Booksellers versus Bestsellers

Ammonius, Coming to an Understanding, and the murderous thinkers of Foucalt's Pendulum

2012-02-12T00:30:00.000-08:00

by John MacBeath Watkins

I am delighted to learn, via Slate, of the existence of the Ammonius Foundation. It exists to encourage people to engage in philosophy, and not the sort of logical positivism and ordinary language philosophy that has made the field seem so irrelevant to the lives of ordinary people.

A Slate article, The Mystery of the Millionaire Metephysician, discusses a curious incident in which a number of philosophers were paid a princely sum to review a 60-page document called Coming to an Understanding. It was a paper on metaphysics, done, the philosophers involved decided, by a talented amateur.

Some reviewers went through the motions and collected their checks, others actually became engaged in the work. I recommend going to the link above, and reading the full story, it's priceless, and reveals much about why philosophy means so little to so many.

The document turned out to be written by Marc Sanders, a Princeton-area businessman. Once James Ryerson had discovered that Sanders wrote Coming to an Understanding, Sanders pleaded that he not reveal this to the world:

"Now that you have discovered that I am Ammonius," he wrote, "I know that you will think it your job to inform the world." He had chosen to remain anonymous, he explained, so that his "failure to become a professional philosopher" would not come to light and thus tempt professional philosophers to "simply dismiss the idea of reviewing my work out of hand because the work was known to be by a devoted amateur."

One might think, so what? T.S. Eliot was a banker, and seems to have liked being a banker. Socrates was a stone carver and former soldier. Baruch Spinoza made his daily bread as a lens grinder (silicosis from the glass he ground may have been the reason he died at 44.) Did being successful in the insurance business make Charles Ives a less important composer?

But the tribes of knowledge are as close knit as the crime families of New York and Sicily. When I was a freshman in college, I took the required class in philosophy, as it happened from the chairman of the department. He told me I seemed to have a talent for this, and should consider majoring in philosophy.

At his urging, I attended a conference and saw some real philosophers. I also looked around at the future philosophy offered.

I came to two conclusions. Academics must become wise to survive. The way to become wise is to narrow the scope of your enquiries to the point where few people are interested enough to bother with them, and at that point, you can become the person who knows the most about it.

And if you are not willing to narrow your thought in this way, well...let's just say I wasn't a good enough waiter to be a philosophy major. Waiting tables is a performance, if you do it well, and I am not a performer.

Besides, the project of the logical positivists was proved impossible by a slender volume called Gödel's Proof. And as to ordinary language philosophy, well, the Wikipedia article captures the futility of it:

Ordinary language philosophy is a philosophical school that approaches traditional philosophical problems as rooted in misunderstandings philosophers develop by distorting or forgetting what words actually mean in everyday use.

Nothing to see here, move along, philosophy is just a big misunderstanding. Not exactly a way to tell people your field is vital to human happiness, is it?

What made philosophy important enough to have its own departments in the best universities was its willingness to attack the big problems, to bring in the best minds and try to determine what it all really means.

Well, that was then. And by then, I mean about 400 BCE.

I thought I might find something more important to people by studying political theory, which at least is tied to human society. But at the time I was in grad school, you essentially had two flavors of political theory. There were conservative theorists who viewed the state as a sort of criminal enterprise (at a political science convention I saw one paper that talked about the social contract as if it were a protection racket, which I suppose is one interpretation of Hobbes' Leviathan) and the Marxists who, this being the 1980s, disparaged the "vulgar Marxists" of the Leninist/Stalinist variety and preferred the delicate lacework of theory the French and a few Germans were building as a rejection of both capitalism and the form Marxism took in all the actual societies where it took root. Oh, and they viewed the right kind of government as okay, but the private sector as criminal

Faithful readers of this blog will know that I'm a liberal, of the sort reviled by both Marxists and conservatives, the sort that considers neither the private nor public sectors as criminal. So not surprisingly, I was not attracted by an academic milieu dominated by delusional Marxism and criminal conservatism (I use the term because much of conservatism seemed dedicated to manufacturing justifications for policies favoring the rich, which made it seem a corrupt enterprise.)

On reflection, I suppose I could have built a career by professing to believe what it was most profitable to believe, but then I'd be no better than Mitt Romney.

So I'm rather delighted to see that there is at least one foundation out there that values things like intelligibility (take that, Derrida!) and epistemic progress (the notion that there is progress in human understanding.) I admit to reservations about teleology and monism, but they are clarity incarnate compared to deconstructionists who won't reveal their method (they don't have one, sort of like the ironic ending to Foucault's Pendulum, where the secret societies try to get the truth from a character who refuses to reveal that they are pursuing a nonsensical concoction.)

But will we ever get past nonsensical concoctions? They seem to play an important part in the academic and political spheres of our society, but I have to think that much of the philosophy of the 20th century will be looked back on with less regard than we give to those theologians who wondered how many angels could dance on the head of a pin. (None. They have no sense of rhythm, and if they get one, they fall right down to the gambling hells and jazz clubs where the rebel angels recite scandalous poems about Bishop Golias, the father of all bohemians.)

Everybody remember where we parked the car.

2012-02-09T22:10:00.001-08:00

The apocalypse of daybreak, a nonsense poem

2012-02-08T18:43:00.000-08:00

By John MacBeath Watkins

The squirrels are quoting Shakespeare

to each other in the park

while the moon falls from the heavens

as he stumbles in the dark

the stars fade in their spotlights

in a sky as cold as stone

while the paparazzi

fight over a bone

And the dogs bay and the cats spray

as they try to claim the new day

and birds soar on wings sore

from battling the broken wind

while the sun comes up like plunder

spreading gold upon the shore.

The Blue Man speaks of octopus ink, and all I see in link rot and the Rapture of the Geeks (Publishing in the twilight of the printed word continued)

2012-02-05T00:27:00.000-08:00

by John MacBeath Watkins

He wore blue jeans and a blue windbreaker over a blue shirt, I wonder what his favorite colour was, but his beard was grey and his frame was wiry. He stood in my bookstore and spoke with great authority on the subject of octopus ink (I live where the largest octopuses live, and yes, that's the proper plural, Octopi is either akin to eel pie or pi to the eighth power.)

One day, he warned, we won't be able to get ink, and the only permanent ink is octopus ink, he said he was extracting it somehow (what's in it for the octopus, I wondered) and saving it in vials he buried in his yard (eccentrics: America's renewable resource.)

Now, once, in Yunnan province, I saw one of the last priests of the Dongba religion writing a sacred book with ink made from soot and water, the pictograms looked like something Matt Groening might draw, and I had to wonder as the blue man spoke, when will we run out of soot and water?

But he saw the future clearly, a future with permanence stolen from us, no memory hole needed, it's inherent in the technology, we can edit this post, this very post (which for all you know once contained a terrible blood libel against someone we no longer can recall, someone denied the immortality of words, another example of the death of ghosts.)

People tell me things live forever on the Web, but when did footnotes fade from books? The links I use instead on the blog rot like madrona logs lying languidly after the pollen has fallen in a climax forest. (Without Freud, remember Freud? that sentence would be more meaningless than it is.)

This fellow named Franzen, he wrote that Oprah book, says that the permanence of print is all that protects us from an Orwellian future. Without print, how will we remember? Every word can be changed, just pixels with all the conscience of pixies in a pixellated world.

I sold a book from 1640, I know it said when I sold it what it said when first it saw the light of day. It said it in Latin, it was a travel book, a Baedeker for Beatrice about Italian cities.

But should this blog be all that survives some future cyber war, or the Singularity, that Rapture of the Geeks, would it remain coherent, as the links all rotted away? I've seen dry rot in the deadwood, seen nature have her way with with the timbers of the mast step, seen a Daphne turned to timber that I loved, and had to very nearly give away.

But link rot is the death of all the proof that secured the love of truth in those readers who took the time to follow all the trails that I had blazed in my research. It's a memory palace built of spider silk, more fragile even than the human mind which moves around in a bundle of nerves walking on (two legs bad, four wheels good,) ready to be run down for the crime of pedestrianism, no, it would not even take that act of violence, it could be just eliminated by a power surge, or that fatal key stroke that wiped out the fourteenth century.

But books are a sensual pleasure, and we are efficient people, so we know what will win in the end. We can only hope for the samizdat to survive in the drawers of roll-top desks and not be lost like Hemingway's luggage.

I spoke with a man of the Bai people, who told me that much of his people's culture was destroyed by the Cultural Revolution. The Chinese did not suffer this fate, because in their culture, there was a custom of hiding important works in interesting times. The works of Confucius, suppressed during the Qin dynasty, were hidden in the walls of a scholar's home.

Will some future culture recover all it's ancient works, or will it have to rebuild based on copies of Rush Limbaugh's Complete Works preserved in some survivalist bunker?

