced such outcome, even if they did it in error; make them pay dearly for such outrage especially if they did it with malice. Just don’t redistribute wealth or income arbitrarily as not only would it fail to solve that problem, but will likely end up worsening it. To Proudhon’s “Wealth is theft” must be added: “Punish the thief, suffer the loss of what he gives you”. Even bad men do produce a lot of good.

Do You Understand the Moral Roots of Greed?

As with inequality, much depends on what “greed” exactly means and whose vice it is. Unlike inequality which is retrospective and is not an absolute requirement of growth, greed is prospective and central to the achievement of that growth. This is why greed is a double edged sword that can do a lot of good (when used by the right folks) or evil, if otherwise. What one can’t simply do is judge those who indulge in it, without inquiring as to why and what their roles are. Like inequality, perceptions about greed tend to be colored by subjective understanding of what is required in such roles. This is why folks find greed by others offensive (but not as much if done by themselves) – it’s the resentment in being excluded from the benefits especially if they don’t know whether they deserve them, or whether they can deliver what’s expected in those roles. Like inequality, greed defies analysis using subjective, overt comparisons; greed goes beyond by being self-referential, never looking at what the other side needs.

If those perceptual problems are not bad enough, one will also be held hostage by moral baggage that he acquired in the society he grew up. Philosophers have pointed out how moral judgments arise from extending beliefs outside of their proper boundaries, while psychologists link them to the mysterious operations of the subconscious, but let’s skip those because they require making shaky assumptions about the purpose and meaning of life. Let us focus on how thinking processes are affected by language and word usage, largely without individual awareness. It turns out that a lot (not all) of moral judgments flow from nothing more than beliefs shaped by personal, family, tribal and community values. A lot of moral judgments (again not all) have little to back them up save for local values (e.g., fairness, justice, etc) that a community holds as sacrosanct. To make matters worse, this error of thought is compounded by carelessness in sentence construction and meaning of words. To Vaggini errors of moral judgment result from illogical transpositions of the subject and object in certain types of sentence structures. As astonishing as that sounds, what the above claims mean is that excessive concern for greed (and also inequality) are the products of self-awareness; anything beyond that is pure, unadulterated fluff.

At any rate there is no need for these uneasy assumptions for there is a simpler explanation for the mental aberration that disposes one to view everything that does not align with his personal ideas of what is just, as greed and “therefore” immoral: the arrogant belief premised in one’s having ALL the facts needed to make a particular moral judgment. In today’s volatile and extremely complex world, that assumption betrays irrational hubris. How else to explain why, in the aftermath of the financial crisis, the sanctimonious quickly and totally blamed it on “greedy bankers” when, in light of perfect hindsight, it turns out that their legitimate roles (as a class, for particular behaviors can never be explained by any general theory) as maximizers of gains were enabled by bad regulation and politically tainted policies which relaxed origination standards and encouraged leverage in pursuit of a policy goal (mass housing).

Unlike politicians, the bankers were performing what they were trained to do, which is to generate profits within silo-like environments that were bereft of sufficient information and understanding, thus amplifying unknown events occurring elsewhere. Save for a prescient few who “boasted” of being right early on, the character and severity of the crisis was generally not foreseeable even by economists who lacked market insights and experience to predict it, let alone prove conclusively that an emergent system could not “right” itself, especially that what finally pushed the system over the cliff are not these mistakes but the flawed decisions of the system’s liquidity managers who erred in dealing with, what else, a no-precedent crisis. Folks who blame greed for the crisis sans any qualifiers (e.g., errors of judgment or irresponsible behavior under complexity), are at best being naïve about human behavior in dynamic systems; at worst they are romanticists who can’t psychologically cope with uncomfortable causes for events that they can’t mentally grasp, so they default to the easier search for demons to exorcise. The fact that conflicted “greed”, if properly harnessed is vital to wealth and job creation should caution those inclined towards simplistic judgments, to ponder the risks of demonizing a vital part of economic life. An inability to entertain two opposed ideas without hiding psychic baggage is a sign of a weak, delusional mind ever seeking relief in transference. Moral outrage is a sop to a guilty conscience.

The Dilemmas of Corporations and the Welfare State

Let’s go right to the heart of issues that protesters are correct to raise even if they can’t quite articulate them well: the legitimacy of Corporations because of the unprecedented powers they have amassed, both outside the sphere of market operations and in their ability to corrupt society through their strong influence over the political process. Who in his or her right mind would question such motive, but it is also true that such ideal goals involve tradeoffs at a stiff price. But if that isn’t bad yet, Occupiers compound their woes by thinking that a non-market solution – the welfare state – can solve the problems they decry, namely slow economic and job growth. Like democracy, the corporation is far from being an ideal solution, save all other alternatives are worse – their tradeoffs are more expensive.

A little history should remind one that the modern corporation is a recent phenomenon, a caricature of the weak entity that it was in the last years of the 19th century or even up to the early years of the 20th. Massive needs for capital by technology, the imperative to diversify markets for stability of growth, and the centralization of authority to deal with efficiency issues and control the resulting complexity – all these led to the amassing of power (and thus its abuse) by those who lead these organizations. That most of them were self-appointed and not responsible to society or even to the corporation’s owners (who got castrated in the process) is not their fault; say what you want about the Law’s failure to come up with the proper legal safeguards or about regulators’ duties to properly enforce the rulings, the fact is that the corporation is the suboptimal solution that has successfully delivered on two of society’s most critical survival desiderata – employing the hundreds of thousands of its members who must earn a living at the least expenditure of time, money and effort; and effecting the efficient conversion of resources into sustainable growth. That many corporations have failed these tests or thwarted their attainment is no reason to reject all of them, unless one is sure that he has a superior alternative.

As one scans the landscape, he finds that few of those are worthwhile candidates to replace it. For the criteria boils down to what extent those vehicles’ decisions can take place within the influence of market discipline, especially as they undertake decisions that have non-market ramifications and “external” influences, such as is the character of social decisions today. The problem is that the boundaries delineating these decisions are booby-trapped with unknown costs and outcomes, which sets this back to the old nemesis, unanticipated consequences. Folks of a disposition akin to those we have met above – a moral repugnance for any inequality and the slightest hint of (unqualified) greed, prefer that non-market solutions predominate. What they claim little or no awareness of (or if they do, are uncomfortable to admit), is that such alternatives involve an explicit if seldom acknowledged tradeoff between two opposed ways of thinking about modern society: a market-responsive one typified by corporations (economically successful but rapacious if uncontrolled) and a non-market driven welfare state (inefficient, wasteful, unsustainable), its only tested alternative. The harsh reality is that one can only choose between two, imperfect solutions, but one of which tends to make the outcomes worse.

