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Authoritarian Posers of Capitalism

chinese

Joel Kotkin writes Choosing Fortune Over Freedom

Excerpts:

This is not surprising, given the rapid progress that country has made in recent years. China has expanded its share of global gross domestic product from 2 percent in 1995 to 12 percent in 2012. Its economic model – communist control of thought and politics but welcoming to most enterprise – has vastly outperformed that of the strongest democracies, the United States, the European Union and Japan, particularly in light of the Great Recession. This recalls the 1930s, where Germany’s state-directed economy and that of the Soviet Union seemed to cope far better with the Depression than their Western democratic counterparts.

Chinese success has made it painfully clear that globalization of capitalism does not require pluralism or Western standards of legality. Nor has it done much to promote global understanding, in the China Sea or elsewhere in the world. Religious and ethnic divisions are, if anything, ever more pronounced. The failure of the much-heralded Arab Spring to create anything remotely pluralistic epitomizes this trend, leaving the West with the dilemma of selecting which repressive regimes to ally with to defeat even more heinous entities, like Hamas or the Islamic State.

HKO

Democratic Capitalism requires broad participation, a strong legal foundation, and a virtuous population. Authoritarian posers are mere cronies.  This success will be short lived as we found our fascination with Fascism to solve conditions of economic turmoil to unwind.

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Raising the Price of Exit

from Scott Grannis from Calafia Beach Pundit, Obama’s attempt to block tax inversion is a mistake;

As the WSJ article notes, it’s still questionable whether the administration has the authority to block inversions via executive order. But in the meantime, this is likely to add up to a disincentive to invest in the U.S. economy. Capital only goes where it is welcome and treated nicely. One essential ingredient for a strong economy is to ensure the owners of capital that they are free to come and go as they wish. Trying to keep company headquarters here by force will only work to keep headquarters from coming here in the first place.

My years living in Argentina taught me firsthand that the best way for a country to stimulate capital flight is to try to prevent capital from leaving. It’s very sad to see the U.S. emulating the proven-to-fail mistakes of the Argentine government.

This probably won’t keep the dollar from appreciating further, but it will add to the headwinds that are keeping the U.S. economy from realizing its full potential.

HKO

When you adapt policies that rely on the reality you want rather than the reality you have,  the natural course is a tyrannical force to bend reality to your will.  This is why Utopian ideals end up becoming so oppressive.  A growing economy is a free economy.  The price of raising the price of exit is to also raise the price of entry.

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we have much more in common with one another than we dare to realize.

nytimes

Economist Mark Perry writes in his blog Carpe Diem, Evidence shows significant mobility in income and affluence – 73% of Americans will be in ‘top 20%’ for at least a year:

Excerpts:

quoted from Mark Rank from the New York Times, From Rags to Riches:

It is clear that the image of a static 1 and 99 percent is largely incorrect. The majority of Americans will experience at least one year of affluence at some point during their working careers. (This is just as true at the bottom of the income distribution scale, where 54% of Americans will experience poverty or near poverty at least once between the ages of 25 and 60).

Ultimately, this information suggests that the United States is indeed a land of opportunity, that the American dream is still possible — but that it is also a land of widespread poverty. And rather than being a place of static, income-based social tiers, America is a place where a large majority of people will experience either wealth or poverty — or both — during their lifetimes.

Rather than talking about the 1 percent and the 99 percent as if they were forever fixed, it would make much more sense to talk about the fact that Americans are likely to be exposed to both prosperity and poverty during their lives, and to shape our policies accordingly. As such, we have much more in common with one another than we dare to realize.

HKO

Much of the data and information on social inequality is misleading and hard to measure.  Thomas Sowell has spoke of the need to recognize that individual journeys are also very different than a description of mere statistical categories.  This piece adds another dimension that even individuals rise and fall among categories during the course of a single life.

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Is too Much Information Antithetical to Knowledge?

From The Wall Street Journal Book Review: ‘The Power of Knowledge,’ by Jeremy Black

The review is by Roger Kimball

Excerpt:

Although deeply grounded in history from the Middle Ages on down, this book also conjures with contemporary issues. Some are technical, like the vistas of information unraveled in the human genome project. Some are political. Until fairly recently, Mr. Black notes, central governments lacked the mechanisms to intervene consistently in everyday life. That, as anyone who can pronounce the acronym “NSA” knows, has changed dramatically. Mr. Black devotes an entire chapter to what he calls “the scrutinized society.” The effort to control public opinion and the flow of information has been most flagrant in totalitarian regimes, but he shows that in democracies, too, information is “filtered and deployed as part of the battle for public opinion.”

The growth and precision of information about society brings with it a pressure toward centralization and consolidation. But information doesn’t flow in one direction: There is also an antiphonal movement of dissent. In the 17th century, Mr. Black writes, “the habit of obedience towards authority was matched by a stubborn, and largely successful, determination to preserve local privileges, in part by rejecting demands for information that might be used to curtail these privileges.” Mr. Black concludes by observing that, though information serves people in power, it also gives “people more oversight and control over their rulers.” The jury may still be out on that.

Mr. Black has given us an eloquent paean to the transformative power of information. I hope it isn’t too impish to offer a countervailing observation or reminder about information itself. It comes from the current-day mathematician David Guaspari : “Comparing information and knowledge,” he wrote, “is like asking whether the fatness of a pig is more or less green than the designated hitter’s rule.”

HKO

The social networks are being mined by political campaigns. No one has yet done this more effectively than Obama.  Rand Paul and possibly others from the right are desperately trying to play catch up.

Government agencies have tools to follow the most minute activities and desires of its citizens and this can have totalitarian consequences in ways we are probably unable to imagine.  Yet citizens also have access to infinite data, information and opinions that can be used to hold their government accountable in ways that the old media could never attempt.

It seems that it is critical to be aware of any attempt of government agencies to control internet media sources.  Recent attempts to define what is a journalist, to monitor newsrooms, and to access sources without warrants should cause us all to pause.

Knowledge and Power by George Gilder takes a different approach.  Gilder contends that knowledge is spread wide and deep in the private sector and that wealth grows when knowledge and power converge.  This rarely happens in government.  It is why central economic planning fails. The use of social networks and other online data sources may provide a lot of data and information, but that falls far short of the knowledge that is needed to use the information wisely.  In fact too much information may at some point be antithetical to knowledge. Nassim Taleb suggested that too much data and information gives rise to relationships and conclusions that are not justified by facts and leads us to monstrous errors in judgment.

While we are aware of the use of technology in the private sector we are just becoming aware of its use as a tool of government power.

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Political Resistance to Innovation

“The problem of politics is that it does not know how to get less wrong. It is as a practical matter impossible to design a national health-care policy that can be tweaked and improved every quarter, or on-the-fly in real time as problems are discovered, as software is. It is nearly impossible to imagine political institutions creating something like a software-update feature for Social Security or the War on Drugs. Resistance to innovation is a part of the deep structure of politics. In that, it is like any other monopoly. It never goes out of business—despite flooding the market with defective and dangerous products, mistreating its customers, degrading the environment, cooking the books, and engaging in financial shenanigans that would have made Gordon Gekko pale to contemplate.”

Excerpt From: Kevin D. Williamson. “The End Is Near and It’s Going to Be Awesome.” HarperCollins, 2013-05-01. iBooks.

This material may be protected by copyright.

Check out this book on the iBookstore: https://itunes.apple.com/us/book/end-is-near-its-going-to-be/id569207288?mt=11