Will all knowledge one day live in the Cloud? The future lasts forever, and in the depths of time will the server farms always be tilled? Some future drought of knowledge could evaporate the Cloud, and leave the server farms all fallow, and then, will screen shot samizdats of some future Analects be found in the walls of a rebel scholar's home?

Sometimes even the mightiest river drowns somewhere deep in the sand.

How to make a mathematician's head explode

2012-01-31T22:07:00.001-08:00

From an emancipated man to his former owner

2012-01-31T21:20:00.000-08:00

From Letters of Note, an absolute gem. After the end of the Civil War, Colonel P.H. Anderson of Big Spring, Tennessee, wrote a letter to his former slave, Jourdan Anderson, who had moved to Ohio and found paid work, asking him to come back to work on his farm.

That took a lot of cheek, but Jourdan was more than up to the challenge, and wrote a small masterpiece in reply that builds to a tragic and funny punchline. I suggest you start at the beginning, read straight through to the end, then stop, because the structure of the letter lends to its impact.

(and a tip of the hat to Amber Ferris for guiding me to this.)

Dayton, Ohio,

August 7, 1865

To My Old Master, Colonel P.H. Anderson, Big Spring, Tennessee

Sir: I got your letter, and was glad to find that you had not forgotten Jourdon, and that you wanted me to come back and live with you again, promising to do better for me than anybody else can. I have often felt uneasy about you. I thought the Yankees would have hung you long before this, for harboring Rebs they found at your house. I suppose they never heard about your going to Colonel Martin's to kill the Union soldier that was left by his company in their stable. Although you shot at me twice before I left you, I did not want to hear of your being hurt, and am glad you are still living. It would do me good to go back to the dear old home again, and see Miss Mary and Miss Martha and Allen, Esther, Green, and Lee. Give my love to them all, and tell them I hope we will meet in the better world, if not in this. I would have gone back to see you all when I was working in the Nashville Hospital, but one of the neighbors told me that Henry intended to shoot me if he ever got a chance.

I want to know particularly what the good chance is you propose to give me. I am doing tolerably well here. I get twenty-five dollars a month, with victuals and clothing; have a comfortable home for Mandy,—the folks call her Mrs. Anderson,—and the children—Milly, Jane, and Grundy—go to school and are learning well. The teacher says Grundy has a head for a preacher. They go to Sunday school, and Mandy and me attend church regularly. We are kindly treated. Sometimes we overhear others saying, "Them colored people were slaves" down in Tennessee. The children feel hurt when they hear such remarks; but I tell them it was no disgrace in Tennessee to belong to Colonel Anderson. Many darkeys would have been proud, as I used to be, to call you master. Now if you will write and say what wages you will give me, I will be better able to decide whether it would be to my advantage to move back again.

As to my freedom, which you say I can have, there is nothing to be gained on that score, as I got my free papers in 1864 from the Provost-Marshal-General of the Department of Nashville. Mandy says she would be afraid to go back without some proof that you were disposed to treat us justly and kindly; and we have concluded to test your sincerity by asking you to send us our wages for the time we served you. This will make us forget and forgive old scores, and rely on your justice and friendship in the future. I served you faithfully for thirty-two years, and Mandy twenty years. At twenty-five dollars a month for me, and two dollars a week for Mandy, our earnings would amount to eleven thousand six hundred and eighty dollars. Add to this the interest for the time our wages have been kept back, and deduct what you paid for our clothing, and three doctor's visits to me, and pulling a tooth for Mandy, and the balance will show what we are in justice entitled to. Please send the money by Adams's Express, in care of V. Winters, Esq., Dayton, Ohio. If you fail to pay us for faithful labors in the past, we can have little faith in your promises in the future. We trust the good Maker has opened your eyes to the wrongs which you and your fathers have done to me and my fathers, in making us toil for you for generations without recompense. Here I draw my wages every Saturday night; but in Tennessee there was never any pay-day for the negroes any more than for the horses and cows. Surely there will be a day of reckoning for those who defraud the laborer of his hire.

In answering this letter, please state if there would be any safety for my Milly and Jane, who are now grown up, and both good-looking girls. You know how it was with poor Matilda and Catherine. I would rather stay here and starve—and die, if it come to that—than have my girls brought to shame by the violence and wickedness of their young masters. You will also please state if there has been any schools opened for the colored children in your neighborhood. The great desire of my life now is to give my children an education, and have them form virtuous habits.

Say howdy to George Carter, and thank him for taking the pistol from you when you were shooting at me.

From your old servant,

Jourdon Anderson

Cordless Challenge for Lake Union?

2012-01-31T16:53:00.000-08:00

by John MacBeath Watkins

I've broached the idea of a Cordless Challenge, an event where people build boats to use a cordless drill for powering vessels that race against each other.

The event started in England:

So at some point in the not-to-distant future, I'll be meeting with Dick Wagner and some other miscreants from the Center for Wooden Boats to see how we might make this happen at the next Seattle Wooden Boat Festival.

Anybody out there want to come? The time and date of the meeting is not yet set.

E=mc², Paradise Lost, and the introvert in society

2012-01-29T18:41:00.000-08:00

by John MacBeath Watkins

“Neither E=mc² nor Paradise Lost was dashed off by a party animal.” That observation, from science writer Winifred Gallagher, illustrates the advantage to society of introverted individuals.

John Milton, as we discussed in this post, was a difficult man whose wife left him shortly after they were married, to return years later. Although he was, in addition to being the poet who wrote Paradise Lost, a public intellectual and a powerful advocate for Puritan causes, he could not have fulfilled the roles he did if he had been one of those people who need constant social interaction. Could the Secretary of Foreign Tongues for the Council of State have dealt with correspondence in a variety of languages had he been at parties all the time?

Yet our society valorizes extroversion, to the extent that introverts often try not to act like introverts. Susan Cain's new book, Quiet: The Power of Introverts in a World That Can't Stop Talking, tries to tackle that problem by showing the advantages of introversion.

Introversion, by her definition, is not the same as shyness. The introverted are careful observers of their environment, and prefer less stimulation than extroverts. The shy are afraid of social judgements. I suppose by this definition, it would be sheer hell to be shy and extroverted, because you would want social interactions that terrified you, whereas shy introverts are happy to be alone with their thoughts.

This is important, because group interactions are less likely to lead to creativity than is quiet contemplation. I've experienced this myself, mainly in academics, because in the working world I've sought out the kind of jobs I can do with a certain amount of autonomy.

It strikes me that it is difficult to get a group to think through the logical permutations of a problem; they are more likely to accept the most obvious solution, because that is the easiest to agree to, and the extroverts in the group will want to move on once the obvious solution has been identified.

And why do introverts stay focused on the problem a little longer?

I have two cats, Bonney and Bunny. When there is a loud noise, like a telephone ringing, Bunny runs to confront it while Bonney runs to a convenient place of concealment. Bonney wants to know what is making the noise before she comes out to examine it. This is the essential difference between extrovert and introvert; a reaction to stimulation that is on the one hand confrontational and on the other, cautious.

From Cain's article in Time:

When these children are at four months, if you pop a balloon over their heads, they holler and pump their arms more than other babies do. At age 2, they proceed carefully when they see a radio-controlled toy robot for the first time. When they’re school age, they play matching games with more deliberation than their peers, considering all the alternatives at length and even using more eye movements to compare choices. Notice that none of these things — popping balloons, toy robots, matching games — has anything to do with people. In other words, these kids are not antisocial. They’re simply sensitive to their environments.

But if they’re not antisocial, these kids are differently social. According to the psychologist Elaine Aron, author of the book Psychotherapy and the Highly Sensitive Person, 70% of children with a careful temperament grow up to be introverts, meaning they prefer minimally stimulating environments — a glass of wine with a close friend over a raucous party full of strangers. Some will grow up shy as well. Shyness and introversion are not the same thing. Shy people fear negative judgment, while introverts simply prefer less stimulation; shyness is inherently painful, and introversion is not. But in a society that prizes the bold and the outspoken, both are perceived as disadvantages.

Read more: http://ideas.time.com/2012/01/26/dont-call-introverted-children-shy/#ixzz1ku6IAPxD

Aron calls the approach of the introvert to the world "alert attention." In the animal world, some creatures are more bold in their explorations of their environment, while others hang back. That's why, when you're feeding birds, they don't all flock to the food at the same time. There's an obvious advantage to getting to the food first, and a less obvious advantage to seeing whether the food is in a dangerous place.

These differences seem to exist within most species, but of course, they exist to differing degrees. Mud hens will come to someone offering food first, then ducks once they've seen that the mud hens don't die, and seagulls are more standoffish than either, preferring to catch the food in the air rather than land and be vulnerable.

Cain, in researching her book, traveled the country documenting our social bias against the introverted, and found that "One of the most poignant moments was when an evangelical pastor I met at Saddleback confided his shame that 'God is not pleased' with him because he likes spending time alone."