None of this defends (let alone excuses) the modern corporation’s hideous handiwork in vital concerns as environmental degradation, unsustainable exploitation of natural reserves, manufacture and exports of death-dealing weapons or drugs, aggressive lobbying to influence regulatory and electoral outcomes, all the way to outsourcing jobs that have no logic other than maintaining “competitive presence”. On the other hand, one has the welfare state, ostensibly set up to take care of those with neither the means nor the knowledge to protect themselves against the vagaries of nature or the rapacity of the markets. What it achieved instead was to siphon the resources that could have been used to get the economy to grow faster in order to lift those at the bottom of the social pyramid, which it diverted to politicians, bureaucrats and parties such as labor unions, with interests vested in perpetuating inefficiency and the sense of entitlements that resisted all reforms that threatened their hold over votes and sources of patronage. It is supreme irony the real threat to the world economy today comes not from the much excoriated “corporate greed” but from explosive public debt, a legacy of the welfare state. In matters that affect society the most – jobs and economic security- the corporate economy, warts and all, trumps the welfare state. To want to kill it while growing the welfare state is not only ludicrous but inane.

Hence the question is: what are Occupiers’ beef against corporations, and why their quixotic preference for such losers as the inept, inefficient and stodgy welfare state to deliver what is important to society? Could it be that the reason they condemn the corporate economy and praise the welfare state is that
they are psychologically insecure with competing in the marketplace where they can get their asses kicked in spite of a (academically indulged) pretense that they’re good. Well one is not THAT good if he must seek solace for his wounds from the womb-like comforts of a nanny, which the welfare state is. The tragedy is that Occupiers do not see that they are ditching imperfect solutions that work in favor of worse ones that have failed miserably, as close to the definition of delusion as one can have.

What Their Real Problem Is: Externalizing Inner Failures

Three years ago a young man asked to talk to me one on one. Thinking that it had to do with his long put off marriage plans, I braced for some unanticipated news: an unplanned wedding, or worse a split. As soon as he sat down gravely on the couch, I sensed that this was a devastating issue, and indeed it was: his job would not be renewed the very next year when he and his fiancé had planned to finally marry. I sat down silently as I listened to him detail the reason for the painful news: that despite being a talented art teacher, well-liked by peers and adored by his students, the artist in him just was not up to the administrative and routine demands of the job. As I observed his face turn grim and his eyes shed tears of anger, frustration and fear, I fought hard to explain and reassure him that being fired was not the end of the world; how I, too, once faced such a disaster, which I overcame by acquiring more expertise than my “firers”, which facilitated my foray into opportunities far beyond what I could find working for others. After going through this human moment we knew that there were serious things we had to do; none of those was about blaming our immigrant fates or the society that gave us our breaks. It was all about coping with life’s challenges as best as we can, as they unfolded in all of their stark harshness.

I wasn’t expecting to see how such an experience could be improved upon and surpassed by this young man who rose above this depressing episode, so well that in the span of less than three years, with a little less than a thousand dollars in seed money, he built a business that his peers now rate highly as an upcoming global sports art licensing and branding business, with fans from all corners of the world so rabid as to tattoo his art work on their bodies. Recently he capped this feat by co-branding and licensing his products to, and partnering as creative designer for, a leading US apparel firm that sells to 1,400 outlets. Looking at it now his dramatic turnaround owed mostly to personal discipline, adhesive-like perseverance, a refusal to get overwhelmed by lots of handicaps (we are outsiders), and a can-do spirit that drives him to excel amidst all odds. Instead of ending up as a loser he turned himself into a self-made entrepreneur who neither gave up nor depends on others for support, refusing to externalize his problems by blaming America for his share of life’s trials. Recently we had occasion to watch a rowdy O.W.S rally blaming the 1 % for their problems, and here is what he said: “I’m not the 1 %. I’m not the 99 %. I’m me, doing what I can to change the world”. I copyrighted and used it as the idea for this essay.

Other than the fact that terribly misguided can be useful in waking up society’s often moribund senses, there is not an iota of logic or fact to back up the O.W.S. positions, no matter how well meant and sincerely they are held. This is why they cannot come up with concrete proposals, and why they prefer to wallow in ambiguities, fearing that taking positions will force them to confront extremely painful realities, not the least being their conflicted inner selves. Why risk the embarrassment of a firm position when in vagueness one can indulge the airs of moral superiority? Could it be that this phenomenon called O.W.S. is the escapism of a bunch of badly raised losers who have succumbed to life’s vicissitudes and blamed America for their misfortunes?

Instead of wasting energy occupying idle real estate, why not build something concrete and useful on top of it?

Monday, October 17, 2011

Debating the Philippine Reproductive Health Bill: A Commentary

By Son of Bastiat

 “I humbly submit that the struggle for an RH bill to protect the health and quality of life of the mother and child in the context of unspeakable poverty is part of liberation theology” adding that Vatican II taught the "primacy of conscience." (Philippines Sen. Santiago’s remarks in a Sun Star 8/2/11 interview)

There is enough hard evidence in other countries that followed the same path of population control, which shows that a contraceptive mentality inevitably leads to a significant rise in abortion, divorce, single mothers and mentally unbalanced adolescents”. (Dr. Villegas, Philippines’ economist in “Little Chance for RH Bill”, 10/15/11)

Like the Occupy Wall Street protesters’ shouts reverberating 3.5 miles away from where this essay is being written, the above quotes read as if their respective positions are clear and sufficiently “joined” as to make a reasoned debate possible. In fact, that is far from being the case, if only because these quotes occurred at two different times and media sources (an online column and interview) and juxtaposed in a contrived debate to highlight the essence of two diametrically opposed positions on the RH Bill. They represent two radical opposed worldviews, neither one effectively articulated by their advocates. Is it due to the RH Bill’s intrinsic complexity, modern man’s intransigence, his pride? Or all of it combined?     


Begin with the Senator’s views, which her quote above succinctly summarizes:

a). Due to unspeakable poverty, an RH Bill will protect the health and quality of mother and child. She makes no reference to the widespread view that overpopulation promotes poverty, only that controlling it promotes human welfare. 

