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I Contain Multitudes

mccloskey

The Enrichment gigantically improved our lives. In doing so it proved scientifically that both social Darwinism and economic Marxism were mistaken. The genetically inferior races and classes and ethnicities proved not to be so. They proved to be creative. The exploited proletariat was not immiserized. It was enriched. In the enthusiasm for the materialist but deeply erroneous pseudo-discoveries of the nineteenth century— nationalism, socialism, Benthamite utilitarianism, hopeless Malthusianism, Comtean positivism, neopositivism, legal positivism, elitist Romanticism, inverted Hegelianism, Freudianism, phrenology, homophobia, historical materialism, hopeful communism, left anarchism, communitarianism, social Darwinism, scientific racism, racial history, theorized imperialism, apartheid, eugenics, tests of statistical significance, geographic determinism, institutionalism, intelligence quotients, social engineering, slum clearance, Progressive regulation, cameralist civil service, the rule of experts, and a cynicism about the force of ethical ideas— much of the clerisy mislaid its earlier commitment to a free and dignified common people. It forgot the main, and the one scientifically proven, social discovery of the nineteenth century— which was itself also in accord with a Romanticism so mischievous in other ways— that ordinary men and women do not need to be directed from above, and when honored and left alone become immensely creative. “I contain multitudes,” sang the democratic, American poet. And he did.

 

McCloskey, Deirdre N. (2016-04-21). Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World (Kindle Locations 288-299). University of Chicago Press. Kindle Edition.

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Ass Backwards Policy

donkeyass

From Barron’s Stephanie Pomboy: A Grim Outlook for the Economy, Stocks by Leslie Norton

The statistics bear this out. Over the last four years, U.S. nominal GDP growth has gone from 4.3% to 4.1% to 3% to 2.4%. The deflator, the inflation we are supposed to be targeting, went from 1.9% to 1.6% to 1.5% to 1.1%. What greater proof do you need that lower rates aren’t helping and, to the contrary, are making things worse? Growth and inflation are slowing, and it has to do with this aging demographic. Add the emotional and financial scares from the housing-bubble bust, and policy makers have really got it ass-backwards. They’re taxing the economy, not stimulating it.

HKO

Ms. Pomboy suggests that in the light of the demographic slowdown, low interest rates may be doing much more damage than good. They are supplying yesterday’s solutions to today’s problems- a major reason I believe Progressivism is exhausting itself

One problem with low interest rates is that it is pushing some folks into risk profiles unsuitable for their station. This will make the next recession, whenever it is, much more painful.

But the government is caught is a Catch 22- if interest rates climb the debt soars out of control. If they remain too low significant groups like the retired, and the essential growth in pension funds, creates a different but significant liability. By their nature government solutions to short term crisis tend to ignore long term consequences.  As the crisis grow ever more frequent there is never enough time to recover in order to return to normal.

The mating call for progressive policies was the infamous quote from John Maynard Keynes, “In the long run we are all dead.”

Try telling that to your kids.

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Power and Blockchain

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from Richard Fernandez at PJ Media, The End of the Memory Hole

But just to illustrate how things have changed for the State we now know that Orwell was wrong.  The mathematically dominant method for recording transactions, whether they involve the transfer of financial assets, intellectual property, health records or any type of information is probably going to be the blockchain.  It has three important properties.  First the entire record can be reproduced by anyone from a Genesis cryptographic starting point such that all records will have the same signature if and only if they are the same.  Second, no part of the record can be altered without regenerating the entire block chain from the the branch.  Third,  it is impossible to rewrite the block chain without incurring enormous real costs in electricity and computing power, as guaranteed by the laws of thermodynamics.

The first property means that blockchain by nature is a public ledger.  The second ensures the database can only be falsified in its entirety from the point of change.  The third makes it prohibitively expensive to do so.  Readers of Ray Bradbury’s The Sound of Thunder will recognize these attributes.  From his story we learn you can’t change the past without altering everything; that by crushing a butterfly in the Jurassic we alter not one item in the record but create a whole alternate history.

The possibility of a immutable record is revolutionary in itself.  History has always been a “fiction agreed upon” — until now.  What happens when you can’t lie boggles the mind. The elites are of course working to get on top of it as they did with the Internet and every other disruptive technology. Central bankers from 90 countries, including Janet Yellen, have met to discuss its impact on the financial industry and they are considerable.  It will make it possible for individuals to make universally verifiable ownership claims over their data. When the technique is applied to currency, as with Bitcoin, blockchain makes it impossible to print “free money” since each new block requires actual computing power to generate, giving blockchain currency something of the guaranteed scarcity of gold. In a world built on a pubic ledger, you can’t change the past without invalidating the ledger.  Drop something down the memory hole and the Ministry of Truth burns up with it.

HKO

I confess that I am still trying to wrap my head around this concept.  Perhaps Wikileaks is the prose version of Blockchain: information out of the reach of those who can control it for their own ends.

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A Veneer of Public Purpose

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From John Cochrane at The Grumpy Economist, Micro vs. Macro:

The cause of sclerotic growth is the major economic policy question of our time. The three big explanations are 1) We ran out of ideas (Gordon); 2) Deficient “demand,” remediable by more fiscal stimulus (Summers, say) 3); Death by a thousand cuts of cronyist regulation and legal economic interference.

Even the New York Times is waking up to the apres-Obama regulatory deluge.

As these stories make clear, the problem is not benevolent but ham-handed interventionism. The problem, much tougher, is best described as “cronyism.” A veneer of public purpose stifles markets, to drive profits to connected parties in return for political support.

The “ideas” and “stimulus” approaches presume everything else in the economy is working just fine. Is investment really slow only because there are, fundamentally, just no good ideas to invest in any more?

The deeper economic issue is whether “macro” and “growth” outcomes really can be separated from “micro” distortions in each market.

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Unbridled Rent Seeking

from Holman Jenkins, Jr. at The Wall Street Journal, Regulation vs. The American People

If Mr. Obama was “deeply frustrated,” the reason was the American people’s lack of support for his agenda. And what the Times calls his regulatory strategy would better be described as unbridled rent seeking.

That’s the term economists use for exercising government power to create private gains for political purposes. Consider:

Mr. Obama’s bank policy dramatically consolidated the banking industry, which the government routinely sues for billions of dollars, with the proceeds partly distributed to Democratic activist groups.

His consumer-finance agency manufactured fake evidence of racism against wholesale auto lenders in order to facilitate a billion-dollar shakedown.

His airline policy, urged by labor unions, led to a major-carrier oligopoly, with rising fares and profits.

His FDA is seeking to extinguish small e-cigarette makers for the benefit of Big Tobacco and Big Pharma (whose smoking-cessation franchise is threatened by cheap and relatively safe electronic cigarettes).

We could go on. Mr. Obama’s own Council of Economic Advisers complains about the increasing cartelization of the U.S. economy—as if this were not a natural output of regulation. In a much-noted Harvard Business Review piece this spring, James Bessen, an economist, lawyer and software entrepreneur, cites increased “political rent seeking” to explain the puzzle of rising corporate profits in the absence of job creation and economic growth.

The truth is, government playing neutral arbiter over the private economy doesn’t produce rents. A stable and predictable regulatory system produces only mingy or non-existent rents.