I sort of doubt that. If you were God, and were constantly bothered by people wanting you to solve their problems or fix their football games, wouldn't you want a little quiet time?

Mythmaking and Manufacturing: The supply side of public spending

2012-01-24T21:25:00.000-08:00

by John MacBeath Watkins

We build the story of our lives on narratives, and do our best to make them like life's supposed to be, as noted in this post. But those narratives are not just private stories, they are also the way we build the communities and nations we live in.

The myths that make America are famous and most of the time carry important truths. They also conceal important truths. The self-reliant frontiersman was able to, as Firesign Theater put it in Temporarily Humboldt County, "carve a new life out of the American Indian," only because the U.S. Cavalry was prepared to chase the Native Americans off their land. And at a time when land was perhaps the most important basis for wealth, this played a major role in the rise of the American economy, essentially transferring wealth from its owners to its invaders in the time-honored manner of pre-industrial empire building.

Clearly, those self-reliant frontiersmen (who make up much of my ancestry,) were dependent upon the willingness of the American government to seize and protect the property they settled. The settlement of the West was an agrarian revolution, taking land from hunter-gatherer use to farming and herding use.

The other revolution was industrial. America had, as a British colony, been held back from developing industry. Mercantilist theory held that colonies were to provide the raw materials for the mother country to manufacture, and make that country wealthy and powerful. This was part of the beef between the colonies and Britain: We wanted to develop the resources and manufacturing here.

And when we did, it was private enterprise and Yankee ingenuity that did the trick, right?

Not quite.

The American rise in manufacturing, and the revolution of mass production, had a lot to do with those things, but also depended on bloated defense contracts and publicly owned manufacturing enterprises. In 1852, the British sent a fact-finding mission, touring the government armories at Harper's Ferry and Springfield to learn about the "American system of manufacture."

Which we got from the French.

Most manufacturing prior to and including the 19th century involved what some scholars call "the craftsmanship of risk." When a craftsman picks up a tool and starts to make something freehand, the product is a functional representation of an idea, and the extent to which it succeeds in making the idea function depends on the skill of the craftsman. The risk is that the product will be flawed because of the lack or skill (or just a bad day) of the craftsman.

In manufacturing, Adam Smith famously chronicled the efficiency of a pin factory based on division of labor, even though the pins were mainly made by hand. This worked quite well, because pins have only one part, which works even if not every pin is quite the same.

Muskets are a different matter. Gunsmiths making each weapon one at a time could produce working muskets, but if a part needed to be replaced, it needed to be shaped by a skilled gunsmith.

French General Jean-Baptiste Vaquette de Gribeauval found that this meant weapons could not be repaired in the field. If you had a stack of muskets, some with one part broken, some with another, you could not assemble a single working musket from the parts, even if they all were built to the same design.

Even with division of labor, the problem remained. Every manufacturing plant had a finishing department, the job of which was to take the parts made by others and shape them so that they could work together in each musket (or clock or sewing machine when those came along.)

The Système Gribeauval was conceived to solve this problem. Each musket would be made with identical parts so that they could be cannibalized to repair other muskets in the field.

This proved extremely expensive. The reason people weren't making identical parts already was that the methods of manufacture available to them involved the craftsmanship of risk. The parts had to be made with far greater precision if they were not to be fitted to the final assembly by modifying them at the end of the process. It took a painstaking gauging process to produce parts that were truly interchangeable, and no individual frontiersman cared to pay for that. Only armies could afford the extra cost, and only in combat was the extra cost worth while.

A number of French officers came to help with our revolution against Britain, and some of them stayed. Indeed, some came back after things got hot back home, since many of them were noblemen and feared Dr. Guillotine's invention. This represented an important transfer of skill from one of the most advanced countries in Europe.

It was also a transfer of skills that would not move as easily to England, a nascent industrial powerhouse and sworn enemy to the French. One French engineer, Marc Isambard Brunel, father of the more famous Isambard Kingdom Brunel, introduced the idea of interchangeable parts to the British Navy, in the block-making process he invented. Marc Brunel, by the way, had taken American citizenship and worked as the city engineer of New York, after he fled France because of his Royalist sympathies.

The woman he loved, an English orphan who had been working as a governess, was held as a spy during the Terror. She was released with fall of Robspierre and traveled to London, where Brunel married her and presented his system of mass production to the Navy, helping win a war against the country he had fled. There's a lesson there for revolutionaries who take the view that you can't make an omelet without breaking some eggs. Sometimes, you end up with egg on your face.

But blocks don't have a lot of parts, and they don't break down much. speed of production was far more important for block manufacture than precision parts.

The American military became interested in the idea of interchangeable parts for the same reason the French under the royalists were. They went farther with it, and one of the people who promoted it was that old fraud, Eli Whitney.

Whitney, after failing at some other enterprises, managed to get a contract to make a (then) large number of muskets because he had contacts with some of his old Yale classmates, even though he had no facility capable of fulfilling his contract. When he failed to deliver the parts on time, he claimed it was because he was trying to do this very hard thing, produce muskets with interchangeable parts. Although Wikipedia claims he assembled a musket from a bin of parts, this is not the case according to this excellent book:

What Whitney actually did was show that the flint lock from one of his muskets would fit another of his muskets. Repairing the lock of one with parts from another, however, was the goal.

But his promotion may have helped more able men to get the backing they needed to really implement the idea. Simeon North, a contemporary of Whitney's, seems to have been far more successful in actually manufacturing parts that were interchangeable. Still more successful was John Hall, a Maine boatbuilder turned inventor who was no doubt familiar with the use of molds and patterns for the making of stock boats. He invented a wide variety of machines for the manufacture of the various parts, and instituted a very complete gauging system for ensuring the quality and interchangeability of the parts. Only a machine could do each action in exactly the same way each time it made a part, and only constant checking with the gauges could ensure that the machine did that. This was the craftsmanship of certainty.

The methods North, Hall and their successors developed automated production to an unprecedented degree, which was necessary to introduce the craftsmanship of certainty. Hall was one of the first to understand that once the system for producing muskets -- or anything else -- the longer the production run, the lower the per-unit production cost. Despite his protestations, the American government kept ordering the kind of small lots (as little as a thousand or two thousand guns at a time) that Whitney had such trouble producing in a timely fashion.

But the revolution that took us from the craftsmanship of risk to the craftsmanship of certainty was the basis for American industrial ascendency every bit as much as the natural resources bought by our treasury (in the case of the Louisiana Purchase and Seward's folly) or conquered by our armies (most of the country,) and the roads, canals and railroads built either with public funds or public assistance. And that revolution would not have happened if the government had not been willing to pay more for weapons than was generally the price because the needs of an army and the needs of a trapper are not the same.

There was plenty of private industry involved. There were contractors working within the armories who learned the methods, invented new machines to automate the process, and carried that knowledge into private industry. But much of the research and industrial experience that supplied our economy with the expertise to succeed was developed on the federal dollar.

And much like the building of roads and schools or the conquest and anexation of nearly half of Mexico, it was a public-sector investment in the supply side of the economy.

Newt's morals, Romney's mendacity

2012-01-21T18:17:00.000-08:00

Brilliant line from Daniel Larison: "Republicans are faced with an unfortunate predicament entirely of their own making: they can rally behind the Republican Bill Clinton to try to stop Romney, or they can nominate the liar."

And the first comment in response says, if you vote for Gingrich, you get both.

The Bishops of Wall Street and the dogma of capitalism

2012-01-18T17:16:00.000-08:00

by John MacBeath Watkins

The Financial Times, and excellent publication with sometimes surprising views, has been running a series on capitalism, and John Kay has written something I find fascinating--that what we now call capitalism isn't what was once called capitalism, which means an entirely different set of incentives are at work.

You can sign up to look at FT articles for free (eight a month) so don't let the paywall stop you from reading the whole thing:

http://www.ft.com/cms/s/0/86667196-3afc-11e1-b7ba-00144feabdc0.html#ixzz1jm7WmxXn

We've been using the word capitalism since about 1850 to describe a form of economic organization where the owners of capital run large commercial enterprises, seeking to maximize profits and investing in their own interest.

This was the form of social organizational form Karl Marx critiqued. But since his death, the limited liability corporation has taken over most large enterprises. Sure, there are still a few true capitalists around, but most companies separate ownership and control into stockholders and management. As Kay notes:

"So the business leaders of today are not capitalists in the sense in which Arkwright and Rockefeller were capitalists. Modern titans derive their authority and influence from their position in a hierarchy, not their ownership of capital. They have obtained these positions through their skills in organizational politics, in the traditional ways bishops and generals acquired positions in an ecclesiastical or military hierarchy."

This ties in with my post the other day about Thorstein Veblen and the 90% tax bracket the other day. As mentioned in that post, some people making public statements about how taxes will affect top earners -- even the top earners themselves -- have no idea what the top marginal rate actually is. What they object to, then, is not the rate but the notion that they deserve to have their taxes raised.