In claiming that an RH Bill will protect the health and quality of life of families, she sidesteps but does not avoid making the conclusion that overpopulation is a major cause of poverty. As a legislator she is no doubt aware that much of the government’s budget is appropriated for poverty amelioration; AND that scarce national resources (land, oceans, etc.) are preempted for basic survival by a predominantly poor and underproductive population. These factors are deemed to reduce the amount of resources that can be used to “grow the pie” or improve its quality. With fewer people, resources and income per capita are much higher. The correlation between population size, per capita income, quality of life and wellbeing in neighboring countries is cited “as proof” of the wisdom of population control policy. 

Bernie Villegas’ comments suggest that while he agrees with this view in the short term, it is fraught with major problems in the long run. He refrains from zeroing in on Santiago’s (and RH Bill advocates) views that overpopulation reduces future growth potential, by citing past research done by Clarke and more recently by Nobelist Gary Becker, to the effect that this redirection of resources from future to current use accounts for a much smaller impact on permanent growth than is being claimed based on “commonsensical observations” drawn from experience which are almost always biased. Assuming that it is huge, China’s situation should serve as a useful reminder of this one-dimensional fallacy: even if its “One-Child-Per Family” had allowed it to amass resources to bankroll its growth, how efficiently they were used, what they brought China’s poor in exchange and where the policies they encouraged are leading China today are far more important than the simplistic resource mobilization issue it addressed.  

These statements ought to caution those inclined towards casual empiricism (i.e., analyses drawn from random experiences) from extending their individual conclusions into the realm of aggregate and multi-generational policy making. This knowledge domain error (see le Compte de Nouy) is more fatal than many RH Bill advocates realize and yet is not pointed out to them by RH Bill opponents. It illustrates the incompleteness of the debate. But why be surprised when the more basic limitations of population-vs-growth models have not been recognized, despite the known shortcomings of statistical analyses when set against the broader context of scientific truth validation and theory of knowledge?    
Score this round for the Senator, but not because she out-argues Villegas on this false economic issue but for the latter’s hedging, in hopes that RH Bill advocates will see that short term tradeoffs between growth and population are not only spurious (“Even assuming, without granting, that population control can help in the important task of eradicating poverty. . .”) but nonsensical especially in the long run when more factors other than economic growth matter. But that’s going ahead of our essay.   

Let’s then go to her second argument:

b). “Liberation Theology” and Vatican II have struck at the roots of social inequality that an RH Bill is designed to mitigate, and the Church has a “mission that includes the struggle on behalf of justice, peace, and human rights." Humanae Vitae the encyclical on which the Church bases its opposition to birth control was based on a “minority’ view, adding that 80% of US Catholics do not follow it.

Let’s dispose of the easier part of her position – that the real reason the encyclical Humane Vitae got adopted by the Church despite being held or accepted only by a “minority” of Catholics, is that electors were railroaded into passing it during the feverish route to Vatican II.  Asserting that some encyclicals are passed over the wishes of the “majority” is mainly a case of verification but the more meaningful question is: can most matters of core importance to a Faith be vetted by its followers? If it is the way a faith’s central tenets are decided, then the crucial element of its unquestioned acceptance disappears; belief by consensus simply means an absence of Faith. The fact that 80 % of members profess to not follow a faith is not to be held against it; that simply means that such Faith does not exist no matter what its members believe. To see why this not solipsism or sophistry, consider what happened when Socialists began to deviate from the strict principles laid down by Marx and Lenin. In due time the socialist camp splintered into factions that ultimately got co-opted by their adversaries (China’s “market socialism” being the best example). The only reason Islam escaped this fate is because its coherence depends less on doctrinal homogeneity and more on coercion. Even so, it is split into two feuding sects. 

Because the Church would not countenance the temporal and totalitarian impulses that drive Socialism and Islam, that existential risk is more serious in the Church’s case since its doctrinal integrity depends on the acceptance of all individual tenets; reject one and the entire edifice falls flat on its face. Absence of members’ coherence, rather than a radical change in one or more core tenets, explains Santiago’s claim that “the absolute authority of the Church has grown weaker over the years”.     

This brings the second, major fallacy in the Senator’s position: Liberation Theology. Santiago claims that the RH Bill draws its legitimacy from the Church’ mission to help the poor but as a Theology specialist, does she believe this? Is it the Church’s stated central mission or merely one of the many avenues that it pursues while carrying out its primary mission (of saving souls)? It surely cannot be the primary one, if only because the Church is a transcendental institution that finds it must minister to the temporal needs of its members. For the Church to involve itself beyond this, even if not at the expense of its spiritual one, would be to risk diluting its primary mission, with all the potential for errors that involvement in social causes lead to. If this is not obvious to a theology scholar, all she has to do is to review the Church’ mixed record of advocating for social causes (e.g., the US bishops’ 70s disastrous position on economic equality or of Archbishop H. Camara’s amateurish dabbling in Latin American development). Suffice it to mention that some of the most spectacular welfare and social justice program failures began as well-meaning religious initiatives to help the poor. If in this fairly straightforward temporal area the Church did a less than fully creditable job, what more with complex, transcendental issues like birth control?    

To put it bluntly the Church has no excuse in involving itself in these debates for social justice reasons. Villegas did not highlight this in his article at all, but again this omission, just like the first above, is why RH Bill advocates, especially those carrying religious baggage end up losing sight of, and getting more confused about their primary position. I would score this at 0-0 as neither side floors the other down.

And finally their third bone of contention:

c). Conscience is what matters above all, being “inviolable” and that a Catholic has a right to follow her own conscience “even when it is erroneous” (ie., meaning it goes against some “objective” standard).

Of all the Senator’s quotes, this one is the most perplexing, both in point of logic and origin, coming as it does from someone educated in theology and law. In the first place, an erroneous conscience presupposes the existence of some kind of moral reference for otherwise there would be no basis for assessing blame, which is the rationale for that claim. But in using the term “erroneous” the Senator explicitly declares that the Church’ tenets are not the only standard by which to base such judgment. It leads her straight to the pre-modern era traps of infallibility and relativism, which have been argued, fought, warred over and resolved since medieval times, resulting in the outcome now known as the Great Separation (not between Church and State but between Man and his Creator).     

Here is where Villegas delivers the knock-out punch. Briefly, the debate between the RH Bill advocates revolves around whether Man’s wishes will prevail over God’s. Santiago herself starkly states it: “In the past, Catholics simply obeyed the bishops. But now, many Catholics are no longer willing to give blind obedience to the Church”. But as pointed earlier, real faith not being a matter of consensus, continued membership in it is a tacit admission that it speaks for God (unless believers are schizophrenic dualists who by definition are deniers of one truth). Villegas’ arguments center around the subtle point that going against God’s will would in the long run be dangerous for Man, even if man refuses to accept it as such. No Nobel economists are needed to prop this position up because it indeed is what happens when man denies accountability to an entity other than himself, regardless of whether it involves faith or not. It was the ultimate (but never admitted) cause of the recent financial crisis. It is the reason why the EU is now imploding into pieces, followed in due course by China. It is what will happen to the Philippines if the RH Bill is passed into law and the contraceptive mentality takes hold. Here’s what UK Prime Minister Cameron attributed the recent rioting in London and nearby cities to: “Irresponsibility. Selfishness. Behaving as if our choices have no consequences. Children without fathers. Schools without discipline. Reward without effort”. (The Financial Times, 8/16/11). These are the RH Bill’s longer term and secondary effects that one side ignores and another sidesteps hoping it will just sink in. But it won’t.

What Villegas says is that passing the RH Bill will perpetuate a cultural dependency and moral weakness that abets all the ills that afflict contemporary Philippine society, with zero assurance that the resources freed by controlling population growth can be turned into material, let alone intangible benefits. It is the existential risk, not the temporary trade-offs that make RH Bill’s passage disastrous. It is just amazing that an ancient debate that has long been clarified, manages to emerge in sophisticated raiment, revealing again that man’s pride doesn’t let him learn from the wisdom that has been learned for ages. The theologian Barth said. “Look around you. . .all you see is chaos, irrationality and downright perversity of the world man has made for himself. What was the mad carnage of the Great War but the predictable result of humanism, which modern theologians celebrated rather than judged? They have wished to experience the known god of this world”, Barth said, “Well! They have experienced him”.


This essay closes by quoting the final paragraph of an essay that the author wrote assessing J. Burnham’s classic 1964 book “The Suicide of the West” (Gateway Editions):

How Western Societies Really Die
What they are saying to us today is that if you want to keep the Federal government open you have to throw women under the bus” is how Sen. P. Murray (D., Wash) depicted the contentious budget debates among Republicans and Democrats in which funding for Planned Parenthood (a pro-abortion group) came close to shutting down the US government. The terrible fact is that the economic future of the US is held hostage by an issue that doesn’t even represent 0.15 % of a budget that liberals have larded with entitlements so that 1-2 % cuts are “draconian” and sufficient to derail compromise. If the US economy implodes it will not be from wars or invasions but from decisions that made killing unborn babies kosher.

Far from stimulating the economy in the way it supposedly did for its neighbors, the RH Bill will unleash destructive values that will keep the Philippine economy from taking off. But don’t count on “modern” RH Bill advocates to supply the antidote, because their self-absorption and pride are too weak to detect it. Writing in Perspectives in Political Science, Summer 2009 Volume 8 Issue 3, Ralph Hancock cited Hans Blumenberg’s view “that the modern age emerged from a movement not of reason but of self-assertion, although the purity of this self-assertion was obscured by attempts to respond to now meaningless questions left over from the challenge of an essentially Gnostic nominalism”.  Understanding the RH Bill’s dangers calls for mastery of a difficult philosophical issue and tempering man’s exaggerated view of the self.   

 [Copyrights VRR@NYC2011, see for the rest of the other blogs]

Sunday, October 16, 2011

"The Suicide of the West" by James Burnham

A Commentary by Son of Bastiat

Its author maintains that western suicidal tendencies lie not so much in the lack of resources or military power, but through an erosion of intellectual, moral and spiritual factors abundant in modern western society and the mainstay of liberal psychology”   

[James Burnham’s 1964classic, SUICIDE OF THE WEST, remains a startling account on the nature of the modern era. It offers a profound, in depth analysis of what is happening in the world today by putting into focus the intangible, often vague doctrine of American liberalism. It parallels the loosely defined liberal ideology rampant in American government and institutions, with the ebb, flow, growth and climax and the eventual decline and death of both ancient and modern civilizations. Gateway Editions Review].

This essay, the second on the author’s research into societal decline and self-annihilation, expands the themes that were explored in his first essay on America’s welfare state catastrophe (“America’s Suicide Attempt by Paul Johnson”}. It broadens their application beyond America to include entire societies as well (“Suicide of the West by J. Burnham”). Why be preoccupied with morbid topics such as societies in decline? Answer: Because it turns out that a common theme permeates the largely unconscious act of terminating country and societal existence: moral cowardice and inner rot. The implosion of the Welfare State and the decay of Western societies are phenomena with deep moral roots. This essay argues that the RH Bill is but another manifestation of this deeply seated death wish that leads to societal suicide.    
Population Control as a Systems Error Tragedy 

Controlling population growth is societal suicide? But wait, aren’t the methods of population control (from contraception to abortion all the way down to euthanasia) precisely used to keep society from “eating its seed” in order to ensure its survival and progress, which is the antithesis of self-destruction? It isn’t paradoxical for a society to ensure survival by killing its own. Like the neutron bomb that can kill people while keeping their homes and buildings intact, survival decisions premised on resource intake and outgo calculations are based on a cynical and depraved view of human nature. What looks rational among non-living ecologies such as factories or cities does not apply to human populations and similar self-aware organisms which are at root, complex, dynamic and adaptive. This tragedy that lies at the root of all Malthusian-type analysis is also based on a flawed conceptual understanding of systems.

Complex systems are usually analyzed by simplifying their underlying structure, a process of successive reduction by taking away parts or relationships and variables that a systems analyst considers irrelevant to the goal at hand (in the case of population, some decision rule that maximizes utility under a resource constraint). There is nothing odd with organisms limiting the scope of their efforts to make sense of the complex world, if simplification is done to conserve energy. Where complications arise is when the basic reductive impulse comes from outside so that values external to the system primarily determine which factors are ”extraneous” or which variables are “irrelevant” to a goal that may not be compatible with the system’s own. Known as “the outside observer problem”, such arbitrary exclusions result in models wherein observers’ biases and not members’ values drive the system’s observed behavior. While all representations of reality reflect both the conscious or subconscious biases of their observers, models that are deliberately tweaked by policy incentives in specified directions will tend to reflect less perfect correspondence between internal behavior and external perceptions. The trouble arises when such flawed models are claimed to “objectively represent” reality and employed as basis for policy decisions, here a policy to control population. Few call out such travesty for the intellectual dishonesty that it is. 