And what is it about this that they object to? Perhaps a societal norm that says they are being rewarded in excess of their value. After all, these are not capitalists, risking all and winning or losing all in the hard-knocks world of industry and finance. They are managers of other peoples' resources. When management decides that the company should lobby against a bill that says the company must disclose more about what its managers are paid, and how that compares to the average (or better, median) pay of workers at the company, are they acting in the interest of the shareholders, or in their own interest?

In economics, it's called the agency problem. You hire people to act in your interest, and not surprisingly, they are tempted to act in their own interests. In religion this means the Church spends its money on palatial workplaces and accommodation for the priesthood, in business, it means such excesses are reserved for the business equivalent to bishops, the CEOs. Who, in the pictures below, is the more potent potentate?

Apostolic palace, Vatican City

Transamerica pyramid

The CEO serves the company in much the same way the Vicar of Christ serves God. Because God does not have a corporeal being at the moment (as far as I know) we rely on those who represent Him to interpret His wishes and decide how the money and other resources given to Him should be spent.

And because the corporation has no corporeal being, the CEO must interpret It's will. Just as Popes have interpreted God's will as being very much in favor of making bishops comfortable and powerful, CEOs have interpreted the corporation's will as being to pay them well if they run a larger (therefore higher status) company regardless of relative performance in comparison to smaller but better-run companies.

They may, as the executives of certain banks did, recklessly expand the company, thereby increasing their status and pay, even at the risk of collapsing the company.

The bishops of Wall Street even have their own dogma, and preach it to the converted, insisting that unbelievers are dangerous and evil. Faith-based economics dominates what should be technical discussions of the best policy for economic growth and responsible public finance. Spain and Italy are nailed to a cross of gold for the salvation of the Euro, and Saint Laffer's Curve is expected to produce a miracle any time...Now! Well, just wait a minute, all these tax cuts have got to produce results...Now! Well, maybe tomorrow.

We know that markets are impossible without governments to guarantee property rights and enforce contracts, yet the dogma of capitalism claims all government is harmful to the functioning of markets. The question becomes, not how should markets be regulated so that they might function best, but whether they are to be regulated at all.

Taxes are cut with the claim that they will produce manna from Wall Street, but the history of the economy shows no link between the top marginal rate and the rate of economic growth.

And the Bishops, in their quiet rooms, contemplate the justice of it all.

Snowboarding crow

2012-01-15T23:04:00.000-08:00

We've had too few crow posts lately. Here's a video of a hooded crow in Russia using a jar lid to snowboard on a roof:

Looks like there's a problem with the link. Try this: http://blogs.scientificamerican.com/video-of-the-week/2012/01/18/snowboarding-crow/

Lies, damned lies, and the size of government

2012-01-15T17:07:00.000-08:00

by John MacBeath Watkins

Shrinking the size of the federal government has been a theme of every president since Jimmy Carter came into office in 1976.

So why doesn't it shrink?

There are a couple of answers to this. One is that it has shrunk. Federal employment peaked in 1967 at 6.4 million, according to this source: http://www.opm.gov/feddata/HistoricalTables/TotalGovernmentSince1962.asp

And now it stands at 4.4 million. Of course, that has happened against a background of employment growth in the rest of the economy, such that federal employment as a percent of total employment has been falling for decades, according to this source: http://www.musingsfrommars.org/2011/01/a-lie-thats-either-malicious-ignorance-or-deliberate-malice.html

That includes the military, and most of those who object to the growth of government also object to any attempt to cut military spending, so I should mention that civilian employment has also fallen since it reached its peak in 1990 under Bush the Elder at 3.067 million. Civilian employment stood at 2.774 in 2010, the most recent year for which I can find numbers. Of course, state and local government employ people as well, which is where the real growth has been:

And, of course, the other answer is that these numbers don't really capture the growth in federal employment because contractors and people hired on federal grants don't appear there. Bush the Younger was particularly prone to growing the government with contractors. Finding out the real size of government takes some sleuthing, which Paul C. Light did in this study. (You can click on the chart to make it larger.)

Light found that federal employment including contractors and such fell 12.6% from 1990 to 1999, increasing between 1999 and 2005 by 35%, mainly in the final three years, when George W. Bush had managed to implement his policies. Clearly, the size of government by some measures varies much more than our second chart would indicate.

It will take Prof. Light or someone like him to make a study that shows what's really happening now, but we can be almost certain that those trying to terrify us with stories of how much government has grown will be playing fast and loose with the numbers. Compare the growth in the civilian labor force in this chart to the flat line for federal employment in our second chart (from here):

This, of course, explains chart 1, which showed federal employment falling as a percentage of total employment. The problem is that many of those showing up as employed by state and local government are supported by federal grants, and until reporting changes, tracking the number of contract employees will be quite hard to track as well.

Camus on political speeches

2012-01-15T15:41:00.000-08:00

"Every time I hear a political speech or I read those of our leaders, I am horrified at having, for years, heard nothing which sounded human. It is always the same words telling the same lies. And the fact that men accept this, that the people's anger has not destroyed these hollow clowns, strikes me as proof that men attribute no importance to the way they are governed; that they gamble--yes, gamble--with a whole part of their life and their so-called 'vital interests'."
--Albert Camus

Understanding God as an imperfect being of doubts and regrets

2012-01-14T15:54:00.000-08:00

by John MacBeath Watkins

Theodicy is the branch of theology that attempts to prove that God is omnibenevolent, omniscient and omnipotent. It is an Enlightenment term coined by Gottfried Liebniz in 1710, in an essay in French the title of which translates to Theodicy: Essays on the Goodness of God, the Freedom of Man and the Origin of Evil.

Theodicy was needed because the Enlightenment was a time when religious authority was loosing its prominent place in Western thought and being replaced by logic as our dominant mode of thought. The picture of God that it painted was one of logical perfection, but in practice, also one of logical paradox. If God is benevolent, omniscient and omnipotent, why is there evil in the world?

It reminds me of the early attempts to understand the solar system, in which it was supposed that the heavens must be perfect ('cause it's heaven, right?) therefore the planets must orbit in perfect circles, and by the way, the Bible says the sun goes around the earth, so you've got to have that, too.

Thus, Ptolemaic astronomy and extremely complex amilary spheres that attempted to model the solar system, like the one at right:

But suppose we did not require God to be perfect. Suppose we assumed that he simply existed, and all the efforts of religion have simply been efforts by his creations to understand him (here I will ask that atheists among my readers suspend their disbelief.)

We know, for example, that Abraham Lincoln existed, and was powerful, and touched many lives. Yet we do not assume that biographies of the man are infallible, or that he was.

Suppose, then, that not only is the Pope not infallible, neither is God. Suppose the Bible was written by human scribes, who while they may have been divinely inspired, remained human and therefore recorded things in a fallible manner (here I will ask that Believers among my readers suspend their belief.)

What picture, then, do we get of God?

He likes bald men, even sending she-bears to maul the children who mocked his prophet Elisha for his baldness. He lets the devil goad him into putting Job through really horrible times just to test whether Job really loves him. He destroys the world with a great flood, and Sodom and Gomorrah with fire, both times because he sees the people he has created have gone wrong.

Are these the acts of a logical, benevolent god who knows all and can do anything? Perhaps the character of God becomes easier to reconcile if we see him as a personality. One that requires constant praise, loses his temper, makes mistakes and has regrets. And why would such a god create the devil? I know, I know, Lucifer started out as a promising young angel and rebelled. But would an omniscient god create an angel he couldn't get along with?

In this short story, I explored the idea that god's isolation, as a consciousness that had no world to perceive, would have caused him to begin to hallucinate, which I believe is basically compatible with Bishop Berkeley's theology. In If I Stop Dreaming, a man realizes that he is God, and everything is his fault, wars, for example, being conflicts within himself. And in this story, God is full of doubts, so what's he going to do, pray? Who is he to turn to?

In God of Doubt, Satan is God's companion, in fact, he might be called God's doubt, a part of himself that questions his motives and his certainties, that part of him, in fact, that forces him to justify his actions and sets moral limits. Without Satan, there is no evil, and without evil, there is no limit on what one might do.

This approaches the central mystery of God, why he would create evil. Remember that the categories we think with are embedded in language. Words describe the meanings we use as categories with which we think. Subtract the concept of evil, and the meaning subsides into the remaining categories of thought, which makes our thought a little more vague.

Jung thought that human archetypes are physically inherited, a part of the human brain. I believe that there are archetypes, but they become part of the structure of thought as we learn language and its uses. Archetypes are bigger than words, just as modules are bigger than commands in object-oriented programming.