Far from being mere intellectual dross, the “verifiability” of claims is the stuff of debate between logical positivists (extreme empiricists for whom naked claims that cannot be verified are meaningless); and the modern philosophers of science such as Kuhn (for whom scientific methods cannot verify the truth due to the observer bias and the fact that cultural and institutional factors influence perceptions of what is claimed as truth). Replace “scientific method” with “statistical tests” and one can grasp the enormity of this policy depravity that in the US now snuffs out the life of an unborn child every 100 seconds, at which rate an entire society turns over in less than five years. Ironically a policy promulgated to keep society from “wasting its seed” is self-annihilating itself.  

The Harmful Effects of Erroneous Policies 

If this is correct then propositions like “reducing population growth is a requisite of economic progress” or positive claims such as “population increases consumption and hence retards growth by reducing capital accumulation”; or “artificial methods of reproduction such as sterilization allows families to raise better quality offspring” all the way to the most sophisticated demographic models that are the basis of official population control policies have to be seen for what they are in essence – incomplete, inaccurate and simplistic expressions of very complex relationships that mostly reflect the biases of their advocates. They produce misleading conclusions about the impacts of population control policies on societies by exaggerating their positive effects on economic variables while underestimating or even omitting their negative long run influences on intangible factors crucial to societal balance and growth.  

If this is not devastating enough, the coup de grace is delivered by nonlinear dynamical systems theory: the fact is that statistical correlations are little more than exercises in ferreting out significant (p<0.05) reduced form relationships from historically sampled data. But live systems like human populations are not only dynamically reactive but anticipatory, meaning that they are capable of purposeful adjustment to varying stimulus in un-anticipatable (or even contrarian) ways that are rarely reflected in historical data used by correlation models. It is this adaptive behavior of dynamic living systems, especially their unpredictable non-linear responses to stimuli, that makes statistical models so woefully inadequate in establishing cause and effect relationships. The effects show up in “irrational” and “outlier” behaviors that are filtered out as atypical data: savings-poor families that find ways to send all children to school, rich taxpayers that bust up revenue forecasts as marginal tax rates rise; countries whose GDPs increase as their informal sectors expand, welfare programs that nurture low productivity and anti-social values. It is these “atypical” system behaviors caused by the arbitrary exclusion of unknown factors that renders ludicrous the claimed power of population control policy failures in explaining the relative disparities in economic performance between the Philippines and its neighbors; such simplistic models could never have foreseen the grave disaster that aggressive population control could have brought the Philippines to if 30 years later it had no skilled labor to export. Policy technicians are better served by reading less econometric books and more philosophical tracts by philosophers such as Popper who believed that rational methods cannot validate the truth value of models and propositions involving human beings whose decisions are intertwined with reason and motivations that can never be satisfactorily captured by such weak models. [Incidentally Popper also offered the same “falsifiability” thesis as basis for claim testing which econometrics deals poorly with, being about hypothesis testing but not about decisions].

The Ideology that Underpins this Intellectual Error   

Statistical methods that do not adequately capture the irrational quirks of dynamically adaptive systems merely probabilistically model traits that dispose individuals towards potential behavioral tendencies; as such they capture traits that dispose, but not sufficiently explain why they actualize specific behaviors. The set of beliefs, philosophies and world views that prime such observed behaviors is at its core an ideology that traces its roots to a fundamental way of thinking about reality that descended from Post Renaissance thought. It goes by the term Rationalism, and its modern offspring called Liberalism.  

In contrast to the traditional (Aristotelian/Thomistic/Augustinian) view of human nature which had a permanent and unchanging essence; where man is corrupt and limited in potential, so that his fate is tragic unless saved by Divine Intervention, Rationalism/Liberalism, (to quote Burnham) – “holds that there is nothing intrinsic to the nature of man that makes it impossible for human society to achieve the goals of peace, freedom, justice and well-being which liberals define as (the accoutrements) of a “good society”. Burnham elaborates on Liberalism by quoting Oakeshott – “Liberalism is confident that reason and rational science, without appeal to revelation, faith, custom or intuition can both comprehend the world and solve its problems”. . . “free from obligations to any authority save for the authority of reason . . He is at once skeptical (because there is almost no opinion, habit, belief, nothing so firmly rooted and so widely held that he hesitates to question; and optimistic (because the rationalist never doubts the power of his reason to determine the worth of a thing, the truth of an opinion or propriety of an action”.

What follows from such a mistaken view of human nature is obvious (again quoting Burnham) – “the peaceful, just, free, virtuous, prosperous society is inevitable or scheduled to come on condition that human beings behave rationally by accepting the liberal ideology, program and leadership” (emphasis and italics supplied by the author). Policies to keep population in check, whether through preventing conception, abortion, passive deprivation or euthanasia, are examples of programs that liberals want to impose on societies (especially its vulnerable members) as way to achieve the “good society” outcome. As explained above such conclusions are both methodologically flawed but epistemologically unsound, and now are shown to be the product of an ideology that seeks to remake societies in its own vision regardless of what the consequences to overall society are. Such is the death wish that ideology buys.    

How Western Societies Really Die

What they are saying to us today is that if you want to keep the Federal government open you have to throw women under the bus” is how Sen. P. Murray (D., Wash) depicted the contentious budget debates among Republicans and Democrats in which funding for Planned Parenthood (a pro-abortion group) came close to shutting down the US government. The terrible fact is that the economic future of the US is held hostage by a flawed issue that doesn’t even represent 0.15 % of a budget that liberal policies have larded with entitlements so that cuts of 1-2 % are now called “draconian”. If the US economy does implode it will not be from wars or alien invasions, it will be from a tragic decision to kill unborn babies. 

Friday, October 7, 2011

The Fate of Rational Men: The Enigma that was Steven Jobs

By Son of Bastiat
“Stay hungry. Stay foolish” – Jobs’ 2005 commencement address at Stanford

The above quote that Steve Jobs ended his 2005 Stanford U commencement address with, (and could well have served as his motto if he had one), comes as an admonition and final sentence in “The Whole Earth Catalogue” a book that in a NY Times 10/06/11 obituary Jobs said “had influenced him greatly as a young man”, adds a final touch of mystery to the enigmatic life that ended yesterday. In the coming days, as the world pays its deep respects to his memory, accolades like “iconic”, “visionary” and “genius” will be heaped on him; he will be compared to Edison, Ford, Rockefeller and Walton, all rolled into one. 

When it comes to lexicon, there is no doubt that Jobs was every word and every lofty idea that embody them. Do these terms describe him? More frankly: Who is the Steven Jobs who passed away yesterday?

The Fables of Successful Enterprise

Begin with the romantic stories, likely to be mythical, of how supermen come to the world of ordinary men. Months after Steve’s birth his short family life ends with his mother giving him up for adoption, because her father wouldn’t abide having a Syrian for a son-in-law. In the annals of enterprise, drastic early life experiences such as a divorce, adoption, abandonment (or in Gates’ case a latchkey childhood) always mark the tipping point separating mortal from immortal. Circumstances like extreme penury or, in Jobs case his family’s lack of means to send him to college, help reinforce the romantic narrative of outsiders rising, phoenix-like, from nothingness to rarefied heights reserved exclusively for the anointed. 

Recent articles have regaled readers with probably apocryphal tales of Jobs retrieving empty soda cans and turning them in for cash; and walking 7 miles across the Reed College campus (Portland, OR) in order to save on fare so he could partake of low cost meals at a Krishna temple. One who can get admitted to Reed cannot be that mendicant. The height of all this icon-buffing, of course, are stories of dropping out of college (he left after a semester) “in order not to deplete my parents’ savings” that if true, catapults its object of devotion into the realms of iconic dropouts who not only left school because they found it a waste of time, but out of love for their struggling parents. A common enough story in the Third World, it is something so rare and edifying and coveted that another drop out (Gates) could only perhaps fantasize about. Those stories can only enhance the image of a spare, disciplined and concerned upbringing, fitting right in with the classical narratives of success so dear to historians of enterprise.    

The Truth Value of Hard Facts

In a class by themselves are the fables that inspire awe and bestow on their tellers the status of “entrepreneurs par excellence”. There is the “Tale of the Garage” where things as novel and as earthshaking as digital personal computers see the first light of day in a place as decrepit and dingy as where the family car is towed at night. Only the fact that this event did not happen centuries ago keeps a manger full of braying horses and donkeys from being used as the backdrop to such a historical event.  Instead it turns out that most stories about incubating ventures in garages are a load of c_ _p; the most likely places, in declining order of frequency are: the kitchen table (for convenient access to the coffeepot); followed by the tool shack for easier reach of tools and parts; and last at the local library most incubators are likely to be mental than physical at least at the onset. It is possible that Jobs briefly stored his PC parts in his family garage, but he also rented an office in town. 

Next come “The Bootstrap” narratives, where the hero always manages to come up with the key insight, the dramatic solution to the problem that had bugged all before that fateful moment. In Jobs’ case, this consisted in stories of how the first personal computer was put together in trial and error experiments using parts and ideas learned in countless sessions with fellow members of the Homebrew Computer Club, an association of electronic hobbyists based in Menlo Park. The reality about the first PC is far from that; a few years previously, the Altos, the first working PC was invented in, of all places, Albuquerque, New Mexico and kits came into the hands of and were assembled by Jobs and his putative partner Steve Wozniack. With Apple’s startup capital placed at all of $ 1,300, their tinkering could not have been of a kind sufficient to radically redesign an existing and working personal computer. So much, then, for the appellation “father of the personal computer” that has been attached to Jobs’ name.

Even more dramatic exaggerations are tales of how Apple II (in its advanced models) revolutionized the personal computer with its incorporation (“adaptation”) of the GUI (graphic user interface) and mouse, two of the most crucial innovations that along with Visicalc, accelerated the use of personal computers. Again, unfortunately both were invented somewhere else, in Palo Alto’s XEROX Parc, then a leading technology company in Silicon Valley and in the Northeast, where it was originally based. Jobs himself acknowledged this in an interview, remarking how “apocalyptic” an experience it was to watch the Altos PC being controlled by a mouse from commands displayed in a graphical medium and not by typing statements or codes the way IBM PC and other computers did. So much again, for “bold pioneering”.    

In fact Jobs was neither an expert in computer technology (Wozniack was the hardware guy) nor in its programming; for some reason he failed to foresee the possibilities in what would later on become the world wide web – now a much bigger field than personal computing itself and which could prove to be its ultimate Nemesis. This technology was created by Tim Berners Lee, who worked as a programmer at NEXT. 

Jobs’ unique talent was not in technology development but in envisioning its social interface and application. This proves that there are few payoffs in high technology per se; what is prized and truly creates value is technology that addresses a need, in the PC’s case, needs without customers or that present ones fail to see. In creating the IPhone, IPod and IPad Jobs deserved to be called a true visionary.

Stunning Success, but at what price? 

All the foregoing stellar accomplishments, even when corrected, would have been more than enough to fill in ten lifetimes for an ordinary man; but as Steve Jobs was not an ordinary man, it is only fair to also look at their antitheses, exceptional not being synonymous with perfect.

The most telling of Jobs’ known failings was his aloofness, his brash, almost tyrannical style especially in the early years. Whereas outsiders to his world were led to believe that he was “charismatic, altruistic and genial” when dealing with others, in the company of his closest friends and associates he was far from such especially early on. In private he was perfunctory, formal and even cold especially about personal things, except when he was inquiring about the status of projects or matters related to work in general. He was suave and even charming with customers, but those who observed, felt and experienced his stern lashings knew that Jobs’ primary concerns were functional, sometimes to the point of being harsh if expectations were not met. 

Jobs’ demands from his associates and subordinates were so total that Apple’s culture was for a while sublimated to it; many have pointed out how his successor Tim Cook  has taken on Jobs’ appearance and mannerisms, a sign of how loyalty to a man can take on blind emulation. Personality cults are commonplace among CEOs, but egoistic values can be devastating during successions, and while Jobs did not seem to indulge it, he did not discourage it either.       

As if that was not bad enough, this lack of warmth extended even to his relationships with close kin, to the point of meeting a sister only late in adulthood, who wrote a novel that portrayed him in an unflattering light. About his immediate family made up of a wife and three children (and a child from a former sweetheart) little is known; Jobs himself was aware of how remote he was to his children. Many successful men are driven to the extremes of limiting family interactions or keeping such affairs private.