To understand the archetype of God, then, is to understand ourselves a little better. And that archetype exists, whether or not a real God exists. That abstract creature of theodicy that is perfect in its benevolence, omnipotence and omniscience, tells us nothing about the God humanity either met or invented in the writing of the Bible. That imperfect creature of rages and mercy has a personality, and therefore a relationship with mankind.

t

Where I live now: Sunset on Vashon Island

2012-01-14T12:29:00.000-08:00

Sunset on Vashon Island, Jan. 13, 2012

The Bain treatment: Should the president serve the owners of America, or the citizens?

2012-01-13T13:20:00.000-08:00

by John MacBeath Watkins

Mitt Romney is running for president on the grounds that what America needs is his business experience. Presumably, this means he intends to subject us to the same treatment Bain gave the companies it took over -- loading us up with debt to pay exorbitant management fees, laying off workers and sending jobs overseas.

The debt part of the equation hasn't been explored much yet, nor has Bain's practice of seeking government subsidies for the companies it was bleeding dry.

But the larger problem is with the comparison to a corporation. In a corporation, most of the ownership does not belong to the workers. As a result, the owners' interests don't coincide with those of the workers, and layoffs, outsourcing, etc. serve the owners at the employees' expense.

So if we think about America as a corporation, we have to ask, who does Mitt Romney think owns this country, its citizens or its investors?

The investors include China, Japan, and other countries, and those wealthy enough to have substantial savings to invest. In 2007, the top 1% of the population owned 42.7 percent of the nation's financial wealth, the next 19% controlled 50.3%, and the bottom 80% controlled 7%, according to this source: http://www2.ucsc.edu/whorulesamerica/power/wealth.html

And aside from the treasury and the Social Security Trust Fund, the largest single owner of our public debt is China, with 8%. Of course, the government doesn't own most of the country, which is why the distribution of wealth matters so much.

So if it is the owners Mr. Romney wishes to serve, the bottom 80% of the population can expect to get screwed. Or, perhaps more accurately, his policies will reflect the fact that he doesn't care if they get screwed, as long as the owners of capital get theirs. That was his history with Bain, and if we are to believe that his experience at Bain shows him the way to manage the economy, that's what we can expect of his administration.

But suppose we look at it another way. The Pacific Northwest used to have a large number of co-op plywood mills. They served the members of the co-op.

These mills did have their own problems, of course, like wanting to take home more of the money the mill made so they could spend it, rather than investing in the mill, and not wanting new members of the co-op who would dilute their ownership and therefore their wealth. They often hired non-co-op workers at an hourly rate, who could be fired or laid off easily. They were to a co-op what guest workers are to a nation.

And the wish to take home more of the money the mill generated instead of investing has a parallel in wanting to have lower taxes rather than investing in roads and bridges, schools and airports.

We have, in fact, under-invested in public infrastructure for many years, in part because of the two-Santa dynamic introduced to our politics in the 1970s.

There are perils associated with governing America as a co-op, but they are nothing like as daunting as those associated with governing this country as a corporation. The Bain treatment would leave 80% of us out in the cold, and serve the 1% more than anyone.

Journalists finding out the truth is not being a 'truth vigilante,' it's their job

2012-01-12T12:26:00.000-08:00

by John MacBeath Watkins

New York Times public editor Arthur S. Brisbane has written a column asking, "Should The Times Be a Truth Vigilante?"

One of the rules of objectivity is not to use words that bias the reader. "Vigilante" is a term applied to those busybodies who take the law into their own hands, trying to achieve justice by extra-legal means. In asking if the Times should act as a "vigilante," he is in effect asking whether the Times should act in an illegitimate manner.

That is akin to using biased attribution, such as, "'I am not a crook,' he lied." Journalists are taught to use the grey little word "said" in such circumstances, so that the readers can make up their own minds. Brisbane apparently does not want the readers to make up their own minds, so he's used a word that prejudices the discussion.

The word "vigilante" also implies that the Times would be usurping the legitimate authority that should be determining what is true. I imagine that if such an authority existed, it would be referred to as the "newspaper of record," or some such.

In fact, if the Times wishes to have the public continue to regard it as a newspaper of record, it needs to act like one. One of the examples Brisbane gives of the vigilante role he claims readers are asking the Times to take on concerns Mitt Romney:

Another example: on the campaign trail, Mitt Romney often says President Obama has made speeches “apologizing for America,” a phrase to which Paul Krugman objected in a December 23 column arguing that politics has advanced to the “post-truth” stage.

Brisbane suggests that the readers are asking that the Times insert some paragraph like the following next time they report such a statement by Romney:

“The president has never used the word ‘apologize’ in a speech about U.S. policy or history. Any assertion that he has apologized for U.S. actions rests on a misleading interpretation of the president’s words.”

This is absurd. The readers have every right to expect that the Times will do its job and report the story fully. When one side makes a claim that seems not to be supported by facts, ask them to produce the facts. If they decline to produce them, or produce words that don't seem to line up with the interpretation, report that. How much more satisfying would it be to write this:

In an email to Politico, the Romney camp said it used the out-of-context quote "intentionally."

How did the press manage to ferret out this bit of deception?

A reporter asked a question.

Was the Politico reporter acting as a "vigilante" in asking why the quote was used out of context? Hardly.

That's the reporter's job.

Brisbane isn't really asking if the Times should act as a vigilante. He's asking if it should do its job, follow up on what politicians and other say and determine whether the facts back up what they've said.

In science, there is a motto: Remarkable claims require remarkable proof. The Times hasn't even been asking for ordinary truth in many cases, notably in the run-up to the war in Iraq.

If you report a lie and make no attempt to determine whether it is true, all you've done is repeat a lie. The claim that you have accurately reported a lie and your story is therefore accurate is pure casuistry. How do readers react when you uncritically repeat a lie? If they find out, they conclude that the newspaper has lied to them, and trust the press a little less.

How do public figures react when you uncritically repeat a lie and do nothing to find out if it's true? They lie some more, because they know there is no penalty for it, you won't do the reporting required to uncover the deceit.

But the Times regards it, apparently, as unethical to do its job.

So, Mr. Romney, who do you envy?

2012-01-11T13:24:00.000-08:00

by John MacBeath Watkins

Mitt Romney says that if you think there are problems in this country with inequity, that's because you envy the successful and you should only talk about these things in "quiet rooms."

For those who have trouble viewing videos, here's the text:

QUESTIONER: When you said that we already have a leader who divides us with the bitter politics of envy, I’m curious about the word envy. Did you suggest that anyone who questions the policies and practices of Wall Street and financial institutions, anyone who has questions about the distribution of wealth and power in this country, is envious? Is it about jealousy, or fairness?

ROMNEY: You know, I think it’s about envy. I think it’s about class warfare. When you have a president encouraging the idea of dividing America based on 99 percent versus one percent, and those people who have been most successful will be in the one percent, you have opened up a wave of approach in this country which is entirely inconsistent with the concept of one nation under God. The American people, I believe in the final analysis, will reject it.

QUESTIONER: Are there no fair questions about the distribution of wealth without it being seen as envy, though?

ROMNEY: I think it’s fine to talk about those things in quiet rooms and discussions about tax policy and the like. But the president has made it part of his campaign rally. Everywhere he goes we hear him talking about millionaires and billionaires and executives and Wall Street. It’s a very envy-oriented, attack-oriented approach and I think it will fail.

As it happens, I'm writing this in a rather quiet room, so let's discuss the issue of inequity. Americans have historically been more willing to tolerate inequity than citizens of many other industrialized countries, so long as they believed that they, too, might make their fortune.

One way of evaluating your chances of doing that is to see how strong the link is between the income of parents and their children. Here's how America stacked up as of March 2010 from this source: http://www.guardian.co.uk/business/2010/mar/10/oecd-uk-worst-social-mobility

You can click on the image to make it larger. I've got a feeling that if we had as much social mobility as, say, Canada, never mind Denmark, inequity would be a non-issue. It's the fact that it has become very hard for people to rise in economic status that the distribution of economic status has become an issue, not just the inequity itself.

Romney needs to identify the criticism of inequity as envy because he is rich, and he's rich in part because his father was rich. It helped him get a good education, it helped him get a good job. Mind you, I don't deny that he worked to make himself wealthier, and his character helped him do that. A man who did not "enjoy being able to fire people" might have laid off fewer people and extracted less wealth from the companies Bain took over. A man less willing to say whatever he thought people wanted to hear might have made fewer deals for Bain. But I'm sure his character, as well, was formed by having a father with these characteristics.

And if the problem with his wealth is not that people are envious of it, but that it was not a fortune most Americans could have aspired to, he'd feel guilty about that, if he is capable of such an emotion. Perhaps, as well, he's putting himself in the place of those who criticize the way people like him make their money, and thinking about how he would feel if he were in their shoes. He strikes me as being ill equipped to deal with issues of fairness, and for the selfish man, a man who lacks empathy, envy is the available emotion -- a feeling not that society has been unfair to others, but that it has been unfair to you, because you aren't getting what you want.