In this regard, Jobs was a stereotype, but one can question its wisdom when used to rebuff his 80 year old biological father’s request, expressed in calls and emails, for a brief chance to meet him before it was all over. Perhaps he felt uncomfortable with digging up the painful memories of his abandonment; perhaps he wanted to avoid legal issues that could ensue, something which his old man disavowed the slightest interest in, saying: “All I wanted was to have a cup of coffee with my son”. Today that one chance in a trillion is gone forever because of Steve’s hard stonewalling. Such is the lot of people who are too rational – they give up the few opportunities to be happy with those who are close to them.         

Why a Rational Life Means Bearing with Unhappiness

A clue to this enigma is seen in his interior life: except for a youthful dalliance with Buddhism Jobs has never affiliated with any formal worship or faith. Spare in his lifestyle, he was not a materialist, let alone a hedonist. At the same time he was never big on philanthropy, once setting up a humanitarian foundation only to disband and divert its funds to acquire PIXAR. At a pledging session held for wealthy businessmen, he was among those who did not commit to donate, and Apple today is a rare American company that has no formal corporate giving program or philanthropic endeavors. If it has, it is nominal.  

Stay hungry. Stay foolish. What could Steve Jobs have had in mind when he cited this quote in his 2005 commencement address? It means simply this: that total devotion to one’s calling means keeping away (staying hungry) from the pleasures of material success, family, personal relations and even faith. In this he was a cold, unsentimental and rational being, finding the greatest meaning in achievement. At the same time he felt that accolades or ties ultimately amounted to nothing, fleeting as they are in life, and counting for nothing after death. This is why he believed that quests for fame or relationships are ultimately foolish. 

One will never be able to know exactly what thoughts played inside Jobs’ head as he lived his final days, but if Freud’s insights on un-reconciled death are of any use, one can deduce that he probably was in great sorrow, despite it being said that he died peacefully. This is why to the end he resisted exchanging a few words with his expectant father; the rational side of him knew that there was no use. 

It is life’s ultimate paradox: he who knows least is the happiest; he who knows the most, suffers.         

Copyrights by V. Ricasio, NYC 2011

Monday, September 5, 2011

When Jobs Disappear for Good

Work's Disappearance Signals the Start of a New Economy
By Son of Bastiat

Today September 5, millions of Americans take a day off in observance of Labor Day, the one day in in the year when they pause to think about the nature and prospects of the task that engages their time and attention more than any other. It will not be a positive assessment given the dreary facts and prospects pertaining to US employment; last Friday the government reported zero job growth. But as this essay will attempt to do, such introspection can also provide the perspective so necessary to survive this looming (and inevitable) tragedy so man can face a future wherein work finally disappears.

Some Dimensions of this Problem

While this essay focuses on American employment performance, its conclusions have universal applicability – some of the trends identified here have earlier been observed in the UK, then in Europe and Japan, and now in the US as well; it will also become the fate of China, Korea and the rest of the NIEs as their economies mature. One cause is demographics (“the quiet leveler of all proud peoples”); others are subtle changes in cultural attitudes towards work, as well as in the fundamental assumptions that underpin the market economy. While this conveys a flavor of inevitability to this problem, in fact the causes run deeper, all the way to metaphysical issues that sages have debated for the last 2000 yrs. 

For one, the US true unemployment rate is not the 14 million who are not working (for 9.1 %) that makes the news, but the 16.5 % that doesn’t. This higher figure includes 8.8 million part timers (5.7%) who report themselves as “actively looking for permanent work but can’t find one”, and a further 2.6 million (1.7 %) of frictionally unemployed folks who have stopped looking for work because they have given up or are sorting out problems that keep them from looking for either part or full time work. In the underdeveloped countries, reported unemployment rates usually hover between 10-15 %; unofficial rates that include under and frictionally employed could reach up to as high as 30-40 %. Dry statistics on unemployment describe but one aspect of this multi-faceted problem but not its meaning.

For another, absolute numbers of unemployed and unemployment rates omit what labor economists call the “growth elasticity of employment” meaning the responsiveness of job creation to the growth of the overall economy. The author has not calculated the post-recession values for the US but at the last time he did (back in early 2000s) this was less than 1.5 (ie, a percentage increase in GDP creates less than 1.5 % in new jobs); and more problematically, this has been on a secular decline from 2.6 to 2.2 and then 1.7 from the 80s to the late 1990s. This figure could only have worsened to perhaps less than 1.0 immediately after the onset of the financial crisis; with today’s 1.5 % GDP growth, employment could be growing at less than 1 % if not fairly close to zero.

Just like its capital-to-GDP counterpart, these statistics serve handily for sizing up the relative efficiencies of alternative job creation proposals. Had the Obama economists done their homework, they would have had second thoughts before pushing for the $ 787 billion stimulus that flopped miserably, in some instances spending $ 500,000 to $ 1 MM to create a single job. This stickiness of job creation has structural and institutional issues that underlie them. Why the Obama administration believes that another $ 250 billion of stimulus spending will finally nudge employment growth is a sign of their desperation, akin to throwing money to see if something sprouts.

The Negative Forces Behind Unemployment

In increasing orders of “controllability” the following are the principal causes of the current (and most recent) unemployment problems:

a). Recession. Naturally, the slump in economic activity should explain the largest and most recent drop in job creation performance. The post-crisis US economy which is now clocked as growing anemically between 1-2% is the dominant reason for its lackluster job creation performance (both due to real job losses and slow job growth relative to its long term norm), which are entirely two separate things even though they are caused by the same economic weakness. It is interesting to isolate though, how much of US’ dismal job creation is due to the recession, and how much is due to an apparent slowdown in the global economy as well – which based on Maddison’s secular studies have declined from 2-3 % prior to 1970s to less than 2 % since then. This latter phenomenon, seldom factored in job creation programs, underscores the even more intractable nature of job creation in today’s highly globalized economies.

b). Structural/Frictional. Many studies of long term job creation have identified a core amount of a country’s labor force that will never leave its “unemployed” or “underemployed’ workers’ ranks. In the post-recession US economy, this rate hovers at a high of 45 % of the total labor force, a figure likely to be skewed by the excessively bad economy, but in the past has stayed at around half that figure. This rate though has crept upwards from single digits (during the 60s boom) to the low double digits (12-15 %) of the 80s, to the middle 20%s range since late 90s. The main reason for this is globalization’s leveling effects on wages and benefits, wherein newly hired and lower paid (relative to developed nations’) workers in emerging and developing countries act as an overhang (a put option) on the latter countries’ abilities to hire workers at higher wage and benefit levels. A similar but difficult to quantify factor is the palpable deterioration in Western cultural values and attitudes towards work, which have tended to increase supervision and hiring costs (due to worker lifestyle and location choices). Together these propel the arbitraging of work offshore, and the trend towards contingent (part time) jobs domestically. 