After all, he didn't become a philanthropist with either the wealth he earned or the wealth he inherited. He's spent a chunk of his own fortune trying to buy his way into high office, meaning that his greatest instinct to charity is to himself.

When Bill Clinton said, "I feel your pain," it sounded hokey, but people believed him, because he'd come from humble origins and had seen how both halves live. He seems to have a certain kind of charm, where the people he meets seem to feel flattered by his attention, feel known. If Mitt Romney tried that line, "I feel your pain," it would sound as phony as he is.

The fact that Romney will say anything to achieve high office shows that he does not have a personal vision of how he wants to change the country. All he wants is the status of being in high office. Apparently, he thinks the social status he's gained by being wealthy is insufficient, and he wants President Obama's job.

So, Mr Romney, is that because you are envious of the president's status?

Romney, Obama, and opportunity

2012-01-11T00:09:00.000-08:00

by John MacBeath Watkins

I watched the news on television, something I seldom do, and saw Mitt Romney give his victory speech. He was attacking President Obama, claiming Obama wants equality of outcomes rather than equality of opportunity.

One of the men below had more opportunity than the other. Can you find him?

Underneath the vid of his speech, CNN had a meter of how well he was doing with a focus group of Republican South Carolina voters. I couldn't help noticing that this part of his speech didn't do as well as the other parts.

Could it be that the multimillionaire son of a multimillionaire, the former governor son of a former governor, is the wrong person to make this argument about an african-American son of a broken home who managed to get scholarships and do amazingly well in college and by dint of hard work, a fine mind, and good character made it to the highest office in the land? Does he think the president wants us all to live in the White House?

He also claimed that Obama got his ideas from Europe. Could it be that Romney, who speaks fluent French and at one time lived in a large mansion in Paris is the wrong man to make that argument as well?

This leads us to an intriguing question. Why does Mitt lie? Surely he knows all the nation is watching. Does he believe that no one will call him on this, or that voters are too dim to notice? Does he believe that a constant stream of lies will make it impossible to untangle the mess, and leave people with the impression that some of it is true?

It's easy enough to believe that he has little respect for the voters. It is equally easy to believe that he has total disdain for the press. But is he right to think so little of his opponents to think they will never find a way to communicate what a slimeball he is?

Thorstein Veblen and the 90 percent tax bracket

2012-01-08T16:45:00.000-08:00

by John MacBeath Watkins

For at least three decades, a major theme in our public discourse has been that setting lower tax rates will make high earners work harder and invest more. But the economy thrived when taxes were as high as 90 percent on the top earners, and continued to thrive when it was 70 percent. The economy has expanded no more rapidly since top marginal rates started falling in the 1980s than it did when top marginal rates were much higher, as the chart at left shows. In fact, this is not the first time we've seen this pattern. Tax top rates to pay for World War I peaked in 1918 at 77 percent and in 1929 hit a low of 24 percent. In 1932, we hit the bottom of the Depression and the top rate rose from 25 percent to 63 percent. What happened after that? The economy got better, probably because Franklin Roosevelt effectively devalued the dollar. The tax rate on the top earners didn't seem to be a factor.

How could this be?

One clue comes from the way the rich react when they fear their taxes might be raised. On Dec. 7, 2011, CNBC reported that Jamie Diamond, CEO of JP Morgan Chase, told an investors conference, "Most of us wage earners are paying 39.6 percent in taxes and add in another 12 percent in New York state and city taxes and we're paying 50 percent of our income in taxes."

This cannot be true. For one thing, the top marginal rate is now 35 percent, and it's only charged on the portion of Diamond's income that is above $379,151. Of course, to a man who makes something like 23 million a year, that first $379,151 is peanuts, so I guess it's understandable that he'd forget that's taxed at a lower rate, but the guy is supposed to be a whiz at numbers, so how could he be wrong about the rate he's paying on most of his income?

Enter Karl Smith, Assistant Professor of Public Economics and Government at the School of Government at the University of North Carolina at Chapel Hill. He suggests that what we are seeing is a different set of incentives than those economists have generally looked at:

The lesson I would take is as follows. Profit or consumption maximizing incentives are just incredibly weak. We think we see consumption incentives in the general populace but we are really seeing status seeking. Folks earn or consume more in an effort to raise their status relative to others.

However, at very high income/status levels this has odd results. When Jaime Dimon or Leon Cooperman say that what they really want is to be loved, they mean it.

In other words, Thorstein Veblen was right, the rich are status seekers more than money maximizers. Our current system allows them conspicuous consumption in the form of private superyachts instead of company yachts, but it's still all about the status.

But is there any real evidence of this? Smith says he sees it all the time:

This makes perfect sense if you note that Jamie (Diamond) doesn’t care about his tax rate. He cares about his taxes being raised. He cares about that because it sends a signal to him about how he is viewed in society and that really matters to him.

I see this in lobbying all the time. Because, I am a soulless technician who will faithfully advise anyone and everyone who asks I see the back rooms of opposing lobbyists all the time.
Here at the state level I can safely say that virtually no one has any idea what they are doing. That is, for the most part the lobbyist do not know and indeed are not particularly interested in what is in the best interest of their clients.

Further, this seems to stem from the fact that the clients are not particularly interested in what is in their best interests.

What they are very interested in is whether legislation is pro them or anti them. However, if you begin to talk about the economy as a complex system full of unintended consequences where anti legislation could be in their best interests their eyes glaze over.

Read the whole thing, it's worth it: http://modeledbehavior.com/2011/12/21/why-not-plutocracy-apathy-runs-deep-edition/

So if the issue is really status, then at a certain level, it is no longer really about money. It is about being shown respect, it is about people knowing that you have power, and money is a means to that end.

But when the tax rate was 90 percent, people who ran things still had status and power. Their status may have been reflected in the executive washroom and the executive jet, because giving them more money would only send most of it to the government.

This sort of status depended on perks supplied by the company, rather than the perks you could purchase with your salary. The result was the loyal company man. Head-hunters could hardly outbid your company for your services, given that most of any additional money wouldn't go to you. A golden parachute did you little good, because again, most of it went to the government.

This has some interesting effects on the incentives for managers. A prime problem with hiring managers, which any public company must do, is that they are likely to act on their own behalf instead of that of the owners (it's called the agency problem.) For example, when I started banking with Washington Mutual Savings in high school, it was a sort of chain version of the Jimmy Stewart savings and loan, risk averse and steady, serving middle class families.

At some point, it began to grow rapidly, taking substantial risks to get there. Why would the managers risk what eventually turned out to be the ruin of the company to make it bigger?

It turns out bankers tend to be paid based on the size of the company, regardless of performance, according to this study. Therefore, growing the bank, even if it means the quality of the loan portfolio declines, is the way for managers to manage the company in their own interest. Washington Mutual went bankrupt, but the managers are still rich. (Though they did have to give back some of the money.)

If their taxes were 90 percent on the top part of their income, the managers would get their status and perks from the company, making its continued health the path to their own continued status.

I can see where it might be difficult to write a paper that gets published in an economics journal pushing this idea, because how do you turn it into math? Yet there's plenty of evidence that people care about status more than they care about their absolute wealth, once their basic needs are taken care of. Why do those who earn just above the minimum wage often oppose raising the minimum wage? Because it would put them on the same status level as people earning the minimum wage.

The problem is, how do we convince billionaires that it is not an insult to their status if they pay at a higher rate? Years of running two foreign wars while cutting taxes and adding Medicare Part D left the country in debt, and a long, grinding recession has made that much, much worse. Something must be done, and as workers have become more productive over the last couple decades, most of the wealth created has gone to the top-level earners. We could, of course, raise taxes on the poor, but they are, you know, poor. You've got to follow the money.

And besides, taking food out of the mouths of the poor seems like less of a problem than taking some status from the rich.

46 Pages: How Tom Paine turned the world upside down

2012-01-07T17:03:00.000-08:00

By Jamie Lutton.

I have been holding my breath. I have been holding my breath since I was ten, and I read a Life magazine article about four students, demonstrators, shot by the National Guard for demonstrating against the war in Vietnam. My parents had not let me see the TV coverage.

I brought that article, cut carefully out, to show and tell that fall, in fourth grade.

I have longed for revolution, but I was raised by careful parents that saw the martial gleam in my eye. They had had one of my older brothers jump the fence, leave college, and join the Socialist Workers Party, to struggle against the war in Vietnam. This led my father, in particular, to raise me with an ironic sense of history, and to distrust revolutions, and talk of revolt.

In my adolescence I could find no clear banner to follow, and under my parent's tutoring, I became less of a firebrand. I was still intensely interested in the world, and distressed by injustice and suffering.

I expressed this passion by becoming a bookseller 29 years ago, with my own shop 25 years ago, but I avoided modern history when I read history, averting my gaze from most modern revolts.
But then I read 46 Pages, a history of 1776 and the impact of Common Sense on the American Revolution, by Scott Liell.

Most modern struggles against tyranny, against fascism, against governments that fire on unarmed protesters fail because they lack words. This history book demonstrated this by examining the beginning of the successful revolt of the American Colonies against the British in the late eighteenth century. This revolt was successful mostly because of the writing of one man, in one slim pamphlet. So, a successful revolution needs words, paragraphs, a compelling argument story to unite people into focused action. The hidden story of the success of the American Revolution is Common Sense, and the man who wrote it, and his story.

Hitherto, before this pamphlet of 46 pages was published, the common colonist, except for a few firebrands like John Adams, were angry with Parliament, but loyal citizens of King George III. This 46 page pamplet, written by a new arrival to the colonies, a middle-aged, poor man who had failed at other endeavors.

Thomas Paine was a widower, a Quaker, a man without a university education. He had spent most of his life 'just making corsets.' This pamplet inflamed the colonies to a man. It was read in all the colonies, going though many printings. It was passed from hand to hand, and read aloud to the illiterate or those to whom English was a second language - a great percentage of the colonies spoke German and Dutch - read by ragged solders under the banner of George Washington, read, and read, and talked about.

It made a strong and clever argument that now was the time to throw off the yoke of English Citizenship, and for the American Colonies to step forward into the world as a new nation, a free nation, without onerous taxes and foreign troops stationed unwillingly in civilian homes.

It carried the day. Nearly half of the men (and women) of the thirteen colonies were, after reading this short document, ready for the grueling task of throwing the English out and forming a new union. . . . .

Other writings followed by Thomas Paine - The American Crisis, written directly after this, in eight parts, read to the ragged soldiers as they fought British soldiers, then, later, The Rights of Man to embolden the French, with known results.

Thomas Paine died in obscurity, and penniless. He gave away any money he ever made. Escaping by the hair's breadth from being jailed in England when he went back after the Revolutionary War to foment revolution there, he was nearly executed during the Terror in Paris, then languished in a French prison, where American friends let him lie for many months .

But this book, 46 Pages, reproduces Common Sense, brings the American Revolution alive. The writing is crisp, and the author does not assume that the reader knows more than the brief sketch we learn in school of the events of the late 18th century. The first half of the book lays the scene by giving a biographical sketch of Thomas Paine, and how he came to become a printer and write Common Sense.

Now I know why the thirteen colonies succeeded, and most other revolts of history failed. . . .

I am no longer holding my breath. A great sorrow and perplexity has been lifted from my thoughts. I have seen clearly now, through this author's analysis of Common Sense. I know now that a successful revolution needs clever and heartfelt words, sentences and ideas that can compel millions. The words that are strong enough, good enough, have not yet been written by the, say, Occupy Seattle people, nor the Tea Partiers.

They have been written before, by Abraham Lincoln, Martin Luther King, and Mahatma Gandhi, dealing with similar problems. Revolution does not always mean unseating a government, but can mean unseating pernicious laws and the evil ideas that created them. But, often, a complete sweep is necessary.

I wait for events and hope that someone can rise up who can write like these men and seize the imagination of not just intellectuals, but common men and women of America.

I leave most political writing to John Watkins, who has greater talent than I. Consider this small blog post *just* a book recommendation. I am developing a book of the 100 nonfiction books of the last 100 years or so, that should be read for good citizenship and better understanding of the world. But this book makes my top 25 nonfiction books of American history, if they wish to know where they came from and hope for better days, instead of despair.

Rethinking Liberal Theory 5: Adam Smith, moral philosopher of the marketplace

2011-12-31T15:43:00.000-08:00

by John MacBeath Watkins

In 1776, two important documents in the evolution of liberalism were published: The Declaration of Independence and The Wealth of Nations.

The Declaration of Independence is a political document, based on a legal system of values. It is almost entirely about who is to blame (hint: his first name was George, and he lived in a very large dwelling in England.) A great deal of it has to do with the king's efforts to keep the colonies from governing themselves. The quartering of soldiers, outlawed in our constitution, was one of the things they objected to, because they were being required to give a place to live to the very troops that were burning their towns (for example, Falmouth, Maine, located on the site of modern-day Portland, burned on Oct. 18, 1775.)

The Declaration objects to the King preventing the colonies from naturalizing new citizens, or encouraging their migration, because apparently the colonists did not regard themselves as entirely English or want only English subjects to immigrate. In short, they were saying that they were not exactly part of the English tribe, and should be allowed to absorb people of other ethnicities. That's a fundamental difference in their view of who they were, and not one the king was likely to welcome.

Adam Smith, on the other hand, was not so concerned with law, which may at first glance seem strange, because he was by profession a moral philosopher. He was at one time the Head of Moral Philosophy at Glasgow University, and his major work there was The Theory of Moral Sentiments. In short, he was a man interested in values. Through the good offices of David Hume, a fellow philosopher of the Scottish Enlightenment, he got a very well-paid position as tutor to Henry Scott, the Duke of Buccleuch, which makes me very happy to be writing this rather than trying to pronounce Buccleuch. This enabled him to travel the continent and meet such great minds as Voltaire, Benjamin Franklin, and François Quesnay, a prominent physiocrat.

It always struck me as odd that the first widely recognized school of economics should be the physiocrats, who considered only the agricultural sector productive of wealth. This is a view they share with Confucious, strangely enough. The economic philosophy they rebelled against, mercantilism, bears in many ways more resemblance to modern economics. The physiocrats divided the world into the proprietary class, the landowners, the productive class, those who worked the land, and the sterile class, the merchants and artisans. They were influenced by Vincent de Gournay, French intendent of Commerce in the 1750s, who's motto was Laissez faire et laissez passer, le monde va de lui même! (let do and let pass, the world goes on by itself.) In Thomas Jefferson's mistrust of cities and idealization of the independent yeoman we see the influence of the physiocrats, in the Federalist advocacy for the role of the government in developing the nation we see the influence of the mercantilists.

Mercantilism focused on the balance of trade, on the wealth of kings, and the accumulation of gold. The current economic policies of China might be said to have evolved from the physiocrat phase, in which intellectuals were sent to work with the peasants because this would teach them what was truly of value, to the mercantilist phase, in which the goal is to get more wealth from the world than you give up.

But in any case, it set Smith's mind to work on the issue of how values work to produce wealth. Unlike the physiocrats, he did think merchants and craftsmen could produce wealth. Like the physiocrats, he thought people acted in their own self-interest, producing the public good as a side effect:

"It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages."

But he also foresaw the concept of market manipulation:

“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

And why is this bad? Because it is an attempt to pervert the system for expressing value judgments that we've been discussing since Part 1 of this series, the value system Hobbes adapted from commerce to give secular legitimacy to sovereigns and stop the religious wars that were tearing England and Europe apart. Coercion and deception are morally objectionable because they are efforts to corrupt the system of values on which commerce is based, therefore parasitic and a threat to the system's proper functioning.

Once again, that Hobbes quotation I keep going back to:

The Value, or WORTH of a man, is as of all other things, his Price; that is to say, so much as would be given for the use of his Power: and therefore is not absolute; but a thing dependant on the need and judgement of another.

The worth of things is expressed in the marketplace with prices, and an effort to rig prices is an effort to pervert social values; a sort of lie. Smith laid out the moral justification, in other words, for anti-trust law, because one of the the intersections of the legal and market systems of value was at the points where markets were not allowed to function. Smith was not a fan of the laissez-faire advocated by Gournay, because he thought the participants in any trade would prefer to pervert the system of social values rather than have to deliver value for money. Thus, regulation of some sort was needed, but even that could be perverted.

Today, pundits like Matthew Yglesias argue that a great deal of our legal structure is designed to protect economic incumbents from competition, and Smith would have agreed, as he wrote:

The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention.

So if people, for example, who do cosmetic things to fingernails and toenails say that their profession should require licensing, and the license should require X years of working in the field, we should ask if bad cuticle treatments are a major medical problem, or if this is intended to raise the incomes of people who do nails. What's important about this is that it shows Smith understood that a market is a made thing, a social artifact that can be perverted by social means such as lies and coercion. Without the legal system of values to place blame for such behavior and punish wrongdoers, could markets survive?

And if the markets are subjected to arbitrary political intervention, what begins as a political problem, described again in the Declaration of Independence...

He has obstructed the Administration of Justice, by refusing his Assent to Laws for establishing Judiciary powers.
He has made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries.

... becomes an economic problem, to the point where stout merchants dress up in disguise and throw tea into Boston Harbor. If the courts are not just, but corrupted by the power and purse of the sovereign, can property be secure? If the sovereign's navy bombards your town with incendiary shot, then sends in the marines to finish burning the town, what does the deed to a property mean? The values of the marketplace can create wealth, but only when there is a functioning legal system. This is an additional problem to the notion that society is formed to protect property: Until such protection exists, even the concept of property is incoherent, and only the passion to possess exists.