c). Policy Errors and Hubris. A very odd but quite powerful contributor to long term unemployment is the predilection of politicians to design and emplace policies that adversely affect incentives to create jobs and/or maintain them. Mainly these policies inhibit hiring because of their impact on costs (of legal compliance and job compensation) but recently the uncertainties stoked by regulations and government interference in the private sector have outweighed even those costs, which are difficult to pass on to consumers. Obama’s recent policies exemplify this job destroying and job growth inhibiting tendencies: Obama Care which will greatly increase employers’ staffing costs; air quality standards that will saddle factories’ with higher operating costs and capital outlays; prohibition on oil drilling and transportation which will make the US hostage to extortionate oil prices; onerous reporting burdens and compliance costs in order to track cash transactions and implement a VAT type tax (both of which were fortunately abandoned). But of even more serious import to business are the current administration’s heavy handed and unprecedented interference in private business in such matters as: cramming down and brazenly eliminating creditors’ interest in the Chrysler restructuring; the forcible bearing by businesses and households of high energy costs in order to subsidize alternative energy; the decision to penalize Boeing for trying to take its aircraft assembly operation to a “right-to-work state” and lately suing to intimidate banks for alleged fraudulent sales of MBS to FHA and Fannie/Freddie, on top of earlier policies to control banks’ internal compensation policies and operations through restrictive laws like Dodd-Frank which along with SarBox have discouraged risk taking and innovation, and likely explains their reticence to lend to businesses. Few of these concerns seem to deter with the bureaucracies that push them aggressively.  

It must be frankly admitted that some of these policies have great merit in light of evidence showing that ineffective enforcement (of existing regulations) have contributed to the financial crises and the worsening of the environment. But sudden implementation and even more seriously, incorrectly timed and non-transparent (intimidating) enforcement calculated to please interest groups such as unions and environmentalists, have created so much uncertainty and hesitation among businesses to create jobs that further hampered the recovery of the US economy. It is seriously indicative of a severe dearth of experienced business hands in the Obama administration, a further indictment of its naivety and hubris if not delusiveness about the real prospects of reforming US society under the dire situation it is in.

These three negative forces conspire to artificially eliminate work before its naturally sanctioned time.

The Final (Positive) Destiny of Work is Its Disappearance

All the preceding factors can be viewed as “cyclical” in the sense that much of their adverse impacts on employment could quickly ease up once the global economy snaps out of its funk and leaps onto a higher growth trajectory. While this happens every now and then (“cyclical”) the chance of this event secularly persisting, while not zero, is not very high, as Angus Maddison’s long term (from 1000 AD) growth studies have shown. If this is correct, then a sustained growth of jobs is itself a chimera. The only task remaining is to explain why this is so, and the author believes that ultimately the reason is rooted in technological and metaphysical forces that are happening beyond anyone’s power to control:

       i. Dematerialization. The world has entered into a phase (of its evolution as a cosmic entity) whereby growth is no longer anchored on increasing consumption of material goods and processing of resources as had been its mode since the Industrial Revolution. It is too soon to say that this confirms what mystic writers have divined ten centuries ago, whereby increasing intelligence and not materiality will be the driving force towards the final destiny of the cosmos. As employment is but the tangible result and manifestation of materiality, it should thus be expected to decline and diminish in the long run future.

       ii. Speed and Mobility. The accelerating rate of change (that dematerialization makes possible) is nature’s way of coping with the complexity that poses as the ultimate challenge to human intelligence. Unfortunately, such speeds as are made possible by the internet also cut out the intermediation and value of information that provides the last refuge for job seekers (if they have not been eliminated by reducing the length of the work cycle and physical stocks that are essential for dealing with uncertainty).    
      iii. Automata. A culmination of the trend towards increasing complexity and intelligence it is the final process that will abolish work, and it occurs when most human activities are performed by robots and mind-machine interfaces so that the only labor needed will be that which is required to maintain these man-machine systems, health, artistic expression and entertainment (human creativity). There will be no other need for work and consequently work will not serve the same purpose as it has served man so far – the means for survival. Instead, work will serve as the creative vehicle for expressing man’s quest for perfection. At this stage after de-mass and velocity have eliminated work, only creativity remains.   

Since life did not endure eons of severe mutation and selection pressure only to vanish meaninglessly, there must be something superior that will make it possible for Man to survive after work disappears.  After all, Nature abhors a vacuum and perfection is an upward (never downward) moving spiral. What exactly is this ingredient the absence of which will mean that the 14.5 billon year Cosmic Experiment must have all been for naught, or at best a burst of randomness?  

The Natural Forces that Will Replace Work (After Jobs are Gone)

It all seems so far-fetched considering the problems sprouting all around him but if one thinks about it deep enough considering the above premises, there is only one logical outcome for modern Man: he can only go so far by dividing the remaining work to its even more basic elements (hoping to somehow “spread” it but at the cost of greater loss of satisfaction and meaning. Ultimately he will have no choice but to change himself and society’s (including the economy’s) basic foundations beginning from purpose to means, to make him survive in a dematerialized, volatile and uncertain world. He must do this because such a change is needed to offset the negative forces that made work disappear unnaturally.

The author has come to accept what seems strange to say especially in this Age of Separation (between Matter and the Spirit) but it is really nothing else but the transcendent values of love and concern for fellowmen that will let man survive the loss of employment and fill this huge void created as the cosmos hurtles towards its destiny. A society and economy restructured along transcendent lines will not only dispense of work but banish this materialistic concern for survival. Weird it sounds but quite very logical.

P. T. de Chardin called it Spirituality. Only a sense of wonder and utter amazement constrains the author from using this term lightly; despite all the flourish that came with it, it all refers to one and the same thing: God who made Man to work by the sweat of his brow if he wanted to survive, is now showing the path to perfection by eliminating that albatross around his neck called work.

Work, especially at meager wages, rather than liberating (“Arbeit macht Frei”) man, has actually condemned him to obscurity.    

Copyrights: VRR@NYC@2011