In fact, to bring the discussion to the present day, I think one of the problems with modern Russia is that the advisers they brought in to help them form a market economy had lived so long in a society with functioning laws and courts, they did not realize how important these things are to the functioning of capitalism. As a result, Laissez faire et laissez passer was the motto of the new Russian state (until the oligopolists became entrenched and the state went back to being repressive.) Add to that the fact that they had spent generations convincing themselves that capitalists were gangsters, and their interpretation of capitalism soon became a society in which economic activity resembled a criminal enterprise, the courts were corrupted by those in power to reward their friends, and the wealth of the nation was lost as all the evils that old moral philolosopher Adam Smith warned of were realized.

Capitalism at its very beginnings faced a dilemma, that it needed regulation to function properly, but the regulation itself could produce mischief that would either unfairly benefit or unfairly penalize commerce. And that's important, because the system of values Smith described was a system for rewarding or penalizing behavior to produce actions that would benefit society as a whole rather than just the individual. A lack of regulation, excessive regulation, or regulation designed to unfairly benefit certain people was a corruption of the way we negotiate the meanings of our actions. Again, this goes back to Ferdinand de Saussure and his theory that language gives us the structure and categories of meanings that allow us to think in that abstract world that is so distinctively human. Manipulations of meaning make our structure of thought less coherent, and could even cause it to break down.

We speak of commercial speech in terms of advertising, but commerce itself is a kind of speech designed to answer the question, how much does that item mean to you? And if the question cannot be answered honestly because of lies or manipulation, our actions cannot accurately reflect this meaning.

Links for this series:

Rethinking liberal theory 1: Thomas Hobbes, blasphemer and patriot

Rethinking liberal theory 2: The outlaw John Locke, terrorist, liberal, and advocate of freedom

Rethinking liberal theory 3: A compact to protect property, or a conspiracy to create meaning?

Rethinking Liberal Theory 4: John Milton and the many shapes of truth

Rethinking Liberal Theory 5: Adam Smith, moral philosopher of the marketplace

Shaw's horrors of Christmas

2011-12-24T10:29:00.000-08:00

Dear readers:

         I thought I did not have to post this, as people could "google" it. I was wrong.

               The complete quote is only in a forgotten book of quotes. So, real books are superior when looking for nasty things to say about this 'wonderful' holiday.

              *ahem*

           George Bernard Shaw on Christmas: (from Our Theatres in the Nineties)

"I am sorry to have to introduce the subject of Christmas....it is an indecent subject; a cruel, gluttonous subject; a drunken, disorderly subject; a wasteful disastrous subject; a wicked, caging, lying, filthy, blasphemous, and demoralizing subject. Christmas is forced on a reluctant and disgusted nation by the shopkeepers and the press: on its own merits it would wither and shrivel in the fiery breath of universal hatred; and anyone who looked back to it would be turned into a pillar of greasy sausages."

           As a shopkeeper I am amused....but I agree. And Shaw wrote this 110 years ago.

                And it is only gotten more terrible, what with TV and so on pounding this dreadful holiday into our heads, from October 15 on. And who will disagree with me?

                        Yick.

                     Regards, and

                 Happy New Year

                  Jamie Lutton

Evil Twin: The story of the second Santa

2011-12-24T01:38:00.000-08:00

by John MacBeath Watkins

In 1976 conservative pundit Jude Waninski proposed the theory of the two Santas, and for decades since, those who followed his advice have been hollowing out our country.

Wanninski was a writer for the Wall Street Journal. He was a believer in monetarism, and also in supply-side economics. The trouble was, his theory called for the government to be starved of funds, under the theory that this would lead to vast new investment in business and produce a rising tide that would drown us all...no, wait, good things were supposed to happen.

But cutting government spending, Wanninski observed, was not a good strategy for election. "Elect me, and I'll take away all your presents," struck him as a poor bit of messaging. Liberals were proposing to spend money on this and that, giving away tax-supported goodies like Santa. Telling people your would take away those goodies presented the Republican Party as Scrooge, who would never be as popular as Santa.

So he proposed the second Santa. This Santa, instead of promising to spend money on constituents, would promise to cut their taxes. By becoming the second Santa, the Republicans would be elected and all would be right with the world.

But wait, isn't this second Santa really a Scrooge, offering to cut your taxes but planning to take away the goodies? No no no no no no. The second Santa would never have to say he would cut services, because the Laffer Curve showed that when you cut taxes, revenues would actually increase!

Except that when they put the plan into action, the revenues never did increase, and the economic results were unspectacular. In fact, they even thought they had set a trap for Bill Clinton when they shut down the government claiming we needed to balance the budget now now now now now! Never mind that Ronald Reagan had vastly increased the debt, or that when George Herbert Walker Bush raised taxes to try and reduce the debt, many Republicans responded by sitting on their hands when he tried to get them to vote for his re-election.

Newt Gingrich and his merry gang thought the tax increase would be terribly unpopular, and would ruin the economy, allowing a Republican to take over the White House and make all right with the world again.

But something went wrong. Clinton managed to reduce the number of people on the federal payroll and raise taxes while getting government to do what people wanted it to do, and the economy boomed. Apparently, raising taxes doesn't ruin the economy if done in moderation, and trying to make government work better can pay off as well.

And what of supply-side economics? It's an odd turn of phrase, isn't it. We've heard so much propaganda on the topic that we always think that means the discredited Laffer Curve, and cutting taxes and claiming one is going to cut spending (though they never do.)

But is that all there is to the supply side of economics? Dwight Eisenhower, a general before he was a president, knew logistics. He also knew what a mess the logistics of the American economy were. In 1919, he accompanied the Transcontinental Motor Convoy from Washington, D.C. to the Presidio in San Francisco, a trip accomplished at an average speed of 5.65 mph over a period of 56 days. In the process, the men in the convoy repaired 44 wooden bridges and traveled most of the distance on unpaved roads.

Eisenhower said he thought the Interstate Highway Act of 1956 was his greatest accomplishment as president. It's an accomplishment no other president would have boasted of, because none of the others have understood as well as Eisenhower how important roads are.

The demand side of the economics of roads hadn't produced a good interstate highway system, even with businessmen, bicyclists and motorists constantly lobbying for them. But Eisenhower knew that if he supplied the country with a fine road system, the movement of goods and people made possible by that system would stimulate the economy beyond all expectation.

And not coincidentally, the period from 1956, when the Interstate Highway Act was passed, and the early 1970s, when most of it had been built, were a period of rapid economic growth for the country.

Michael Mandel of the Progressive Policy Institute has provided us with a graphic representation of what's happened since the main period of highway construction ended:

While that's been happening, we've been playing around with the second Santa, waiting for that tide that will lift all boats. We're still on the rocks.

Eisenhower, interestingly enough, did not want to lower the top marginal tax rate from 90 percent. We were paying down the national debt as a percentage of GDP and we had uses for the tax money, providing the roads industry needed and educating the workers who would do the jobs. He'd been in charge of making sure the Army had enough men, enough machines, could get what was needed from point A to point B, and he'd seen what it took to train men well enough to be useful in a great enterprise.

John Kennedy, whose father and family friends were no doubt tired of paying such high taxes, lowered the top marginal rate to 70%. Who knows, that may be where the Laffer Curve actually applies. After all, there's a study that shows that's the rate that collects the most money from the rich.

But the business of cutting the top rate to its current level of 35% was essentially a fraud. Laffer never did the work to find out where the increase in marginal rates actually could make taxes collected fall, he simply asserted that it was a lower rate than the current one, and has continued to make that assertion no matter what the current rate is.

In the meantime, the real supply side of economics, the provision of the means and the skilled workers needed to build the economy, has simply been neglected. The second Santa has taken it away.

And did the second Santa achieve his goal? Did he starve government?

Not really. George W. Bush, who lowered taxes repeatedly during his time in the White House, raised the number of people working for the government by 35%, as we discussed in this post. The whole thing turned out to be a scam.

The problem is, people like Eisenhower weren't working a scam. They expected the American people to pay for what they got, and they promised to spend the peoples' money wisely. Rather than playing Santa, they were advising the people that here was an investment opportunity that could make the country richer, how about it, are you in? And if the people weren't, the project didn't get built. Meanwhile, the national debt did this:

That's right, it was well under control until the Second Santa got his hands on the checkbook with the election of Ronald Reagan to the presidency in 1980 (Wanninski was part of his brain trust.) Those tax-and-spend liberals were, it turned out, pay-as-you-go liberals.

The damage has been done, and will take many years to undo. But first, we've got to keep the second Santa from coming down that chimney. Give the first some milk and cookies, then build a fire.